Tripoli Rocketry v. Bureau of Alcohol, Tobacco, 04-5453.

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Citation: 437 F.3d 75
• Docket Number: No. 04-5453.,04-5453.
• Parties: TRIPOLI ROCKETRY ASSOCIATION, INC. and National Association of Rocketry, Appellants v. BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES, Appellee.
• Decision Date: 10 February 2006

437 F.3d 75 TRIPOLI ROCKETRY ASSOCIATION, INC. and National Association of Rocketry, Appellants
v.
BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES, Appellee. No. 04-5453. United States Court of Appeals, District of Columbia Circuit. Argued January 10, 2006. Decided February 10, 2006.

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Appeal from the United States District Court for the District of Columbia (No. 00cv00273).

Joseph R. Egan argued the cause for appellants. With him on the briefs were Martin G. Malsch, Robert J. Cynkar, and Charles J. Fitzpatrick.

Jane M. Lyons, Assistant U.S. Attorney, argued the cause for appellee. With her on the brief were Kenneth L. Wainstein, U.S. Attorney, and Michael J. Ryan, Assistant U.S. Attorney. R. Craig Lawrence, Assistant U.S. Attorney, entered an appearance.

Before: TATEL and GARLAND, Circuit Judges, and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge EDWARDS.

HARRY T. EDWARDS, Senior Circuit Judge.

Appellants Tripoli Rocketry Association and National Association of Rocketry are non-profit organizations whose members are hobby rocket enthusiasts. They challenge the Bureau of Alcohol, Tobacco, Firearms & Explosives' ("ATFE") refusal to alter its classification of ammonium perchlorate composite propellant ("APCP") as an "explosive" for purposes of 18 U.S.C. § 841(d) (2000). (ATFE is currently charged with administering the statute at issue. Until recently, those duties rested with the Bureau of Alcohol, Tobacco & Firearms ("ATF"), and, before that, with the Internal Revenue Service. For the sake of simplicity, we will refer only to "ATFE," except when quoting material that refers to one of its predecessors.)

APCP is commonly used as fuel in hobby rockets, and classification as an explosive

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imposes regulatory controls on the handling of APCP by appellants' members. The statutory definition of "explosive" encompasses materials whose "primary or common purpose" is to "function by explosion." ATFE determines whether a material fits this definition by characterizing the speed at which the material burns: materials with the fastest burn rates detonate, the slowest ones burn, and substances in between deflagrate. In other words, under ATFE's characterization, a substance that deflagrates burns more rapidly than something that simply burns (like paper or a candle wick), but less rapidly than something that detonates (like dynamite). And ATFE treats a material as explosive if it functions by detonation or deflagration.

Appellants challenge ATFE's determination that APCP deflagrates. Appellants contend that ATFE's determination was arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2)(A) (2000), because there is no evidence in the record supporting the conclusion that APCP functions by deflagration and there is some evidence in the record suggesting a contrary conclusion. In response, ATFE points to evidence relating to the properties of "rocket propellants." ATFE also argues that, in a case of this nature — involving the agency's expertise in deciding a highly technical question — the court should defer to ATFE's judgment.

This court routinely defers to administrative agencies on matters relating to their areas of technical expertise. We do not, however, simply accept whatever conclusion an agency proffers merely because the conclusion reflects the agency's judgment. In order to survive judicial review in a case arising under § 7006(2)(A), an agency action must be supported by "reasoned decisionmaking." Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 374, 118 S.Ct. 818, 139 L.Ed.2d 797 (1998) (quoting Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). "Not only must an agency's decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational. Courts enforce this principle with regularity when they set aside agency regulations which, though well within the agencies' scope of authority, are not supported by the reasons that the agencies adduce." Id. The problem in this case is that ATFE's explanation for its determination that APCP deflagrates lacks any coherence. We therefore owe no deference to ATFE's purported expertise because we cannot discern it. ATFE has neither laid out a concrete standard for classifying materials along the burn-deflagrate-detonate continuum, nor offered data specific to the burn speed of APCP when used for its "common or primary purpose." On this record, the agency's decision cannot withstand judicial review. We therefore remand the case for further consideration.

I. BACKGROUND

Title XI of the Organized Crime Control Act of 1970 ("OCCA") regulates the manufacture, distribution, and storage of explosive materials. See Pub.L. No. 91-452, § 1102, 84 Stat. 952 (1970) (codified at 18 U.S.C. §§ 841-848 (2000)). Under the statute, "explosive materials" include "explosives, blasting agents, and detonators," 18 U.S.C. § 841(c); and, for purposes of the provisions at issue here, "explosives" include:

any chemical compound mixture, or device, the primary or common purpose of which is to function by explosion; the term includes, but is not limited to, dynamite and other high explosives, black

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powder, pellet powder, initiating explosives, detonators, safety fuses, squibs, detonating cord, igniter cord, and igniters.

18 U.S.C. § 841(d).

Until recently, the statute required the Secretary of the Treasury or his delegate to compile an explosives list, 18 U.S.C. § 841(d), (k) (2000), but this responsibility was reassigned by the Homeland Security Act, Pub.L. No. 107-296 § 1112(e), 116 Stat. 2135, 2276 (2002). The current version of OCCA requires the Attorney General to "publish and revise at least annually in the Federal Register" the explosives list, including "any additional explosives which he determines to be within the coverage of this chapter." 18 U.S.C. § 841(d) (Supp. 2002). Potential users must obtain a license or permit from ATFE to import, manufacture, or deal in explosive materials. 18 U.S.C. § 842(a); see also 18 U.S.C. § 843 (2000) (outlining requirements for obtaining licenses). Users are also subject to certain requirements governing the manufacture, storage, transportation, transfer, and sale of explosive materials. 18 U.S.C. § 842(b)-(k). Violators of these statutory provisions face the possibility of criminal sanctions. 18 U.S.C. § 844(a)(1), (b) (2000).

It has always been the case that the agency regulations implementing these OCCA requirements have exempted, inter alia, "propellant actuated devices ... manufactured, imported, or distributed for their intended purposes." See 27 C.F.R. § 555.141(a)(8) (2005) (current exemption); 26 C.F.R. § 181.141(i) (1972) (initial exemption). "Propellant actuated device" is defined to mean: "Any tool or special mechanized device or gas generator system which is actuated by a propellant or which releases and directs work through a propellant charge." 27 C.F.R. § 555.11 (2005).

Appellants claim that there is no known purpose for using APCP other than as a rocket propellant. According to appellants, hobby rocket enthusiasts use APCP in one of two fashions. The material is sometimes shipped already in a rocket motor and then used once in a model rocket. Alternatively, the material is shipped as part of a reloadable motor kit in the form of propellant modules, from which the rocket enthusiast assembles the motor. Upon ignition, APCP in rocket motors is designed to release its energy in a controlled, predictable, and focused fashion to power the flight of the hobby rocket.

APCP was placed on the first "Explosives List" issued in 1971, see Commerce in Explosives, 36 Fed.Reg. 658, 675 (Jan. 15, 1971), and has remained on the list ever since, see Commerce in Explosives; List of Explosive Materials, 70 Fed.Reg. 73,483, 73,484 (Dec. 12, 2005). In April 1994, ATFE sent a letter to Aerotech, Inc., a company that produces hobby rockets, replying to the company's inquiries regarding the regulatory constraints affecting its business. ATFE explained that "[d]uring the early 1970's when [ATFE] was assigned the responsibility of enforcing the Federal explosives laws, it was clear that [the agency] did not intend to regulate toy model rockets which did not constitute a public safety hazard," but that "[i]t is also clear that ammonium perchlorate composite propellants are explosives since they have been on the explosives list since the first list was published in 1971." Letter from ATFE to Gary C. Rosenfield, President, Aerotech, Inc. (Apr. 20, 1994) at 1, Joint Appendix ("J.A.") 106. The agency declared that the exemption for propellant actuated devices applies only to rocket motors that, inter alia, contain no more than 62.5 grams of propellant, thus excluding APCP from exemption. Id. ATFE also announced that, while fully assembled

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rocket motors could qualify for the exemption, rocket propellent prior to assembly cannot.

Appellants challenged this decision in a September 7, 1999 letter to ATFE, asserting that APCP does not function by explosion and, therefore, ATFE lacked statutory authority to regulate the material as an explosive. Appellants also argued that any type of rocket motor, regardless of the amount of fuel, is a propellant actuated device and therefore exempt from regulation. Finally, appellants criticized what they considered procedural defects in the promulgation of the explosives list, arguing that ATFE had never enunciated any "criteria (specific or general) for determining why the listed materials were `explosives,' `detonators,' or `blasting agents'" and that the "absence of any criteria by which to make a determination that APCP should be on the list ... renders the explosives list both over-inclusive and under-inclusive." Letter From Appellants'...