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[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Proposed Rules]
[Pages 60391-60405]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23932]

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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Parts 478, 555, and 771

[Docket No. ATF 33P; AG Order No. 3469-2014]
RIN 1140-AA40

Rules of Practice in Explosives License and Permit Proceedings 
(2007R-5P); Revisions Reflecting Changes Consistent With the Homeland 
Security Act of 2002

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), 
Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Justice proposes to codify the Bureau of 
Alcohol, Tobacco, Firearms, and Explosives (ATF) procedures and 
practices in connection with the disapproval of initial applications, 
denials of renewal, and revocations of explosives licenses or permits. 
The proposed regulations will be codified in a new part entitled 
``Rules and Practice in License and Permit Proceedings.'' The proposed 
regulations are based upon the regulations that ATF relied upon prior 
to its transfer from the Department of the Treasury to the Department 
of Justice.
    Additionally, the Department proposes minor revisions to 
regulations governing administrative proceedings related to the denial, 
suspension, or revocation of a license, and the imposition of a civil 
fine under Federal firearms law to reference regulations under ATF 
authority. These proposed revisions remove all references to statutes, 
regulations, positions, and other terms that are applicable only to the 
Department of the Treasury. These

[[Page 60392]]

revisions reflect ATF's position as a regulatory and enforcement agency 
under the Department of Justice and are consistent with the proposed 
regulations governing administrative hearing processes for explosives 
licenses and permits.

DATES: Written comments must be postmarked and electronic comments must 
be submitted on or before January 5, 2015. Commenters should be aware 
that the electronic Federal Docket Management System will not accept 
comments after midnight Eastern Time on the last day of the comment 
period.

ADDRESSES: Send comments, identified by docket number (ATF 33P), by any 
of the following methods:
     Mail: Denise Brown, Enforcement Programs and Services, 
Office of Regulatory Affairs, Mailstop 6N-602, Bureau of Alcohol, 
Tobacco, Firearms, and Explosives, 99 New York Avenue NE., Washington, 
DC 20226; ATTN: ATF 33P. Written comments must appear in minimum 12-
point font size (.17 inches), include the sender's mailing address, and 
be signed; they may be of any length.
     Fax: 202-648-9741.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to the Federal eRulemaking portal, http://www.regulations.gov, including any personal information provided. For 
detailed instructions on submitting comments and additional information 
on the rulemaking process, see the ``Public Participation'' heading of 
the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Denise Brown, Enforcement Programs and 
Services, Office of Regulatory Affairs, Bureau of Alcohol, Tobacco, 
Firearms, and Explosives, U.S. Department of Justice, 99 New York 
Avenue NE., Washington, DC 20226; telephone: (202) 648-7070.

SUPPLEMENTARY INFORMATION:

I. Background

    The Attorney General has delegated to the Director of the Bureau of 
Alcohol, Tobacco, Firearms, and Explosives (ATF) responsibility for 
administering and enforcing title I of the Gun Control Act of 1968 
(GCA), Public Law 90-618, as amended, 18 U.S.C. Chapter 44, relating to 
commerce in firearms and ammunition; and Title XI, Regulation of 
Explosives, of the Organized Crime Control Act of 1970 (OCCA), Public 
Law 91-452, as amended, 18 U.S.C. Chapter 40. See 18 U.S.C. 926(a); 18 
U.S.C. 843; 28 CFR 0.130. Under the GCA, ATF has the authority to 
license applicants, renew licenses, and revoke Federal firearms 
licenses. The OCCA, as amended by the Safe Explosives Act, Title XI, 
Subtitle C of Public Law 107-296, the Homeland Security Act of 2002 
(enacted November 25, 2002), authorizes ATF to provide licenses and 
permits to qualified applicants for the acquisition, distribution, 
storage, or use of explosive materials and renew or revoke such 
licenses and permits.

A. Rules of Practice in Permit Proceedings (27 CFR Part 71)

    On November 25, 2002, President George W. Bush signed the Homeland 
Security Act of 2002, Public Law 107-296 (the Act), which divided the 
regulatory functions of the Bureau of Alcohol, Tobacco, and Firearms 
into two separate agencies. The Act renamed the Bureau of Alcohol, 
Tobacco and Firearms as the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives and transferred law enforcement and certain regulatory 
functions to the Department of Justice. The Act also retained in the 
Department of the Treasury (Treasury) certain functions of the former 
Bureau of Alcohol, Tobacco, and Firearms. The functions retained by 
Treasury became the responsibility of a new Alcohol and Tobacco Tax and 
Trade Bureau (TTB).
    As a result of the Act, TTB has all regulatory authority under 27 
CFR Part 71 and ATF therefore cannot promulgate new regulations under 
this part, although ATF uses the regulations in Part 71 to administer 
hearings related to the application and revocation of Federal 
explosives licenses and permits.

B. License Proceedings (27 CFR Part 478)

    Regulations that implement the provisions of the GCA are set forth 
in 27 CFR Part 478. Subpart E of Part 478 relates to proceedings 
involving Federal firearms licensees, including the denial, suspension, 
or revocation of licenses and the imposition of civil fines. 
Specifically, 27 CFR 478.76 provides that an applicant or licensee may 
be represented at a hearing for the disapproval of applications for 
firearms licenses, for the denial, suspension, or revocation of a 
firearms license, or for imposition of a civil fine under federal 
firearms law by an attorney, a certified public accountant, or any 
other person recognized to practice before ATF as provided in 31 CFR 
Part 8, if the representative complies with the applicable practice 
requirements of 26 CFR 601.521 through 601.527.

C. License and Permit Proceedings (27 CFR Part 555)

    The regulations that implement OCCA procedural and substantive 
requirements are found in 27 CFR Part 555. Subpart E of Part 555 
relates to proceedings involving Federal explosives licensees and 
permittees, including the denial of an initial application, denial of a 
renewal, and revocation of a license or permit. Specifically, 27 CFR 
555.78 provides that an applicant, licensee, or permittee may be 
represented at a hearing for the disapproval of applications for 
explosives licenses, and for the denial of renewal or revocation of 
such licenses or permits under federal explosives law by an attorney, a 
certified public accountant, or any other person recognized to practice 
before ATF as provided in 31 CFR Part 8, if the representative complies 
with the applicable practice requirements of 26 CFR 601.521 through 
601.527.

II. Proposed Rule

A. Creation of new 27 CFR Part 771

    The Department proposes revising ATF regulations to add a new part 
that implements 18 U.S.C. 843 and 847 relating to the procedures and 
practice for the disapproval of initial applications, denials of a 
renewal, and revocations of explosives licenses or permits by ATF under 
federal explosives law. ATF is incorporating and updating the language 
relevant to its operations currently found in Part 71 into proposed 27 
CFR Part 771. The creation of Part 771 is primarily an administrative 
change that will improve the organization of ATF regulations. The 
proposed regulations will be codified in a new part 771 in Chapter II 
of title 27 CFR and are separated into subparts as follows:

Subpart A--Scope and Construction
Subpart B--Definitions
Subpart C--General
Subpart D--Compliance and Settlement
Subpart E--Grounds for Revocation or Denial
Subpart F--Hearing Procedure
Subpart G--Administrative Law Judges
Subpart H--Decisions
Subpart I--Review
Subpart J--Miscellaneous

B. Proposed Amendments to 27 CFR Part 478

    This proposed rule amends ATF regulations governing procedures and 
practices for disapproving applications for firearms licenses; for 
denying, suspending, or revoking a firearms license; and for imposing a 
civil fine

[[Page 60393]]

under federal firearms law. The proposed rule revises 27 CFR 478.76 to 
allow an applicant or licensee to be represented at a proceeding by 
himself, an attorney, a certified public accountant, or any other 
person without submitting a declaration of a representative pursuant to 
26 CFR 601.521, and it deletes the current references to 31 CFR Part 8 
and 26 CFR 601.521 through 601.527. Under the proposed rule, an 
applicant or licensee shall file in the proceeding a duly executed 
power of attorney designating his representative. The applicant or 
licensee shall also file waivers, if applicable, under the Privacy Act 
of 1974 (see 5 U.S.C. 552a), and 26 U.S.C. 6103(c) (confidentiality and 
disclosure of returns and return information). The Director of Industry 
Operations may be represented in proceedings under Sec. Sec.  478.72 
and 478.74 by an attorney for the government in the ATF Office of Chief 
Counsel who is authorized to execute and file motions, briefs, and 
other papers in the proceeding on behalf of the Director of Industry 
Operations in the attorney's own name as ``Attorney for the 
Government.''

C. Proposed Amendments to 27 CFR Part 555

    This proposed rule amends ATF regulations governing procedures and 
practices for disapproving applications, denying renewals, and revoking 
explosives licenses or permits under federal explosives law. This 
proposed rule amends Sec.  555.73 and Sec.  555.73 to state that the 
administrative hearings will be conducted in accordance with the 
hearing procedures prescribed in part 771, thereby replacing the 
current references in these sections to part 71.
    The proposed rule revises 27 CFR 555.78 to allow an applicant, 
licensee, or permittee to be represented at a proceeding by himself, an 
attorney, a certified public accountant, or any other person without 
submitting a declaration of a representative pursuant to 26 CFR 
601.521, and it deletes the current references to 31 CFR Part 8 and 26 
CFR 601.521 through 601.527. Under the proposed rule, an applicant, 
licensee, or permittee shall file in the proceeding a duly executed 
power of attorney designating his representative. The applicant, 
licensee, or permittee shall also file waivers, if applicable, under 
the Privacy Act of 1974 (see 5 U.S.C. 552(a)) and 26 U.S.C. 6103(c) 
(confidentiality and disclosure of returns and return information). An 
attorney for the government may represent the Director of Industry 
Operations under Sec. Sec.  555.73 and 555.75 who is authorized to 
execute and file motions, briefs, and other papers in the proceeding, 
on behalf of the Director of Industry Operations, in the attorney's own 
name as ``Attorney for the Government.''
    This proposed rule amends Sec.  555.79 to state that, in the event 
that an appeal is taken from a decision of a hearing, the process by 
which the Director will review the complete original record will be 
contained in a new part 771, thereby replacing the current reference in 
this section to part 71.
    This proposed rule revises Sec.  555.82 to state that regulations 
governing the procedures and practices for disapproving applications 
for explosives licenses and permits and for denying renewal of or 
revoking such licenses and permits are contained in a new Part 771.
Statutory and Executive Order Reviews

A. Executive Order 12866 and 13563

    This proposed rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), The Principles of Regulation and in accordance with Executive 
Order 13563, ``Improving Regulation and Regulatory Review,'' section 1, 
General Principles of Regulation, and section 6, Retrospective Analyses 
of Existing Rules.
    Further, both Executive Orders 12866 and 13563 direct agencies to 
assess all costs and benefits of available regulatory alternatives and, 
if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility. The Department has assessed the costs and 
benefits of this regulation and believes that the regulatory approach 
selected maximizes net benefits.
    This rule will not have an annual effect on the economy of $100 
million or more, nor will it adversely affect in a material way the 
economy, a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
government or communities. Similarly, it does not create a serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency, materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof, or raise novel legal or policy issues arising out 
of legal mandates, the President's priorities, or the principles set 
forth in Executive Order 12866. Accordingly, this rule is not a 
``significant regulatory action'' as defined in Executive Order 12866.
    Section 6 of Executive Order 13563, directs agencies to develop a 
plan to review existing significant rules that may be ``outmoded, 
ineffective, insufficient, or excessively burdensome,'' and to make 
appropriate changes where warranted. The Department selected and 
reviewed this rule under the criteria set forth in its Plan for 
Retrospective Analysis of Existing Rules, and determined that this 
proposed rule transfers and consolidates regulations governing 
explosives license application renewal or revocation of licenses and 
permits, improving the enforcement of ATF regulations.

B. Executive Order 13132

    This proposed regulation will not have substantial direct effects 
on the States, on the relationship between the Federal Government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. Therefore, in accordance with section 
6 of Executive Order 13132, the Attorney General has determined that 
this proposed regulation does not have sufficient federalism 
implications to warrant the preparation of a federalism summary impact 
statement.

C. Executive Order 12988

    This proposed rule meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice 
Reform.''

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 605(b)) exempts an agency 
from the requirement to conduct a regulatory flexibility analysis of 
any rule subject to notice and comment rulemaking requirements if the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. Small entities 
include small businesses, small not-for-profit enterprises, and small 
governmental jurisdictions. The Attorney General has reviewed this 
proposed rule and, by approving it, certifies that it will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule recodifies the ATF regulations governing the 
procedure and practice for disapproving applications, denying renewals, 
and revoking explosives licenses or permits under

[[Page 60394]]

federal explosives law in a new part 771 under ATF's regulatory 
authority.
    Additionally, this proposed rule updates the regulations governing 
the denial, suspension, or revocation of a firearms license, and 
imposition of a civil fine under federal firearms law to only reference 
regulations under ATF authority. This proposed rule also amends the 
regulations to require an applicant or licensee in a proceeding 
concerning the denial, suspension, or revocation of a firearms license, 
or the imposition of a civil fine under federal firearms law, to file a 
duly executed power of attorney designating his representative, and 
waivers, if applicable, under the Privacy Act of 1974 (See 5 U.S.C. 
552(a)), and 26 U.S.C. 6103(c) (confidentiality and disclosure of 
returns and return information). This is required in the current 
regulations by reference to 31 CFR Part 8 and 26 CFR 601.521 through 
601.527. The changes proposed in this rule are purely administrative 
and do not add any new requirements that would have any impact on the 
economy.

E. Small Business Regulatory Enforcement Fairness Act of 1996

    This proposed rule is not a major rule as defined by section 251 of 
the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 804. This proposed rule will not result in an annual effect on 
the economy of $100 million or more; a major increase in costs or 
prices; or significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign-based enterprises in 
domestic and export markets.

F. Unfunded Mandates Reform Act of 1995

    This proposed rule will not result in the expenditure by State, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any one year, and it will not 
significantly or uniquely affect small governments. Therefore, no 
actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

G. Paperwork Reduction Act

    This proposed rule does not impose any new reporting or 
recordkeeping requirements under the Paperwork Reduction Act of 1995.
Public Participation

A. Comments Sought

    ATF is requesting comments on the proposed rule from all interested 
persons. ATF is also specifically requesting comments on the clarity of 
this proposed rule and how it may be made easier to understand.
    All comments must reference this document docket number (ATF 33P), 
be legible, and include the commenter's name and mailing address. ATF 
will treat all comments as originals and will not acknowledge receipt 
of comments.
    Comments received on or before the closing date will be carefully 
considered. Comments received after that date will be given the same 
consideration if it is practical to do so, but assurance of 
consideration cannot be given except as to comments received on or 
before the closing date.

B. Confidentiality

    Comments, whether submitted electronically or in paper, will be 
made available for public viewing at ATF and on the Internet as part of 
the eRulemaking initiative. Comments are subject to the Freedom of 
Information Act. Commenters who do not want their names or other 
personal identifying information posted on the Internet should submit 
their comments by mail or facsimile, along with a separate cover sheet 
containing their personal identifying information. Both the cover sheet 
and comment must reference this docket number. Information contained in 
the cover sheet will not be posted on the Internet. Any personal 
identifying information that appears within the comment will be posted 
on the Internet and will not be redacted by ATF.
    Any material that a commenter considers to be inappropriate for 
disclosure to the public should not be included in the comment. Any 
person submitting a comment shall specifically designate that portion 
(if any) of the comments that contains material that is confidential 
under law (e.g., trade secrets, processes, etc.). Any portion of a 
comment that is confidential under law shall be set forth on pages 
separate from the balance of the comment and shall be prominently 
marked ``confidential'' at the top of each page. Confidential 
information will be included in the rulemaking record but will not be 
disclosed to the public. Any comments containing material that is not 
confidential under law may be disclosed to the public. In any event, 
the name of the person submitting a comment is not exempt from 
disclosure.

C. Submitting Comments

    Comments may be submitted in any of three ways:
     Mail: Send written comments to the address listed in the 
ADDRESSES section of this document. Written comments may be of any 
length, must appear in minimum 12-point font size (.17 inches), and 
include the commenter's mailing address and signature.
     Facsimile: You may submit comments by facsimile 
transmission to (202) 648-9741. Faxed comments must:
    (1) Be legible and appear in minimum 12-point font size (.17 
inches);
    (2) Be on 8\1/2\'' x 11'' paper;
    (3) Contain a legible, written signature; and
    (4) Be no more than five pages long. ATF will not accept faxed 
comments that exceed five pages.
     Federal eRulemaking Portal: To submit comments to ATF via 
the Federal eRulemaking portal, visit http://www.regulations.gov and 
follow the instructions for submitting comments.

D. Request for Hearing

    Any interested person who desires an opportunity to comment orally 
at a public hearing should submit such request for a hearing, in 
writing, to the Director of ATF within the 90-day comment period. 
Address requests for public hearings to Denise Brown, Enforcement 
Programs and Services, Office of Regulatory Affairs, Mailstop 6N-602, 
Bureau of Alcohol, Tobacco, Firearms, and Explosives, 99 New York 
Avenue NE., Washington, DC 20226; ATTN: ATF 33P. The Director, however, 
reserves the right to determine, in light of all circumstances, whether 
a public hearing is necessary.
Disclosure
    Copies of this proposed rule and the comments received will be 
available for public inspection by appointment during normal business 
hours at: ATF Reading Room, Room 1E-062, 99 New York Avenue NE., 
Washington, DC 20226; telephone: (202) 648-8740.
Drafting Information
    The author of this document is Denise Brown; Enforcement Programs 
and Services; Office of Regulatory Affairs, Bureau of Alcohol, Tobacco, 
Firearms, and Explosives.

List of Subjects

27 CFR Part 478

    Administrative practice and procedure, Arms and munitions, Customs 
duties and inspection, Exports, Imports, Intergovernmental relations, 
Law enforcement officers, Military personnel, Penalties, Reporting and 
recordkeeping requirements, Research, Seizures and forfeitures, 
Transportation.

[[Page 60395]]

27 CFR Part 555

    Administrative practice and procedure, Customs duties and 
inspection, Explosives, Hazardous substances, Imports, Penalties, 
Reporting and recordkeeping requirements, Safety, Security measures, 
Seizures and forfeitures, Transportation, Warehouses.

27 CFR Part 771

    Administrative practice and procedure, Explosives.

Authority and Issuance

    Accordingly, for the reasons discussed in the preamble, 27 CFR 
Parts 478 and 555 are proposed to be amended and Part 771 is proposed 
to be added to chapter II, title 27 as follows:

PART 478--COMMERCE IN FIREARMS AND AMMUNITION

0
1. The authority citation for 27 CFR part 478 continues to read as 
follows:

    Authority:  5 U.S.C. 552(a); 18 U.S.C. 847, 921-931; 44 U.S.C. 
3504(h).

0
2. Section 478.76 is revised to read as follows:

Sec.  478.76  Representation at a hearing.

    Applicants or licensees may represent themselves or be represented 
by an attorney, a certified public accountant, or any other person, 
specifically designated in a duly executed power of attorney that shall 
be filed in the proceeding by the applicant or licensee. The applicant 
or licensee shall file waivers, if applicable, under the Privacy Act of 
1974 and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns 
and return information). The Director of Industry Operations may be 
represented in proceedings under Sec. Sec.  478.72 and 478.74 by an 
attorney in the Office of Chief Counsel who is authorized to execute 
and file motions, briefs, and other papers in the proceeding, on behalf 
of the Director of Industry Operations, in the attorney's own name as 
``Attorney for the Government.''

PART 555--COMMERCE IN EXPLOSIVES

0
3. The authority citation for 27 CFR part 555 continues to read as 
follows:

    Authority:  18 U.S.C. 847.

0
4. Amend Sec.  555.73 by removing ``part 71'' and adding in its place 
``part 771''.
0
5. Amend Sec.  555.75 by removing ``part 71'' and adding in its place 
``part 771''.
0
6. Revise 555.78 to read as follows:

Sec.  555.78  Representation at a hearing.

    An applicant, licensee, or permittee may represent himself, or be 
represented by an attorney, a certified public accountant, or any other 
person, specifically designated in a duly executed power of attorney 
that shall be filed in the proceeding by the applicant, licensee, or 
permittee. The applicant, licensee, or permittee shall file waivers, if 
applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) 
(confidentiality and disclosure of returns and return information). The 
Director of Industry Operations may be represented in proceedings under 
Sec. Sec.  555.73 and 555.75 by an attorney in the Office of Chief 
Counsel who is authorized to execute and file motions, briefs and other 
papers in the proceeding, on behalf of the Director of Industry 
Operations, in the attorney's own name as ``Attorney for the 
Government.''
0
7. Amend Sec.  555.79 by removing ``part 71'' and adding in its place 
``part 771''.
0
8. Revise Sec.  555.82 to read as follows:

Sec.  555.82  Rules of practice in license and permit proceedings.

    Regulations governing the procedure and practice for disapproval of 
applications for explosives licenses and permits and for the denial of 
renewal or revocation of such licenses and permits under the Act are 
contained in part 771 of this chapter.
0
9. Add subchapter E (consisting of part 771) to 27 CFR chapter II to 
read as follows:

SUBCHAPTER E--EXPLOSIVE LICENSE AND PERMIT PROCEEDINGS

PART 771--RULES OF PRACTICE IN EXPLOSIVE LICENSE AND PERMIT 
PROCEEDINGS

Subpart A--Scope and Construction of Regulations
Sec.
771.1 Scope of part.
771.2 Liberal construction.
771.3 Forms prescribed.
Subpart B--Definitions
771.5 Meaning of terms.
Subpart C--General
771.25 Communications and pleadings.
771.26 Service on applicant, licensee, or permittee.
771.27 Service on the Director of Industry Operations or Director.

Time

771.28 Computation.
771.29 Continuances and extensions.

Representation at Hearings

771.30 Personal representation.
771.31 Attorneys and other representatives.
Subpart D--Compliance and Settlement
771.35 Opportunity for compliance.
771.36 Settlement.
771.37 Notice of contemplated action.
771.38 Licensee's or permittee's failure to meet requirements within 
reasonable time.
771.39 Authority of Director of Industry Operations to proceed with 
revocation or denial action.
Subpart E--Revocation or Denial
771.40 Denial of initial application
771.41 Denial of renewal application or revocation of license or 
permit
771.42 Grounds for revocation of licenses or permits.
771.43 Grounds for denial of applications for licenses or permits.
Subpart F--Hearing Procedure

Notices

771.55 Content.
771.56 Forms.
771.57 Execution and disposition.
771.58 Designated place of hearing.

Request for Hearing

771.59 Initial application proceedings.
771.60 Revocation or denial of renewal proceedings.
771.61 Notice of hearing.

Non-Request for Hearing

771.62 Initial application
771.63 Revocation or denial of renewal.

Responses to Notices

771.64 Answers.
771.65 Responses admitting facts.
771.66 Initial conferences.

Failure To Appear

771.67 Initial applications.
771.68 Revocation or denial of renewal.

Waiver of Hearing

771.69 Withdrawal of request for hearing.
771.70 Adjudication based upon written submissions.

Surrender of License or Permit

771.71 Before citation.
771.72 After citation.

Motions

771.73 General.
771.74 Prior to hearing.
771.75 At hearing.

Hearing

771.76 General.
771.77 Initial applications.
771.78 Revocation or denial of renewal.

Burden of Proof

771.79 Initial applications.
771.80 Revocation or denial of renewal.

General

771.81 Stipulations at hearing.
771.82 Evidence.
771.83 Closing of hearings; arguments, briefs, and proposed 
findings.
771.84 Reopening of the hearing.

[[Page 60396]]

Record of Testimony

771.85 Stenographic record.
771.86 Oath of reporter.
Subpart G--Administrative Law Judges
771.95 Responsibilities of administrative law judges.
771.96 Disqualification.
771.97 Powers.
771.98 Separation of functions.
771.99 Conduct of hearing.
771.100 Unavailability of administrative law judge.
Subpart H--Decisions
771.105 Administrative law judge's findings and recommended 
decision.
771.106 Certification and transmittal of record and decision.

Action by Director of Industry Operations

771.107 Initial application proceedings.
771.108 Director of Industry Operations' decision.
771.109 Revocation or denial of renewal proceedings.
771.110 Revocation or denial of renewal.
771.111 Proceedings involving violations not within the division of 
issuance of license or permit.
Subpart I--Review
771.120 Appeal on petition to the Director.
771.121 Review by Director.
771.122 Denial of renewal or revocation.
771.123 Court review.
Subpart J--Miscellaneous
771.124 Depositions.
771.125 Witnesses and fees.
771.126 Discovery.
771.127 Privileges.

Record

771.135 What constitutes record.
771.136 Availability.

    Authority: 18 U.S.C. 843, 847.

Subpart A--Scope and Construction of Regulations

Sec.  771.1  Scope of part.

    Regulations in this part govern procedures and practices for 
disapproving applications for licenses and permits and denying renewal 
of or revocation of such licenses or permits under 18 U.S.C. Chapter 
40.

Sec.  771.2  Liberal construction.

    Regulations in this part shall be liberally construed to secure 
just, expeditious, and efficient determination of the issues presented. 
The Rules of Civil Procedure for the U.S. District Courts (28 U.S.C. 
appendix) are not controlling, but may act as a guide in any situation 
not provided for or controlled by this part and shall be liberally 
construed or relaxed when necessary.

Sec.  771.3  Forms prescribed.

    (a) The Director is authorized to prescribe all forms required by 
this part. All of the information called for in each form shall be 
furnished as indicated by the headings on the form and the instructions 
on or pertaining to the form. In addition, information called for in 
each form shall be furnished as required by this part.
    (b) Requests for forms should be made to the ATF Distribution 
Center or through the ATF Web site at http://www.atf.gov.

Subpart B--Definitions

Sec.  771.5  Meaning of terms.

    When used in this part and in forms prescribed under this part, 
where not otherwise distinctly expressed or manifestly incompatible 
with the intent thereof, terms shall have the meaning provided in this 
subpart. Words in the plural form shall include the singular, and vice 
versa, and words importing the masculine gender shall include the 
feminine.
    Administrative law judge. The person appointed pursuant to 5 U.S.C. 
3105, designated to preside over any administrative proceedings under 
this part.
    Applicant. Any person who has filed an application for a license or 
permit under 18 U.S.C. Chapter 40.
    Application. Any application for a license or permit under 18 
U.S.C. Chapter 40 for operations not covered by an existing license or 
permit.
    ATF. The Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
Department of Justice.
    Attorney for the Government. An attorney in the ATF Office of Chief 
Counsel authorized to represent the Director of Industry Operations in 
the proceeding.
    CFR. The Code of Federal Regulations.
    Contemplated notice. Includes any notice contemplating the 
revocation or denial of renewal of a license or permit.
    Director. The Director, Bureau of Alcohol, Tobacco, Firearms, and 
Explosives, Department of Justice.
    Director of Industry Operations. The principal ATF official in a 
Field Operations division responsible for administering regulations in 
this part.
    Ex parte communication. An oral or written communication not on the 
public record with respect to which reasonable prior notice to all 
parties is not given, but not including requests for status reports.
    Initial decision. The decision of the Director of Industry 
Operations in a proceeding concerning the revocation of, denial of 
renewal of, or denial of application for a license or permit. This 
decision becomes the agency's final decision in the absence of an 
appeal.
    Final decision. The definitive decision of ATF, e.g., the agency's 
decision in the absence of an appeal or the Director's decision 
following an appeal to the Director.
    License. Subject to applicable law, entitles the licensee to 
transport, ship, and receive explosive materials in interstate or 
foreign commerce, and to engage in the business specified by the 
license, at the location described on the license.
    Licensee. Any importer, manufacturer, or dealer licensed under the 
provisions of 18 U.S.C. Chapter 40 and 27 CFR Part 555.
    Limited permit. A permit issued to a person authorizing him to 
receive for his use explosive materials from a licensee or permittee in 
his State of residence on no more than six occasions during the 12-
month period in which the permit is valid. A limited permit does not 
authorize the receipt or transportation of explosive materials in 
interstate or foreign commerce.
    Other term. Any other term defined in the Federal explosives laws 
(18 U.S.C. Chapter 40), the regulations promulgated thereunder (27 CFR 
Part 555), or the Administrative Procedure Act (5 U.S.C. 551 et seq.), 
where used in this part, shall have the meaning assigned to it therein.
    Permittee. Any user of explosives for a lawful purpose who has 
obtained either a user permit or a limited permit under 18 U.S.C. 
Chapter 40 and 27 CFR Part 555.
    Person. Any individual, corporation, association, firm, 
partnership, society, or joint stock company.
    Recommended decision. The advisory decision of the administrative 
law judge in any proceeding regarding the revocation of, denial of 
renewal of, or denial of application for a license or permit. ATF must 
act on a recommended decision with its own initial or final decision.
    User-limited permit. A user permit valid only for a single purchase 
transaction. Recipients of a user-limited permit must obtain a new 
permit for any subsequent purchase transaction.
    User permit. A permit issued to a person authorizing him to--
    (1) Acquire for his own use explosive materials from a licensee in 
a State other than the State in which he resides or from a foreign 
country, and;
    (2) Transport explosive materials in interstate or foreign 
commerce.
    Willfulness. The plain indifference to, or purposeful disregard of, 
a known

[[Page 60397]]

legal duty. Willfulness may be demonstrated by, but does not require, 
repeat violations involving a known legal duty.

Subpart C--General

Sec.  771.25  Communications and pleadings.

    (a) All communications to the Government regarding the procedures 
set forth in this part and all pleadings, such as answers, motions, 
requests, or other papers or documents required or permitted to be 
filed under this part, relating to a proceeding pending before an 
administrative law judge, shall be addressed to the administrative law 
judge at his post of duty and the attorney for the Government. 
Communications concerning proceedings not pending before an 
administrative law judge should be addressed to the Director of 
Industry Operations or Director, as the case may be.
    (b) Except to the extent required for the disposition of ex parte 
matters as authorized by law, no ex parte communications shall be made 
to or from the administrative law judge concerning the merits of the 
adjudication. If the administrative law judge receives or makes an ex 
parte communication not authorized by law, the administrative law judge 
shall place on the record of the proceeding:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral 
communications; and
    (3) All written responses and memoranda stating the substance of 
all oral responses to paragraphs (b)(1) and (2) of this section.

Sec.  771.26  Service on applicant, licensee, or permittee.

    All orders, notices, motions, and other formal documents required 
to be served under the regulations in this part may be served by 
mailing a signed, original copy thereof to the designated 
representative of the applicant, licensee, or permittee by certified 
mail, with request for return receipt card, at the representative's 
business address, by personal service, or as otherwise agreed to by the 
parties. If the applicant, licensee, or permittee has not yet 
designated a representative, all orders, notices, motions, and other 
formal documents required to be served under the regulations in this 
part may be served by mailing a signed, original copy thereof to the 
applicant, licensee, or permittee at the address stated on his 
application, license, or permit, or at his last known address, or by 
delivery of such original copy to the applicant, licensee, or permittee 
personally, or in the case of a corporation, partnership, or other 
unincorporated association, by delivering the same to an officer, or 
manager, or general agent thereof, or to its attorney of record. Such 
personal service may be made by any employee of the Department of 
Justice designated by the Attorney General or by any employee of ATF. A 
certificate of mailing and the return receipt card, or certificate of 
service signed by the person making such service, shall be filed as a 
part of the record.

Sec.  771.27  Service on the Director of Industry Operations or 
Director.

    Pleadings, motions, notices, and other formal documents may be 
served by certified mail, by personal service, or as otherwise agreed 
to by the parties on the Director of Industry Operations (or upon the 
attorney for the Government on behalf of the Director of Industry 
Operations), or on the Director, if the proceeding is before him for 
review on appeal.

Time

Sec.  771.28  Computation.

    In computing any period of time prescribed or allowed by this part, 
the day of the act, event, or default after which the designated period 
of time is to run is not to be included. The last day of the period to 
be computed is to be included, unless it is a Saturday, Sunday, or 
Federal holiday, in which event the period runs until the next day that 
is not a Saturday, Sunday, or Federal holiday. Pleadings, requests, or 
other papers or documents required or permitted to be filed under this 
part must be received for filing at the appropriate office within the 
time limits, if any, for such filing.

Sec.  771.29  Continuances and extensions.

    For good cause shown, the administrative law judge, Director, or 
Director of Industry Operations, as the case may be, may grant 
continuances and, as to all matters pending before him, extend any time 
limit prescribed by the regulations in this part (except where the time 
limit is statutory).

Representation at Hearings

Sec.  771.30  Personal representation.

    Any individual or member of a partnership may appear for himself, 
or for such partnership, and a corporation or association may be 
represented by a bona fide officer of such corporation or association, 
upon showing of adequate authorization.

Sec.  771.31  Attorneys and other representatives.

    An applicant, licensee, or permittee may represent himself, or be 
represented by an attorney, a certified public accountant, or any other 
person, specifically designated in a duly executed power of attorney 
that shall be filed in the proceeding by the applicant, licensee, or 
permittee. The applicant, licensee, or permittee shall file waivers, if 
applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) 
(confidentiality and disclosure of returns and return information). The 
Director of Industry Operations may be represented in proceedings by an 
attorney in the Office of Chief Counsel who is authorized to execute 
and file motions, briefs, and other papers in the proceeding on behalf 
of the Director of Industry Operations, in the attorney's own name as 
``Attorney for the Government.''

Subpart D--Compliance and Settlement

Sec.  771.35  Opportunity for compliance.

    No license or permit shall be revoked or denied renewal unless, 
prior to the institution of proceedings, facts or conduct warranting 
such action shall have been called to the attention of the licensee or 
permittee by the Director of Industry Operations in writing in a 
contemplated notice, and the licensee or permittee shall have been 
accorded an opportunity to demonstrate or achieve compliance with all 
lawful requirements as set forth in section 9(b) of the Administrative 
Procedure Act. In cases in which the Director of Industry Operations 
alleges in his contemplated notice, with supporting reasons, willful 
violations or that the public interest requires otherwise, this section 
does not apply and the issuance of a contemplated notice is 
unnecessary.

Sec.  771.36  Settlement.

    Any proposals of settlement should be made to the Director of 
Industry Operations, but may be made through the attorney for the 
Government. Where necessary, the date of the hearing may be postponed 
pending consideration of such proposals when they are made in good 
faith and not for the purpose of delay. If proposals of settlement are 
submitted, and they are considered unsatisfactory, the Director of 
Industry Operations may reject the proposals and may, either directly 
or through the attorney for the Government, inform the licensee or 
permittee of any conditions on which the alleged violations may be 
settled. If the proposals of settlement are considered satisfactory to 
the Director of

[[Page 60398]]

Industry Operations, the licensee or permittee shall be notified 
thereof and the proceeding shall be dismissed.

Sec.  771.37  Notice of contemplated action.

    Where the Director of Industry Operations has not ascertained 
whether the licensee or permittee has willfully violated the federal 
explosives laws and where he believes the matter has the potential to 
be settled informally, i.e., without formal administrative proceedings, 
he shall, in accordance with section 5(b) of the Administrative 
Procedure Act, prior to the issuance of a notice of revocation or 
denial of renewal, give the licensee or permittee a contemplated notice 
of such action and an opportunity to show why the license or permit 
should not be revoked or denied renewal. The notice should inform the 
licensee or permittee of the charges on which the notice would be 
based, if issued, and afford him a period of 15 days from the date of 
the notice, or such longer period as the Director of Industry 
Operations deems necessary, in which to submit proposals of settlement 
to the Director of Industry Operations. Where informal settlement is 
not reached promptly because of inaction by the applicant, licensee, or 
permittee or proposals are made for the purpose of delay, a notice 
shall be issued in accordance with Sec. Sec.  771.42 or 771.43, as 
appropriate. The issuance of a notice of contemplated action does not 
entitle the recipient to a hearing before an administrative law judge.

Sec.  771.38  Licensee's or permittee's failure to meet requirements 
within reasonable time.

    If the licensee or permittee fails to meet the requirements of 
applicable laws and regulations within such reasonable time as may be 
specified by the Director of Industry Operations, proceedings for 
revocation or denial of renewal of the license or permit shall be 
initiated.

Sec.  771.39  Authority of Director of Industry Operations to proceed 
with revocation or denial action.

    Where the evidence is conclusive and the nature of the violation is 
such as to preclude any settlement, the violation is of a continuing 
character that necessitates immediate action to protect the public 
interest, or the Director of Industry Operations believes that any 
informal settlement of the alleged violation will not ensure future 
compliance with applicable laws and regulations, or in any similar case 
where the circumstances are such as to clearly preclude informal 
settlement, and the Director of Industry Operations so finds and states 
the reasons therefor in the notice, the Director of Industry Operations 
may proceed with the revocation or denial of renewal.

Subpart E--Revocation or Denial

Sec.  771.40  Denial of initial application.

    Whenever the Director of Industry Operations has reason to believe 
that an applicant for an original license or permit is not eligible to 
receive a license or permit under the provisions of Sec.  555.49 of 
this chapter, the Director of Industry Operations shall issue a notice 
of denial on ATF Form 5400.11 (Notice of Denial of Application for 
License or Permit) (F 5400.11). The notice will set forth the matters 
of fact and law relied upon in determining that the application should 
be denied and will afford the applicant 15 days from the date of 
receipt of the notice in which to request a hearing to review the 
denial. If no request for a hearing is filed within that time, a copy 
of the application, marked ``Disapproved,'' will be returned to the 
applicant.

Sec.  771.41  Denial of renewal application or revocation of license or 
permit.

    If, following the opportunity for compliance under Sec.  555.71 of 
this chapter, or without opportunity for compliance under Sec.  555.71 
of this chapter as circumstances warrant, the Director of Industry 
Operations finds that the licensee or permittee is not likely to comply 
with applicable laws or regulations or is otherwise not eligible to 
continue operations authorized under his license or permit, the 
Director of Industry Operations shall issue a notice of denial of the 
renewal application or revocation of the license or permit, ATF F 
5400.11 (Notice of Denial of Application for License or Permit) or ATF 
Form 5400.10 (Notice of Revocation of License or Permit) (F 5400.10), 
as appropriate. The notice will set forth the matters of fact 
constituting the violations specified, dates, places, and the sections 
of law and regulations violated. In the case of the revocation of a 
license or permit, the notice will specify the date on which the action 
is effective, which date will be on or after the date the notice is 
served on the licensee or permittee. The notice will also advise the 
licensee or permittee that he may, within 15 days after receipt of the 
notice, request a hearing and, if applicable, a stay of the effective 
date of the revocation of his license or permit.

Sec.  771.42  Grounds for revocation of licenses or permits.

    Whenever the Director of Industry Operations has reason to believe 
that any holder of a license or permit has willfully violated any 
provision of 18 U.S.C. Chapter 40 or the regulations prescribed 
thereunder or has become ineligible to continue operations authorized 
under the license or permit, the Director of Industry Operations shall 
issue a notice for the revocation of such license or permit, as the 
case may be.

Sec.  771.43  Grounds for denial of applications for licenses or 
permits.

    If, upon examination of any application (including a renewal 
application) for a license or permit, the Director of Industry 
Operations has reason to believe that the applicant is not entitled to 
such license or permit, the Director of Industry Operations shall issue 
a denial of the application. An applicant is not eligible for a license 
or permit if he fails to meet the requirements of 18 U.S.C. 843(b) and 
Sec.  555.49 of this chapter.

Subpart F--Hearing Procedure

Notices

Sec.  771.55  Content.

    (a) Notices for the revocation or denial of renewal of a license or 
permit shall be promptly issued by the Director of Industry Operations 
and shall set forth:
    (1) The sections of law and regulations relied upon for authority 
and jurisdiction;
    (2) The specific grounds upon which the revocation or denial is 
based, i.e., the matters of fact constituting the violations specified, 
dates, places, and sections of law and regulations violated;
    (3) In the case of a revocation, the date on which the action is 
effective; and
    (4) That the licensee or permittee has 15 days from receipt of the 
notice within which to request a hearing before an administrative law 
judge.
    (b) Notices for the denial of an initial application for a license 
or permit shall set forth:
    (1) The sections of law and regulations relied upon for authority 
and jurisdiction;
    (2) The specific grounds upon which the denial is based, i.e., the 
matters of fact and law relied upon for the disapproval of the 
application; and
    (3) That the application will be disapproved unless a hearing is 
requested within 15 days from receipt of the Notice.

Sec.  771.56  Forms.

    Notices shall be issued on the following forms:
    (a) ATF Form 5400.9, ``Order After Denial or Revocation Hearing,'' 
for all revocations or denials of renewal of licenses or permits 
pursuant to 18 U.S.C. Chapter 40 after a hearing has been held and a 
Recommended Decision

[[Page 60399]]

has been issued by the administrative law judge;
    (b) Form 5400.10, ``Notice of Revocation for License or Permit,'' 
for all revocations of licenses or permits pursuant to 18 U.S.C. 
Chapter 40, except as provided for in paragraph (a) of this section;
    (c) Form 5400.11, ``Notice of Denial of Application for License or 
Permit,'' for the denial of renewal or original applications for 
licenses or permits pursuant to 18 U.S.C. Chapter 40, except as 
provided for in paragraph (a) of this section;
    (d) Form 5400.12, ``Notice of Contemplated Denial or Revocation of 
License or Permit,'' for the contemplated revocation or denial of 
renewal application of licenses or permits pursuant to 18 U.S.C. 
Chapter 40; or
    (e) Such other forms as the Director may prescribe.

Sec.  771.57  Execution and disposition.

    A signed original of the applicable form shall be served on the 
licensee or permittee. If a hearing is requested, a copy shall be sent 
to the administrative law judge designated to conduct the hearing. Any 
remaining copies shall be retained for the office of the Director of 
Industry Operations.

Sec.  771.58  Designated place of hearing.

    The designated place of hearing shall be determined by the 
administrative law judge, taking into consideration the convenience and 
necessity of the parties and their representatives.

Request for Hearing

Sec.  771.59  Initial application proceedings.

    (a) If the applicant for an initial license or permit desires a 
hearing, he shall file a request in writing with the Director of 
Industry Operations within 15 days after receipt of notice of the 
disapproval, in whole or in part, of the application. The request 
should include a statement of the reasons for a hearing.
    (b) On receipt of the request, the Director of Industry Operations 
shall forward a copy of the request, together with a copy of the 
notice, to the Office of Chief Counsel for the assignment of an 
administrative law judge.
    (c) After the Office of Chief Counsel notifies the Director of 
Industry Operations or the attorney for the Government of the 
assignment of an administrative law judge, the Director of Industry 
Operations shall notify the licensee or permittee of the assignment.

Sec.  771.60  Revocation or denial of renewal proceedings.

    (a) If the licensee or permittee desires a hearing, he shall file a 
request, in writing, with the Director of Industry Operations within 15 
days after receipt of the notice or within such time as the Director of 
Industry Operations may allow.
    (b) Where a licensee or permittee requests a hearing, the Director 
of Industry Operations shall forward a copy of the request, together 
with a copy of the notice, to the Office of Chief Counsel for the 
assignment of an administrative law judge.
    (c) After the Office of Chief Counsel notifies the Director of 
Industry Operations or the attorney for the Government of the 
assignment of an administrative law judge, the Director of Industry 
Operations shall notify the licensee or permittee of the assignment.
    (d) In the case of a revocation, a licensee or permittee may 
include a request for a stay of the effective date of revocation with 
the request for a hearing.
    (e) On receipt of a request for a stay of the effective date of a 
revocation, the Director of Industry Operations shall timely advise the 
licensee or permittee whether the stay is granted.
    (1) If the stay is granted, the matter shall be referred to an 
administrative law judge pursuant to paragraph (b) of this section.
    (2) If the stay is denied, the licensee or permittee may request an 
immediate hearing. In this event, the Director of Industry Operations 
shall immediately refer the matter to the Office of Chief Counsel for 
the assignment of an administrative law judge, who shall set a date and 
place for hearing, which date shall be no later than 10 days from the 
date the licensee or permittee requested the immediate hearing.

Sec.  771.61  Notice of hearing.

    Once a request for a hearing has been referred to the 
administrative law judge, the administrative law judge shall set a time 
and place for a hearing and shall serve notice thereof upon the parties 
at least 10 days in advance of the hearing date.

Non-Request for Hearing

Sec.  771.62  Initial application.

    In the case of an initial application, if the applicant does not 
request a hearing within 15 days, or within such additional time as the 
Director of Industry Operations may in his discretion allow, the 
Director of Industry Operations will return a copy of the application, 
marked ``Disapproved,'' to the applicant, accompanied by a brief 
statement including the findings upon which the denial is based.

Sec.  771.63  Revocation or denial of renewal.

    In the case of a revocation or denial of renewal of an application, 
if the licensee or permittee does not request a hearing within 15 days, 
or within such additional time as the Director of Industry Operations 
may in his discretion allow, the Director of Industry Operations shall 
make the initial decision in the case pursuant to Sec.  771.78(b).

Responses to Notices

Sec.  771.64  Answers.

    (a) Where the licensee or permittee requests a hearing in 
accordance with Sec.  771.60 of this chapter, a written response to the 
relevant notice may be filed with the administrative law judge and 
served on the Director of Industry Operations within 15 days after the 
licensee or permittee receives service of the designation of the 
administrative law judge.
    (b) Where no hearing is requested, the licensee or permittee may 
file a written answer to the relevant notice with the Director of 
Industry Operations within 15 days after service of the notice.
    (c) An answer shall contain a concise statement of the facts that 
constitute the grounds for defense. A hearing, if requested, may be 
limited to the issues contained in the notice and the answer. The 
administrative law judge or Director of Industry Operations, as the 
case may be, may, as a matter of discretion, waive any requirement of 
this section.
    (d) Answers need not be filed in initial application proceedings.

Sec.  771.65  Responses admitting facts.

    If the licensee or permittee desires to waive the hearing on the 
allegations of fact set forth in the notice and does not contest the 
facts, the answer may consist of a statement that the licensee or 
permittee admits all material allegations of fact charged in the notice 
to be true. The Director of Industry Operations shall base the decision 
on the notice and such answer, although such an answer shall not affect 
the licensee's or permittee's right to submit proposed findings of fact 
and conclusions of law or right to appeal.

Sec.  771.66  Initial conferences.

    (a) In any proceeding, the administrative law judge, upon his own 
motion or upon the motion of one of the parties or their qualified 
representatives, may in the administrative law judge's discretion 
direct the parties or their qualified representatives to appear at a 
specified time and place for a conference to consider:
    (1) Simplification of the issues;

[[Page 60400]]

    (2) The necessity of amendments to the pleadings;
    (3) The possibility of obtaining stipulations, admissions of facts, 
and documents;
    (4) The possibility of both parties exchanging information or 
scheduling discovery;
    (5) A date on which both parties will simultaneously submit lists 
of proposed hearing exhibits;
    (6) Limiting the number of expert witnesses;
    (7) Identifying and, if practicable, scheduling all witnesses to be 
called; however, there is no requirement in these proceedings for the 
parties to submit pre-hearing statements or statements of proposed 
testimony by witnesses; and
    (8) Such other matters as may aid in the disposition of the 
proceeding.
    (b) As soon as practicable after such conference, the 
administrative law judge shall issue an order that recites the action 
taken, the amendments allowed to the pleadings, and the agreements made 
by the parties or their qualified representatives as to any of the 
matters considered. The order shall also limit the issues for hearing 
to those not disposed of by admission or agreement. Such order shall 
control the subsequent course of the proceedings, unless modified for 
good cause by a subsequent order. After discovery is complete, the 
order may be amended or supplemented if necessary.

Failure to Appear

Sec.  771.67  Initial applications.

    Where the applicant on an initial application for a license or 
permit has requested a hearing and does not appear at the appointed 
time and place, evidence has not been offered to refute or explain the 
grounds upon which disapproval of the application is contemplated, and 
no good cause has been shown for the failure to appear, the applicant 
shall be considered to have waived the hearing. When such waiver 
occurs, a default judgment against the applicant will be entered and 
the administrative law judge shall recommend disapproval of said 
application.

Sec.  771.68  Revocation or denial of renewal.

    If, on the date set for a hearing concerning the revocation or 
denial of renewal of a license or permit, the licensee or permittee 
does not appear, no evidence has been offered, and no good cause has 
been shown for the failure to appear, the attorney for the Government 
will proceed ex parte and offer for the record sufficient evidence to 
make a prima facie case. At such hearing, documents, statements, and 
affidavits may be submitted in lieu of testimony of witnesses.

Waiver of Hearing

Sec.  771.69  Withdrawal of request for hearing.

    At any time prior to the assignment of an administrative law judge, 
the licensee or permittee may, by filing written notice with the 
Director of Industry Operations, withdraw his request for a hearing. If 
such a notice is filed after assignment to the administrative law judge 
and prior to issuance of his recommended decision the Director of 
Industry Operations shall move the administrative law judge to dismiss 
the proceedings as moot. If such a notice is filed either after 
issuance of a notice of denial or notice of revocation and before 
assignment of the administrative law judge, or after issuance by the 
administrative law judge of his recommended decision and prior to the 
Director of Industry Operations' order disapproving the application or 
denying the renewal of or revoking the license or permit, the Director 
of Industry Operations shall, by order, dismiss the proceeding.

Sec.  771.70  Adjudication based upon written submissions.

    The licensee or permittee may waive the hearing before the 
administrative law judge and stipulate that the matter will be 
adjudicated by the Director of Industry Operations based upon written 
submissions. Written submissions may include stipulations of law or 
facts, proposed findings of fact and conclusions of law, briefs, or any 
other documentary material. The pleadings, together with the written 
submissions of both the licensee or permittee and the attorney for the 
Government, shall constitute the record on which the initial decision 
shall be based. The election to contest the denial or revocation 
without a hearing under this section does not affect the licensee's or 
permittee's right to appeal to the Director pursuant to Sec.  555.79 of 
this chapter or to the United States Court of Appeals for the district 
in which the licensee or permittee resides or has his principle place 
of business pursuant to Sec.  555.80 of this chapter.

Surrender of License or Permit

Sec.  771.71  Before citation.

    If a licensee or permittee surrenders the license or permit before 
the notice of revocation or denial of renewal, the Director of Industry 
Operations may accept the surrender. But if the evidence, in the 
opinion of the Director of Industry Operations, warrants issuance of a 
notice for revocation or denial of renewal, the surrender shall be 
refused and the Director of Industry Operations shall issue the notice.

Sec.  771.72  After citation.

    If a licensee or permittee surrenders the license or permit after 
notice, but prior to the referral to an administrative law judge and 
prior to an initial decision, the Director of Industry Operations may 
accept the surrender of the license or permit and dismiss the 
proceeding as moot. If a licensee or permittee surrenders the license 
or permit after notice and after the referral to the administrative law 
judge, but prior to the issuance of a recommended decision, the 
Director of Industry Operations may accept the surrender of the license 
or permit and shall move the administrative law judge to dismiss the 
proceedings as moot. In either case, if, in the opinion of the Director 
of Industry Operations, the evidence is such as to warrant revocation 
or denial of renewal, as the case may be, the surrender of the license 
or permit shall be refused, and the proceeding shall continue.

Motions

Sec.  771.73  General.

    All motions shall be made and addressed to the administrative law 
judge before whom the proceeding is pending, and copies of all motion 
papers shall be served upon the other party or parties. The 
administrative law judge may dispose of any motion without oral 
argument, but he may, if he so desires, set it down for hearing and 
request argument. The administrative law judge may dispose of such 
motion prior to the hearing on the merits or he may postpone the 
disposition until the hearing on the merits. No appeal may be taken 
from any ruling on a motion until the whole record is certified for 
review. Examples of typical motions may be found in the Rules of Civil 
Procedure referred to in Sec.  771.2.

Sec.  771.74  Prior to hearing.

    All motions that should be made prior to the hearing, such as a 
motion directed to the sufficiency of the pleadings or of preliminary 
orders, shall be filed in writing with the Director of Industry 
Operations or the administrative law judge if the matter has been 
referred to him, and shall briefly state the order or relief applied 
for and the grounds for such motion.

Sec.  771.75  At hearing.

    Motions at the hearing may be made in writing to the administrative 
law judge or stated orally on the record.

[[Page 60401]]

Hearing

Sec.  771.76  General.

    If a hearing is requested, it shall be held at the time and place 
stated in the notice of hearing unless otherwise ordered by the 
administrative law judge.

Sec.  771.77  Initial applications.

    (a) The administrative law judge who presides at the hearing on 
initial applications shall recommend a decision to the Director of 
Industry Operations. The administrative law judge shall certify the 
complete record of the proceedings before him and shall immediately 
forward the complete certified record to the Director of Industry 
Operations. The administrative law judge shall also send one copy of 
his recommended decision to the applicant or the applicant's 
representative, one copy to the attorney for the Government, and one 
copy to the Director of Industry Operations, who shall make the initial 
decision as provided in Sec.  771.107. The applicant may be directed by 
the Director of Industry Operations to produce such records as may be 
deemed necessary for examination. All hearings on applications shall be 
open to the public subject to such restrictions and limitations as may 
be consistent with orderly procedure.
    (b) If no hearing is requested, the return of the application 
marked ``Disapproved'' is the Director of Industry Operations' initial 
decision.

Sec.  771.78  Revocation or denial of renewal.

    (a) The administrative law judge who presides at the hearing in 
proceedings for the revocation or denial of renewal of licenses or 
permits shall make a recommended decision to the Director of Industry 
Operations. The administrative law judge shall certify the complete 
record of the proceedings before him and shall immediately forward the 
complete certified record to the Director of Industry Operations. The 
administrative law judge shall also send one copy of his recommended 
decision to the licensee or permittee or the licensee's or permittee's 
representative, one copy to the attorney for the Government, and one 
copy to the Director of Industry Operations, who shall make the initial 
decision as provided in Sec.  771.109.
    (b) If no hearing is requested, the Director of Industry Operations 
shall make the initial decision.

Burden of Proof

Sec.  771.79  Initial applications.

    In hearings on the initial denial of applications, the burden of 
proof is on the Government to show by a preponderance of the evidence 
that the Director of Industry Operations had reason to believe that the 
applicant is not entitled to a permit or license.

Sec.  771.80  Revocation or denial of renewal.

    In hearings on the revocation or denial of renewal of a license or 
permit, the burden of proof is on the Government to show that the 
Director of Industry Operations had reason to believe that the licensee 
or permittee is not entitled to a permit or license, as may be the 
case. The Government must meet this proof by a preponderance of the 
evidence.

General

Sec.  771.81  Stipulations at hearing.

    If there has been no initial conference under Sec.  771.66, the 
administrative law judge may at the beginning of the hearing require 
that the parties attempt to arrive at such stipulations as will 
eliminate the necessity of taking evidence with respect to allegations 
of fact about which there is no substantial dispute. The administrative 
law judge should take similar action, where appropriate, throughout the 
hearing and should call and conduct any conferences that he deems 
advisable with a view to the simplification, clarification, and 
disposition of any of the issues involved in the hearing.

Sec.  771.82  Evidence.

    Any relevant evidence that would be admissible under the rules of 
evidence governing civil proceedings in matters not involving trial by 
jury in the Courts of the United States shall be admissible. The 
administrative law judge may relax such rules in any hearing when in 
his judgment such relaxation would not impair the rights of either 
party and would more speedily conclude the hearing or would better 
serve the ends of justice. However, the administrative law judge shall 
provide for the exclusion of irrelevant, immaterial, or unduly 
repetitious evidence. Every party shall have the right to present his 
case or defense by oral or documentary evidence, depositions, or duly 
authenticated copies of records and documents; to submit rebuttal 
evidence; and to conduct such reasonable cross-examination as may be 
required for a full and true disclosure of the facts.
    (a) Witnesses. The administrative law judge shall have the right in 
his discretion to limit the number of witnesses whose testimony may be 
merely cumulative and shall, as a matter of policy, not only exclude 
irrelevant, immaterial, or unduly repetitious evidence but shall also 
limit the cross-examination of witnesses to that required for a full 
and true disclosure of the facts so as not to unnecessarily prolong the 
hearing and unduly burden the record. Opinion testimony shall be 
admitted when the administrative law judge is satisfied that the 
witness is properly qualified as defined by Federal Rule of Evidence 
701.
    (b) Documentary Evidence. Material and relevant evidence shall not 
be excluded because it is not the best evidence unless its authenticity 
is challenged, in which case reasonable time shall be given to 
establish its authenticity. When only portions of a document are to be 
relied upon, the offering party shall prepare the pertinent excerpts, 
adequately identified, and shall supply copies of such excerpts, 
together with a statement indicating the purpose for which such 
materials will be offered, to the administrative law judge and to the 
other parties. Only the excerpts, so prepared and submitted, shall be 
received in the record. However, the whole of the original document 
should be made available for examination and for use by opposing 
counsel for purposes of cross-examination. Compilations, charts, 
summaries of data, and photostatic copies of documents may be admitted 
in evidence if the proceedings will thereby be expedited, and if the 
material upon which they are based is available for examination by the 
parties. Objections to the evidence shall be in short form, stating the 
grounds relied upon. The transcript shall not include argument or 
debate on objections, except as ordered by the administrative law 
judge, but shall include the rulings thereon. Where official notice is 
taken of a material fact not appearing in the evidence in the record, 
any party shall, on timely request, be afforded an opportunity to 
controvert such fact.
    (c) Hearsay. Probative, material, and reliable hearsay evidence is 
admissible in proceedings under this subpart.

Sec.  771.83  Closing of hearings; arguments, briefs, and proposed 
findings.

    Before closing a hearing, the administrative law judge shall 
inquire of each party whether the party has any further evidence to 
offer, which inquiry and the response thereto shall be shown in the 
record. The administrative law judge may hear arguments of counsel and 
the administrative law judge may limit the time of such arguments at 
his discretion. The administrative law judge may, in his discretion, 
allow briefs to be filed on behalf of either party but shall closely 
limit the time within which the briefs for both parties shall be filed, 
so

[[Page 60402]]

as to avoid unreasonable delay. The administrative law judge shall also 
ascertain whether the parties desire to submit proposed findings and 
conclusions, together with supporting reasons, and, if so, a period of 
not more than 15 days (unless extended by the administrative law 
judge)--after the close of the hearing or receipt of a copy of the 
record, if one is requested--will be allowed for such purpose.

Sec.  771.84  Reopening of the hearing.

    The Director, the Director of Industry Operations, or the 
administrative law judge, as the case may be, may, as to all matters 
pending before him, in his discretion reopen a hearing--
    (a) In case of default under Sec. Sec.  771.67 or 771.68 where the 
applicant, licensee, or permittee failed to request a hearing or to 
appear after one was set, upon petition setting forth reasonable 
grounds for such failure, and
    (b) Where any party desires leave to adduce additional evidence 
upon petition summarizing such evidence, establishing its materiality, 
and stating reasonable grounds why such party with due diligence was 
unable to produce such evidence at the hearing.

Record of Testimony

Sec.  771.85  Stenographic record.

    A stenographic record shall be made of the testimony and 
proceedings, including stipulations, admissions of fact, and arguments 
of counsel in all proceedings. A transcript of the evidence and 
proceedings at the hearing shall be made in all cases.

Sec.  771.86  Oath of reporter.

    The reporter making the stenographic record shall subscribe an oath 
before the administrative law judge, to be filed in the record of the 
case, that he will truly and correctly report the oral testimony and 
proceedings at such hearing and accurately transcribe the same to the 
best of his ability.

Subpart G--Administrative Law Judges

Sec.  771.95  Responsibilities of administrative law judges.

    Administrative law judges shall be under the administrative control 
of the Director. In hearings under this subpart, administrative law 
judges must apply all governing agency rulings and governing agency 
precedent. They shall be responsible for the conduct of hearings and 
shall render their decisions as soon as is reasonably possible after 
the hearing is closed. Administrative law judges shall also be 
responsible for the preparation, certification, and forwarding of the 
complete record of proceedings and the administrative work relating 
thereto and, by arrangement with Directors of Industry Operations and 
representatives of the Office of Chief Counsel shall have access to 
facilities and temporary use of personnel at such times and places as 
are needed in the prompt dispatch of official business.

Sec.  771.96  Disqualification.

    An administrative law judge shall, at any time, withdraw from any 
proceeding if he deems himself disqualified. Upon the filing in good 
faith by the applicant, licensee, permittee, or attorney for the 
Government of a timely and sufficient affidavit of facts showing 
personal bias or otherwise warranting the disqualification of any 
administrative law judge, if the administrative law judge fails to 
disqualify himself, the Director shall upon appeal, as provided in 
Sec.  771.120, determine the matter as a part of the record and 
decision in the proceeding. If the Director decides the administrative 
law judge should have deemed himself disqualified, the Director will 
remand the record for hearing de novo before another administrative law 
judge. If the Director should decide against the disqualification of 
the administrative law judge, the proceeding will be reviewed on its 
merits by the original administrative law judge. The burden is upon the 
party seeking disqualification to set forth evidence sufficient to 
overcome the presumption of the administrative law judge's honesty and 
integrity.

Sec.  771.97  Powers.

    Administrative law judges shall have authority to:
    (a) Administer oaths and affirmations;
    (b) Issue subpoenas as authorized by law;
    (c) Rule upon offers of proof and receive relevant evidence;
    (d) Take or cause depositions to be taken whenever the ends of 
justice would be served thereby;
    (e) Regulate the course of the hearing;
    (f) Hold conferences for the settlement or simplification of the 
issues by consent of the parties;
    (g) Require the attendance at such conferences of at least one 
representative of each party who has the authority to negotiate 
concerning resolution of issues in controversy;
    (h) Dispose of procedural requests or similar matters;
    (i) Render recommended decisions in proceedings on applications for 
licenses and permits and on revocation or denial of renewal of licenses 
or permits;
    (j) Call, examine, and cross-examine witnesses, including hostile 
or adverse witnesses, when the administrative law judge deems such 
action to be necessary to a just disposition of the case, and introduce 
into the record documentary or other evidence; and
    (k) Take any other action authorized by rule of the Bureau of 
Alcohol, Tobacco, Firearms, and Explosives consistent with the 
Administrative Procedure Act.

Sec.  771.98  Separation of functions.

    Administrative law judges shall perform no functions inconsistent 
with their duties and responsibilities. The Director may assign 
administrative law judges duties not inconsistent with the performance 
of their functions as administrative law judges. Except to the extent 
required for the disposition of ex parte matters as required by law, no 
administrative law judge shall consult any person or party as to any 
fact in issue unless there has been notice and opportunity for all 
parties to participate. The functions of the administrative law judge 
shall be entirely separated from the general investigative functions of 
the agency. No officer, employee, or agent engaged in the performance 
of investigative or prosecuting functions in any proceeding shall, in 
that proceeding or a factually related proceeding, participate or 
advise in the administrative law judge's or Director's decision, or in 
the agency review on appeal, except as a witness or counsel in the 
proceedings. The administrative law judge may not informally obtain 
advice or opinions from the parties or their counsel, or from any 
officer or employee of the ATF, as to the facts or the weight or 
interpretation to be given to the evidence. The administrative law 
judge may, however, informally obtain advice on matters of law or 
procedure in a proceeding from officers or employees who were not 
engaged in the performance of investigative or prosecuting functions in 
that proceeding or a factually related proceeding. The administrative 
law judge may, at any time, consult with and obtain instructions from 
the Director on questions of law and policy. Furthermore, it is not a 
violation of the separation of functions for the administrative law 
judge to participate in the questioning of witnesses, where the 
questioning is for clarification or to move the proceedings along, and 
where the questioning is not so extensive as to place the 
administrative law judge in the position of a prosecuting officer.

[[Page 60403]]

Sec.  771.99  Conduct of hearing.

    The administrative law judge is charged with the duty of conducting 
a fair and impartial hearing and of maintaining order in form and 
manner consistent with the dignity of a court proceeding. In the event 
that counsel or any person or witness in any proceeding shall refuse to 
obey the orders of the administrative law judge, or be guilty of 
disorderly or contemptuous language or conduct in connection with any 
hearing, the administrative law judge may, for good cause stated in the 
record, suspend the hearing, and, in the case of disorderly or 
contemptuous language or conduct by an attorney, recommend that the 
Director report the matter to the Chief Counsel regarding the attorney 
for the Government or the applicable state bar association regarding 
the attorney for a licensee or permittee for disciplinary action. The 
refusal of a witness to answer any question that has been ruled to be 
proper shall be considered by the administrative law judge in 
determining the weight to be given all the testimony of that witness.

Sec.  771.100  Unavailability of administrative law judge.

    In the event that the administrative law judge designated to 
conduct a hearing becomes unavailable before the filing of his findings 
and recommended decision, the Director may assign the case to another 
administrative law judge for the continuance of the proceeding, in 
accordance with the regulations in this part in the same manner as if 
he had been designated administrative law judge at the commencement of 
the proceeding.

Subpart H--Decisions

Sec.  771.105  Administrative law judge's findings and recommended 
decision.

    Within a reasonable time after the conclusion of the hearing, and 
as expeditiously as possible, the administrative law judge shall render 
his recommended decision. All decisions shall become a part of the 
record and, if proposed findings and conclusions have been filed, shall 
show the administrative law judge's ruling upon each of such proposed 
findings and conclusions. Decisions shall consist of:
    (a) A brief statement of the issues of fact involved in the 
proceeding;
    (b) The administrative law judge's findings and conclusions, as 
well as the reasons or basis therefor with record references, upon all 
the material issues of fact, law, or discretion presented on the record 
(including, when appropriate, comment as to the credibility and 
demeanor of the witnesses); and
    (c) The administrative law judge's recommended determination as to 
the revocation or denial at issue.

Sec.  771.106  Certification and transmittal of record and decision.

    After reaching his decision, the administrative law judge shall 
certify the complete record of the proceeding before him and shall 
immediately forward the complete certified record together with one 
copy of the administrative law judge's recommended decision to the 
Director of Industry Operations for initial decision, one copy of the 
recommended decision to the applicant or the applicant's 
representative, and one copy of the recommended decision to the 
attorney for the Government.

Action by Director of Industry Operations

Sec.  771.107  Initial application proceedings.

    (a) Accepting the recommended decision. If the Director of Industry 
Operations, after consideration of the record of the hearing and of any 
proposed findings, conclusions, or exceptions filed with him by the 
applicant, accepts the recommended decision of the administrative law 
judge, the Director of Industry Operations shall by order approve or 
disapprove of the application in accordance with the recommended 
decision. If the Director of Industry Operations approves the 
application, he shall briefly state for the record his reasons 
therefor. However, if the Director of Industry Operations disapproves 
of the applications, he shall serve a copy of the administrative law 
judge's recommended decision on the applicant, informing the applicant 
of the Director of Industry Operations' contemplated action and 
affording the applicant not more than 10 days in which to submit 
proposed findings and conclusions or exceptions to the recommended 
decision with reasons in support thereof.
    (b) Rejecting the recommended decision. If, after such 
consideration referenced in paragraph (a) of this section, the Director 
of Industry Operations rejects the recommended decision of the 
administrative law judge, in whole or in part, the Director of Industry 
Operations shall by order make such findings and conclusions as in his 
opinion are warranted by the law and facts in the record. Any decision 
of the Director of Industry Operations ordering the disapproval of an 
application for a permit shall state the findings and conclusions upon 
which it is based, including his ruling upon each proposed finding, 
conclusion, and exception to the administrative law judge's recommended 
decision, together with a statement of the administrative law judge's 
findings, conclusions, and reasons or basis therefor, upon all material 
issues of fact, law, or discretion presented on the record. A signed 
original of the decision of the Director of Industry Operations shall 
be served upon the applicant and the original copy containing a 
certificate of service shall be placed in the official record of the 
proceeding.

Sec.  771.108  Director of Industry Operations' decision.

    When the Director of Industry Operations issues an initial decision 
in accordance with Sec. Sec.  771.77 or 771.107 the decision shall 
become a part of the record. The decision shall consist of:
    (a) A brief statement of the issues involved in the proceedings;
    (b) The Director of Industry Operations' findings and conclusions, 
as well as the reasons therefor; and
    (c) The Director of Industry Operations' determination on the 
record.

Sec.  771.109  Revocation or denial of renewal proceedings.

    (a) Accepting the recommended decision. After consideration of the 
complete certified record of the hearing, if the Director of Industry 
Operations agrees with the recommended decision of the administrative 
law judge, the Director of Industry Operations shall enter an order 
revoking or denying the renewal of the license or permit or dismissing 
the proceedings in accordance with the administrative law judge's 
recommended decision.
    (b) Rejecting the recommended decision. After consideration of the 
complete certified record of the hearing, if the Director of Industry 
Operations disagrees with the recommended decision of the 
administrative law judge, he may file a petition with the Director for 
review of the recommended decision, as provided in Sec.  771.120. If 
the Director of Industry Operations files such a petition, he shall 
withhold issuance of the order pending the decision of the Director, 
upon receipt of which he shall issue the order in accordance with the 
Director's decision. A signed original of the order of the Director of 
Industry Operations shall be served upon the licensee or permittee or 
his representative and the original copy containing a certificate of 
service shall be placed in the official record of the proceeding.

[[Page 60404]]

    (c) In a case where the initial decision is made by the Director of 
Industry Operations in accordance with Sec.  771.78(b), the Director of 
Industry Operations shall also issue an order revoking or denying the 
renewal of the license or permit, or dismissing the proceedings in 
accordance with his initial decision. A signed original of the decision 
and order of the Director of Industry Operations shall be served upon 
the licensee or permittee or his representative and the original copy 
placed in the official record of the proceeding.

Sec.  771.110  Revocation or denial of renewal.

    Pursuant to Sec.  771.109(a), when the Director of Industry 
Operations issues an order revoking or denying the renewal of a license 
or permit, he shall furnish a copy of the order and of the recommended 
decision on which it is based to the Director. Should such order be 
subsequently set aside on review by the courts, the Director of 
Industry Operations will so advise the Director.

Sec.  771.111  Proceedings involving violations not within the division 
of issuance of license or permit.

    In the event violations occurred at a place not within the field 
division where the licensee or permittee is located, the Director of 
Industry Operations of the field division where the licensee or 
permittee is located will take jurisdiction over any proceeding and 
will take appropriate action in accordance with this subpart, including 
issuing the relevant notice.

Subpart I--Review

Sec.  771.120  Appeal on petition to the Director.

    (a) An appeal to the Director may be made by the applicant, 
licensee, or permittee, or by the Director of Industry Operations. For 
the applicant, licensee, or permittee, such appeal shall be made by 
filing a petition for review on appeal with the Director within 15 days 
of the service of the adverse initial decision by the Director of 
Industry Operations. For the Director of Industry Operations, such 
appeal shall be taken by filing a petition for review on appeal with 
the Director within 15 days of the issuance of the administrative law 
judge's decision recommending against revocation or denial of renewal. 
The petitioning applicant, licensee, or permittee must submit arguments 
showing that the Director of Industry Operations' initial decision, and 
if applicable the underlying administrative law judge's recommended 
decision, was without reasonable warrant in fact or contrary to law and 
regulations. The petitioning DIO must submit arguments showing the 
administrative law judge's recommended decision was without reasonable 
warrant in fact or contrary to law and regulations. Nothing in these 
regulations shall limit the authority of the Director to review the 
administrative law judge's decision exercising all the powers that he 
would have in making the recommended decision.
    (b) A copy of the petition shall be filed with the Director of 
Industry Operations or served on the applicant, licensee, or permittee, 
as the case may be. In the event of an appeal, the Director of Industry 
Operations shall immediately certify and forward the complete original 
record, by certified mail, to the Director, for his consideration and 
review.

Sec.  771.121  Review by Director.

    (a) Modification or reversal. On appeal, the Director shall afford 
a reasonable opportunity for the submission of proposed findings, 
conclusions, or exceptions with reasons in support thereof and an 
opportunity for oral argument. The Director may alter or modify any 
finding of the administrative law judge (or of the Director of Industry 
Operations as the case may be) and may affirm, reverse, or modify the 
recommended decision of the administrative law judge, or the initial 
decision of the Director of Industry Operations, or may remand the case 
for further hearing, but shall not consider evidence that is not a part 
of the record.
    (b) Affirmance. Except in the case of a remand, when, on appeal, 
the Director affirms the initial decision of the Director of Industry 
Operations or the recommended decision of the administrative law judge, 
as the case may be, such decision shall be the agency's final decision.
    (c) Recusal. Appeals and petitions for review shall not be decided 
by the Director in any proceeding in which the Director has engaged in 
an investigation or prosecution and in such event the Director shall so 
state his disqualification in writing and refer the record to the 
Deputy Director for appropriate action. The Deputy Director may 
designate an Assistant Director or one of the Deputy Director's 
principal aides to consider any proceeding instead of the Director. The 
original copy of the decision on review shall be placed in the official 
record of the proceeding, a signed duplicate original shall be served 
upon the applicant, licensee, or permittee, and a copy shall be 
transmitted to the Director of Industry Operations.

Sec.  771.122  Denial of renewal or revocation.

    If the Director orders the denial of an application, a copy of the 
application marked ``Disapproved'' will be returned to the applicant by 
the Director of Industry Operations. If the Director orders a 
revocation of a license of permit, any stay of revocation will be 
withdrawn and the revocation will become effective upon the order of 
the Director of Industry Operations. After the issuance of a denial of 
a renewal application or a revocation, and pending the final 
determination of a timely appeal, the licensee or permittee may 
continue operations, if at all, pursuant to Sec.  555.83 of this 
chapter.

Sec.  771.123  Court review.

    (a) If an applicant, licensee, or permittee files an appeal in the 
United States Court of Appeals for the district in which he resides or 
has his principle place of business, within 60 days after the receipt 
of the Director's decision, the Director, upon notification that an 
appeal has been taken, shall prepare the record for submission to the 
court in accordance with applicable court rules.
    (b) If an applicant, licensee, or permittee does not seek review 
with the Director, but instead seeks review within 60 days after the 
receipt of the initial decision of the Director of Industry Operations 
pursuant to Sec.  771.109, the Director of Industry Operations, upon 
notification that an appeal has been taken, shall prepare the record 
for submission to the court in accordance with applicable court rules. 
The Director of Industry Operations shall notify the Director if such 
an appeal is taken.
    (c) The Director, or the Director of Industry Operations, as the 
case may be, shall certify the correctness of the transcript of the 
record, forward one copy to the attorney for the Government in the 
review of the case, and file the original record of the proceedings 
with the original certificate in the appropriate United States Court of 
Appeals.

Subpart J--Miscellaneous

Sec.  771.124  Depositions.

    The administrative law judge may take or order the taking of 
depositions by either party to the proceeding at such time and place as 
the administrative law judge may designate before a person having the 
power to administer oaths, upon application therefor and notice to the 
parties to the action. The testimony shall be reduced to writing by the 
person taking the deposition, or a person under his direction, and the 
deposition shall be subscribed by the

[[Page 60405]]

deponent unless subscribing thereof is waived in writing by the 
parties.

Sec.  771.125  Witnesses and fees.

    Witnesses summoned before the administrative law judge may be paid 
the same fees and mileage that are paid witnesses in the courts of the 
United States, and witnesses whose depositions are taken and the 
persons taking the same shall severally be entitled to the same fees as 
are paid for like services in the courts of the United States. Witness 
fees and mileage shall be paid by the party at whose instance the 
witnesses appear and the person taking the deposition shall be paid by 
the party at whose instance the deposition is taken.

Sec.  771.126  Discovery.

    The discovery provisions of the Federal Rules of Civil Procedure 
and the Federal Rules of Criminal Procedure are not controlling with 
respect to agency proceedings under this part. However, fundamental 
fairness requires a party be given the opportunity to know what 
evidence is offered and a chance to rebut such evidence. Either party 
may petition the administrative law judge for non-burdensome discovery 
if the party can demonstrate that the interests of justice require 
disclosure of these materials.

Sec.  771.127  Privileges.

    The Administrative Procedure Act, 5 U.S.C. 559, provides that, 
except as otherwise required by law, privileges relating to procedure 
or evidence apply equally to agencies and persons. Therefore, an agency 
may rely on judicially-approved privileges to resist production of its 
files where appropriate.

Record

Sec.  771.135  What constitutes record.

    The transcript of testimony, pleadings, exhibits, all papers and 
requests filed in the proceeding, and all findings, decisions, and 
orders, shall constitute the exclusive record. Where the decision rests 
on official notice of material fact not appearing in the record, the 
administrative law judge shall so state in his findings and any party 
shall, on timely request, be afforded an opportunity to show facts to 
the contrary.

Sec.  771.136  Availability.

    A copy of the record shall be available for inspection or copying 
by the parties to the proceedings during business hours at the office 
of the administrative law judge or the Director of Industry Operations 
or, pending administrative review, at the Office of the Director.

    Dated: October 1, 2014.
Eric H. Holder, Jr.,
Attorney General.
[FR Doc. 2014-23932 Filed 10-6-14; 8:45 am]
BILLING CODE 4410-FY-P
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