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U.S. v. ROCK ISLAND ARMORY

June 7, 1991

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ROCK ISLAND ARMORY, INC., AND DAVID R. REESE, DEFENDANTS.



The opinion of the court was delivered by: Mihm, District Judge.

ORDER

After oral argument on the above motions, but before entry of a final order, the United States filed a motion to reconsider the Court's decision to dismiss the above counts. After careful consideration, the Court hereby denies the motion to reconsider.

The superseding indictment alleges that Defendants committed acts in respect to the making and registration of "firearms," i.e., machineguns,*fn1 in the years 1987 and 1988 which violated parts of the National Firearms Act, Chapter 53 of the Internal Revenue Code, 26 U.S.C. § 5801 et seq. Specifically, Count I alleges in part that Defendants conspired "(a) to manufacture firearms in violation of Title 26, United States Code, Sections 5822*fn2 and 5861(f)*fn3 [and] (b) to knowingly deliver into interstate commerce firearms in violation of Title 26, United States Code, Sections 5822 and 5861(j). . . ."*fn4 Count 2 alleges that in 1988, Defendants made machineguns "in violation of the registration provisions of Title 26, United States Code, Section 5822," which is alleged to have violated 26 U.S.C. § 5861(f). Count 3 alleges that Defendants delivered into interstate commerce the same machineguns as in Count 2, and that these machineguns "had not been registered as required by the provisions of Title 26, United States Code, Section 5822," in violation of 26 U.S.C. § 5861(j).

Since its passage in 1934, the registration, taxation, and other requirements of the National Firearms Act ("NFA") have been upheld by the courts under the power of Congress to raise revenue.*fn5 However, 18 U.S.C. § 922(o), which became effective on May 19, 1986, prohibits possession of machineguns, and thereby repealed or rendered unconstitutional the portions of the National Firearms Act which provided for the raising of revenue from the making, possession, and transfer of machineguns made after such date. As the government conceded at oral argument, the United States refuses to register or accept tax payments for the making or transfer of machineguns made after 1986.*fn6 Thus, § 922(o), as applied to machineguns made after May 19, 1986, left the registration and other requirements of the National Firearms Act without any constitutional basis.

P.L. 99-308, 100 Stat. 449 (May 19, 1986), codified as 18 U.S.C. § 922(o), provides:

  (1) Except as provided in paragraph (2), it shall
  be unlawful for any person to transfer or possess
  a machinegun.
  (2) This subsection does not apply with respect to
  —
    (A) A transfer to or by, or possession by or
    under the authority of, the United States or any
    department or agency thereof or a State, or a
    department, agency, or political subdivision
    thereof; or
    (B) any lawful transfer or lawful possession of
    a machinegun that was lawfully possessed before
    the date this subsection takes effect.

As interpreted and administered by the Bureau of Alcohol, Tobacco and Firearms ("BATF"), U.S. Department of the Treasury, § 922(o) prohibits the private possession of any machinegun not made and registered before May 19, 1986. Thus, since May 19, 1986, BATF has refused to approve any application to make, transfer, register, and pay the $200 tax on any machinegun made after that date.*fn7 Before that date, BATF approved such applications pursuant to 26 U.S.C. § 5812 and 5822. Farmer v. Higgins, 907 F.2d 1041, 1042-44 (11th Cir. 1990), cert. denied, ___ U.S. ___, 111 S.Ct. 753, 112 L.Ed.2d 773 (1991) (upholding BATF's denial of an application to make and register a machinegun by a private collector under § 5822).

As applied to machineguns alleged to be possessed after May 19, 1986, prosecutions may no longer proceed under 26 U.S.C. § 5861. This is because the National Firearms Act is part of the Internal Revenue Code, and its provisions — including registration of machineguns possessed after May 19, 1986 — are valid only to the extent they aid in the collection of tax revenue. Since BATF would not register and accept tax payments for any machinegun after May 19, 1986, registration of machineguns made and possessed after that date no longer serves any revenue purpose, and such registration requirements are invalid. Since 18 U.S.C. § 922(o) is interpreted to ban registration and taxation of machineguns under the National Firearms Act, § 922(o) effectively repeals such registration and taxation provisions. Congress has no enumerated power to require registration of firearms. However, since registration of firearms may assist in the collection of revenue, Congress passed the National Firearms Act in 1934 pursuant to its power to tax. Section 922(o) destroys the constitutional basis of registration.

In the 1934 hearings, Attorney General Homer S. Cummings explained in detail how the NFA would be based on the tax power. National Firearms Act: Hearings Before the House Committee on Ways and Means, 73rd Cong., 2d Sess., 6 (1934). Cummings denied that machineguns could be banned, because "we have no inherent police power to go into certain localities and deal with local crime. It is only when we can reach those things under . . . the power of taxation, that we can act." Id. at 8.

When Congressman Harold Knutson asked "why should we permit the manufacture, that is, permit the sale of the machine guns to any one outside of the several branches of the Government," Congressman Sumners suggested "that this is a revenue measure and you have to make it possible at least in theory for these things to move in order to get internal revenue?" Id. at 13-14. Cummings agreed: "That is the answer exactly." Id. at 14. The following dialogue ensued:

  Attorney General CUMMINGS. . . . If we made a
  statute absolutely forbidding any human being to
  have a machine gun, you might say there is some
  constitutional question involved. But when you
  say, "we will tax the machine gun," . . . you are
  easily within the law.
  Mr. LEWIS. In other words, it does not amount to
  prohibition, but allows of regulation.
  Attorney General CUMMINGS. That is the idea. We
  have studied that very carefully.

Id. at 19.

The National Firearms Act was originally passed as a taxing statute under the authority of Nigro v. United States, 276 U.S. 332, 48 S.Ct. 388, 72 L.Ed. 600 (1928). See National Firearms Act: Hearings Before the Committee on Ways and Means, supra, at 101-02, 162. Upholding the Harrison Anti-Narcotic Act, Nigro noted:

  "In interpreting the act, we must assume that it
  is a taxing measure, for otherwise it would be no
  law at all. If it is a mere act for the purpose of
  regulating and restraining the purchase of the
  opiate and other drugs, it is beyond ...

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