By Tom Odom, Esq.
A number of our clients have expressed concern about statements at a White House briefing this week regarding Administration initiatives to implement gun control measures via executive action. See http://www.whitehouse.gov/the-press-office/2013/08/29/fact-sheet-new-executive-actions-reduce-gun-violence.
Of particular interest to clients with gun trusts (or others who may be contemplating establishing such a trust), is the suggestion that under new regulation trustees may be subjected to more of the requirements that would apply to individuals who seek to register firearms subject to the National Firearms Act (“NFA”). Joshua Prince, Chief Counsel of the Firearms Industry Consulting Group — and well known to the readers of this blog — was quoted in an article earlier this week with respect to the initiative. See http://www.examiner.com/article/atf-advances-executive-gun-controls-with-proposed-trust-rule-change.
1. The Rulemaking Process
Let me start by describing the current state of that initiative and the stages that remain before it could be fully implemented. For those of you with nothing more interesting to do, twice each year a “unified regulatory agenda” is published that outlines the projects that different federal agencies have under consideration. ATF has been considering a rule change with respect to trustees of gun trusts for several years now. Every six months, ATF announces that it has plans to move ahead with the initiative at a period that continues to roll forward. This spring, ATF projected that it might publish an Advance Notice of Proposed Rulemaking (“ANPR”) in the Federal Register in October 2013. It looks more likely that the initiative may actually move forward now. At present, ATF’s draft is under review by the Office of Information and Regulatory Affairs (“OIRA”). Under an Executive Order, OIRA reviews rulemaking projects of administrative agencies to ensure they meet the requirements of several statutes imposing procedural requirements. OIRA review must be completed before the ATF initiative is unveiled to the public. It is not uncommon for OIRA to require an agency to do additional work and that may be the most appropriate result here as ATF claims that any change it proposes would not impose any unfunded mandates on State and local governments, would not impose economically significant burdens on small businesses or small governmental entities, and would not raise any federalism concerns. It is difficult to comprehend how ATF could reach those conclusions with a straight face so OIRA may require ATF to actually consider each of those issues even before going public. (If you have a small business that may be burdened by ATF’s initiative, you may want to contact the Chief Counsel for Advocacy of the Small Business Administration to request that ATF actually consider and conduct an analysis of impacts on small businesses. That post is currently held by Dr. Winslow Sargeant, U.S. Small Business Administration, 409 3rd St, SW, Washington DC 20416. His office receives e-mail at firstname.lastname@example.org and telephone calls at (202) 205-6533. You could also share your concern with Brenda R. Friend, at ATF, 99 New York Avenue, NE, Washington, DC 20226, Washington , DC 20226. Her phone number is 202 648-8408 and she is designated as the contact person for the initiative.)
Once OIRA approves, the next step would be for ATF to publish the ANPR in the Federal Register. The ANPR simply gives advance warning (and additional lead time to interested persons) that ATF will issue a Notice of Proposed Rulemaking (“NPR”) at a future date, thirty or sixty or more days later. It is the publication of the NPR that initiates the period for the submission of public comments on the substance of the proposed rule.
It is very important that all interested persons make their views known to ATF during the public comment period. Interested persons may not only express concerns with aspects of the proposed rule and suggest alternatives, they should also affirmatively express support for aspects of the proposed rule, if any, that they view as beneficial. By law, ATF is obligated to consider and address all significant issues raised by public comments and provide a reasoned explanation for its decisions with respect to those issues. Thoughtful public comments that raise matters not considered by ATF may well require significant revision of the proposed rule. After the comment period, after drafting its response to issues raised by the comments, only then may ATF publish a final rule in the Federal Register. Even then, subject to limited exceptions, at least thirty days must be provided before the regulation becomes effective.
After the final regulation is published in the Federal Register, it is subject to judicial review. Courts may consider whether ATF adequately responded to issues raised in the public comments, whether it provided a reasoned explanation for its decisions, whether it followed all the proper procedures, and whether the resulting final rule is arbitrary or capricious. If a court finds ATF failed in any of those respects, the rule would be sent back to ATF for further procedures.
As the mind-numbing detail of the previous four paragraphs illustrates, there are several stages before any new regulation can become final and enforceable. If your eyes glazed over, forgive me, I am a former professor of administrative law and I rarely get a chance to lecture on the rulemaking process anymore.
2. Implications for Persons with Gun Trusts or Contemplating Establishing Gun Trusts
If you have a gun trust or are contemplating establishing one, you likely have concern about whether ATF’s initiative could undermine the effectiveness of a trust. Because the actual text of the ATF proposal has not yet been released to the public — let alone the text of the final rule — no one yet knows the impact but a few observations are in order.
First, the law is constantly in flux. More often than you realize ATF or some other agency changes the “guidance” it provides to regulated parties. Court decisions are handed down every day. There is rarely, if ever, a time when one can be certain that the law in a given area is “settled”.
Second, in the context of firearms regulation it is not at all uncommon that the law grandfathers in prior arrangements (such as private ownership of automatic firearms imported prior to 1968 or of domestic manufacture prior to 1986) so it is possible, in fact, that there may be greater urgency in completing trusts and naming trustees. In fact, I believe ATF commented at a conference Joshua Prince and I attended earlier this month that they would only seek to impose the requirements of new regulations to applications filed after the effective date of any such new regulations. If that is indeed the approach ATF takes, then having a trust in place with trustees designated and firearms transferred to the trust in advance of the effective date of any new regulation would mitigate any added burden the new regulation would otherwise impose. In other words, rather than waiting, now may be the time to finally take the step to put matters in order.
Third, some of the reports of what ATF may try to do through a new rulemaking may well misunderstand ATF’s intent in certain respects. Based on prior reports, it seems that ATF is unlikely to require that trustees submit to a criminal background check by local law enforcement or to obtain the signature of a chief law enforcement officer (“CLEO”) in order to transfer a NFA firearm to a trust. Of course, there may still be plenty of other provisions of concern to law-abiding gun owners.
Fourth, if you skipped the part about the rulemaking process, you, as a member of the public, have the opportunity to influence the shape of the final rule ATF adopts.