Today, at the NRA Firearms Law Seminar in Nashville, Tennessee, NFA Branch Attorney William (Bill) Ryan spoke about Gun Trusts. Before we get into some of his somewhat shocking statements/concessions that are clearly contrary to ATF’s prior positions, it was interesting that he started out by saying that, in his opinion, the largest cause of the backlog at the NFA Branch is the submission of non-attorney drafted trusts and fill in trusts, which result in a high number of error letters due to their invalidity. He actually stated that he HIGHLY advised that attorneys handle the drafting of the trusts because of the plethora of issues the NFA Branch has to contend with in relation to the non-attorney drafted trusts. For some statistical background, he stated that in 2003, there were 45 trust applications. In 2012, there were 36,000 trust applications. He also reaffirmed that trusts can own any type of firearms, both Title 1 and Title 2 firearms.
Comments Regarding ATF 41P
ATF Attorney Ryan stated that ATF is “still sorting through the comments filed in opposition to ATF-41P” and that he still has a number of them to review. Since ATF is still sorting through the issues presented in the comments, they cannot have drafted a final rule taking into account those comments/issues and cannot have responded to the comments/issues. More importantly, once a draft final rule is prepared with responses to all the issues raises, it will have to go up to the Chief Counsel’s Office. While he said he had no idea when to expect ATF to take any action, it clearly seems based on his comments that the action date of May 2015 will be pushed back at least another six months.
More importantly, in response to a question of what happens when the executor of an estate is a prohibited person, Attorney Ryan responded “He can’t possess it.” Which is obviously correct. However, the questioner then said but how do you know because no background check is performed and he could be in possession of that firearm as a prohibited person. Attorney Ryan responded, “It is on that person to know that as well.” HOLD ON.
The entire putative premise for ATF-41P was that prohibited persons were gaining access to NFA firearms. Now, when presented with a question of a prohibited executor coming into possession of NFA firearms, the ATF is perfectly comfortable relying on the prohibited executor not to possess the firearms in the estate but is not perfectly fine with relying on a prohibited settlor or trustee not to possess the firearms in a trust? Say what?!?! ATF just undermined its entire premise for ATF-41P. I guess it is time to submit another supplemental comment in opposition to ATF-41P. (By the way, there is nothing prohibiting the submission of additional comments even after the comment period has closed and there is case law, depending on the status of the administrative agencies promulgation of a final rule, that requires the agency to consider them and respond to them. So, yeah, continue submitting comments!)
Comments Regarding Person Under the GCA vs. NFA
Further solidifying my argument that a trust can manufacture a machinegun, as it is not a person under the GCA but is a person under the NFA, he acknowledged, including in the presentation slides, that the definition of a person under the NFA includes a trust but under the GCA, a trust is not included. Specifically, he declared “This explains why a trust can have NFA firearms but a trust can’t be licensed under the GCA. It’s not a person and cannot be a licensee; only an individual [sic] can be a licensee.” (I believe he meant only a “person” can be a licensee, referring to the definition of a person under a GCA).
This extremely problematic for ATF given its prior position that putatively it can pierce through the trust to a person. If it can pierce through the trust to an individual (or other entity defined as a person under the GCA), then it cannot deny a trust an FFL. WHOOPSIE. It’s a shame that this issue hasn’t been raised in the litigation that has been filed utilizing my argument, as it has been a longstanding issue, which will result in a win for the Industry regardless of how the court decides the issue (assuming it is properly litigated).