An ammo distributor who claimed to lose $3 million after the Bureau of Alcohol, Tobacco, Firearms and Explosives reclassified a specific type of Russian 5.45x39mm ammunition lost their case in federal court Wednesday.

In April 2014, the ATF announced that it had deemed Russian surplus 7N6 type ammo “armor piercing,” making it no longer importable to the United States.

The ammo was banned from import as samples tested by the agency were found to contain a steel core and an obscure pistol, the AK74-based Polish Kbk wz/89S Fabryka Bronie Onyx, was capable of chambering the round, a violation of federal law on armor-piercing rounds for handguns.

While Congress dithered and launched an inquiry into the regulatory change as 7N6 was a popular round with shooting enthusiasts and legislation was introduced to prohibit the federal government from issuing or enforcing new restrictions on the manufacture, importation, or sale of ammunition, P.W. Arms, Inc., a wholesaler in Redmond, Washington filed suit against the ATF contending the agency incorrectly classified the ammo.

According to the complaint filed last December, the ATF issued the permits to P.W. Arms to import the 50 million rounds of the surplus ammo on three separate occasions: twice in February 2013 and once in February 2014.

After the company invested $3 million in acquiring and shipping the stockpile, federal agents intercepted the first shipment, containing 37.8 million rounds as it entered the country in February 2014, two months before the official reclassification in April. This led to the remaining ammunition being stored in Hamburg, Germany and in a Free Trade Zone facility in Reno, Nevada.

With their ammunition held up and undeliverable, P.W.Arms sought to be made whole by the government.

On Wednesday, U.S. District Court Judge John C. Coughenour, a 1981 appointment by President Reagan, held that it was an undisputed fact that the 7N6 bullet is composed of a lead plug, a steel core, and a steel jacket and this, coupled with the capability to be chambered in a pistol, made it illegal, regardless of when the ATF issued its finding.

In his 18-page ruling, Coughenour found that ATF’s classification was not “arbitrary and capricious” under the language of the Gun Control Act of 1968 and that, as P.W. Arms had to submit an ATF Form 6 holding that the rounds were not classified under the law as “armor piercing ammunition” prior to import, the error was on the company in the first place.

To the argument from the importer that the cartridge’s projectile core is not wholly constructed of a listed armor piercing metal such as steel, the court held that the law allowed for “traces” of the metals to satisfy the mandate and that, “Plaintiff never argues that the 7N6 bullets do not have the capacity to pierce body armor, highlighting the disingenuous nature of Plaintiff’s claim.”

While P.W. Arms argued the FB Onyks handgun was rarely encountered and thus the likelihood that 7N6 ammo would ever be used in it in the U.S. was slim, Coughenour pointed out that, “nothing in the GCA requires a level of popularity or availability for the handgun from which an armor-piercing bullet may be fired; the statute simply requires that the projectile ‘may be used in a handgun.’”

Finally, Coughenour pointed out that the ATF may revoke an importation permit at any time.

An appeal in the case, if filed, would be heard by the United States Courts for the Ninth Circuit.

The Onyks 89S pistol is no longer listed on FB’s website as being in available.