President Obama Announces New Executive Actions to Reduce Gun VIolence

Washington, DC -(Ammoland.com)- President Obama announced a number of executive actions “to reduce gun violence and make our communities safer.” 

The President’s press conference came on the heels of the White House publishing a Fact Sheet outlining the executive actions.

Background Checks for Responsible Persons

The Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) is finalizing a rule to require background checks for people who obtain firearms through a trust, corporation, or other legal entity. Many will recall when ATF published the proposed rule, ATF 41P, back on September 9, 2013. The proposal received a lot of attention and indeed prompted more than 9,500 public comments. The Attorney General signed the final rule on January 4, 2016, and it will be effective 180 days after publication in the Federal Register. We expect the final rule will be published in the next few days.

In the near future we will publish a separate Alert with a detailed summary and analysis of this final rule. To quickly summarize, one of the rule’s most significant and positive provisions is the elimination of the requirement in existing regulations that the Form 1 Application to Make and Register a Firearm and the Form 4 Application for Tax Paid Transfer and Registration of Firearm include a certification from the Chief Law Enforcement Officer (CLEO) where the maker or transferee resides. CLEOs are often reluctant to sign the certification for a variety of reasons, including the language in the certification itself and concern with future liability if the firearm is misused. The final rule substitutes a CLEO notification requirement for the certification requirement, eliminating what is frequently an obstacle for firearms owners to obtain registered NFA firearms.

In addition, the final rule adopts a definition of “responsible person” different from that in the proposed rule, adding language to clarify the definition is limited to unlicensed entities, including trusts, partnerships, associations, companies (including LLC), or corporations. This is an important distinction so that the definition will not apply outside the area of NFA transfers.

Not surprisingly, the final rule requires each “responsible person” complete a form with personal identifying information and submit photographs and fingerprints when a trust or legal entity files a Form 1 or Form 4 or is listed as a transferee on a transfer application. In the case of trusts, this means that settlors/grantors and trustees must submit the form, photographs, and fingerprints. Beneficiaries are “responsible persons” only if they have the authority to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for or on behalf of the trust. No doubt this will make it far less attractive for persons to establish trusts as registrants of NFA firearms, as one of the primary reasons for doing so was to avoid the background checks that apply to transfers to individuals. Once the final rule takes effect all settlors/grantors, trustees, and beneficiaries authorized to possess registered firearms will be required to submit photographs and fingerprints so a background check can be completed.

More Resources for FBI/NICS to Conduct Background Checks

The Federal Bureau of Investigation (FBI) is overhauling the National Instant Criminal Background Check System (NICS) to make it more effective and efficient. The President announced the FBI will hire more than 230 additional examiners to process background checks, increasing the existing workforce by 50 percent. He also announced that the FBI is working with the U.S. Digital Service to modernize NICS. Improvements include processing background checks 24 hours a day/7 days a week to improve overall response time and improving notification of State and local authorities when prohibited persons unlawfully attempt to purchase firearms.

More Resources for ATF

The President’s fiscal year 2017 budget will include funding for 200 new ATF agents and investigators to help enforce federal firearms laws. It is unclear how many of the 200 positions will be Special Agents (police officers who carry firearms and have authority to obtain and execute warrants) and how many will be Industry Operations Investigators who conduct inspections of federal firearms licensees and federal explosives licensees.

The President also announced ATF’s establishment of an Internet Investigation Center to track online firearms trafficking. In addition, ATF will dedicate $4 million and additional personnel to enhance the National Integrated Ballistics Information Network (NIBIN). NIBIN is a ballistic imaging network operated throughout the U.S. that stores images of fired cartridge casings recovered from crime scenes.

Licensees to Report Thefts or Losses of Firearms in Transit

ATF is finalizing a rule to ensure licensees who ship firearms notify law enforcement if firearms are lost or stolen in transit. The Attorney General signed the final rule on January 4, 2016, and it will be published in the Federal Register within the next week. It will be effective 30 days after the date of publication. The final rule is based on a notice of proposed rulemaking published in the Federal Register on August 12, 2014. We are preparing a separate analysis of the final rule to be published as a separate Alert within the next few days.

Increase Mental Health Treatment and Reporting

The Administration is proposing a new $500 million investment to increase access to mental health care. By using the word “propose,” this likely means the Administration will include a new $500 million expenditure in its 2017 budget proposal. Congress must approve any new items in the Administration’s budget.

Social Security Administration Rulemaking

Under the heading of “mental health treatment,” the President announced the Social Security Administration (SSA) will begin the rulemaking process to require reporting of information to FBI/NICS about beneficiaries who are prohibited from possessing a firearm “for mental health reasons.” This will likely take the form of a notice of proposed rulemaking to define which persons receiving disability benefits from SSA fit within the definition of “adjudicated as a mental defective” in regulations implementing the Gun Control Act.

Department of Health and Human Services Rulemaking

The Department of Health and Human Services (HHS) is finalizing a rule to remove unnecessary legal barriers preventing States from reporting mental health information to FBI/NICS. The rule, scheduled to be published in the Federal Register on January 6, 2016, will amend regulations implementing the Health Insurance Portability and Accountability Act of 1996 to permit States to disclose to FBI/NICS the identities of individuals who are subject to federal firearms disabilities under the Gun Control Act due to commitment to a mental institution or an adjudication as a mental defective.

Gun Safety Technology

President Obama directed the Departments of Defense, Justice, and Homeland Security to conduct or sponsor research into gun safety technology and to review the availability of “smart gun” technology.

ATF Guidance on Unlicensed Dealers

The President announced ATF’s publication of a document titled “Do I Need a License to Buy and Sell Firearms?” The informal guidance lists factors federal courts consider important in finding an unlicensed person is “engaged in the business” of dealing in firearms. The document states the “totality of circumstances” must be considered in determining whether a person requires a FFL, and notes the specific facts and circumstances of each situation must be considered. The factors that may indicate a person is dealing without a license include the following:

• Quantity and frequency of sales;
• Representations that the person is a source of firearms;
• Taking orders for firearms from customers;
• Offering to buy firearms to immediately resell;
• Creating a business entity or trade name for the firearms business;
• Securing State and local business licenses to sell items that may include firearms;
• Purchasing a business insurance policy to cover a firearms inventory;
• Commercial advertising;
• Printing business cards;
• Accepting credit card payments;
• Repetitively acquiring the same type of firearm or a large quantity of the same type of firearm and then selling or offering to sell those firearms; and
• Repetitively selling or offering to sell firearms in unopened or original packaging (or in new condition).

The guidance document on unlicensed dealers may be a useful compendium of federal case law on “engaging in the business.” Nevertheless, it does not affect licensees already in business and it is doubtful it will assist United States Attorneys Offices in prosecuting persons who engage in a firearms business without a license in violation of the statute. Violations of this provision must be committed “willfully,” which requires the government prove the defendant acted with knowledge his conduct was unlawful. Such knowledge need not be specific awareness of the precise provision of law violated, but general knowledge that the conduct was unlawful. Unless there is evidence a particular suspect was aware of ATF’s guidance document and understood that he or she required a FFL, ATF’s publication of the document is unlikely to have an impact on criminal prosecutions of unlicensed dealers. The document appears to be an election-year deliverable issued primarily for political purposes.

Conclusion

Most of the new executive actions announced by President Obama will have limited impact on federal firearms licensees, with the exception of the final rule requiring licensees to report thefts or losses of firearms in transit, the final rule relating to NFA trusts, more resources for FBI/NICS, and the potential for more resources for ATF. We note that both the ATF final rules are likely to increase the burden on licensees by requiring additional reports of theft or loss and by increasing the paperwork burden associated with transferring registered NFA firearms to consumers. As stated above, we will publish a separate analysis of the theft/loss final rule and the NFA trust rule when it is published.

The SSA and HHS rules will result in the reporting of more information to NICS about persons prohibited from possessing firearms because of a mental health issue. This may be viewed as a positive development from a public safety standpoint. We note, however, the reporting of personal mental health information to the federal government raises considerable personal privacy and civil rights issues.

Increasing the resources for FBI/NICS should benefit federal firearms licensees by resulting in quicker NICS checks and fewer delayed responses. Increasing the number of ATF Industry Operations Investigators in ATF field divisions could result in more frequent inspections of licensees and provide more regulatory personnel to answer questions from industry members.

It is unclear how many of the 200 new positions will be regulatory personnel and the benefits such personnel would bring to members of the firearms industry.

About Reeves & Dola:

Reeves & Dola is a Washington, DC law firm that specializes in helping clients navigate the highly regulated and complex world of manufacturing, sales and international trade of defense and commercial products. We have a deep understanding of the Federal regulatory process, and use our expertise in working with a variety of Federal agencies to assist our clients with their transactional and regulatory needs.

For more information, visit: www.ReevesDola.com.