I went back and read the ruling. The judge is saying that a stripped lower receiver is not a firearm because it not a housing for the "bolt or breachblock."
I don't think that the BCG partially passing through the rear of the lower make it a housing. At least not in the plain English understanding of a housing. It would be like saying the upper receiver is a housing for the ammunition.
A bigger defect in the Government's case is that the ATF's rule making defining a "frame or receiver" did not comply with the Administrative Procedures Act.
It does become a matter of interpretation, doesn't it? I might have emphasized to the judge that the AR15 bolt carrier group moves as the firearm operates: it is located in the upper receiver for part of the operating cycle, but also occupies a portion of the lower receiver/receiver extension during part of the cycle. Is that sufficient to qualify the lower as the "receiver" in the mind of the judge? Possibly, depending on the judge and how the point is argued. However, I suspect the federal attorneys were surprised when the question was raised, and likely didn't have sufficient guidance/input from the ATF technical folks to even argue the point.
A bigger defect in the Government's case is that the ATF's rule making defining a "frame or receiver" did not comply with the Administrative Procedures Act.
And if applicable, that might be a terminal defect...