WASHINGTON (CNN) -- Obama administration efforts to monitor gun trafficking of certain semi-automatic firearms along the U.S. border into Mexico received court approval on Friday amid complaints from gun dealers it violated their rights.
A federal appeals court in Washington said the Bureau of Alcohol, Tobacco, and Firearms can require the four southern border states -- California, Arizona, New Mexico, and Texas-- to report multiple sales of certain guns.
The three-judge panel said those 2011 special requirements did not "come close" to violating a law prohibiting a national firearm registry, any possibility of which is a major fear of gun rights activists.
The judges said the ATF demand letter was sent to 7 percent of federal firearms dealers nationwide and required information from a "small number of transactions."
A coalition of gun rights groups supported by the National Rifle Association that lost the appeal can now ask the Supreme Court to decide the matter.
ATF officials have admitted they struggle to trace firearms recovered from gun trafficking operations into Mexico. In response, it began notifying to gun dealers and pawn brokers in the border states two years ago.
It ordered them to report sales of "two or more semi-automatic rifles capable of accepting a detachable magazine and with a caliber greater than .22" to an unlicensed buyer. That reporting had to be completed within five business days.
Gun dealers say the restrictions violate federal law and are overly burdensome.
The National Shooting Sports Foundation, a group based in Newtown, Connecticut, where a mass shooting of school children jolted the nation last year, brought the initial lawsuit.
It has said federal officials exaggerate the U.S.-Mexico gun-running problem.
"The truth is that less than 12 percent of the guns Mexico seized in 2008, for example, have been verified as coming from the U.S," said the group which contends the government exaggerates U.S.-Mexico gun running.
There was no immediate reaction from gun rights groups to the court ruling.
The case is National Shooting Sports Foundation, Inc. v. Jones (12-5009).