York v. Secretary of Treasury

• Decision Date: 01 October 1985
• Docket Number: No. 84-1370,84-1370
• Citation: 774 F.2d 417
• Parties: William M. YORK, dba York Arms Co., Plaintiff-Appellant, v. SECRETARY OF TREASURY; Stephen E. Higgins, Director Bureau of Alcohol, Tobacco and Firearms (BATF) and John Does 1 through 20, Agents of BATF, Defendants- Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 417

774 F.2d 417

William M. YORK, dba York Arms Co., Plaintiff-Appellant, v. SECRETARY OF TREASURY; Stephen E. Higgins, Director Bureau of Alcohol, Tobacco and Firearms (BATF) and John Does 1 through 20, Agents of BATF Defendants- Appellees.

No. 84-1370.

United States Court of Appeals Tenth Circuit.

Oct. 1, 1985.

Loni F. DeLand and Herschel Bullen of McRae & DeLand, Salt Lake City, Utah, for plaintiff-appellant.

Brent D. Ward, U.S. Atty., and Barbara W. Richman, Asst. U.S. Atty., Salt Lake City, Utah, for defendants-appellees.

Before LOGAN, SETH and SEYMOUR, Circuit Judges.

LOGAN, Circuit Judge.

After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Cir.R. 10(e). The cause is therefore ordered submitted without oral argument.

Plaintiff William M. York appeals from the district court's grant of summary judgment for defendants, the Secretary of the Treasury and the Director and agents of Bureau of Alcohol, Tobacco and Firearms (BATF). York sued for injunctive and other relief from a BATF ruling classifying the YAC STEN MK II weapon as a "machinegun." York claimed that (1) the BATF ruling was arbitrary, capricious, and an abuse of discretion; (2) the BATF ruling violated his rights as seller of the gun to due process and equal protection; and (3) he is entitled to de novo review of the agency's decision.

In 1982 the BATF became aware that York was selling a gun called the YAC STEN MK II, a somewhat modified version of the famous World War II British STEN submachine gun. BATF issued its ruling after examining a sample obtained through normal commercial channels. York, a federally licensed firearms manufacturer, had ignored the BATF's request for a sample to enable classification of the gun under the National Firearms Act, 26 U.S.C. Secs. 5801-5872.

Before the ruling, York had written to the BATF to request general information on the standards applicable to his business but had made no mention of the STEN. In response, the BATF sent York several publications but recommended that he contact the Bureau with specific questions. York made no further written inquiries, although he was aware that the STEN's status was in question and apparently made some telephone inquiries.

After classifying the STEN as a "machinegun" under 26 U.S.C. Sec. 5845(b), BATF agents told York to recall the weapons already sold and advised purchasers by letter to return the guns. York resisted the recall and filed this action. The district court granted defendants' motion for summary judgment and dismissed York's complaint with prejudice.

I

Congress has delegated the administration of the National Firearms Act to the Department of the Treasury, which acts through the BATF. See Davis v. Erdmann, 607 F.2d 917, 918 (10th Cir.1979) (judicial recognition of the administrative hierarchy). Under 26 U.S.C. Sec. 7805(a), the Secretary of the Treasury or his delegate "shall prescribe all needful rules and regulations for the enforcement" of the Internal Revenue Code title, which includes the National Firearms Act. In the present case, the BATF was using that enforcement power to interpret 26 U.S.C. Sec. 5845(b), which provides that a "machine gun" includes "any weapon which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger." Id.

The Bureau designated the STEN a machinegun in ATF Ruling 83-5. The ruling noted that the STEN had identical design characteristics to the original World War II submachinegun, except for a disconnector intended to prevent more than one shot from being fired with a single trigger function. The ruling stated:

"The trip lever (disconnector) is designed in such a way a simple modification to it, such as bending, breaking or cutting allows the weapon to operate automatically. Thus, this simple modification to the trip lever (disconnector), together with STEN submachinegun design features and components in the YAC STEN MK II carbine, permits the firearms to shoot automatically, more than one shot, without manual reloading by a single function of the trigger. The above combination of machinegun design features as employed in the YAC STEN MK II carbine are not normally found in the typical sporting firearm."

R. I, 137-38. After noting that the National Firearms Act defined a weapon that shoots automatically, or can be readily restored to shoot automatically, more than one shot by a single trigger function, as a machinegun, the Bureau ruling declared:

"The 'shoots automatically' definition covers weapons that will function automatically. The 'readily restorable' definition defines weapons which previously could shoot automatically but will not in their present condition. The 'designed' definition includes weapons which have not previously functioned as machineguns but possess specific machinegun design features which facilitate automatic fire by simple alteration or elimination of existing component parts."

R. I, 138.

The BATF ruling on the STEN was thus an administrative interpretation of an existing statute. Under Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1964), "when faced with a problem of statutory construction, [a court] shows great deference to the interpretation given the statute by the officers or agency charged with its administration." Id. at 16, 85 S.Ct. at 801. This court similarly has held that a court "should not overturn an administrative interpretation of a statute which it is charged with administering unless it can be said that the interpretation is plainly erroneous." Board of Directors and Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777, 784 (10th Cir.), cert. denied, 414 U.S. 924, 94 S.Ct. 233, 38 L.Ed.2d 158 (1973). Although an interpretative rule like the one involved in this case is not granted the "force of law" of legislative rules, it still requires deferential treatment by the court. Compensation Commission of Alaska v. Aragon, 329 U.S. 143, 153-54, 67 S.Ct. 245, 250, 91 L.Ed. 136 (1946).

Applying these standards to the facts of this case, we hold that the BATF classification was based on relevant factors, was not a clear error of judgment, and was not arbitrary, capricious, or an abuse of discretion. Although York argues that the BATF has not classified other firearms that are "readily convertible" to automatic weapons as machineguns, there are statements in the record outlining important distinctions between those guns and the STEN. Charles Lanum, a firearms enforcement officer with the BATF, explained to York in a November 1983 meeting that the YAC STEN MK II was merely a manipulation of the parts of the original British STEN, not a redesign. In contrast, several of the weapons that York characterized as comparable were not designed originally to accommodate machinegun parts. The BATF ruling stressed that the disconnector in the YAC STEN MK II, which must prevent automatic fire, could be disabled by mere bending, breaking, or cutting. In response to a letter from York's congressman, the BATF asserted that other weapons were neither designed originally to fire automatically nor able to be converted without substantial alteration or substitution of parts. York has never offered any evidence contradicting these points beyond his own vehement insistence that the unclassified guns are the same as the STEN. In fact, his counsel admitted when arguing against the summary judgment motion that there was no way to demonstrate that the YAC STEN MK II could not be converted to automatic operation.

York has also detailed the adverse impact the BATF ruling will have on his business. But harsh consequences for York's business alone are not enough to find an agency's action unreasonable. See Gulf Oil Corp. v. Hickel, 435 F.2d 440, 447-48 (D.C.Cir.1970).

II

Analysis of whether the BATF followed necessary procedures requires us first to decide whether the Bureau's action qualifies as an adjudication or a rulemaking. We are convinced that it includes elements of both. See 2 K. Davis, Administrative Law Treatise Sec. 10:5 (2d ed. 1979) (recognizing that most agency actions involve elements of both adjudication and rulemaking).

The portion of the BATF ruling that further defines the language of 26 U.S.C. Sec. 5845(b) was merely an interpretative rule not subject to either notice and comment procedure under 5 U.S.C. Sec. 553 or the formalities of an agency hearing under 5 U.S.C. Secs. 556-557. ¹ See, e.g., American Postal Workers Union, AFL-CIO v. U.S. Postal Service, 707 F.2d 548, 559 (D.C.Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1594, 80 L.Ed.2d 126 (1984). In contrast, that portion of the Bureau's ruling placing the STEN in the category of machineguns, i.e., applying the law to the facts of a particular case, was not a rulemaking of any stripe. ² Rather, such agency action fell into the category of adjudication, albeit informal. Such decisions require adjudicatory hearings under the Administrative Procedure Act only when a statute demands that they be made "on the record after opportunity for an agency hearing." 5 U.S.C. Sec. 554(a); see also Anaconda Company v. Ruckelshaus, 482 F.2d 1301, 1306 (10th Cir.1973). There is no such requirement in this case. Further, the classification of the STEN falls under an exception to the hearing requirement for "proceedings in which decisions rest solely on inspections, tests, or elections." 5 U.S.C. Sec. 554(a)(3).

Nevertheless, York argues that the agency failed to observe his constitutional right to due process in this case. In this respect York evidently claims that he is constitutionally entitled to a predeprivation hearing. He complains that he was allowed "no input regarding the decision to construe...