The Reload Analysis Newsletter

Members’ Newsletter: Bump Stock Ban Ruling Has Big Implications

Late Friday night we got significant breaking news when the Fifth Circuit ruled the Trump-era bump stock ban unconstitutional.

Interestingly, the case didn’t deal with the Second Amendment. It focused on the logical inconsistency in the ATF’s rule, and the ambiguity in its claim bump stocks are machineguns under the National Firearms Act. But it is still likely to have a huge impact on gun control in the United States.

There are two reasons for that, which Contributing Writer Jake Fogleman lays out the details of in a member exclusive. The first is the ruling creates a split among the circuit courts over the ban, which makes the Supreme Court more likely to take up an appeal. The second is the signal it sends about the legality of President Biden’s own rules on unfinished gun parts and pistol braces, which share many of the same traits as the bump stock ban.

Jake and I were both sick this week, which means there is no podcast episode. The good news is I’m feeling much better and will be at SHOT Show in Las Vegas starting next weekend. Please reach out if you’re going to be there as well. I’d love to do a meet-up with any Reload Members who are going to be in town!

Since SHOT Show is the industry’s trade show, it makes for a good transition to our other topic this week: gun sales slowed again in 2022. Should gun owners start to worry? I examine some of the reasons concern is warranted, and a few reasons to believe things may be going better than you’d think.


A blue target on sale at a West Virginia Walmart in May 2022
A blue target on sale at a West Virginia Walmart in May 2022 / Stephen Gutowski

Bump Stock Ban Struck Down
By Stephen Gutowski

The ATF’s bump stock ban doesn’t square with federal law and can’t stand.

That’s the ruling handed down by an en banc panel of the Fifth Circuit Court of Appeals on Friday. By a vote of 13-3, the full court overturned a December 2021 panel ruling in favor of the ban. It found the Trump-era rule created by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) in response to the Las Vegas shooting violates the Administrative Procedure Act because it goes against the plain meaning of the federal laws it was purporting to enforce.

“A plain reading of the statutory language, paired with close consideration of the mechanics of a semi-automatic firearm, reveals that a bump stock is excluded from the technical definition of ‘machinegun’ set forth in the Gun Control Act and National Firearms Act,” Judge Jennifer Walker Elrod wrote for the majority in Cargill v. Garland.

While it doesn’t deal directly with the Second Amendment, the ruling is a significant win for gun-rights activists who’ve fought the ban since it was enacted in 2018. It sets up a potential Supreme Court showdown because other appeals courts have previously upheld the regulation. Friday’s ruling creates the first new circuit split over a gun law since the Court’s landmark June 2022 decision in New York State Rifle and Pistol Association v. Bruen, which set a higher standard for reviewing gun restrictions.

The ban targets specialized stocks that are designed to replace traditional stocks in order to help facilitate bump firing. That method uses a gun’s recoil to enable a shooter to depress the trigger on a semi-automatic firearm much more quickly than by pulling it in a traditional manner. When bump firing a shooter holds their finger in a fixed position and pushes forward with the firearm causing the round to fire and allowing the shot’s recoil to move the gun far enough rearward to reset the trigger before it is pushed back into the shooter’s finger.

Bump stocks make the method easier to achieve by allowing the grip and stock to slide independently of the rest of the gun. However, bump firing is possible on any semi-automatic firearm without using specialized stocks or any other accessory.

The technique allows the shooter to achieve a much higher rate of fire. But it also requires the trigger to be actuated for every individual shot unlike a fully-automatic machinegun, which will continually fire after a single trigger pull until its ammunition is depleted or the trigger is released. The Fifth Circuit ruled these are key distinctions that mean a bump stock can’t be classified as a machinegun (effectively banning them) under current federal law.

“Bump firing does not maintain if all a shooter does is initially pull the trigger,” the court found. “Rather, to continue the firing after the shooter pulls the trigger, he or she must maintain manual, forward pressure on the barrel and manual, backward pressure on the trigger ledge.”

That means bump stocks are by definition not machineguns under the National Firearms Act and are not subject to the registration and tax requirements under the law. The ATF had tried to use the registration requirement to ban the devices since the machinegun registry has been closed since 1986, which made it impossible to legally register, and therefore possess, bump stocks under the agency’s rule.

The Fifth Circuit ruled the process the ATF used usurped the powers of Congress.

“As an initial matter, it purports to allow ATF—rather than Congress—to set forth the scope of criminal prohibitions,” Elrod wrote. “Indeed, the Government would outlaw bump stocks by administrative fiat even though the very same agency routinely interpreted the ban on machineguns as not applying to the type of bump stocks at issue here. Nor can we say that the statutory definition unambiguously supports the Government’s interpretation.”

The majority further condemned the ATF’s reasoning because it could be used to justify declaring all semi-automatic firearms machineguns.

“We reiterate that a shooter can bump fire an ordinary semi-automatic rifle even without a bump stock,” Elrod wrote. “But nobody, not even the Government, contends that semi-automatic rifles are machineguns. That concession damns the Government’s position.”

Judge Stephen Higginson, joined by judges James Dennis and Graves, dissented. They disagreed with the court’s contention that bump stocks don’t meet the definition of a machinegun under federal law or even that the definition is ambiguous about it. They accused their colleagues of “legaliz[ing] an instrument of mass murder.”

“Today, our court extends lenity, once a rule of last resort, to rewrite a vital public safety statute banning machineguns since 1934,” Higgenson wrote. “In conflict with three other courts of appeals, our court employs its new lenity regime to carve out from federal firearms regulation the bump stock—a device that helped the Las Vegas shooter fire over a thousand rounds during an eleven-minute long attack, at times shooting about nine bullets per second, killing at least 58 people and wounding hundreds more.”

The rest of the court said what matters is how Congress wrote the law that governs machineguns, whether the judges like the definition or not.

“Prudent or not, Congress defined the term “machinegun” by reference to the trigger’s mechanics,” Elrod wrote for the majority. “We are bound to apply that definition as written.”

The majority argued there was no escaping the conclusion that the ATF’s rule can’t stand.

“The definition of ‘machinegun’ as set forth in the National Firearms Act and Gun Control Act does not apply to bump stocks,” Elrod wrote. “And if there were any doubt as to this conclusion, we conclude that the statutory definition is ambiguous, at the very least. The rule of lenity therefore compels us to construe the statute in Cargill’s favor.”

The Fifth Circuit remanded the case back down to the district court. It ordered the lower court to rule in favor of Cargill and determine the proper scope of relief.

The Department of Justice did not respond to a request for comment on whether it planned to appeal the decision.

UPDATE 1-6-2023 9:33 PM EASTERN: This piece has been updated with more details from the ruling.


A steel target on sale at a Walmart in West Virginia during May 2022
A steel target on sale at a Walmart in West Virginia during May 2022 / Stephen Gutowski

Analysis: Bump Stock Decision Tees Up Potential Supreme Court Showdown [Member Exclusive]
By Jake Fogleman

There’s a new contender for what the next big Supreme Court gun case could be.

On Friday, the Fifth Circuit Court of Appeals voted 13-3 to strike down the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Trump-era ban on bump stocks. In its ruling, the majority said that the ban violated the Administrative Procedure Act when it attempted to interpret the devices as falling under the federal definition of “machinegun.”

“A plain reading of the statutory language, paired with close consideration of the mechanics of a semi-automatic firearm, reveals that a bump stock is excluded from the technical definition of ‘machinegun’ set forth in the Gun Control Act and National Firearms Act,” Judge Jennifer Walker Elrod wrote for the majority.

The ruling now creates what’s known as a “circuit split,” in which multiple federal courts of appeals have come down on opposite sides of an issue. Before Friday’s decision, the Tenth Circuit in 2020, the Sixth Circuit in 2021, and the D.C. Circuit in August 2022 all ruled to uphold the ATF’s interpretation of bump stocks as machineguns. A three-judge panel for the Fifth Circuit, comprised of judges all appointed by Democratic Presidents, also previously ruled to uphold the ban. 

Circuit splits are often, though not always, a precondition for the Supreme Court when deciding which cases to grant certiorari. That’s because it’s the High Court’s prerogative to ensure a unified interpretation of the law that lower courts follow. Should the Biden administration appeal the Fifth Circuit’s decision to the High Court, the likelihood that the nine justices will agree to review the case has increased considerably.

This is significant for several reasons. Not least of which is that, until this point, the Court has publicly shied away from hearing challenges to the ban. Three prior attempts to have the court review separate cases involving the ban were all rejected without comment from the justices. That left gun owners forced to surrender their lawfully purchased property uncompensated and without immediate recourse. It also left those who refused to comply with the ban at further risk of a federal felony offense. The new circuit split gives those gun owners another chance to beat the ban.

The Court taking the bump stock case would provide further reason to think it plans to more aggressively pursue gun-related cases, even if they don’t directly hinge on Second Amendment jurisprudence. Rather than relying on the Court’s new standard of review for gun cases, the Fifth Circuit ruling hinged on limits surrounding an executive agency’s power to interpret federal law. That has been a longstanding bugaboo for many of the Court’s conservative majority, and they’ve already shown a willingness to rein in regulatory bodies acting beyond their statutory authority as recently as the last court session.

Should SCOTUS decide to weigh in once again on the limits of administrative rulemaking, it could also affect the legality of the ATF rules stemming from President Joe Biden’s executive orders. At least two separate lawsuits have already been filed against the ATF’s newest rule on so-called ghost gun kits and unfinished firearm parts. The agency has shown a similar willingness to shift the goalposts on how aggressively it will interpret that rule against gun dealers.

Furthermore, the agency’s final rule on stabilizing pistol braces is expected to be released this month. It’s even more similar to the Trump-era bump stock ban. The aggressive interpretation of pistol braces as National Firearms Act-regulated items the ATF is pursuing would turn millions of Americans into federal felons for owning something they lawfully purchased and which they were previously assured was a legal item by the ATF.

The Fifth Circuit ruling against the bump stock ban already represents a substantial legal roadblock for the Biden-era rules. And, should it decide to weigh in, the Supreme Court’s decision on bump stocks would foreshadow the legality of ATF’s most recent two rules.

Much will depend on the next steps taken in the Cargill case. The Fifth Circuit’s ruling will likely be appealed. It’s hard to imagine the Biden administration allowing bump stocks to become legal in Texas, Mississippi, and Louisiana.

Gun-rights advocates who’ve fought the ban since 2018 have plenty of incentive to bring a case to the High Court through one of the other circuits if Biden decides to do nothing.

If a bump stock case makes it to the Supreme Court, the chances are higher than ever that the justices will take it up. The outcome of such a case would have a massive impact on the future of executive branch gun-control efforts just as they’re becoming a common bi-partisan workaround to the legislative process.


Shotguns and rifles on sale at a West Virginia Walmart in May 2022
Shotguns and rifles on sale at a West Virginia Walmart in May 2022 / Stephen Gutowski

Analysis: How Much Should Slower 2022 Sales Concern Gun Owners? [Member Exclusive]
By Stephen Gutowski

16.4 million guns were sold in 2022.

That’s certainly a lot. But it’s actually a substantial decrease from the 18.5 million sold in 2021 and the 21 million sold in 2020.

Additionally, the two publicly-traded American gun companies have experienced corresponding declines in their sales. Ruger’s sales dropped to $139.4 million in its most recent quarter compared to $178.2 million and $145.7 million in the same quarter of the previous two years. Smith & Wesson saw an even more severe decline from $248.7 million between August and October 2020 to $230.5 million in 2021 and just $121.0 Million in 2022.

Ruger’s stock has fallen from a price high of about $87 per share at points in both 2020 and 2021 to $51 today. Smith and Wesson fell from a 2021 high of about $31 to about $9.

There are, of course, larger structural trends at play beyond the control of the gun industry or any other industry. Supply constraints have pushed prices up, and the resulting inflation has squeezed consumers to at least some degree. That’s led to lower demand and, combined with rising interest rates designed to fight that inflation, has put pressure on every company.

Lower demand has led to lower earnings and resulted in a general market downturn that has hit every sector.

Still, there are reasons to think the downturn may hit the gun industry particularly hard. For one, they’re coming off record-setting sales that saw millions of Americans buy guns for the first time. That’s a good thing for the industry in the long term, but it may be a drawback in the midterm.

It is extremely unlikely (hopefully) the next few years will produce the kind of motivating events for gun ownership the last few years have seen. I’d imagine most Americans who were potential gun owners going into 2019 have already become gun owners since then. That makes market growth a bit more challenging, especially with the general economic headwinds.

With the threat of the pandemic, rioting, and potential new federal gun restrictions waining, the typical downcycle the industry experiences in the wake of demand surges could be worse than usual.

There are also reasons to think the downturn won’t be so bad. For one, while 16.4 million sales is down a lot from 2020, it’s up a lot from the 13.2 million in 2019. It’s also still ahead of the 15.7 million sales in 2016, the previous all-time record.

The gun companies have also experienced this trend.

“A comparison back to […] the last period of normal firearm demand provides a great illustration,” Mark Smith, Smith & Wesson president, said in the company’s most recent earnings call. “This indicates that the temporary headwinds are being offset by longer-term tailwinds.”

Smith & Wesson’s most recent sales were up 6.4 percent compared to the same pre-pandemic quarter, and Ruger did even better with a 38 percent increase. While it may be hard to convert an above-average number of new gun buyers in the near term, a significant number of the millions who decided in the last two years are likely to keep buying. That means the new normal will is higher than the old.

With gun carry becoming far easier in many states, including populous blue states, thanks to the Supreme Court, there’s good reason to think demand will remain high relative to pre-pandemic years. Smith said Smith & Wesson has already seen evidence of this.

“As you’ll recall, there were more than 10 million new consumers added to the firearms market over the past 18 to 24 months, many of whom are now returning for subsequent purchases,” he said. “With these new entrants, previous studies indicating that firearms enthusiasts will own an average of seven to eight firearms and recent data showing that conceal carry is on the rise, we believe long-term demand trends remain very healthy.”

So, the industry is unlikely to collapse. It’s unlikely to see waves of layoffs or bankruptcies either since most experienced companies are designed to weather the feast-and-famine nature of the industry. Besides, what’s bad in the short or midterm for the industry isn’t always bad for gun owners generally.

Since the drivers of this downturn are, effectively, an increase in national stability from the lows of the last two years and the return of a divided federal government (ending whatever hope President Biden had for new gun bans), it would be pretty odd to lament it. It’s possible all of those trends could reverse themselves, but I’m not sure anyone would be happy to see it.

Plus, this sort of downturn is less likely to produce severe industry damage than it is to produce some really favorable deals for gun buyers. Smith & Wesson is certainly betting a price war is ahead.

“All of this means we remain in a highly competitive environment and winning profitable market share at the consumer level remains our core focus,” Smith said. “With many consumers squeezed by inflation and record prices for household essentials, consumer price sensitivity on discretionary purchases has increased, predictably, leading to increased promotional activity within the firearm space.”

Even from an investor’s standpoint, Ruger and Smith could represent a decent value. Certainly, if you bought at the peak, you’re having a very bad time. But, if you’re thinking of buying today, both stocks are near five-year lows despite much better sales than five years ago.

I have no idea what direction the market is headed or if a recession could push things much lower than today. For now, though, the market seems to be undervaluing them.

It’s far from clear 2022 represents the new bottom of the gun market. With how much cushion it still has over the pre-pandemic era and how the decline has slowed, it probably is a good representation of the new normal. So, there’s little reason for gun owners to be concerned.


That’s it for now.

I’ll talk to you all again soon.

Thanks,
Stephen Gutowski
Founder
The Reload

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