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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7834 Introduced in House (IH)]

<DOC>

118th CONGRESS
  2d Session
                                H. R. 7834

To improve the licensing requirements for the retail sale of firearms, 
                        and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 2024

  Mr. Frost (for himself, Mr. Neguse, Mrs. Ramirez, and Ms. Kelly of 
  Illinois) introduced the following bill; which was referred to the 
                       Committee on the Judiciary

_______________________________________________________________________

                                 A BILL

 
To improve the licensing requirements for the retail sale of firearms, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prevent Illegal Gun Resales Act''.

SEC. 2. INCREASED LICENSING FEES.

    Section 923 of title 18, United States Code, is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking 
                        ``$1,000'' and inserting ``$2,000'';
                            (ii) in subparagraph (B), by striking 
                        ``$50'' and inserting ``$2,000''; and
                            (iii) in subparagraph (C), by striking 
                        ``$10'' and inserting ``$1,000'';
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by striking 
                        ``$1,000'' and inserting ``$2,000''; and
                            (ii) in subparagraph (B), by striking 
                        ``$50'' and inserting ``$2,000''; and
                    (C) in paragraph (3)--
                            (i) in subparagraph (A), by striking 
                        ``$1,000'' and inserting ``$2,000''; and
                            (ii) in subparagraph (B)--
                                    (I) by striking ``$200'' and 
                                inserting ``$400''; and
                                    (II) by striking ``$90'' and 
                                inserting ``$180''; and
            (2) in subsection (b), by striking ``$10'' and inserting 
        ``$20''.

SEC. 3. ANTI-TRAFFICKING PROCEDURES.

    (a) Dealer's License Application Required To Specify Business 
Practices To Prevent Diversions From Lawful Commerce.--Section 
923(d)(1)(G) of title 18, United States Code, is amended to read as 
follows:
                    ``(G) in the case of an application to be licensed 
                as a dealer--
                            ``(i) the applicant certifies that secure 
                        gun storage or safety devices will be available 
                        at any place in which firearms are sold under 
                        the license to persons who are not licensees 
                        (subject to the exception that in any case in 
                        which a secure gun storage or safety device is 
                        temporarily unavailable because of theft, 
                        casualty loss, consumer sales, backorders from 
                        a manufacturer, or any other similar reason 
                        beyond the control of the licensee, the dealer 
                        shall not be considered to be in violation of 
                        the requirement under this subparagraph to make 
                        available such a device);
                            ``(ii) the applicant submits with the 
                        application a specification of the firearms 
                        business practices, policies, and procedures of 
                        the applicant; and
                            ``(iii) the Attorney General determines 
                        that the specification describes policies, 
                        practices, and procedures comply with 
                        regulations prescribed under section 926(d).''.
    (b) Regulations To Require Licensed Dealers To Implement Business 
Practices, Policies, and Procedures To Prevent Business Inventory 
Firearms, Ammunition, and Accessories From Being Diverted From Lawful 
Commerce, and Prevent Business Inventory Firearms From Being 
Transferred to a Straw Purchaser.--Section 926 of such title is amended 
by adding at the end the following:
    ``(d) The Attorney General shall prescribe regulations requiring 
licensed dealers to implement business practices, policies, and 
procedures sufficient to prevent firearms, ammunition, and accessories 
in the business inventory of a licensed dealer from being diverted from 
lawful commerce, and to prevent business inventory firearms of a 
licensed dealer from being transferred to a straw purchaser, and shall 
do so in consultation with government entities with expertise similar 
to that of the White House Office of Gun Prevention.''.
    (c) Penalties for Failure To Implement Business Practices, 
Policies, and Procedures Specified in Approved Dealer's License 
Application.--Section 924 of such title is amended by adding at the end 
the following:
    ``(q) The Attorney General may impose a civil money penalty of not 
more than $5,000 on, and may suspend the license issued under section 
923 to, any person who is a licensed dealer who fails to comply with 
any practice, policy, or procedure specified in the application 
approved under section 923 of the person to become a licensed 
dealer.''.

SEC. 4. PREVENTING FIREARM TRAFFICKING.

    (a) Duties of Firearm Licensees.--Section 923(g) of title 18, 
United States Code, is amended--
            (1) in paragraph (1)(B)--
                    (A) by striking ``or'' at the end of clause (ii); 
                and
                    (B) by redesignating clause (iii) as clause (iv) 
                and inserting after clause (ii) the following:
                            ``(iii) for ensuring compliance with the 
                        regulations prescribed under section 926(d); 
                        or'';
            (2) in paragraph (3)(B)--
                    (A) by inserting ``a firearm involved in a crime 
                or'' after ``thereof regarding'';
                    (B) by striking ``, and shall destroy each such 
                form and any record of the contents thereof no more 
                than 20 days after the date such form is received'' and 
                inserting ``and shall retain each such form and any 
                record of the contents of the form for 180 days after 
                the date the form is received''; and
                    (C) by striking the 2nd sentence; and
            (3) by striking paragraph (7) and inserting the following:
    ``(7)(A) Each licensee shall respond immediately to, and in no 
event later than 24 hours after the receipt of, a request by the 
Attorney General for information contained in the records required to 
be kept by this chapter as may be required for determining the 
disposition of 1 or more firearms in the course of a bona fide criminal 
investigation. The requested information shall be provided orally or in 
writing, as the Attorney General may require. The Attorney General 
shall implement a system whereby the licensee can positively identify 
and establish that an individual requesting information via telephone 
is employed by and authorized by the agency to request the information.
    ``(B) Each licensee shall, in the absence of unique and special 
circumstances and approved in writing by the Attorney General, maintain 
records of all such crime gun trace requests for firearms disposed of 
by the licensee within the preceding 3 years, with copies of the 
transaction records for the firearms in the possession of the licensee, 
if any, to review before the transfer of any firearm.
    ``(C) Each licensee shall review all records of crime gun trace 
requests before transferring any firearm, and report sales or other 
dispositions whenever the licensee sells or otherwise disposes of any 
firearm to an unlicensed person to whom a crime gun has been traced. 
The report shall be prepared on a form specified by the Attorney 
General and forwarded to the office specified thereon and to the 
department of State police or State law enforcement agency of the State 
or local law enforcement agency of the local jurisdiction in which the 
sale or other disposition took place, not later than the close of 
business on the day that the licensee determines that the sale or other 
disposition occurs.
    ``(D)(i) Each licensed dealer shall update the practices, policies, 
and procedures referred to in section 923(d)(1)(G)(ii) of the licensee, 
whenever--
            ``(I) the licensee reports to the Attorney General 5 or 
        more lost or stolen firearms in any period of 12 consecutive 
        months; or
            ``(II) 5 or more firearms that were used in a crime under 
        Federal, State, or local law within 3 years after the last 
        known retail sale of the firearm are traced to the licensee 
        within any such 12-month period.
    ``(ii) Each licensed dealer shall maintain physical records of 
costs incurred to implement and update the business practices, 
policies, and procedures, including the installation of audio and video 
surveillance of firearms transactions, and the implementation of an 
electronic record keeping system, or of physical security to prevent 
loss or theft of firearm inventory, and shall make the records 
available for inspection on the premises covered by the license until 
the licensee ceases to engage in the business of selling firearms.''.
    (b) Duties of the Attorney General.--The Attorney General shall--
            (1) develop, draft, and distribute to persons licensed 
        under chapter 44 of title 18, United States Code, materials 
        setting forth best business practices, policies, and procedures 
        to prevent the diversion of firearms inventory from lawful 
        commerce, and from time to time revise the materials as 
        appropriate; and
            (2) during the 3 fiscal years that first begin after the 
        date of the enactment of this Act, prioritize for compliance 
        inspections those firearms dealers that have not been inspected 
        within the then preceding fiscal year with a high number of 
        crime gun traces relative to other firearms dealers.

SEC. 5. MENS REA REQUIREMENT FOR VIOLATIONS OF RULES APPLICABLE TO ONLY 
              LICENSEES.

    Section 924(a)(1)(D) of title 18, United States Code, is amended by 
striking ``willfully'' and inserting ``knowingly''.

SEC. 6. FIREARMS TRAFFICKING OFFENSE.

    (a) In General.--Section 933 of title 18, United States Code, is 
amended to read as follows:
``Sec. 933. Trafficking in firearms
    ``(a) Prohibitions.--
            ``(1) In general.--It shall be unlawful for any person to--
                    ``(A) ship, transport, transfer, cause to be 
                transported, or otherwise dispose of 2 or more firearms 
                to another person in or affecting interstate or foreign 
                commerce, if the person knows or has reasonable cause 
                to believe that the use, carrying, or possession of a 
                firearm by such other person would constitute a felony 
                (as defined in section 932(a));
                    ``(B) receive from another person 2 or more 
                firearms in or affecting interstate or foreign 
                commerce, if the person knows or has reasonable cause 
                to believe that the receipt would constitute a felony; 
                or
                    ``(C) attempt or conspire to commit conduct 
                described in paragraph (1) or (2).
            ``(2) Licensees.--It shall be unlawful for any licensee to 
        ship, transport, transfer, cause to be transported, or 
        otherwise dispose of any firearm to another licensee if the 
        licensee knows or has reasonable cause to believe that--
                    ``(A) in the preceding year, 5 or more firearms 
                that were used in a crime under Federal, State, or 
                local law within 3 years after the last known retail 
                sale of the firearms have been traced to such other 
                licensee;
                    ``(B) in the preceding year, to the knowledge of 
                the licensee, such other licensee has since failed to 
                implement or update business practices to prevent 
                firearm trafficking or straw purchasing;
                    ``(C) such other licensee lacks adequate security 
                to prevent loss or theft of firearms or ammunition from 
                the inventory of such other licensee; or
                    ``(D) in the most recent inspection of such other 
                licensee under this chapter, the Attorney General has 
                found 3 or more violations relating to failures to 
                timely or accurately record information in firearm 
                acquisition and disposition records.
    ``(b) Affirmative Defenses.--It shall be an affirmative defense to 
a charge of violating--
            ``(1) subsection (a)(1) of this section, that the licensee 
        took all reasonable steps, including the implementation of and 
        updates to business practices pursuant to subsection 
        923(g)(7)(D), to prevent the diversion of inventory firearms 
        from lawful commerce; and
            ``(2) subsection (a)(2) of this section, that the licensee 
        took all reasonable steps to comply with subsection (a)(2) and 
        failed to discover facts that would render disposition of 
        firearms to a licensee unlawful under subsection (a)(2) only as 
        the direct result of a violation of Federal law by the 
        licensee.
    ``(c) Penalties.--
            ``(1) In general.--Any person who violates subsection 
        (a)(1) shall be fined under this title, imprisoned for not more 
        than 15 years, or both.
            ``(2) Licensees.--
                    ``(A) Civil penalties.--Any licensee who violates 
                subsection (a)(2) shall, after notice and opportunity 
                for a hearing, disgorge all profits from the transfer 
                of the firearms that are the subject of the violation, 
                and the court may impose on the licensee a civil money 
                penalty equal to the greater of--
                            ``(i) $10,000 for each firearm involved, or 
                        $50,000 with respect to any such firearm that 
                        was subsequently used in a crime under Federal, 
                        State, or local law; or
                            ``(ii) the total amount expended by the 
                        Attorney General in the preceding 3 fiscal 
                        years to trace firearms used in a crime under 
                        Federal, State, or local law, multiplied by the 
                        percentage of the firearms traced to the 
                        licensee that were recovered during that 
                        period.
                    ``(B) License suspension or revocation.--In 
                addition to any penalty under subparagraph (A), the 
                Attorney General may, after notice and opportunity for 
                a hearing, suspend or revoke the license issued to the 
                licensee under this chapter in the case of the first 
                violation of this section and, in the case of any 
                subsequent violation, shall immediately revoke the 
                license.''.
    (b) Directive to Sentencing Commission.--
            (1) In general.--Pursuant to its authority under section 
        994(p) of title 28, United States Code, the United States 
        Sentencing Commission shall review and, if appropriate, amend 
        the Federal sentencing guidelines and policy statements 
        applicable to persons convicted of offenses under section 933 
        of title 18, United States Code (as added by subsection (a) of 
        this section).
            (2) Requirements.--In carrying out this section, the 
        Commission shall review the penalty structure that the 
        guidelines provide based on the number of firearms involved in 
        the offense and determine whether any changes to the penalty 
        structure are appropriate in order to reflect the intent of the 
        Congress that the penalties reflect the gravity of the offense, 
        the number of trafficked firearms purchased by or from the 
        defendant, the extent of the knowledge of the defendant about 
        the overall scheme to traffic firearms, the amount of money or 
        nonmonetary compensation provided to the defendant for the 
        participation of the defendant, and the culpability of the 
        defendant, including whether the defendant is a licensed 
        manufacturer, importer, or dealer and, as mitigating factors, 
        whether the defendant is a relative or current or former 
        intimate partner of another individual involved in a conspiracy 
        to traffic firearms, is a domestic violence survivor, or has 
        been otherwise exploited by personal affection, fear of 
        reprisal. or economic need to commit an offense under section 
        933 of title 18, United States Code.
    (c) Directive to ATF.--
            (1) Duty to investigate.--The Director of the Bureau of 
        Alcohol, Tobacco, Firearms and Explosives shall investigate the 
        source of firearms trafficked in violation of section 923 or 
        933 of title 18, United States Code, and in particular, whether 
        the source is engaged in the business of importing, 
        manufacturing, or dealing in firearms in violation of section 
        922(a)(1) of such title, and refer prosecutions of the source 
        to the Attorney General. The Director shall assess whether 
        regulations, informal guidance, licensee resources regarding 
        trafficking, and the conduct of a firearms transferee would 
        indicate, to a reasonable person, that the transferee may be 
        violating section 932 or 933 of such title, and revise and re-
        issue the materials developed under section 4(b) of this Act, 
        accordingly.
            (2) Gun trafficking awareness program.--The Director shall 
        establish a program, to be known as the ``Gun Trafficking 
        Awareness Program'', in which licensees under chapter 44 of 
        title 18, United States Code, who have transferred firearms to 
        an individual who has violated section 932(b) of such title, 
        but who lack the mens rea to have committed a violation of 
        section 933 of such title, may be enrolled for purposes of 
        preventing future such violations. The program shall include, 
        at a minimum--
                    (A) electronic or in-person training of such a 
                licensee and all employees of the licensee who are 
                responsible for handling firearms to identify signs of 
                straw purchasing or gun trafficking;
                    (B) the adoption by such a licensee of electronic 
                record keeping and collation of records relevant to 
                trafficking, including crime gun trace requests and 
                multiple purchase reports; and
                    (C) a requirement that such a licensee who operates 
                retail premises from which firearms are transferred 
                maintain audio and video surveillance of all areas of 
                the premises; and
                    (D) inspections of such a licensee, as appropriate, 
                and not more frequently than quarterly, for a period of 
                1 year, to ensure compliance with such chapter.
    (d) Directive to the Attorney General.--Within 2 years after the 
date of the enactment of this Act and annually thereafter, the Attorney 
General shall submit to the Committee on the Judiciary of the Senate 
and the Committee on the Judiciary of the House of Representatives a 
report containing the following information:
            (1) For the preceding 12-month period--
                    (A) the number of investigations initiated for 
                violations of section 933 of title 18, United States 
                Code;
                    (B) the number of individuals, entities, and 
                Federal firearm licensees charged criminally or civilly 
                for the violations;
                    (C) the number of individuals, entities, and 
                Federal firearm licensees indicted for the violations;
                    (D) the number of investigations referred to the 
                Attorney General by the Bureau of Alcohol, Tobacco, 
                Firearms and Explosives that did not result in criminal 
                or civil charges; and
                    (E) the number of licensees enrolled in, and the 
                number of licenses determined to have successfully 
                completed, the program established under subsection 
                (c)(2).
            (2) To the extent the information is available, the average 
        length of the sentences of imprisonment and average and mean 
        monetary fines imposed on persons convicted of violations of 
        section 933 of title 18, United States Code, during the 
        preceding 12-month period.
            (3) A narrative describing the trafficking schemes 
        prosecuted in the preceding 12-month period, including the 
        sources of firearms, the roles of various defendants in the 
        scheme, the number of firearms trafficked, and a description of 
        any trafficking practices or trends common among various 
        firearm trafficking schemes.

SEC. 7. ENHANCED REGULATION OF HIGH RISK DEALERS.

    Chapter 44 of title 18, United States Code, is amended by adding at 
the end the following:
``Sec. 935. Regulation of high risk dealers
    ``(a) In General.--On a determination by the Attorney General that 
a licensed dealer is a high risk dealer, the Attorney General shall--
            ``(1) require the dealer to permanently alter the business 
        practices of the dealer or make physical improvements to the 
        firearms business premises of the dealer to reduce the 
        diversion of firearms from the firearms inventory of the 
        dealer, which requirements shall include requiring the dealer 
        to--
                    ``(A) adopt electronic acquisition and disposition 
                record keeping;
                    ``(B) provide the National Tracing Center with 
                electronic access to all records required to be kept 
                under this chapter that are possessed by the dealer;
                    ``(C) make video and audio recordings of all 
                firearms transactions, and maintain the recordings for 
                360 days; and
                    ``(D) retain for more than 360 days, any video or 
                audio recording of a firearm transaction that was the 
                subject of a trace request; and
            ``(2) not less frequently than biennially, inspect or 
        examine the inventory, records, and business premises of the 
        dealer without reasonable cause or warrant.
    ``(b) Cessation.--On application of a high risk dealer, on a form 
prescribed by the Attorney General, and approval of the application by 
the Attorney General in writing, the inspections of the dealer under 
subsection (a)(2) shall cease--
            ``(1) on certification by the Attorney General that the 
        dealer--
                    ``(A) has permanently altered the business 
                practices of the dealer or made the physical 
                improvements required under subsection (a)(1); and
                    ``(B) will maintain the practices and improvements 
                until otherwise notified by the Attorney General; and
            ``(2) if, on 2 separate and consecutive occasions at least 
        6 months apart, the Attorney General has inspected and examined 
        the books and records of the dealer and, during that period, 
        the dealer has not been notified of any violations of Federal, 
        State, or local law.
    ``(c) Notice.--The Attorney General shall inform high risk dealers 
in writing of their obligations under this section.
    ``(d) Definition.--The term `high risk dealer' means any dealer 
identified by the Attorney General as lacking sufficient policies, 
procedures, or controls to prevent the diversion from lawful commerce 
of firearms or ammunition in the firearms business inventory of the 
dealer or transferred by the dealer, and firearms possessed by the 
dealer that are to be destroyed, and, thus, necessitating enhanced 
regulation and enforcement including regular inspection and examination 
of the inventory, records, and premises of the firearms business of the 
dealer. The Attorney General shall so identify such a dealer if--
            ``(1) the Attorney General has issued to the dealer a 
        report of violation or warning letter;
            ``(2) the dealer has been the subject of a warning 
        conference with the Attorney General within the preceding 36 
        months; or
            ``(3) in the preceding 12 months, the dealer was the source 
        of 2 or more firearms that were used in a crime under Federal, 
        State, or local law within 36 months after the last known 
        retail sale of the firearm.''.

SEC. 8. EFFECTIVE DATE.

    Sections 2 through 6 shall take effect on the date that is 180 days 
after the date of the enactment of this Act.
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