In the Federal Register for today, January 15, 2016, ATF published its Final Rule in ATF-41P, at volume 81, pages 2658 through 2723. As previously reported here, ATF posted the Final Rule to its Website on January 4, 2016. In the event of any discrepancies, the version published in the Federal Register represents the official text. You may find a brief description of the rule here. (Please note that ATF designated the Final Rule as “ATF-41F” despite the fact that the Proposed Rule and the rulemaking docket were designated ATF-41P.)
The language of the actual regulations span only Federal Register pages 2721 to 2723, with pages 2658 to 2721 constituting the “preamble” or the “concise general statement of their basis and purpose” as required by section 553(c) of the Administrative Procedure Act. For purposes of interpreting the meaning of the three pages of regulations, the sixty-two page preamble constitutes a very influential source. And, for purposes of determining whether the regulations were validly adopted, the preamble is the key document. On its face, the preamble reflects ATF’s failure to abide by the procedure mandated by Congress in several key respects. Throughout the document ATF substitutes conclusory statements for a reasoned explanation.
A preliminary analysis of the Final Rule permits a few observations, the most important of which is that no change takes effect until July 13, 2016, see 81 Fed. Reg. 1658, 180 days after publication in the Federal Register. The delayed effective date means that there is an opportunity for trusts and other legal entities to file one or more Form 1s and Form 4s to be processed under current law and effectively grandfathered prior to the new rule taking effect. Moreover, ATF has indicated that forms that are in the course of being processed on the effective date will be handled under current law. See 81 Fed. Reg. 2710.
The delayed effective date also means that there is an opportunity for persons who continue to oppose the rule, the attorneys representing them, and the various organizations that filed comments on the proposed rule to communicate and cooperate. While no one can force such cooperation, wasted time can be minimized and an optimal legal strategy can be developed by working together. The good work done in filing comments on ATF’s proposed rule laid a solid foundation for judicial review of the Final Rule, provided that there exists an adequate interest in taking that course. In that vein, we obtained www.FightATF41p.com, which provides further information about ATF-41p, issues with the rulemaking and the ability to submit donations for a legal challenge to invalidated, at least portions, of ATF-41p.
Just as we outlined numerous problems in ATF’s proposed rule, we will be posting here some of ATF’s errors with regard to the Final Rule. Please check back for updates.
UPDATE: Several comments to this post raised the prospect of congressional action to prevent the implementation of the Final Rule. After almost two years spent educating Congress about the issue, Amendment 302 was adopted by the House of Representatives before the House passed the appropriations bill to fund ATF for the fiscal year starting October 1, 2015. Amendment 302 would have prohibited the expenditure of funds to issue a rule that changed the CLEO certification requirement “in a manner that has the same substance of the proposed rule” that culminated in the Final Rule addressed here. (By its own terms, Amendment 302 would not have limited ATF’s ability to adopt a Final Rule that imposed substantial burdens as long as the CLEO certification requirement were not extended to legal entities.) Amendment 302 along with the rest of the appropriations bill failed to pass the Senate. Instead, Congress enacted and the President signed the Consolidated Appropriations Act of 2016 which lacked any such restriction while funding ATF through September 20, 2016. The provisions regarding ATF are located at page 2029-60 and 2029-61 of that Act. Subsequently, Rep. John Culberson, the Chairman of the Commerce, Justice, and Science Appropriations Subcommittee proposed “to defund and stop the President’s proposed executive actions.” Rep. Culberson stated that he has and will use his power as Chairman to restrict ATF’s ability to manage the appropriated funds on a “week to week” basis through oversight, without the need for any new legislation . The fact that ATF published the Final Rule despite that warning would seem to suggest either that the oversight does not place sufficient pressure on ATF or that the oversight authorities do not believe the Final Rule is improper. You can make yourself heard on the issue by calling the Congressman’s office at 202-225-2571.