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Sheppard v. Houchens

United States District Court, D. New Hampshire

April 11, 2016

James R. Sheppard
v.
Kenneth Houchens, Director of Industry Operations for the Bureau of Alcohol, Tobacco, Firearms, and Explosives Opinion No. 2016 DNH 079

          ORDER

          LANDYA McCAFFERTY, District Judge.

         James Sheppard brings this action against Kenneth Houchens, the Director of Industry Operations for the Bureau of Alcohol, Tobacco, Firearms, and Explosives ("ATF"), seeking judicial review of the denial of his application for a firearms license. Houchens moves to dismiss the amended complaint (doc. no. 7) ("first amended complaint"), on the ground that Sheppard failed to exhaust his administrative remedies. In response, Sheppard filed both an objection to the motion to dismiss and a motion for leave to file a second amended complaint (doc. no. 19) ("motion to amend"). Houchens objects to the motion to amend, arguing that Sheppard's failure to exhaust his administrative remedies renders futile his attempt to amend his complaint. For the reasons that follow, Sheppard's motion to amend is denied, and Houchens' motion to dismiss is granted.

         Background

         This case concerns James Sheppard's application to ATF for a federal firearms license ("License"). The procedures which must be followed by ATF in such circumstances, and the ways in which an applicant may seek judicial intervention, are of particular importance in this case. Therefore, the court first outlines the regulatory framework governing such applications, and then provides the specific facts pertaining to Sheppard's application and request for judicial review.

         A. Regulatory Framework

         Under 18 U.S.C. § 923(a), a person is prohibited from "dealing in firearms... until he has filed an application with and received a license to do so" from ATF. ATF must process License applications in accordance with 18 U.S.C. § 923, and its implementing regulations, 27 C.F.R. Part 478. Section 923(d)(2) requires ATF to approve or deny an application for a License "within the 60-day period beginning on the date" the application "is received." See also 27 C.F.R. § 478.47(c). If ATF "fails to act within such period, the applicant may file an action under section 1361 of title 28 to compel" ATF to act upon the application. 18 U.S.C. § 923(d)(2); see also 27 C.F.R. § 478.47(d). In the event ATF denies the application, it must provide written notice of its decision, "stating specifically the grounds upon which the application was denied...." 18 U.S.C. § 923(f)(1); see also 27 C.F.R. § 478.71 (decision must "set forth the matters of fact and law relied upon in determining that the application should be denied").

         If ATF denies an application for a License, it must, "upon request by the aggrieved party, promptly hold a hearing to review his denial...." 18 U.S.C. § 923(f)(2); see also 27 C.F.R. § 478.72 (hearing must be scheduled "as expeditiously as possible").

If after a hearing held under paragraph (2) the Attorney General decides not to reverse his decision to deny an application or revoke a license, the Attorney General shall give notice of his decision to the aggrieved party. The aggrieved party may at any time within sixty days after the date notice was given under this paragraph file a petition with the United States district court for the district in which he resides or has his principal place of business for a de novo judicial review of such denial or revocation.

         § 923(f)(3). The regulations describe the process of obtaining judicial review as follows: "If [an applicant] is dissatisfied with a posthearing decision... denying the application... he may, pursuant to 18 U.S.C. § 923(f)(3), within 60 days after receipt of the final notice denying the application..., file a petition for judicial review of such action...." 27 C.F.R. § 478.78.

         Thus, federal law provides two avenues for a License applicant to seek judicial intervention. First, an applicant may file a petition for a writ of mandamus, pursuant to 28 U.S.C. § 1361, to compel action on an application when ATF fails to act within the 60-day period. See 18 U.S.C. § 923(d)(2); 27 C.F.R. § 478.47(d). Second, after requesting and receiving an administrative hearing on his denial, an applicant may petition the court to conduct a de novo review of ATF's denial of his License application. 18 U.S.C. § 923(f)(3); 27 C.F.R. § 478.78.

         B. Factual Background[1]

         On December 5, 2013, James Sheppard applied to ATF for a License. Sheppard submitted the application on behalf of 209 Storage, a business which he owns as sole proprietor. 209 Storage is located at 60 Pine Street, Unit M, Methuen, Massachusetts.

         After not receiving a decision from ATF within 60 days, Sheppard filed a "petition for judicial review" in this court on July 14, 2015 (doc. no. 1). Sheppard's petition requests that the court order ATF to issue him a License. After being notified of the lawsuit, ATF issued a written denial of Sheppard's application on August 3, 2015. Sheppard amended his complaint to reflect the denial, and again requested that the court order ATF to issue him a License. See doc. no. 7. Sheppard has not yet had an administrative hearing.[2]

         Houchens moves to dismiss the first amended complaint. In support, Houchens argues that the court lacks subject matter jurisdiction because Sheppard failed to exhaust his administrative remedies. Houchens acknowledges that a License applicant who has not received a ...


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