U.S. can track bulk rifle sales to Mexican gangs: court WASHINGTON (Reuters) - A federal regulation aimed at detecting bulk sales of semi-automatic rifles to Mexican drug gangs was upheld Friday by an U.S. appeals court. A unanimous panel of the U.S. Court of Appeals for the District of Columbia Circuit said the Obama administration acted within its authority to adopt the 2011 rule, which affects firearms sellers in states bordering Mexico. The Gun Control Act of 1968 "unambiguously authorizes" the rule, and it is unrealistic to argue, as gun retailers and manufacturers did, that the rule is too burdensome, Judge Karen Henderson wrote for the panel of three judges. The rule requires stores in Arizona, California, New Mexico and Texas to notify federal law enforcement when someone buys two or more of a specific type of firearm within five business days. The U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives adopted the notice requirement amid soaring drug violence in Mexico, carried out in part using firearms that originated in the United States. Retailers and gunmakers, including the National Shooting Sports Foundation, a firearms trade association based in Newtown, Connecticut, where a gunman killed 20 children and six adults at a school last December, sued to block the rule. With the failure of new gun control proposals in Congress since the Newtown shooting, the rule stands as one of the few firearms measures put in place by President Barack Obama's administration. The measure applies only to high-caliber, semi-automatic rifles that can use a detachable magazine. Larry Keane, general counsel for the National Shooting Sports Foundation, said the organization is waiting for the outcomes of similar cases in two other federal appeals courts. "The issue isn't done being litigated," Keane said in a telephone interview. He said the ATF is exceeding its right to make demands of retailers. "Tomorrow, ATF could say not just these four states, but these eight states or these 24 states," he said. An ATF spokeswoman declined to comment on the ruling. Thousands of firearms are believed to cross the border illegally into Mexico each year, and semi-automatic rifles with detachable magazines are a favorite of drug traffickers, the ATF said in a report last year. Mexican authorities recovered more than 68,000 U.S.-sourced guns from 2007 to 2011, the ATF said. The case is National Shooting Sports Foundation Inc, et al, v. B. Todd Jones, U.S. Court of Appeals for the D.C. Circuit, No. Reporting by David Ingram; Editing by Doina Chiacu