A SUMMARY OF ATF’s DRAFT PROPOSAL

By Tom Odom, Esq.

The text that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) submitted to the Office of Information and Regulatory Affairs (“OIRA”) is now available for review.  It can be found here:  https://www.atf.gov/sites/default/files/assets/inside-atf/2013/082913-wash-machine-guns-destructive-devices-and-certain-other-firearms.pdf  Yesterday I posted a summary of the process through which an initiative like this one may eventually become a final, enforceable rule, together with some general observations for individuals with gun trusts or who are contemplating establishing a gun trust.  And, for those who sought guidance on how to prepare public comments for a rulemaking proceeding, I offered some resources.

Today, with the actual text of a proposal in hand, in a separate post I identified potential procedural defects that warrant immediate attention.  It is not too late for input to require ATF to follow procedures that ensures a more thorough review of the substance of the proposal.  While the matter is pending OIRA review is an ideal time to raise those issues.

What most of you want to know at this point is just what does ATF propose to do.  Here is a brief summary of the substantive provisions of the ATF proposal.

First, despite prior indications to the contrary, ATF is NOT proposing to eliminate the requirement for certification by a chief law enforcement officer (“CLEO”).  The text of the certification will change but the essential function remains the same.  This information supercedes my posting yesterday.

Second, the requirements that have been applicable to individuals who sought to make or acquire National Firearms Act (“NFA”) firearms will not change in any substantial manner.  Although ATF will be revising certain forms, the same information will be collected.

Third, the familiar requirements applicable to individuals will be extended to “responsible persons” of legal entities that own NFA firearms.  That means that not only will responsible persons have to submit photographs and fingerprints, they will also need to get the CLEO signature.

Fourth, an estate would not constitute a legal entity with respect to which a “responsible person” would be subject to the foregoing requirements.  The NFA firearms will pass from the decedent to the heir by operation of law, without transfer tax.

Who is a “responsible person” who would be subject to the new requirements, if finally adopted?  With respect to a trust, the draft proposal defines as a responsible person “any individual, including any grantor, trustee, or beneficiary, who possesses, directly or indirectly, the power or authority, under any trust instrument or other document, or under state law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust.”  Although the specific titles vary in the context of partnerships, corporations, and associations, the breadth of the concept is the same.

Do not assume that just because someone has a title like “grantor” or “beneficiary” that they would necessarily constitute a responsible person.  Depending upon the specific trust provisions (or pertinent document governing a different legal entity) and the law of the state, individuals with such titles may not have the “power or authority” that the definition considers key.

The proposal contains several internal inconsistencies and other problems that are worthy of consideration when preparing comments on the substance of the proposal.  Look for that next post later this weekend.

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12 Comments

Filed under ATF, Firearms Law, Gun Trusts

12 responses to “A SUMMARY OF ATF’s DRAFT PROPOSAL

  1. John Moore

    TangentiaIly related. I only just got my trust made and expected to stop by the dealer next week to get the paperwork started. Is there any feeling about whether paperwork submitted prior to the comment period will go thru following the current procedure?

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    • All evidence supports that pending applications will be processed under the current regulations and any applications submitted after the effective date of the new regulation will require the newly required information

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  2. ztpullin

    Pure political play. Same day the regs on NFA were released Holder announces feds changed their mind and are no OK with state marijuana legalization. The two issues, although claimed by different parties, are intimately linked. It baffles me how the Executive can say states can trump federal law if its marijuana, but the feds are going to ram this senseless gun rules down states throats, where the states obviously (Missouri) do not want it.

    I sense a continued reversal in the Supreme Court’s broad interpretation of the Commerce Clause is on its way.

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  3. Thanks for the analysis and insight. Any comments on whether/how existing trusts would be affected? Are they grandfathered, or will ATF develop some process to bring them into “compliance”?

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  4. Jorge E Ravelo MD

    Mr. Odom,
    After I settled down I managed to read the proposed rule changes, and I believe ATF thinks they are indeed relaxing the CLEO sign off, as stated in page 19 of the .pdf document.
    It sounds like ATF believes that most CLEOs would sign what is basically an identity check and a statement certifying state and local laws don’t prohibit possession of the NFA item. But what is to compel them? After all most of these denials are political, using the perceived liability as an excuse.
    If ATF’s interest was assuring that all individuals acquiring these items went thru a thorough FBI check, they would drop the CLEO sign off, turn it into a notification at the state or local level, and most of these trusts would go the individual route. Even a trust could be handled the same way. Then everybody goes thru the FBI wringer.
    They may have been going this route when the initial summary of the rule change was posted. I could live with CLEO notification, but I would rather not.
    Can we pressure them to do just notify the CLEO?

    What say you Esquire?

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    • The problem with CLEO notification, which was originally proposed, is that many states, including PA, have prohibition on the State and any agency maintaining any form of registry of firearms, which such notification could violate. ATF/the Administration has elected not to move forward with notification but rather to implement CLEO signature requirements for all. I believe it is unlikely that they will change position

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      • Jorge E Ravelo MD

        Thanks for your reply Sir.
        I agree the cause is hopeless.
        We are dealing with urban radical socialists here.
        When do you think this rule will become effective?
        I was hoping to get one more suppressor here in Miami via my trust.
        With Form 3’s averaging ten weeks it would be difficult to get the filing before the 90 day comment period ends, assuming that would start soon.

        The mayor of a city that ends one block away from my residence is my patient, and I sewed up the scalp of his chief of police once. Maybe he will stretch his jurisdiction a wee bit 😉

        Thanks for a very informative blog on this and other issues.

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      • John

        If the CLEO was obliged to destroy the request and, if acted upon, any record of a check, would it then constitute a registry?

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  6. John

    If you could shed some light on two questions it would at help me form my public comment to the BATFE. I was contemplating a trust when this news broke so I consider myself an interested party. Both my trust decision and some of my comments hinge on non-owner usage and the ability of a trust to solve the dilemma. Unfortunately for the lay person your description of a “responsible person” is far too brief for a good understanding. Does a minor being supervised by the owner of a Title II device (suppressor in this case) need to be a “responsible person” (beneficiary?) in order to use (posses?) or even hold it? No CLEO can sign off on that since it would be illegal for them to posses the item on their own. Is there an alternative to “responsible person” for an adult relative to have unsupervised use (within my state) of a Title II device? The proposed regulations do not allow for out of state relatives, who reside where these items are illegal, to be a “responsible person” and get CLEO approval even if the item was to never enter their state.

    Thanks for all the useful information and links your are posting. I will use your contact form to inquire if your offices can perform services outside of PA.

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    • Unfortunately, you are asking questions which have yet to be determined and which will likely hinge on what powers the trust document bestows upon any particular person. Typically, there is concern over allowing a beneficiary use trust assets, as there are fiduciary issues that the Uniform Trust Code imposes on trustees.

      We have not even begun the comment period and the ATF can change the proposed Rule based upon the comments received. I agree that the proposed Rule would not seem to allow a person, who lives in a state that prohibits such firearms, from becoming a trustee of a trust established in another state, as the Rule reflects that the Responsible Person (referred to in the Industry as RP) would have to obtain the signature of the CLEO in his/her jurisdiction.

      While we do not know whether existing trust will be grandfathered in or some other action will be taken, I believe it is likely that the new Regulation, when adopted, will only apply to new applications to make and transfer NFA firearm. Therefore, I have suggested that anyone who has items that they would like to procure using a trust or corporation, procure them now!

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