PHOENIX - The Obama administration can legally order gun dealers in Arizona and three other border states to report people who buy multiple weapons, a federal appeals court ruled Friday.

In a unanimous opinion, the three-judge panel of the Court of Appeals for the District of Columbia rejected arguments by two Arizona dealers and the National Shooting Sports Foundation that the 2011 "demand letter" sent to the dealers by the Bureau of Alcohol, Tobacco, Firearms and Explosives violates federal laws forbidding the government to create a national firearms registry.

Judge Karen Henderson, writing for the court, said the letter, designed to help ATF trace guns purchased in the United States and used in crimes in Mexico, was directed only to federally licensed firearms dealers in four states.

"The record discloses that the letter requires information about the covered transactions from only approximately 7 percent of the total number of (licensed dealers) nationwide," she said. And it doesn't require reporting all sales, she said - only those where they sell two or more rifles of a specific type to the same person within a five-day period.

The judge also rejected claims that the ATF demand created an unreasonable burden on dealers, and the contention that dealers might not know if the firearms they are selling fit the definition of what the ATF wants.

Friday's ruling is a significant victory for the Obama administration and the ATF. The agency's reputation was tarnished by the botched "Fast and Furious" program that let straw buyers purchase weapons that ended up not only in Mexico, but at the scene of the murder of Border Patrol agent Brian Terry in 2010 near Rio Rico.

It could also give the Obama administration the legal maneuvering room needed to enact other restrictions and requirements on the sale of weapons after Congress failed to approve changes in federal law.

No one at J&G Sales in Prescott, one of the plaintiffs in the lawsuit, would comment on Friday's ruling. Yuma-based Foothills Firearms has since gone out of business.

But attorney Richard Gardiner, who represents the two Arizona firms, said an appeal to the U.S. Supreme Court is possible, though he wants more time to review the 30-page ruling. He said, though, the appellate decision is based on a flawed assumption of what current law requires of dealers and why that makes the ATF demand improper.

The ATF action stems from the agency's argument that many of the weapons used to commit crimes in Mexico originated in the United States. But William Hoover, an ATF assistant director, told a congressional subcommittee in 2008 it was difficult to trace these firearms back to the original source.

The letter sent to the dealers demanding the information was designed to create a shortcut, allowing ATF to create its own records of weapons sold to those buying more than one.

Among the contentions is the difficulty of determining a specific individual who bought weapons on different days during any five-day period. Challengers said that's not the way dealers keep their records.

Henderson said the fact that a dealer chooses to keep records in alphabetical or numerical order does not give him or her legal grounds to complain about the ATF requirement, adding that nothing precludes dealers from keeping records chronologically.

Gardiner also argued that federal law allows ATF to demand only the information already on the sales records dealers are now required to keep. He said those records do not contain the details of whether a specific weapon fits the definition of what the ATF now wants reported, making the ATF demand beyond its legal authority.

Henderson responded: "To argue that a federal firearms licensee who purchases and sells firearms for a living would price and sell rifles without knowing its type of action and ammunition feeding source blinks reality."

She said even assuming a dealer could not determine the characteristics of its own files, ATF has a website and phone number a dealer can use to determine whether a rifle is "semi-automatic" and "capable of accepting a detachable magazine."

The court also rebuffed claims that what ATF is doing violates a 1986 federal law barring the agency from enacting any rule or regulation that creates a national firearms registry.

"The July 2011 demand letter requires the reporting of only a limited number of sales and only on a prospective basis," Henderson wrote. "In short, because ATF sent the demand letter to only 7 percent of federal firearms licensees nationwide and required information on only a small number of transactions, the July 2011 demand letter does not come close to creating a 'national firearms registry.' "

Todd Rathner, a board member of the National Rifle Association, said the ruling is based on the flawed assumption this kind of reporting, limited to just four states, will somehow reduce gun violence in Mexico.

"I think it it's ridiculous," said Rathner. "I don't think it's going to do anything to prevent guns from going to Mexico."

Rathner also criticized ATF for putting a new burden on dealers on the grounds they need to track firearms in Mexico as a result of the Fast and Furious program.

"The biggest purveyor of guns to Mexico was the ATF," Rathner said.