Warning to All FFLs: ATF is Contemplating Another Rulemaking

We’ve barely had an opportunity to catch a breath since the deadline to file comments in ATF’s rulemaking 41P related to the making and transfer of NFA firearms but all Federal Firearms Licensees (“FFLs”) and those interested in seeing the local FFL not driven out of business need to be aware that ATF has yet another new rule in the works.  If you don’t care about FFLs at all but are concerned about violation of constitutional limits, the matter should be of interest to you as well.

For FFLs who maintain a sizeable inventory of any sort of firearms so as to provide customers with a selection, there has long been a concern that ATF may attempt to impose obligations to conduct periodic physical inventories in addition to the paper (or computerized) records of the Acquisition and Disposition (“A&D”) Books.  Most FFLs conduct such inventories simply as a matter of good business practice.  And when ATF conducts a periodic inspection it is routine to check serial numbers of all firearms in the inventory against the A&D record.  The concern of FFLs is not so much with doing an inventory as with (1) the frequency of such an obligation as a physical inventory often means having to close the business for one or more days and (2) having yet more micro-regulation of the business that results in yet more traps to be sprung by over-zealous enforcement authorities.

Sensitive to such concerns, since 2004, Congress has included a provision in ATF’s annual appropriations prohibiting the expenditure of funds on the formulation or implementation of a regulation imposing any such obligation.  Because the Government has been operating by continuing resolution after continuing resolution, it requires a bit of cross-reference to illustrate that the limitation remains effective.  You can trust me or delve into this footnote.[1]

In light of that prohibition, it was rather surprising to see that the latest semi-annual regulatory agenda (RIN 1140-AA41) indicates that ATF plans to publish a proposed rule on that subject this very month, December 2013.  Often entries in the regulatory agenda are little but wishful thinking so that entry alone might not be cause for concern but there is reason to believe the entry is more than fantasy.

Julian Hattem authored an article appearing on November 20 in The Hill with respect to an ATF rulemaking that is supposedly pending review by the Office of Information and Regulatory Policy (“OIRA”).  Hattem quotes the White House as saying the proposed regulations “would target cases where guns go missing ‘in transit.'”  It would appear that the story references the item identified in the regulatory agenda and the story certainly suggests that the draft proposed rule would require FFLs to conduct periodic, physical checks for missing inventory.

Readers of this blog in the early days of the effort of Firearms Industry Consulting Group to explain the rulemaking process in connection with ATF 41P may recall that clearance by OIRA is a necessary step prior to publication of a proposed rule in the Federal Register.

The obvious question is if OIRA has a draft regulation under review, who drafted it?  After all Congress prohibited the expenditure of any funds “to promulgate” any such rule.  As you may recall from news reports during the government shutdown in October, federal employees cannot simply “volunteer” to do the work when no appropriations have been authorized.  Doing so is a felony.  See Anti-Deficiency Act, 31 U.S.C. §§ 1341, 1350.  It seems likely that some employees at ATF (and other components of the Department of Justice) have blatantly misused government funds and acted in defiance of limits on their statutory authority.  It is not merely a violation of law to have engaged in work where Congress denied funding, there is a statutory obligation to advise Congress of any violations, id. § 1351, so that other employees at ATF (and other components of DOJ) were required to report such violations to Congress.

Starting last month, FICG has contacted members of the House and Senate committees that have jurisdiction over DOJ appropriations, members of the House and Senate committees that have “oversight” responsibility for ATF, and other congressional leaders asking for an investigation of this matter.

FICG also contacted the Small Business Administration since many FFLs would seem to constitute “small businesses” entitled to special considerations under the Regulatory Flexibility Act yet the abstract in the regulatory agenda asserts that no “small entities” are affected and no Regulatory Flexibility Analysis is required.  It is difficult to conceive how any such statement could be made in good faith if Hattem accurately described the ATF proposal.

Because of the apparent misuse of government funds, FICG also requested that the Office of Inspector General for DOJ launch an investigation into the matter.  And FICG has reached out to other entities that may be able to ascertain what is happening at ATF.

As we have seen with respect to the ATF 41P proceeding, it can require substantial resources to oppose a proposed rule once it is published in the Federal Register.  This time, please do not wait for that stage before letting your voice be heard.  Request that your Senators and Member of the House of Representatives demand answers from ATF now.  What draft was sent to OIRA for review?  How did any such draft come into existence without a clear misuse of government funds?  Who authorized such work?  And who will be held responsible?

If you can take the time to contact just one Congressman, I suggest Representative Frank Wolf, the chairman of the Subcommittee on Commerce, Justice, Science, and Related Agencies of the House Appropriations Committee.  His address is 233 Cannon House Office Building, Washington, DC  20515.  His fax number is 202-225-0437.

Our constitutional structure entrusts the legislature with power over appropriations as a necessary check on executive power.  The “power of the purse” is supposed to be the means that ensures that no agency of government can long act in defiance of Congress.  But if Congress will not demand answers when agencies apparently disregard that power, one must ask whether Congress itself has become irrelevant.

[1]  ATF appropriations are continued through January 15, 2014 by virtue of § 1101(a)(2) of the Continuing Appropriations Act, 2014, H.R. 2775.  Sections 103 and 104 make clear that prior restrictions on ATF use of funds remain in effect.  The law referenced as the source of the continued appropriations is Public Law 113-6.  That law, the Consolidated and Further Continuing Appropriations Act, Public Law 113-6 (2013), § 110, substitutes “2013” for “2012” in Public Law 112-55, Division B, § 113(b)(3), thereby continuing ATF appropriations subject to all the same limitations as the prior year.  Public Law 113-6 then explicitly states:  “That, in the current fiscal year and any fiscal year thereafter, no funds made available by this or any other Act shall be expended to promulgate or implement any rule requiring a physical inventory of any business licensed under section 923 of title 18, United States Code.”  The referenced licensed businesses are FFLs.

2 thoughts on “Warning to All FFLs: ATF is Contemplating Another Rulemaking

    1. Actually, there is no “thought crime” involved here. Rather, Congress has prohibited spending any appropriations to work on the proposal and a separate statute prohibits officers from circumventing such limitations by “volunteering” to do the work (particularly when civil service rules could then obligate payment for the resulting work anyway).


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