After reading the order, I think it's clear that -- to this judge -- the issue is the ATF redefining terms that are defined in statute by the Congress by agency fiat. Basically, the judge seems to be saying "That which Congress hath defined, thou shalt not redefine."
Yep that's How I see the wording . emphasis mine .
. ATF says the “term ‘frame’ means the part of a handgun . . . that provides housing or a structure for the component (i.e., sear or equivalent) designed to hold back the hammer, striker, bolt, or similar primary energized component prior to initiation of the firing sequence.” 27 C.F.R. § 478.12(a)(1). ATF defines “receiver” similarly, though it says the term refers to a “rifle, shotgun, or projectile weapon other than a handgun.” Id. § 478.12(a)(2). Plaintiffs do not take issue with those definitions, which appear to be updated, more precise versions of ATF’s 1978 interpretation. But the Final Rule did not merely update ATF’s terminology. ATF added an entirely new section expanding its jurisdiction to include “partially complete, disassembled, or nonfunctional frameor receiver.” Id. § 478.12(c). ATF now claims authority to regulate parts that are “designed to or may readily be completed, assembled, restored, or otherwise converted to function as a frame or receiver.” Id. The parts must be “clearly identifiable as an unfinished component part of a weapon.” Id. In deciding whether something is a partially complete frame or receiver, ATF may consider other materials such as molds, instructions, and marketing materials “that are sold, distributed, or possessed with the item or kit.” Id. The Final Rule’s redefinition of “frame or receiver” conflicts with the statute’s plain meaning. The definition of “firearm” in the Gun Control Act does not cover all firearm parts. It covers specifically “the frame or receiver of any such weapon” that Congress defined as a firearm. 18 U.S.C. § 921(a)(3)(B). That which may become a receiver is not itself a receiver. Congress could have included firearm parts that “may readily be converted” to frames or receivers, as it did with “weapons” that “may readily be converted” to fire a projectile. But it omitted that language when talking about frames and receivers. “[W]hen Congress includes particular language in one section of a statute but omits it in another section of the same Act, .......
Section 478.12(c) is thus facially unlawful because it describes only parts that Congress intentionally excluded from its definition of “firearm.” It is purely an expansion of authority beyond the statutory language.