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ATF "Engaged in the Business" Rule Vacated Nationwide in Texas v. ATF

Independently fact-checkedLaw current as of August 9, 2026By Recording Law Editorial Team7 min read

Independently fact-checked against primary sources (last audited June 25, 2026). · Law checked current as of August 9, 2026. · 4 primary sources cited on this page. How we verify our legal content

ATF "Engaged in the Business" Rule Vacated Nationwide in Texas v. ATF

A federal judge in Amarillo, Texas vacated the ATF's 2024 "Engaged in the Business" Final Rule nationwide on June 12, 2026, finding it unlawful under the Administrative Procedure Act. The ruling came in State of Texas et al. v. ATF, No. 2:24-cv-00089-Z (N.D. Tex.).

Information last verified on June 25, 2026. This is a developing story; we update it as the record changes.

Status: Final judgment entered June 12, 2026 by U.S. District Judge Matthew Kacsmaryk, vacating the 2024 rule nationwide. The Department of Justice voluntarily dismissed its earlier Fifth Circuit appeal in April 2026 and stopped defending the rule. As of June 25, 2026, no notice of appeal from the June 12 final judgment has been confirmed.

Jurisdiction scope: Federal. The vacatur applies to the ATF's nationwide rule and does not change state-level rules. For state and federal screening duties, see our overview of federal and state background check laws.

What Happened

On June 12, 2026, U.S. District Judge Matthew Kacsmaryk entered final judgment in State of Texas et al. v. ATF, No. 2:24-cv-00089-Z, in the U.S. District Court for the Northern District of Texas, Amarillo Division. The court granted summary judgment in part to the plaintiffs, denied the government's cross-motion, and set aside the ATF's 2024 Final Rule under the Administrative Procedure Act.

The plaintiffs included the States of Texas, Louisiana, Mississippi, and Utah, along with Gun Owners of America, the Gun Owners Foundation, the Tennessee Firearms Association, the Virginia Citizens Defense League, and an individual plaintiff. They had challenged the rule as exceeding the agency's statutory authority and as conflicting with the text of the Gun Control Act and the Bipartisan Safer Communities Act.

The court invoked 5 U.S.C. 706(2), the Administrative Procedure Act provision directing a reviewing court to "hold unlawful and set aside" agency action found to be unlawful. Because APA vacatur is not limited to the named parties, the court ordered that the defendants may not apply the Final Rule to anyone, giving the ruling nationwide reach. The court also dissolved its earlier preliminary injunction, issued in May 2024, as unnecessary once the rule was vacated.

The 2024 Final Rule appeared at 89 Fed. Reg. 28,968 (April 19, 2024) and amended Title 27 of the Code of Federal Regulations, Part 478. It took effect on May 20, 2024 before being enjoined as to the plaintiffs and now vacated in full.

Federal Firearms License application and NICS background check form on a dealer counter

What the Law Actually Says

Federal law requires anyone "engaged in the business" of dealing in firearms to hold a Federal Firearms License (FFL). The licensing requirement appears in 18 U.S.C. 923. An FFL holder must run a National Instant Criminal Background Check System (NICS) check before transferring a firearm and must keep records of acquisitions and dispositions. People who are not dealers, such as private individuals selling from a personal collection, generally do not carry those federal duties when they make occasional sales.

The phrase "engaged in the business" is defined in 18 U.S.C. 921(a)(21)(C). The Bipartisan Safer Communities Act of 2022 amended that definition. Before the 2022 law, a dealer was a person whose "principal objective" was "livelihood and profit." The Bipartisan Safer Communities Act replaced that standard with a person who deals in firearms "to predominantly earn a profit." The statute defines "to predominantly earn a profit" as intending to obtain pecuniary gain, and it states that proof of actual profit is not required. The definition still excludes a person who makes "occasional" sales to enhance a personal collection.

The 2024 ATF rule was the agency's attempt to implement that statutory change through regulation. Critics argued the rule swept far past the statute by treating many private and hobbyist sellers as presumptive dealers, which would have pulled them into the FFL, NICS, and recordkeeping system. The June 12 ruling does not erase the statute. It removes the agency's 2024 rule while the underlying "predominantly earn a profit" standard in 18 U.S.C. 921(a)(21)(C) remains the law.

For how screening duties differ by jurisdiction, see our guides to Texas background check laws and Virginia background check laws. If you are documenting a lawful private transfer, our guide explains how a private gun sale bill of sale works.

One hand passing a closed manila folder across a wooden desk to another open hand

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

The procedural backdrop shapes this outcome. After the 2024 rule was challenged, the Department of Justice under a new administration voluntarily dismissed its Fifth Circuit appeal in April 2026 and announced a broader package of firearms regulatory rollbacks. That meant the rule arrived at final judgment without an agency defending it on the merits. A vacatur entered against a government that has stopped contesting the case is far less likely to be appealed than one entered over the government's objection.

The decision also reflects a recurring tension in administrative law: how far an agency may go when Congress hands it a broadened statutory term. The court's reasoning, as reported, is that the rule strayed from the statutory text by recasting occasional, non-commercial sellers as dealers. That is a statutory-authority problem, not a Second Amendment holding, and it travels through the same APA channel that has reshaped other recent ATF rules.

For readers, the practical takeaway is narrower than the headline. The 2024 rule is gone, but the Bipartisan Safer Communities Act standard is not. Whether a particular seller is "engaged in the business" still turns on the statute and on how a future agency or court reads it. We covered a separate firearms-law development in our report on the Supreme Court and the marijuana-user gun ban.

How This Affects You

This section is general legal information, not advice about your situation.

For licensed dealers, the immediate change is that the 2024 rule's expanded definitions and presumptions no longer apply. Dealers remain subject to the FFL, NICS, and recordkeeping duties that existed under the Gun Control Act and the Bipartisan Safer Communities Act statute itself.

For private sellers and hobbyists, the rule that would have pushed more occasional sellers toward dealer status has been vacated. The governing question reverts to the statutory text: whether a person deals in firearms as a regular course of trade or business to predominantly earn a profit. Someone selling from a personal collection on an occasional basis was not automatically a dealer under the statute, and the vacated rule no longer changes that analysis.

State law is a separate layer. A nationwide vacatur of a federal rule does not alter a state's own background-check, waiting-period, or private-transfer requirements. Sellers and buyers should confirm their own state's rules before any transfer.

What Happens Next

The most consequential variable is whether the government appeals the June 12 final judgment. As of June 25, 2026, no notice of appeal from that judgment has been confirmed. Given that the Department of Justice voluntarily dismissed its earlier appeal and stopped defending the rule, a fresh appeal would be unusual, though the docket can change.

A future administration could attempt to reinstate a similar rule, but it would have to start a new rulemaking and survive the same APA scrutiny that defeated the 2024 version. Congress could also amend the statute, which would change the analysis directly rather than through agency rulemaking.

For now, the operative authority is the Bipartisan Safer Communities Act text in 18 U.S.C. 921(a)(21)(C) and the licensing framework in 18 U.S.C. 923, without the 2024 implementing rule.

This article is legal information, not legal advice. It does not create an attorney-client relationship. Laws change and apply differently to individual facts. Consult a licensed attorney in your jurisdiction before acting on anything here.

Sources

Last updated: 2026-06-25. This is a developing story; details verified as of 2026-06-25.

Frequently Asked Questions

What did the court decide on June 12, 2026?

The U.S. District Court for the Northern District of Texas entered final judgment vacating the ATF's 2024 'Engaged in the Business' Final Rule, holding it unlawful under the Administrative Procedure Act and ordering that ATF may not apply it to anyone.

Is the vacatur nationwide?

Yes. The court held that vacatur under the Administrative Procedure Act is not limited to the named parties and ordered that the defendants may not apply the Final Rule to anyone, which gives the ruling nationwide effect.

What was the 2024 ATF rule?

It was a Final Rule, published at 89 Fed. Reg. 28,968 on April 19, 2024, that redefined who is 'engaged in the business' as a firearms dealer. It expanded who must hold a Federal Firearms License, run NICS background checks, and keep dealer records.

What statute is at the center of the case?

The definition of 'engaged in the business' in 18 U.S.C. 921(a)(21)(C), the dealer licensing requirement in 18 U.S.C. 923, and the Bipartisan Safer Communities Act of 2022, which broadened the dealer definition to a 'predominantly earn a profit' standard.

Does this ruling end background checks for gun sales?

No. Licensed dealers must still run NICS checks and keep records under existing law. The ruling removes the 2024 rule that would have expanded who counts as a dealer; it does not repeal the dealer system or state background-check laws.

Did the Department of Justice appeal?

The Department of Justice voluntarily dismissed its Fifth Circuit appeal in April 2026 and stopped defending the rule. As of June 25, 2026, no notice of appeal from the June 12, 2026 final judgment has been confirmed.

Does this change private gun sales?

The vacated rule would have treated more occasional and hobbyist sellers as presumptive dealers. With the rule gone, the analysis returns to the statutory text. State private-transfer and background-check laws are unaffected by this federal ruling.

Is this a Second Amendment ruling?

No. As reported, the decision rests on the Administrative Procedure Act and on the rule exceeding the statutory text, not on a Second Amendment holding.

Updates

Governing law re-checked for recent changes

Independently fact-checked against the cited primary sources

Sources and References

  1. Court order, State of Texas et al. v. ATF, No. 2:24-cv-00089-Z (N.D. Tex.)(atf.gov).gov
  2. ATF Final Rule: Definition of Engaged in the Business as a Dealer in Firearms(atf.gov).gov
  3. 18 U.S.C. 921 Definitions(law.cornell.edu)
  4. 18 U.S.C. 923 Licensing(law.cornell.edu)
  5. Bipartisan Safer Communities Act, S.2938, 117th Congress(congress.gov).gov
  6. DOJ and ATF Regulatory Reforms press release(justice.gov).gov
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