By Tom Odom, Esq.

The text that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“BATF”) submitted to the Office of Information and Regulatory Affairs (“OIRA”) is now available for review.  It can be found here:

There are numerous statutes designed to ensure that the process of rulemaking is open to the public, fair, and that particular matters receive special attention.  At this preliminary stage, some of the most useful comments that can be submitted are those that point out that those procedures should be applied to this proposal so that, when considered on the substance, there has been ample advance analysis.  As detailed below, it seems that ATF seeks to circumvent some of the procedures that would provide for a more thorough review.

1.         The “ACTION” (page 1) identified is that of “Notice of Proposed Rulemaking” (“NPR”).  It is not clear whether this is an error by ATF or whether the process associated with an Advanced Notice of Proposed Rulemaking (“ANPR”) has silently been ignored.  In light of the fact that ATF designated the initiative as a “significant” rulemaking in the Semi-Annual Regulatory Agenda and within the text of the proposal itself (page 28), I would like to think it is just sloppy work by ATF.  Classification as “significant” is usually synonymous with added rulemaking procedures, including the use of an ANPR

2.         The “DATES” (page 2) heading confirms that ATF anticipates providing a ninety (90) day period for the submission of public comments once the NPR is published in the Federal Register.

3.         The “ADDRESSES” (pages 2-3) section contains important information in addition to providing instructions about how to submit public comments once the NPR is published in the Federal Register.  Please note the warning that all comments will be posted “without change” and “including any personal information provided” to a government Webpage open to public viewing.  As a result, you may want to consider how much personally identifying information you include in any comments you submit.

4.         The “BACKGROUND” (pages 27-28) information asserts that the proposal complies with Executive Orders 12866 and 13563.  It is difficult to imagine how that is true.  Executive Order 12866 asserts a philosophy that agencies should consider market-based alternatives to regulations, that if regulations are required the agency “shall design its regulations in the most cost-effective manner to achieve the regulatory objective,” and that an agency “shall . . . propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.”  In addition, “[e]ach agency shall tailor its regulations to impose the least burden on society, including individuals, businesses of differing sizes, and other entities (including small communities and governmental entities), consistent with obtaining the regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations.”  To act according to that stated philosophy, the Executive Order contemplates that the agency, here ATF, would seek wide participation of interested persons early in the process of formulating a draft proposal.  Executive Order 13563 underscores that “[b]efore issuing a [NPR], each agency, where feasible and appropriate, shall seek the views of those who are likely to be affected, including those who are likely to benefit from and those who are potentially subject to such rulemaking.”

5.         The “BACKGROUND” (page 28) also asserts that the proposal “will not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public safety or health, or state, local, or tribal governments or communities.”  With such an assertion ATF dispensed with much of the regulatory impact analysis.  Small business FFLs may care to differ with the conclusion that no sector or the economy or jobs would be burdened in a material way.  Local law enforcement facing tens of thousands of additional requests for certification each year may also disagree.

6.         The costs associated with the proposal (pages 31-33) seem to be severely under-stated.  ATF assumed that entities would have only two responsible persons each.  Would attorneys who establish legal entities that hold NFA firearms please survey your files?  Please provide ATF with a more realistic calculation of the number of responsible persons per non-FFL entity.  The last trust I drafted, earlier this week, had nine trustees alone.  And ATF estimates that a responsible person could obtain the necessary certification from a Chief Law Enforcement Officer (“CLEO”) in 30 minutes, with an additional 70 minutes of travel time (page 32).  I expect that some individuals who grew sufficiently frustrated waiting and waiting for CLEO approval to pay to have a gun trust or other legal entity established might shed light on the reasonableness of that time estimate.  ATF classified as new expenses imposed by the proposal the cost of submitting all the documentation necessary to establish the validity of the legal entity (page 33) such as “partnership agreements, articles of incorporation, corporate registration, declarations of trust with any trust schedules, attachments, exhibits, and enclosures.”  But ATF estimated that those documents would only average 15 pages for each legal entity.  Again, the last trust I drafted was closer to 50 pages.  If, in your experience, ATF is again off-base in estimating costs, now is the time to let them know.

7.         The costs that the proposal would impose on small governmental entities (pages 36-37) also seems rather low.  If there are CLEOs out there who find 30 minutes insufficient to “review the information provided, conduct their own background checks, and determine whether to complete the certificate”, please let ATF know.

8.         The economic benefits ATF claims would flow from the proposal (pages 37-38) seem speculative at best.  ATF did not identify a single instance in which a registered NFA firearm was used in a crime of violence.  ATF did not identify a single instance in which a registered NFA firearm was used in the commission of any crime at all.  At most, ATF identified a total of three instances in which a prohibited person was a responsible person in a legal entity (pages 11, 38), yet in two of the cases ATF does not maintain that the prohibited person ever sought, let alone obtained, possession of an NFA firearm.  In the third case the transfer was never consummated.  If any those or any other case a prohibited person did actually possess a NFA firearm there are already severe criminal penalties.  As a result, any marginal increase in public safety seems likely to be outweighed by a realistic computation of the costs of the proposal.

9.         ATF asserts that there is no need for a close analysis under Executive Order 13132 because there would be no impact on federalism (page 39).  This proposal would seem to be the sort of item that begs for such analysis.  Congress has established a public policy that permits ownership and possession of NFA firearms upon registration and payment of a transfer tax.  States, like Pennsylvania, have legislation manifesting a public policy that permits ownership and possession of NFA firearms and that also explicitly prohibits local authorities from regulating the ownership or possession of firearms.  18 PA.C.S. § 6120; see also Ortiz v. Commonwealth, 681 A.2d 152, 156 (Pa. 1996).  Yet, ATF’s proposed regulation would grant each of the CLEOs throughout Pennsylvania (and states with similar laws) de facto authority to thwart national and State public policy by simply refusing to sign a document.  At present, CLEOs have no such unilateral authority because gun trusts and other legal entities have not required their certification.  ATF seeks to avoid the federalism impact of its proposal by asserting that “any impact on state and local resources would be voluntary and expected to be minimal” (pages 39-40).  If the expenses were actually “voluntary” and “minimal” it is hard to imagine how ATF would gain any useful information.  ATF’s proposal places a burden on CLEOs.  Perhaps some of you would care to explain the problem to ATF.  And perhaps some State and local officials would care to tell ATF that its refusal to prepare a federalism impact analysis exacerbates the problem.

10.       The Regulatory Flexibility Act is designed to ensure that agencies do not mindlessly adopt a one-size-fits-all approach to regulation.  What may seem like a reasonable regime for large companies may overly burden small businesses.  What works for large metropolitan areas may not work for a rural police force.  ATF dispensed with any analysis under the Regulatory Flexibility Act, asserting “this proposed rule will not have a significant economic impact on a substantial number of small entities.”  (Page 40)  Perhaps some small businesses have a different opinion.  Are there FFL small businesses out there who anticipate undue burdens in trying to conduct business with customers who use legal entities?  Are there local police departments who care to explain they do not have the same resources to devote to these matters?

11.       ATF similarly dismissed any notion that its proposal could produce a “a major increase in costs or prices” or have a significant adverse effect on employment (page 41) so that analysis under the Small Business Regulatory Enforcement Act was unnecessary.  Those of you in the business of buying and selling firearms may think otherwise.

12.       The Unfunded Mandates Reform Act is designed to ensure that agencies are sensitive to the burdens they place on State and local governments.  Despite the increase of tens of thousands of applications per year that will be submitted to CLEOs, ATF simply asserts that the proposed rule “will not significantly or uniquely affect small governments” (page 41).  Representatives of State and local governments that will bear this added cost may wish to voice their objection.

13.       Congress recognizes that federal agencies may inadvertently impose burdens when they impose requirements of information collection and recordkeeping.  In order to keep that burden to reasonable levels, Congress requires that agencies receive OIRA approval of regulations and other actions that may impose such burdens, particularly when the burdens fall on individuals, small businesses, and State and local governments.  Here, the very crux of ATF’s proposal is to increase information collection and recordkeeping.  The analysis under the Paperwork Reduction Act seems to be infected with the same errors discussed above.  Assumptions about the number of responsible persons and the amount of time necessary to comply with the proposal are equally faulty in this context.

Comments addressed to these procedural issues that are submitted now may well ensure a more complete opportunity to consider the substance of the proposal.  It is not too soon to raise any of the foregoing issues.


  1. In number 6 you ask, “Would attorneys who establish legal entities that hold NFA firearms please survey your files?” for the purpose of producing “a more realistic calculation of the number of responsible persons per non-FFL entity.”

    While you’re at it, I wonder if mining the number of trustees that live in different states per trust would provide evidence to support the issue you address regarding federalism in 9. I know my trust has trustees in 4 states, and per my understanding of the proposed rule a CLEO in any one of those states could prevent me from transferring an NFA item to my trust in PA.


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