Cite as R.P.B. Industries, Inc., v. Secretary of Treasury, Case No. C 82-1149 A (N.D.Ga. July 21, 1982) IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION R.P.B. INDUSTRIES, INC., C82-1149A a Georgia Corporation by and through its President WAYNE DANIEL, Plaintiff, vs. SECRETARY OF THE TREASURY, STEPHEN E. HIGGINS, Acting Director, Bureau of Alcohol, Tobacco and Firearms, Defendants. ORDER This civil action involves a dispute between R.P.B. Industries, Inc., a manufacturer of semi-automatic and automatic firearms, and the Bureau of Alcohol, Tobacco and Firearms (ATF), the federal agency responsible for enforcing the National Firearms Act, 26 U.S.C. section 5801 et seq. The National Firearms Act imposes taxes on the making and transfer of certain firearms. 26 U.S.C. sections 5811, 5821. Firearms covered by the Act include machine guns, sawed-off shotguns and rifles, and destructive devices. 26 U.S.C. section 5845. In addition, manufacturers, importers, and dealers in these firearms are required to pay annual special occupational taxes. 26 U.S.C. section 5801. Persons who pay a special occupational tax as manufacturers are exempt from the making tax, and transfers between registered manufacturers, importers, and dealers are exempt from the transfer tax. 26 U.S.C. section 5852(c) and (d). The subject of this suit is ATF Ruling 82-8, issued pursuant to 26 U.S.C. section 7805(a) and 27 C.F.R. section 71.41. The ruling concludes that three firearms manufactured by plaintiff. The SM-10, SM-11A1, and the SAC carbine, are machine guns covered by the National Firearms Act because they are designed to shoot automatically more than one shot by a single function of the trigger. The statutory definition of machine gun reads as follows: The term "machine gun" means 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. 26 U.S.C. section 5845(b). The firearms in question had previously been classified as semiautomatic by ATF, but were reclassified as machine guns in ATF Ruling 82-8 because of ATF's belief that the firearms were designed to shoot automatically. See Exhibit B to Complaint. The ATF informed plaintiff of its ruling by letter dated June 2, 1982, said ruling to be effective by its own terms on June 21, 1982. Plaintiff filed this action June 1, 1982 seeking declaratory and injunctive relief to halt the enforcement of ATF Ruling 82-8. Jurisdiction was based upon 5 U.S.C. sections 1331 and 1361. Declaratory relief was sought pursuant to 28 U.S.C. sections 2201 and 2202. Following a hearing attended by counsel for all parties, the Court entered an order on June 18, 1982, temporarily enjoining the defendants from implementing the proposed ATF Ruling 82-8, and consolidated the preliminary injunction hearing with the trial of the case on the merits. Subsequently, on June 23, 1982, defendants moved to dismiss or, alternatively, for summary judgment, to which plaintiff responded, likewise seeking summary judgment, on June 28, 1982. Without a ruling on the cross motions for summary judgment having yet been entered, the matter came on for the consolidated preliminary injunction and trial on the merits hearing on June 28, 1982. The court entered an order deciding the case in the defendant's favor on July 2, 1982, and today enters this memorandum opinion setting forth its reasoning for its rulings on the motions for summary judgment and for preliminary injunction, and setting forth the findings of fact and conclusions of law required to be made pursuant to Fed. R. Civ. P. 52(a) following adjudication on the merits. The jurisdictional questions raised by defendants are pretermitted. FINDINGS OF FACT 1. Plaintiff R.P.B. Industries, Inc. (R.P.B.), is a firearms manufacturer whose principal place of business is within the Northern District of Georgia. The corporate president is Wayne E. Daniel, who testified at trial. 2. In 1979, R.P.B. submitted a .45 caliber (the SM-10) pistol to ATF for classification as either a Title I (semiautomatic) or a Title II (automatic) weapon. The Bureau's Firearms Classification Panel chose to classify the firearm as a semiautomatic weapon and so informed R.P.B. by letter dated April 11, 1979. The letter also indicated that the weapon was extremely simple to modify to full automatic fire and suggested that consideration be given to further modifications, which would make alteration to full automatic more difficult. The letter stated in part: An examination of the above pistol indicates that the receiver has been redesigned from the M-10 submachine gun by eliminating the holes for the selector lever and the sear and disconnector have been permanently affixed to the receiver. Since the receiver is different from the M-10 submachine gun, the M-10 semiautomatic pistol is classified as a firearm as that term is defined in Section 921(a)(3) of Title I of the Gun Control Act of 1968. Our examination also showed that due to the minimal changes which have been made to the receiver, the M-10 semiautomatic pistol is extremely simple to convert to full automatic fire. Therefore, it is suggested that you consider some further modifications which would make conversion to full automatic fire more difficult. Should you decide to make further changes in the design of the weapon, we would be interested in examining a sample weapon incorporating the changes. 3. Following the ATF's letter of April 11, 1979 to R.P.B., the manufacturer made some attempts to develop a new semiautomatic pistol less susceptible to conversion, but failed to do so. In 1980 and 1981, R.P.B. increased sales of the semiautomatics as a result of advertising and direct mailing to over 150,000 gun dealers in the United States. During 1979, the first full year of production of the semiautomatics, R.P.B's sales totaled $1.1 million. In 1980, sales rose to $2.2 million, and in 1981 to around $4 million. Over ninety percent of these sales were attributable to semiautomatics and accessories. 4. From the date of the classification of the challenged firearm by the ATF in 1979 to the present, a considerable number of R.P.B. semiautomatic firearms have been examined by the ATF Firearms Technology Branch in conjunction with criminal investigations. The majority of those semiautomatic firearms had been converted by their users to automatic firearms. The R.P.B. "semiautomatic" firearms can be made to fire in the fully automatic mode by the following methods: A. Insertion of coins behind the trigger to limit its motion. B. Removal of a portion of the disconnector by cutting with side cutting pliers. C. Removal of a portion of the disconnector by breaking with vice grip pliers. D. Removal of the forward portion of the trip by grinding. E. Removal of the entire trip by breaking with a screwdriver, hammer, and pliers. 5. Since January 1, 1979, R.P.B. semiautomatics converted to full automatic firearms have been identified throughout the United States where they have been used in the commission of numerous crimes. 6. In a similar situation, the ATF encountered in July 1981, a large quantity of "semiautomatic" Interdynamic KG-9 firearms, manufactured by another maker in Miami, Florida, which firearms were also being converted from semiautomatics to automatics and which were being confiscated as a result of their use by criminals. On January 19, 1982, as a result of the above, the ATF reclassified the KG-9 as an automatic firearm. 7. Due to the facts recited above with respect to R.P.B.'s semiautomatics, the Firearms Enforcement Branch prepared a memorandum on March 25, 1982, which was forwarded to the Director, ATF, recommending a ruling similar to the KG-9 ruling, reclassifying the R.P.B. semiautomatic firearms as Title II weapons (i.e., machine guns). On May 20, 1982, letters notifying Mr. Daniel, President of R.P.B. Industries, and his supplier, Durex, Inc., advising them of the proposed ruling, were signed by the Acting Director, ATF. Pursuant to the provisions of the May 20, 1982 letter, R.P.B. was given the opportunity to comment on the proposed Ruling. R.P.B. was given a conference on May 27, 1982, and also presented its views in writing. 8. On June 2, 1982, the Acting Director, ATF signed the reclassification ruling with an effective date of June 21, 1982. The ruling, ATF Ruling 82-8, reads as follows: The Bureau of Alcohol, Tobacco and Firearms has reexamined firearms identified as SM10 pistols, SM11A1 pistols, and SAC carbines. The SM10 is a 9 millimeter or .45 ACP caliber, semiautomatic firearm; the SM11A1 is a .380ACP caliber, semiautomatic firearm; and the SAC carbine is a 9 millimeter or .45ACP caliber, semiautomatic firearm. The weapons are blowback operated, fire from the open bolt position with the bolt incorporating a fixed firing pin, and the barrels of the pistols are threaded to accept a silencer. In addition, component parts of the weapons are a disconnector and a trip which prevent more than one shot being fired with a single function of the trigger. The disconnector and trip are designed in the SM10 and SM11A1 pistols and in the SAC carbine (firearms) in such a way that a single modification to them, such as cutting, filing, or grinding, allows the firearms to operate automatically. Thus, this simple modification to the disconnector or trip, together with the configuration of the above design features (blowback operating, firing from the open bolt position, and fixed firing pin) in the SM10 and SM11A1 pistols and SAC carbine are normally not found in typical sporting firearms. The National Firearms Act, 26 U.S.C. section 5845(b), defines a machine gun to include 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. 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 those weapons which have not previously functioned as machine guns but possess design features which facilitate full automatic fire by a simple modification or elimination of existing component parts. Held: The SM10 and SM11A1 pistols and the SAC carbine are designed to shoot automatically more than one shot, without manual reloading, by a single function of the trigger. Consequently, the SM10 and SM11A1 pistols and SAC carbines are machine guns as defined in Section 5845(b) of the Act. With respect to the machine gun classification of the SM10 and SM11A1 pistols and SAC carbines, under the National Firearms Act, pursuant to 26 U.S.C. section 7805(b), this ruling will not be applied to SM10 and SM11A1 pistols and SAC carbines manufactured or assembled before June 21, 1982. Accordingly, SM10 and SM11A1 pistols and SAC carbines, manufactured or assembled on or after June 21, 1982, will be subject to all the provisions of the National Firearms Act and 27 C.F.R. Part 179. 9. The SM10 pistol, SM11A1 pistol, and SAC Carbine manufactured by R.P.B. Industries, Inc. were designed to shoot automatically more than one shot, without manual reloading, by a single function of the trigger. This conclusion is based upon these facts: (1) These firearms are mechanically simple to convert from semiautomatic to fully automatic; (2) These firearms are not functionally useful as semiautomatic weapons due to their relatively heavy weight and their inaccuracy in targeting; (3) These firearms resemble R.P.B.'s Ingram submachine gun and are concealable weapons. CONCLUSIONS OF LAW 1. The SM10 pistol, SM11A1 pistol, and SAC carbine are machine guns as defined in 26 U.S.C. section 5845(b). 2. The public notice and comment requirements of the Administrative Procedure Act, 5 U.S.C. section 553, do not apply to ATF Ruling 82-8 as plaintiff contends because that ruling is merely an interpretive rule. 5 U.S.C. section 553(6)(A); 27 C.F.R. section 71.41(d)(2)(i)A). Interpretive rules are administrative constructions of statutory provisions on questions of law reviewable in the courts. Pickus v. United States Board of Parole, 507 F.2d 1107, 1113 (D.C. Cir. 1974). Although ATF Ruling 82-8 imposes new requirements on the plaintiff, it does so by interpreting the meaning of already binding statutes rather than by creating any new regulations which would require public notice. See National Restaurant Association v. Simon, 411 F. Supp. 993 (D.D.C. 1976). 3. The ATF's issuance of ATF Ruling 82-8 was not arbitrary, capricious, or an abuse of discretion, as plaintiff suggests, nor is the Bureau's administrative interpretation of 26 U.S.C. section 5845(b) plainly erroneous. The Bureau's issuance of Ruling 82-8 was in accordance with prior Bureau action when faced with similar facts (e.g. the KG9) and was in response to a distinct problem with the subject firearms with respect to their being converted to automatic firearms for use in criminal activities. The Bureau is not required, when classifying firearms, to act with identical fervor as to all manufacturers in reclassifying convertible semiautomatics as automatic machine guns; rather, the Bureau may consider such factors as the number of converted firearms seized in criminal investigations, the concealability and lethalness of the firearms in issue, and the ease of conversion. Considering those factors in the case at bar leads to the conclusion that the Bureau's reclassification of the R.P.B. firearms in issue was not arbitrary, capricious, or an abuse of discretion. Nor was the reclassification of the subject firearms plainly erroneous since in the Court's opinion, it was correct. See Finding of Fact No. 17. As a result of the foregoing, the Clerk shall enter judgment for the defendants, and shall assess costs against plaintiff. SO ORDERED this 21 day of July, 1982. [signed] UNITED STATES DISTRICT JUDGE JUDGMENT ON DECISION BY THE COURT UNITED STATES DISTRICT COURT / NORTHERN DISTRICT OF GEORGIA / ATLANTA DIVISION CIVIL ACTION Docket No. C 82-1149 A R.P.B. INDUSTRIES, INC., et al., Plaintiff, vs. JUDGMENT SECRETARY OF THE TREASURY, et al., Defendants. This action came on for trial (hearing) before the court, United States District Judge CHARLES A. HOYE, JR., presiding. The issues having been duly tried (heard) and a decision having been duly rendered, it is ordered and adjudged that Plaintiff take nothing, that the action be dismissed, and that the Defendants, SECRETARY OF THE TREASURY, and STEPHEN E. HIGGINS, Acting Director, Bureau of Alcohol, Tobacco, and Firearms, have and recover of the Plaintiff, R.P.B. INDUSTRIES, INC., A Georgia Corporation by and through its President WAYNE DANIEL, its costs of action. FILED AND ENTERED IN CLERK'S OFFICE JULY 21, 1982 BEN H. CARTER CLERK Dated at: Atlanta, Georgia Date: July 21, 1982 BEN H. CARTER, CLERK, U.S.D.C.