United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Treasury, Postal Service, and General

Government, Committee on

Appropriations, House of

Representatives

September 1996 FEDERAL FIREARMS

LICENSEE DATA

ATF’s Compliance with

Statutory Restrictions

G O A

years

1921 - 1996

GAO/GGD-96-174

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-272242 

September 11, 1996

The Honorable Jim Lightfoot

Chairman, Subcommittee on Treasury,

 Postal Service, and General Government

Committee on Appropriations

House of Representatives

Dear Mr. Chairman:

Your August 2, 1995, letter requested that we review various aspects of the

Bureau of Alcohol, Tobacco and Firearms’ (ATF) operations. This report,

the last in a series,1

 responds to your request that we review ATF’s

compliance with legislative restrictions on maintaining certain federal

firearms licensee2

 data. You requested this review because of concerns

that ATF may not have been complying with the legislative restrictions on

centralizing and consolidating data from federal firearms licensee records.

Specifically, we agreed to (1) identify and describe the ATF data systems

that contain retail firearms purchaser data and (2) determine whether

ATF’s Out-of-Business Records System and Multiple Sales System3 comply

with the legislative data restrictions. In addition, we agreed to assess ATF’s

overall legal interpretation of the data restrictions. In April 1996, we

testified on several issues before your Subcommittee, including our

findings related to ATF’s Out-of-Business Records System’s compliance

with the data restrictions.4

 Those findings are included in this report.

Background ATF, a criminal and regulatory enforcement agency within the Department

of the Treasury, is responsible for providing industry regulation; collecting

revenue; and enforcing federal statutes regarding firearms, explosives,

alcohol, tobacco, and arson. A critical component of ATF’s criminal

1

On March 29, 1996, we issued the following reports in connection with the Subcommittee’s

request—Use-of-Force: ATF Policy, Training and Review Process Are Comparable to DEA’s and FBI’s

(GAO/GGD-96-17) and Federal Firearms Licensees: Various Factors Have Contributed to the Decline in

the Number of Dealers (GAO/GGD-96-78).

2

ATF issues various categories of federal firearms licenses, including those for manufacturers,

importers, and dealers of firearms. Firearms dealer licenses are granted to dealers and pawnbrokers

who sell firearms at wholesale or retail and gunsmiths who repair firearms. Federal firearms dealer

licensees account for about 90 percent of all federal firearms licensees.

3

The data system containing multiple sale report data is a subsystem of ATF’s Firearms Tracing

System. However, in this report it will be referred to as the Multiple Sales System, unless specifically

noted otherwise.

4

Alcohol, Tobacco and Firearms: Issues Related to Use of Force, Dealer Licensing, and Data

Restrictions (GAO/T-GGD-96-104, Apr. 25, 1996).

Page 1 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

enforcement mission is the tracing of firearms used in crimes to identify

the last known purchaser of a firearm. To accomplish its criminal

enforcement responsibilities, ATF has 22 field divisions, headed by special

agents in charge, located throughout the United States.5

To efficiently and effectively carry out its enforcement responsibilities, ATF

maintains certain computerized information on firearms and firearms

purchasers. Over the years, Congress has tried to balance the law

enforcement need for this information with the competing interest of

protecting the privacy of firearms owners. To achieve this balance,

Congress has required federal firearms licensees to provide ATF certain

information about firearms transactions and the ownership of firearms

while placing restrictions on ATF’s maintenance and use of such data.

The Gun Control Act of 1968, as amended, established a system requiring

federal firearms licensees to record firearms transactions, maintain that

information at their business premises, and make these records available

to ATF for inspection and search under certain prescribed circumstances.6

The system was intended to permit law enforcement officials to trace

firearms involved in crimes while allowing the records themselves to be

maintained by the licensees rather than by a governmental entity. Through

the use of these records,7 ATF provides firearms tracing services to federal,

state, local, and foreign law enforcement agencies. To carry out its

firearms tracing responsibilities, ATF maintains a firearms tracing

operation at the National Tracing Center in Falling Waters, West Virginia.

The Center traces firearms suspected of being involved in crimes to the

last known purchaser to assist law enforcement in identifying suspects.

Appendix II provides a detailed description and flowchart of ATF’s tracing

operation.

Since the passage of the Gun Control Act, Congress has enacted two

provisions that place restrictions on ATF’s handling of federal firearms

licensee records. Since fiscal year 1979, the annual Treasury appropriation

act generally has prohibited ATF from using appropriated funds in

5

To carry out its regulatory responsibilities, ATF has its Firearms and Explosives Licensing Center in

Atlanta as well as 5 district offices, headed by a district director, and within them 37 area offices,

headed by an area supervisor.

6

P.L. 90-618, 82 Stat. 1213 (Oct. 22, 1968).

7

These records include an acquisition and disposition logbook and Firearms Transaction Records

(ATF Form 4473), which include, among other things, the name of the purchaser, the type of firearm

purchased, and the firearm model and serial number.

Page 2 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

connection with consolidating or centralizing the records of acquisition

and disposition of firearms maintained by federal firearms licensees.8

In addition, a provision of the Firearms Owners’ Protection Act of 1986

(P.L. 99-308, 100 Stat. 449 (May 19, 1986)), codified at 18 U.S.C. 926(a),

prohibits ATF from issuing any rule or regulation, after the date of that act,

requiring that (1) firearms licensee records (or any portion of the contents

of the records) be recorded at or transferred to a facility owned, managed,

or controlled by the United States or any state or any political subdivision

thereof or (2) any system of registration of firearms, firearms owners, or

firearms transactions or dispositions be established. Further, section

926(a) provides that ATF’s authority to inquire into the disposition of a

firearm during a criminal investigation is not restricted or expanded by

this section. The act also limited ATF’s authority to require reports from

licensees to those specified by statute and codified several reporting

requirements that ATF had previously imposed on licensees by regulation,

including those related to out-of-business licensee records and reports of

multiple handgun (pistols and/or revolvers) sales.9

Results in Brief ATF identified and described for us 14 national data systems and 4

subsystems that relate to firearms. According to ATF, five systems and one

subsystem contain data that readily identify retail purchasers or

possessors of specific firearms. We reviewed in detail the Out-of-Business

Records and Multiple Sales Systems. These systems (1) play a significant

role in the firearms tracing process, (2) contain data obtained from nonlaw

enforcement sources, and (3) involve large numbers of records and

reports containing data on firearms transactions and purchasers.

The Out-of-Business Records System contains records that federal

firearms licensees are required by statute to forward to ATF within 30 days

8

In 1978, under the general authority provided for in the Gun Control Act of 1968, ATF proposed

additional reporting requirements that would have required firearms licensees to report virtually all of

their firearms transactions to ATF on a quarterly basis (43 Fed. Reg. 11,800 (Mar. 21, 1978)). To

prevent the final issuance of these regulations, Congress passed a fiscal year 1979 appropriation

restriction that prohibited ATF from “consolidating or centralizing within the Department of the

Treasury the records of receipt and disposition of firearms maintained by Federal firearms licensees”

or “issuing or carrying out any provisions” of the proposed regulations. P.L. 95-429, 92 Stat. 1002

(Oct. 10, 1978). Congress has passed a similar restriction in each ATF appropriation since fiscal year

1979. In fiscal year 1994, the rider was expanded to prohibit the consolidation or centralization of “any

portion” of these records. P.L. 103-123, 107 Stat. 1229 (Oct. 28, 1993). In the same fiscal year, the

reference to the 1978 proposed rules was dropped.

9

See 18 U.S.C. 923(g). As originally enacted, the Gun Control Act required licensees to submit such

reports and information as the Secretary of the Treasury prescribed by regulation and authorized the

Secretary to prescribe such rules and regulations as he deemed reasonably necessary to carry out the

provisions of the act. See 18 U.S.C. 923(g) and 926 (1976 ed.).

Page 3 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

following a permanent discontinuance of their business. The National

Tracing Center microfilms and indexes these records to facilitate locating

them for firearms tracing purposes. The computerized index contains such

information as the serial number of the firearm and the federal firearms

licensee number but does not capture and store firearms purchasers’

names or other identifying information into an automated file. This

information remains stored on microfilm.

The Multiple Sales System contains data from reports that federal firearms

licensees are required by statute to send to ATF showing sales or other

dispositions of two or more pistols and/or revolvers to an unlicensed

person at one time or during any 5 consecutive business days. In

November 1995, ATF initiated a new policy on multiple sale reports and

began computerizing at the Tracing Center the information contained in

the reports, including firearms purchaser information. As part of this new

policy, ATF adopted a requirement for purging from the system after 2

years the names of, and other identifying information on, multiple sale

purchasers whose firearms have not been identified in a trace.

We determined that the Out-of-Business Records System and the Multiple

Sales System, as designed, comply with the data restrictions. With regard

to 18 U.S.C. 926(a), this restriction applies to certain rules or regulations

issued after the effective date of the Firearms Owners’ Protection Act that

require the recording at or transferring of firearms licensee records to a

government facility or the establishment of a registry of firearms, firearms

owners, or firearms transactions or dispositions. At the same time it

enacted the section 926(a) restriction, Congress codified the then-existing

regulatory requirements that licensees forward out-of-business records

and multiple sale reports to ATF. The current regulatory requirements

concerning these records and reports do not violate section 926 because

they predate the Firearms Owners’ Protection Act and thus are not subject

to section 926(a).

We also determined that the two systems do not violate the appropriation

rider prohibition against consolidating or centralizing licensee records.

The regulatory requirements that licensees send these records and reports

to ATF existed before the appropriation rider was first passed for fiscal

year 1979, and there is no indication in the legislative history that the rider

was intended to overturn ATF’s existing practices concerning the

acquisition or use of licensee information. Moreover, the Firearms

Owners’ Protection Act gave ATF specific statutory authority to collect

these records and reports. The legislative history of the act indicates that

Page 4 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

Congress considered placing constraints on ATF’s maintenance of these

records and reports, but did not do so. Lastly, Congress has appropriated

funds related to these systems.

In addition, on the basis of our review, observations, and discussions with

ATF officials, we believe that ATF operated the two systems consistently

with their design, with one exception relating to the Multiple Sales System.

Specifically, ATF had not fully implemented its 2-year purge requirement,

which it subsequently informed us that it had taken action to correct.

Concerning ATF’s overall legal interpretation of the data restrictions, we

agree with ATF’s view of section 926(a), but we believe that its

interpretation of the annual appropriation rider was too narrow. ATF

contended that both section 926(a) and the appropriation rider restricted

it from issuing rules and regulations imposing additional reporting

requirements on licensees but did not restrict what it did internally with

information it otherwise acquired.

We agree that the restriction in section 926(a) limits ATF only from

prescribing certain rules or regulations. The appropriation rider, however,

contains no language that would limit its application either to prescribing

rules and regulations or to imposing additional reporting requirements on

licensees. We believe that the rider has legal effect independent of section

926. Congress enacted it for a number of years predating the Firearms

Owners’ Protection Act and has continued to enact it for each subsequent

year. In our view, ATF’s interpretation that the appropriation rider applied

only to the issuance of rules and regulations that impose additional

reporting requirements on licensees, and did not reach ATF’s internal

information practices, was not supported by the statutory language or

legislative history of the rider.

However, we do not believe that the rider precludes all information

practices and data systems that involve an element of “consolidating or

centralizing” licensee records. The legislative history of the rider indicates

that it was originally enacted in response to an ATF proposal that was

viewed as a wholesale aggregation of licensee firearms transaction records

that went beyond the intent of Congress when it enacted the Gun Control

Act of 1968. In our view, the rider must be interpreted in light of its

purpose and in the context of the other statutory provisions governing

ATF’s acquisition and use of information contained in the Gun Control Act,

as amended.

Page 5 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

Pursuant to the Gun Control Act, ATF is responsible for certain regulatory

and law enforcement functions. The act, as amended, contains specific

statutory authorities that allow ATF to obtain certain firearms transaction

information from licensees. To implement these responsibilities and

authorities, ATF necessarily gathers specific firearms transaction data, and

must centralize or consolidate the data to some degree. However, the

Firearms Owners’ Protection Act, and its legislative history, indicate a

clear congressional concern that a registry of firearms, firearms owners, or

firearms transactions or dispositions not be established.

Therefore, to the extent that the centralization or consolidation of firearms

transaction records is incident to carrying out a specific ATF responsibility

and does not entail the aggregation of data on firearms transactions in a

manner that would go beyond the purposes of the Gun Control Act of

1968, as amended, we do not believe that the rider would be violated.

Given its legal position on the limited scope of the rider, ATF had not

systematically analyzed its data systems and information practices to give

appropriate effect to the appropriation rider. In response to a draft of this

report, ATF stated that it (1) adopted our broader interpretation of the

rider, as summarized above and discussed later, (2) had applied it to a

legal review of the systems listed in appendix IV that we did not review,

and (3) is committed to applying it to any record systems it establishes in

the future. ATF concluded that the systems it reviewed, as described, were

in compliance with the appropriation rider under the revised

interpretation. However, ATF did not determine whether the systems were

actually operating as described, as we did for the Out-of-Business Records

and the Multiple Sales Systems.

Scope and

Methodology

To address our objectives, we reviewed ATF documents and data and

discussed ATF policies and operations with agency officials. We obtained

from ATF officials descriptions of national data systems that ATF officials

determined were related to firearms, including those that contained retail

firearms purchaser data. Although we reviewed the descriptive data

provided by ATF on the firearms-related data systems, with the exception

of the Out-of-Business Records and the Multiple Sales Systems, we did not

verify whether these or any other ATF data systems contained retail

firearms purchaser data or observe system operations. We reviewed

relevant laws and ATF regulations, legal opinions, and documents relating

to ATF’s firearms tracing, out-of-business records, and multiple sale reports

processing operations. We also observed and conducted some tests of

Page 6 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

these operations and discussed them with officials at ATF’s National

Tracing Center. We did not review ATF’s other systems for compliance with

the data restrictions. With regard to the Out-of-Business Records and

Multiple Sales Systems, we did not review their compliance with other

statutory requirements, such as the Privacy Act and the Computer Security

Act.

We reviewed relevant laws and ATF regulations, legal opinions, and other

documents concerning the data restrictions. We discussed ATF’s legal

interpretation of the data restrictions with ATF’s Associate Chief Counsel

(Firearms and Explosives) and other headquarters and Tracing Center

officials. Appendix I contains a detailed discussion of our objectives,

scope, and methodology.

We did our work at ATF’s headquarters in Washington, D.C., and National

Tracing Center in Falling Waters, West Virginia, from August 1995 through

July 1996 in accordance with generally accepted government auditing

standards. We obtained comments on a draft of this report from ATF. These

comments are discussed at the end of this letter and are reprinted in

appendix IX. ATF officials also provided some technical comments, which

we incorporated where appropriate.

ATF Has Several

Nationwide Computer

Systems That Contain

Retail Firearms

Purchaser Data

ATF collects and maintains data from the firearms industry to carry out its

criminal and regulatory enforcement responsibilities more efficiently and

effectively. ATF’s criminal enforcement responsibilities include

investigating firearms-related crimes and tracing firearms used in crimes,

and its regulatory responsibilities include regulating the manufacture and

importation of firearms and licensing firearms dealers. ATF has established

national data systems to maintain the data it collects from the firearms

industry, including federal firearms licensees.

To identify ATF national data systems that contain retail firearms purchaser

data, we requested from ATF a description of its national data systems that

relate to firearms. ATF identified and provided documentation on 14

national data systems and 4 subsystems relating to firearms. Appendix III

provides a brief description of these systems and subsystems.

ATF indicated that five systems and one subsystem contain retail firearms

purchaser data.10 These are the (1) Firearms Tracing System and one of its

10An ATF official told us that he based his determination of whether the ATF data systems contained

retail firearms purchaser data on the systems’ ability to readily identify a retail purchaser or possessor

of a specific firearm.

Page 7 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

three subsystems—the system dealing with multiple sale reports;

(2) Firearms Tracking System; (3) Project Lead; (4) Out-of-Business

Records System; and (5) National Firearms Act Database. Appendix IV

provides a detailed description of the five systems and one subsystem.

We reviewed the descriptive information provided by ATF to determine

whether we agreed with its categorization of the data systems and

subsystems. On the basis of that review and follow-up discussions with ATF

officials, ATF recategorized several of the systems and subsystems. On the

basis of the information provided by ATF, we agreed with its categorization

of its data systems as presented in appendixes III and IV.

ATF’s Out-Of-Business

Records and Multiple

Sales Systems Comply

With Legislative

Restrictions

The Out-of-Business Records and Multiple Sales Systems, as designed,

comply with the legislative data restrictions. Also, on the basis of our

review, observations, and discussions with ATF officials, we believe that

ATF operates the systems consistently with their design, with one

exception relating to the purging of data from the Multiple Sales System,

which ATF subsequently informed us it had taken action to correct.

Out-Of-Business Records

System

Shortly after the passage of the Gun Control Act of 1968, ATF issued

regulations requiring federal firearms licensees who permanently

discontinued their businesses to forward their transaction records to ATF

within 30 days following the discontinuance. This ensured that ATF had

access to these records for its tracing operation. In 1986, the Firearms

Owners’ Protection Act codified this regulatory reporting requirement.11

Accordingly, since the enactment of the Gun Control Act, ATF has

maintained the out-of-business records at a central location, currently the

National Tracing Center.

Before fiscal year 1991, ATF maintained these records in hard copy in

boxes, with a file number assigned to each firearms licensee. If ATF

determined during a trace that a firearm had been sold by a firearms

licensee who was out of business and had sent in its records, an ATF

employee was to locate the boxes containing the records and manually

search them for the appropriate serial number. According to ATF, this was

11See 18 U.S.C. 923(g)(4). The provision states, “[W]here a firearms or ammunition business is

discontinued and succeeded by a new licensee, the records required to be kept by this chapter shall

appropriately reflect such facts and shall be delivered to the successor. Where discontinuance of the

business is absolute, such records shall be delivered within thirty days after the business

discontinuance to the Secretary [of the Treasury]. However, where State law or local ordinance

requires the delivery of records to other responsible authority, the Secretary may arrange for the

delivery of such records to such other responsible authority.”

Page 8 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

a time-consuming and labor-intensive process, which also created storage

problems for ATF.

In 1991, ATF began a major project to microfilm these records and destroy

the originals. In fiscal year 1992, ATF began using a minicomputer to create

a computerized index of the microfilm records containing the information

necessary to identify whether ATF had a record relating to a firearm being

traced. The index contains the following information: (1) the cartridge

number of the microfilm; (2) an index number; (3) the serial number of the

firearm; (4) the federal firearms licensee number; and (5) the type of

document on microfilm, i.e., a Firearms Transaction Record (ATF Form

4473) or acquisition and disposition logbook pages. The index information

that is entered into the minicomputer is stored on a database in ATF’s

mainframe computer to allow searches of the index information. The other

information, including the firearms purchaser’s name or other identifying

information and the firearms manufacturer, type, and model, remains

stored on microfilm cartridges and is not computerized. Appendix V

provides a more detailed description of the Out-of-Business Records

System along with pertinent statistical data.

We believe that ATF’s current Out-of-Business Records System complies

with the data restrictions. With regard to 18 U.S.C. 926(a), as discussed

earlier, it prohibits ATF from prescribing certain rules or regulations after

the date of enactment of the Firearms Owners’ Protection Act. At the same

time it added the section 926(a) restriction, Congress codified at 18 U.S.C.

923(g)(4) the then-existing regulatory requirement that licensees who

permanently go out of business send their records to ATF. ATF’s current

regulatory requirement concerning the out-of-business records predates

the Firearms Owners’ Protection Act, and is thus not subject to section

926(a).12

With regard to the annual appropriation rider, in our view, the

Out-of-Business Records System does not violate the general prohibition

on “consolidation or centralization” of firearms acquisition and disposition

records. The regulatory requirement that licensees send these records to

ATF existed before the appropriation rider was first passed for fiscal year

1979, and there is no indication in the legislative history that the rider was

intended to overturn ATF’s existing practices concerning the acquisition or

use of licensee information. According to ATF, the out-of-business records

historically have been maintained at a central location.

12While some revisions have been made since the enactment of the Firearms Owners’ Protection Act,

these revisions do not expand the scope of the regulation. See 27 C.F.R. 178.127 (1995).

Page 9 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

Moreover, the Firearms Owners’ Protection Act provided ATF with specific

statutory authority to collect these records. In the legislative history of the

act, there is evidence that Congress considered placing constraints on

ATF’s maintenance of out-of-business records, but did not do so. The

Senate-passed version of the act prohibited the Secretary of the Treasury

from maintaining out-of-business records at a centralized location and

from entering them into a computer for storage or retrieval.13 This

restrictive provision was dropped from the version of the bill enacted by

Congress.

Lastly, in fiscal year 1992, Congress appropriated $650,000 “for

improvement of information retrieval systems at the National Firearms

Tracing Center.”14 These funds were for the microfilming of the

out-of-business records. For fiscal year 1995, Congress appropriated funds

for the President’s firearms initiative, which included a request for funding

of the Out-of-Business Records System.15 Congress provided these funds in

the same legislation that contained the rider restricting consolidation and

centralization of licensee records. According to ATF, the system solved

storage and trace timing problems, thereby enhancing ATF’s tracing

capabilities. At the same time, the system does not computerize certain

key information, such as firearms purchaser information. In conclusion,

we believe that the system for maintaining the out-of-business records

does not violate either data restriction provision. (Our legal analysis of the

Out-of-Business Records System is contained in app. VIII.)

Furthermore, on the basis of our review of the Out-of-Business Records

System documentation provided by ATF, our discussions with ATF officials,

and our observation of the out-of-business records process, we believe

that ATF was operating the system in a manner consistent with the way it

was designed by ATF. During a visit to the Tracing Center, we observed that

the Out-of-Business Records System does not permit the operator to enter

the name or other identifying information of any firearm purchaser, or the

type or model of any firearm. Thus, we found no evidence that ATF

captures and stores firearms purchasers’ names or other identifying

information from the out-of-business records in an automated file.

13S. 49, 99th Cong., 1st Sess. (1985).

14P.L. 102-141, 105 Stat. 836 (Oct. 28, 1991).

15P.L. 103-329, 108 Stat. 2384 (Sept. 30, 1994); see S. Rep. No. 103-286, 103d Cong., 2d Sess. at 19 (1994).

Page 10 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
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Multiple Sales System Since 1975, federal firearms licensees have been required by regulation16

and subsequently by law17 to report all transactions in which an unlicensed

person18 has acquired two or more pistols and/or revolvers at one time or

during any 5 consecutive business days (called a multiple sale). The

purpose of the multiple sale reporting requirement regulation was to

enable ATF to “monitor and deter illegal interstate commerce in pistols and

revolvers by unlicensed persons.”19 According to ATF, that purpose has

remained unchanged since 1975.

In an August 1993 memorandum on gun dealer licensing, the President

listed a number of steps that ATF could take to ensure compliance with

federal firearms licensing requirements. These steps included, among

other things, increasing scrutiny of licensees’ multiple sale reports and

providing automated access to those reports.

In November 1995, ATF issued a new policy centralizing and computerizing

multiple sale reports at its National Tracing Center.20 Prior to that time,

ATF’s criminal enforcement field divisions maintained multiple sale reports

locally. To computerize the reports, ATF developed a Multiple Sales

Subsystem as part of its Firearms Tracing System so that the reports could

be entered directly into the Tracing System and used for tracing purposes.

As of June 30, 1996, ATF had computerized about 91,600 multiple sale

reports and associated 521 firearms traces with those reports. The head of

the National Tracing Center estimated that in the future the Center will

receive 130,000 multiple sale reports annually. In addition to using

multiple sale reports for tracing purposes, ATF also provides multiple sale

report data to its criminal enforcement field divisions through Project

1627 C.F.R. 178.126a (1995).

17See 18 U.S.C. 923(g)(3)(A). The provision states, “Each licensee shall prepare a report of multiple

sales or other dispositions whenever the licensee sells or otherwise disposes of, at one time or during

any five consecutive business days, two or more pistols, or revolvers, or any combination of pistols

and revolvers totalling two or more, to an unlicensed person. The report shall be prepared on a form

specified by the Secretary [of the Treasury] 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 multiple sale or other disposition occurs.”

18Multiple sales between federal firearms licensees are not required to be reported.

1940 Fed. Reg. 19,201 (May 2, 1975).

20ATF’s National Tracing Center began computerizing multiple sale reports from 3 of its then 24

criminal enforcement field divisions on a test basis in June 1995. In November 1995, ATF required all

of its field divisions to forward these reports to the Tracing Center for processing.

Page 11 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

Lead21 for use in developing investigative leads, such as leads on firearms

traffickers, straw purchasers,22 and federal firearms licensees who appear

to be engaged in suspicious activity.

Unlike the Out-of-Business Records System, reports entered into ATF’s

computerized Multiple Sales System are retrievable by firearm purchaser

name. However, as part of its November 1995 policy, ATF adopted a

requirement to purge firearms purchaser data in the system that were over

2 years old if they had not been linked to firearms traces. According to the

Chief of the Firearms Enforcement Division, the primary reason for

purging purchaser data over 2 years old is to delete data that may not be

useful because of its age. In addition, the head of the Tracing Center said

that ATF is sensitive for privacy reasons about retaining firearms purchaser

data that may no longer be useful. Appendix VI provides a detailed

description of the multiple sale reporting requirement and the data system

along with pertinent statistical data.

We believe that ATF’s Multiple Sales System complies with the data

restrictions. As discussed earlier, the prohibitions in section 926(a) only

apply to certain rules or regulations prescribed after the enactment of the

Firearms Owners’ Protection Act. In the same act, Congress codified the

then-existing regulatory requirement that federal firearms licensees

prepare these multiple sale reports and forward them to ATF. ATF’s current

regulatory requirement concerning the multiple sale reports predates the

Firearms Owners’ Protection Act and thus is not subject to section

926(a).23

With regard to the annual appropriation rider, in our view, the Multiple

Sales System does not violate the general prohibition on the

“consolidation or centralization” of firearms acquisition and disposition

records. The requirement that licensees prepare these reports and send

them to ATF existed in regulation before the first appropriation rider was

passed in fiscal year 1979, and there is no indication in the legislative

21Project Lead is a computer software program that allows ATF criminal enforcement field divisions to

query and manipulate data downloaded from the Firearms Tracing System. These data include

firearms dealer and purchaser information from firearms traces and information from all multiple sale

reports, including purchaser and firearms information. ATF criminal enforcement field divisions are

provided information that is applicable to their respective geographic area of responsibility.

22According to ATF, a “straw” purchaser is a person who buys firearms for another person. In some

instances, a straw purchaser may be used because the actual purchaser is prohibited by law from

acquiring a firearm. For example, the actual purchaser may be a felon.

23The regulation is now codified at 27 C.F.R. 178.126a (1995). While some revisions have been made

since the enactment of the Firearms Owners’ Protection Act, the requirement concerning licensee

reports to ATF has not changed.

Page 12 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

history that the rider was intended to overturn ATF’s existing practices

concerning the acquisition or use of licensee information.

Although the multiple sale reports historically have been maintained at the

field level, the provisions and legislative history of the Firearms Owners’

Protection Act, which gave ATF specific statutory authority to collect these

records, indicate that ATF would not be precluded from computerizing the

multiple sale reports. The act requires that licensees send the reports “to

the office specified” on the ATF form.24 Under this provision, ATF could

specify that licensees forward the multiple sale reports to a central

location. In addition, the legislative history of the act indicates that

Congress considered placing constraints on ATF’s maintenance of multiple

sale reports but did not do so. The Senate-passed version of the Firearms

Owners’ Protection Act prohibited the Secretary of the Treasury from

maintaining multiple sale reports at a centralized location and from

entering them into a computer for storage or retrieval.25 This restrictive

provision was dropped from the version of the bill enacted by Congress.

Lastly, for fiscal year 1995, Congress appropriated funds to implement the

President’s firearms initiative, which included plans to automate multiple

sale reports.26 Congress provided these funds in the same legislation that

contained the rider restricting consolidation and centralization of licensee

records. In conclusion, we believe that the Multiple Sales System does not

violate either data restriction provision. (Our legal analysis of the Multiple

Sales System is contained in app. VIII.)

With regard to the operation of the Multiple Sales System, on the basis of

our review and observations and discussions with ATF officials, we believe

that ATF was, with one exception, operating the system in a manner

consistent with its design. Our test of the Multiple Sales System at the

Tracing Center showed that ATF’s requirement to purge firearms purchaser

data over 2 years old if not linked to firearms traces had not been fully

implemented. At our request, a Tracing Center computer specialist queried

the system for multiple sale records with sales dates over 2 years old. The

results of this query identified 2,291 records27 (of the over 86,000 that had

been entered) that contained purchaser data for sales over 2 years old. The

2418 U.S.C. 923(g)(3)(A).

25S. 49, 99th Cong., 1st Sess. (1985).

26P.L. 103-329, 108 Stat. 2384 (Sept. 30, 1994); see S. Rep. No. 103-286, 103d Cong., 2d Sess. at 19 (1994).

27Some of these records may have involved firearms linked to firearms traces and thus the firearms

purchaser data should not have been purged from the system.

Page 13 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

computer specialist indicated that he thought multiple sale purchaser data

over 2 years old had been purged during the last upgrade of the Firearms

Tracing System. In July 1996, the Chief of the Firearms Enforcement

Division provided us with documentation stating that the affected

purchaser data had been purged from the Multiple Sales System and that

future purges would be performed weekly. We did not verify whether the

affected purchaser data were purged and whether weekly purges were

being done.

In addition, ATF officials also told us that while the 2-year purge

requirement pertained to the Multiple Sales System at the Tracing Center,

it was not being applied to multiple sale data maintained locally by ATF

criminal enforcement field divisions through Project Lead. ATF had no

requirement or mechanism for purging multiple sale purchaser data over 2

years old after it was received by field divisions. The Chief of the Firearms

Enforcement Division told us that ATF planned to place Project Lead on its

mainframe computer in about a year. At that time, ATF plans to apply the

2-year purge requirement to multiple sale data in Project Lead.

In Response to Our

Review, ATF Has

Adopted a Broader

Interpretation of the

Data Restriction in the

Annual Appropriation

Rider

ATF’s interpretation of the data restrictions in the annual appropriation

rider and 18 U.S.C. 926(a) was contained in a number of opinions and

correspondence that ATF provided us during our review. Although we

agreed with ATF’s interpretation of 18 U.S.C. 926(a), we believed that ATF

was interpreting the data restriction contained in the annual appropriation

rider too narrowly. As a result, ATF would not have reviewed its data

systems and information practices to ensure compliance with the broader

interpretation of the rider, as discussed below. Appendix VIII contains our

detailed legal analysis.

In response to a draft of this report, ATF stated it adopted the broader

interpretation of the rider, had applied it to a legal review of the systems

listed in appendix IV that we did not review, and is committed to applying

it to record systems it might establish in the future.

Previously, ATF maintained that the restrictions in section 926(a) and the

appropriation rider had the same effect, and that they were intended only

to preclude rules or regulations issued after the enactment of the Firearms

Owners’ Protection Act that impose additional reporting requirements

upon licensees. Thus, ATF viewed the data restrictions as having no

application to the agency’s internal practices, i.e., they did not restrict

what ATF did with information it had acquired through reporting

Page 14 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

requirements in effect before the act or through other means, such as ATF’s

criminal enforcement and regulatory activities.

ATF’s interpretation relied on the language and context of section 926 and

related provisions (primarily section 923), as well as the language and

context of the 1979 appropriation rider, which was enacted to counter the

broad reporting requirements that ATF sought to impose on licensees

through the 1978 proposed rulemaking. ATF maintained that the basic

effect of the Firearms Owners’ Protection Act—codifying certain former

regulatory reporting requirements in section 923 and restricting the

agency’s authority to prescribe certain rules and regulations in section

926—was to preempt any additional reporting requirements that the

agency might impose on licensees.

We agreed with ATF’s interpretation of the data restrictions as far as it

went; clearly the data restrictions apply to rules or regulations that would

impose additional reporting requirements upon licensees. The question

was whether they have any effect beyond such reporting requirements,

and, in particular, whether they restrict how ATF compiles or otherwise

uses firearms transaction records once they have been acquired from

licensees through current reporting requirements or other means.

With regard to the restriction in section 926(a), we agree that it is limited

to ATF actions in the form of prescribing rules and regulations. The

appropriation rider, however, contains no language that would limit its

application either to prescribing rules and regulations or to imposing

additional reporting requirements on licensees. Although the original

version of the rider did refer to the 1978 proposed rulemaking that would

have required new reporting by licensees, it was not limited to that

proposal. Furthermore, beginning in fiscal year 1994, the reference to the

1978 proposal was dropped from the appropriation rider, and the language

of the restriction was expanded to include “any portion” of these licensee

records. In our view, given its structure and language prohibiting the use

of appropriations in connection with consolidating or centralizing certain

firearms licensee records within the Department of the Treasury, the rider

appears to encompass ATF’s internal operations.

ATF’s prior legal opinions did not analyze the rider, other than to treat it as

“similar to” the section 926(a) restriction. However, we believe that the

appropriation rider clearly has legal effect independent of section 926.

Congress enacted it for a number of years predating the Firearms Owners’

Protection Act and has continued to enact it for each subsequent year. As

Page 15 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

referred to above, the language of the appropriation rider was expanded in

fiscal year 1994 to include portions of licensee firearms records.28 Further,

there are significant differences in the language of the two

provisions—most notably, the absence from the rider of any limitation on

its coverage to rules or regulations. There is no indication in the legislative

history of the Firearms Owners’ Protection Act that section 926 was

intended to subsume or otherwise affect the appropriation rider.

Therefore, in our view, ATF’s interpretation that the appropriation rider

applied only to the issuance of rules and regulations that impose

additional reporting requirements on licensees, and did not reach ATF’s

internal information practices, was not supported by the statutory

language or legislative history of the rider.

Determining the extent to which the appropriation rider restricts ATF’s

internal information practices posed more difficult questions. The

appropriation rider applies to “consolidating or centralizing, within the

Department of the Treasury, the records, or any portion thereof, of

acquisition and disposition of firearms maintained by Federal firearms

licensees.” However, we do not believe that the rider precludes all

information practices and data systems that involve an element of

“consolidating or centralizing” licensee records.

The legislative history of the rider indicates that it was originally enacted

in response to an ATF proposal that was viewed as a wholesale aggregation

of licensee firearms transaction records that went “beyond the intent of

Congress when it passed the Gun Control Act of 1968.”29 There is no

evidence in the legislative history that the rider was intended to overturn

existing ATF information practices or data systems. Indeed, the Firearms

Owners’ Protection Act, which amended the Gun Control Act and was

enacted 8 years after the original rider was passed, reaffirmed several

long-standing ATF information practices. The rider must be interpreted in

light of its purpose and in the context of the other statutory provisions

governing ATF’s acquisition and use of information contained in the Gun

Control Act, as amended.

Pursuant to the Gun Control Act, ATF is responsible for certain regulatory

functions, such as licensing and monitoring firearms licensees, as well as

certain law enforcement functions, such as the tracing of firearms. The

28P.L. 103-123, 107 Stat. 1229 (Oct. 28, 1993).

29S. Rep. No. 95-939, 95th Cong., 2d Sess. at 11-12 (1978); see also H.R. Rep. No. 95-1249, 95th Cong., 2d

Sess. at 9-10 (1978).

Page 16 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

act, as amended, contains specific statutory authorities that allow ATF to

obtain certain firearms transaction data from licensees. Section 923

contains licensee recordkeeping and reporting authorities, as well as the

authorities for ATF to conduct inspections and searches of licensee

business premises for certain purposes. To implement these

responsibilities and authorities, ATF necessarily gathers specific firearms

transaction data, and must centralize or consolidate the data to some

degree.

However, as discussed above, section 926(a) precludes ATF from issuing

rules or regulations after enactment of the Firearms Owners’ Protection

Act that require the establishment of any system of registration of

firearms, firearms owners, or firearms transactions or dispositions. The

legislative history of the Firearms Owners’ Protection Act indicates a clear

congressional concern that such a registry not be established.30

Therefore, to the extent that the centralization or consolidation of records

is incident to carrying out a specific ATF responsibility and does not entail

the aggregation of data on firearms transactions in a manner that would go

beyond the purposes of the Gun Control Act of 1968, as amended, we do

not believe that the rider would be violated.

Conclusions ATF’s Out-of-Business Records and Multiple Sales Systems comply with the

data restrictions, including the restriction in the annual appropriation

rider, as discussed above. However, we did not review the other data

systems and subsystems ATF identified as containing firearms-related

information to determine their compliance with the data restrictions. ATF’s

legal interpretation of the restriction in the appropriation rider was that

the restriction had no application to ATF’s internal information practices

under any circumstances. Given this, ATF had not reviewed its data

systems and information practices to determine whether they involved the

type of centralization or consolidation of records that might be affected by

the rider, as discussed above. Such a review would help provide assurance

that the systems and subsystems we did not review currently comply with

the rider.

In response to a draft of this report, ATF (1) revised its interpretation of the

rider to adopt the broader interpretation we believed was appropriate;

(2) applied this interpretation to a legal review of the systems, as

described in appendix IV, that we did not review; and (3) stated it will

30For example, see S. Rep. No. 98-583, 98th Cong., 2d Sess. at 18 (1984).

Page 17 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

apply the new interpretation to future systems. Although it found that the

current systems, as described, comply with the broader interpretation, ATF

did not determine whether the systems are operating as described. Such a

determination would provide fuller assurance that the systems are in

compliance.

Recommendation We recommend that the Secretary of the Treasury require the Director of

ATF to

• review ATF’s firearms data systems and information practices to ensure

that they comply with the appropriation rider, as discussed above; and

• report the results of these actions to the Subcommittee in conjunction

with ATF’s fiscal year 1998 budget submission.

Agency Comments

and Our Evaluation

ATF provided written comments on a draft of this report. These comments

are reprinted in appendix IX. Overall, ATF concurred with our findings and

conclusions concerning the compliance of the Out-of-Business Records

and Multiple Sales Systems with the statutory data restrictions. However,

ATF disagreed with our conclusions regarding systems we did not review

because it believed those systems were outside the scope of our review.

Nevertheless, ATF agreed with and adopted the broader interpretation of

the data restriction in the annual appropriation rider, as discussed in this

report, for its existing, as well as future, systems. It also applied its revised

interpretation to a legal review of the systems containing retail firearms

purchaser data that we did not review and found them to be in

compliance. In light of these actions ATF requested that we reconsider our

recommendation.

With regard to the issue of ATF’s interpretation of the data restriction

contained in the annual appropriation rider, we concluded in our draft

report that given ATF’s legal interpretation that the appropriation rider had

no application to its internal information practices, ATF had not analyzed

its data systems and information practices to determine whether they

involved the type of centralization and consolidation of records that might

be affected by the rider. Therefore, we concluded that ATF could not

ensure that the systems and subsystems that we did not review complied

with the rider; nor could ATF provide Congress with reasonable assurance

that, in the future, its data systems, subsystems, and information practices

would be in compliance with the rider, assuming that Congress continued

to enact it.

Page 18 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

In commenting on our draft report, ATF stated that these assertions were

speculative and ranged far beyond the scope of our review. We do not

agree that our conclusion and recommendation go beyond the scope of

our review. While we were asked to review only two systems’ compliance

with the data restrictions, our third objective—to assess ATF’s overall legal

interpretation of the data restrictions—covered all of its data systems and

information practices. However, we did not suggest or imply that the ATF

data systems and practices that we did not review were not in compliance

with the law. Rather, our intention was to focus on the lack of assurance

that ATF was providing related to its systems’ compliance with the

restriction in the rider based on its narrow interpretation.

Nevertheless, ATF stated that it “will hereafter apply GAO’s interpretation of

the rider to its record systems and any future systems it might establish.” It

further stated that it saw “no disadvantage to ATF in changing its position

to be in conformity with the reading given by GAO since our record systems

actually comply with GAO’s interpretation of the rider.” Also, as part of its

written response to our draft report, ATF enclosed an August 23, 1996,

opinion of the ATF Chief Counsel, whose Office reviewed those ATF data

systems that contain retail firearms purchaser data (with the exception of

the two systems that we reviewed) and found them to be in compliance

with the rider, under the revised interpretation. The Chief Counsel’s

opinion also indicated that if ATF adopted our interpretation of the rider,

the Office of the Chief Counsel would, in the future, review any proposed

new record system to determine compliance with the rider.

We believe ATF has taken several important actions toward fulfilling the

recommendation. Most notably, ATF has revised its legal analysis of the

rider, applied it to the descriptions of the remaining systems that contain

retail firearms purchaser information, and stated that future systems will

be reviewed under the revised analysis. These actions, in our view,

constitute major steps toward providing assurance that ATF is currently

complying with the rider and that the agency will continue to comply with

it in the future. Accordingly, we have modified our final report to reflect

ATF’s actions.

Although ATF has taken significant steps toward implementing our

recommendation, in our view, it has not fully implemented the

recommendation. ATF’s legal analysis of the description of the remaining

systems that contain retail firearms purchaser information appears to

apply appropriate criteria and rationale. In addition, the legal analysis

discusses various general controls that ATF had in place and actions it had

Page 19 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
B-272242 

taken to help ensure that existing, as well as future, records systems and

information practices comply with the law. However, it was not clear how

these controls specifically applied to the systems discussed in ATF’s legal

analysis or whether they were used to help ensure that the systems were

in compliance with the data restrictions. To fully respond to our

recommendation, ATF needs to provide assurance that the systems are

actually operating as they were described. Thus, we believe that ATF

should perform an operational review of the systems listed in appendix IV

that we did not review. Therefore, we are retaining our recommendation

that ATF review these systems and report the results to the House

Appropriations Subcommittee.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will send copies of the report to the

Ranking Minority Member of the Subcommittee, appropriate

congressional committees, the Secretary of the Treasury, the Director of

ATF, and other interested parties. Copies will also be made available to

others upon request.

The major contributors to this report are listed in appendix X. If you have

any questions about this report, please call me on (202) 512-8777.

Sincerely yours,

Norman J. Rabkin

Director, Administration

 of Justice Issues

Page 20 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Page 21 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

26

Appendix II 

Description of ATF’s

Firearms Tracing

Process

28

Appendix III 

ATF’s

Firearms-Related Data

Systems

33

Appendix IV 

ATF Data Systems

That Contain Retail

Firearms Purchaser

Data

36

Firearms Tracing System 36

Firearms Tracking System 39

Project Lead 40

Out-Of-Business Records System 41

National Firearms Act Database 42

Appendix V 

Description of ATF’s

Out-Of-Business

Records System

43

Appendix VI 

Description of ATF’s

Multiple Sales System

46

Page 22 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Contents

Appendix VII 

Report of Multiple

Sale or Other

Disposition of Pistols

and Revolvers

51

Appendix VIII 

Legal Analysis of

Statutory Restrictions

Concerning Federal

Firearms Licensee

Data

52

Background 52

The Appropriation Rider 52

18 U.S.C. 926(a) 54

ATF’s Legal Interpretation 55

Analysis of ATF’s Interpretation 56

ATF’s Out-Of-Business Records System and Multiple Sales

System Comply With Data Restrictions

58

Appendix IX 

Comments From the

Bureau of Alcohol,

Tobacco and Firearms

63

GAO Comment 75

Appendix X 

Major Contributors to

This Report

76

Tables Table IV.1: Characteristics of the Firearms Tracing System 37

Table IV.1a: Characteristics of the Multiple Sales Subsystem 38

Table IV.2: Characteristics of the Firearms Tracking System 39

Table IV.3: Characteristics of Project Lead 40

Table IV.4: Characteristics of the Out-Of-Business Records

System

41

Table IV.5: Characteristics of the National Firearms Act Database 42

Table V.1: Disposition of Records of Federal Firearms Licensees

Who Went Out of Business, FYs 1992-1995

45

Table VI.1: Number of Multiple Sale Reports Processed at the

National Tracing Center and Firearms Traces Linked to Multiple

Sale Reports, June 1995-June 1996

49

Page 23 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Contents

Figures Figure II.1: Flowchart of ATF’s Firearms Tracing Process 29

Figure II.2: Number of Traces ATF Completed and Those

Completed by Tracing Firearm to a Retail Licensee or Purchaser,

FYs 1992-1995

32

Abbreviations

ATF Bureau of Alcohol, Tobacco and Firearms

FOPA Firearms Owners’ Protection Act

RACF Resource Access and Control Facility

TECS Treasury Enforcement Communications System

Page 24 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Page 25 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix I 

Objectives, Scope, and Methodology

Because of concerns regarding ATF’s compliance with the legislative

restrictions regarding centralizing and consolidating data from federal

firearms licensee records, the Chairman of the House Subcommittee on

Treasury, Postal Service, and General Government, Committee on

Appropriations, requested that we review ATF’s compliance with the

legislative restrictions on maintaining certain federal firearms licensee

data. We agreed to (1) identify and describe the ATF data systems that

contain retail firearms purchaser data and (2) determine whether ATF’s

Out-of-Business Records System and Multiple Sales System1

 comply with

the legislative data restrictions. We also agreed to assess ATF’s overall legal

interpretation of the legislative data restrictions.

To identify and describe the ATF data systems that contain retail firearms

purchaser data, we obtained from ATF headquarters officials descriptions

of ATF national data systems that they determined relate to firearms. We

also asked ATF to identify those national data systems that contained retail

firearms purchaser data. We reviewed the provided descriptive data to

determine whether we agreed with ATF’s categorization of each data

system. We also interviewed appropriate ATF headquarters and National

Tracing Center officials to obtain additional information and clarification

concerning the data systems. However, with the exception of the

Out-of-Business Records and the Multiple Sales Systems, we did not

independently verify the contents of the data systems because of time

constraints.

At the Subcommittee’s request, we focused on assessing ATF’s

Out-of-Business Records System and Multiple Sales System. These

systems (1) play a significant role in the firearms tracing process,

(2) contain data obtained from nonlaw enforcement sources, and

(3) involve large numbers of records and reports containing data on

firearms transactions and purchasers. To obtain information on the

firearms tracing process and the Out-of-Business Records and Multiple

Sales Systems, we interviewed officials and reviewed system

documentation and other data at ATF headquarters and at ATF’s National

Tracing Center in Falling Waters, West Virginia. We also observed the

firearms tracing, out-of-business records, and multiple sale reports

processing operations at the Center and discussed these operations with

Center officials.

1

The data system containing multiple sale report data is a subsystem of ATF’s Firearms Tracing

System. However, in this report we refer to it as the Multiple Sales System, unless specifically noted

otherwise.

Page 26 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix I 

Objectives, Scope, and Methodology

To address whether the Out-of-Business Records and Multiple Sales

Systems were in compliance with the legislative data restrictions, we

reviewed relevant laws and ATF regulations, legal opinions, and

documentation on the design of these systems. We also discussed ATF’s

legal opinions with ATF’s Associate Chief Counsel (Firearms and

Explosives) and other officials. We did not review ATF’s other systems for

compliance with the data restrictions. With regard to the Out-of-Business

Records and Multiple Sales Systems, we did not review their compliance

with other statutory requirements such as the Privacy Act and the

Computer Security Act. Furthermore, to determine whether ATF’s actual

handling of the records and reports in these systems was in accord with

the systems’ designs, we observed the processing and maintenance of the

out-of-business records and the multiple sale reports at the Tracing

Center, conducted some tests, and discussed these operations with ATF

headquarters and Tracing Center officials. To determine whether ATF was

implementing its requirement to purge certain firearms purchaser data

from the Multiple Sales System, we conducted data entry and retrieval

tests.

To assess ATF’s overall legal interpretation of the legislative data

restrictions and their application to ATF operations, we reviewed relevant

laws and their legislative histories, ATF regulations and legal opinions, and

other documentation concerning the data restrictions. We also interviewed

ATF’s Associate Chief Counsel (Firearms and Explosives) and other ATF

headquarters and Tracing Center officials.

Page 27 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix II 

Description of ATF’s Firearms Tracing

Process

The Gun Control Act of 1968, as amended, requires federal firearms

licensees to record firearms transactions, maintain that information at

their business premises, and make such records available to ATF for

inspection and search under certain prescribed circumstances.2

 Through

the use of these records,3 ATF provides firearms tracing services to federal,

state, local, and foreign law enforcement agencies. ATF also uses the

records for other law enforcement purposes. To carry out its firearms

tracing responsibilities, ATF maintains a firearms tracing operation, located

at the National Tracing Center in Falling Waters, West Virginia. With a staff

of 45 as of July 1996, the Tracing Center tracks firearms suspected of being

involved in crimes to assist law enforcement in identifying suspects.

The Tracing Center receives trace requests by facsimile, telephone, and

mail. To do a trace, the manufacturer and the serial number of the firearm

must be known. The Tracing Center determines the ownership of firearms

being traced by using documentation, such as out-of-business licensee

records and multiple sale reports, which are maintained in ATF’s national

data systems, and/or by contacting manufacturers, importers, wholesalers,

and retailers (i.e., firearms dealers). The objective of the trace is to identify

the last known purchaser of the firearm. ATF is to document each trace

request and its results and provide that information to the requester. ATF

considers a request completed when it traces the firearm to a retail

firearms licensee or a purchaser or when it cannot identify the purchaser

for various reasons. For example, the description of the firearm as

submitted by the requester may not have contained sufficient information

to perform a trace. Figure II.1 provides a macro flowchart of ATF’s firearms

tracing process.

2

P.L. 90-618, 82 Stat. 1213 (1968). As originally enacted, the Gun Control Act required licensees to

submit such reports and information as the Secretary of the Treasury prescribed by regulation, and

authorized the Secretary to prescribe such rules and regulations as he deemed reasonably necessary to

carry out the provisions of the act. See 18 U.S.C. 923(g) and 926 (1976 ed.).

3

These records include an acquisition and disposition logbook and Firearms Transaction Records

(ATF Form 4473), which include, among other things, the name of the purchaser, the type of firearm

purchased, and the firearm model and serial number.

Page 28 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix II 

Description of ATF’s Firearms Tracing

Process

Figure II.1: Flowchart of ATF’s

Firearms Tracing Process

Receive request

by fax, telephone,

or mail

Code trace

request

Enter

data

Electronic online

trace submission

Check

suspect guns,

multiple sales,

and

interstate theft

Check indexed

gun serial

numbers

(OOBR)

Find

gun serial

number?

Is

manufacturer

active?

Contact

manufacturer

Identify

wholesaler/retailer

Check OOBR

section

Yes

No

Does

ATF have

licensee's

records?

Yes

Attempt to

locate missing

licensee

records

No

Yes

No

a

A

C

D

E

F

B

Page 29 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix II 

Description of ATF’s Firearms Tracing

Process

Identify

purchaser?

Close-out Mail/Fax 

trace

results

End Yes

No

Contact active

firearms licensee

Identify and locate

inactive

manufacturer or 

firearms licensee

Manually search

microfilm record

and verify

match

Print ATF 

Form

4473

Review for

confirmation

Identify

purchaser?

Yes

No

Locate

firearms licensee

Does

licensee

have records?

Yes

No

C

D

E

F

B

A

Legend:

OOBR - Out-of-business records

Page 30 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix II 

Description of ATF’s Firearms Tracing

Process

aFrom this point in the tracing process, an active and/or inactive manufacturer, importer, or

licensee may be involved. It should also be noted that not all traces are successfully completed.

Some are closed due to age of firearm, incomplete/inaccurate description of firearm, loss of

licensee records, or inability to locate licensee.

Source: ATF.

For fiscal years 1992 through 1995, ATF received a total of 262,984 trace

requests. The number of trace requests received by ATF increased about

56 percent during this 4-year period, from 51,210 in fiscal year 1992 to

80,042 in fiscal year 1995. During this period, ATF completed a total of

243,584 traces, including those that did not result in the identification of a

retail firearms licensee or purchaser. As shown in figure II.2, the number

of traces completed more than doubled, from 42,980 in fiscal year 1992 to

86,215 in fiscal year 1995. During this 4-year period, ATF identified a retail

firearms licensee or a purchaser of the traced firearm, on average, in about

41 percent of the completed trace requests. In fiscal year 1995, the number

of completed trace requests resulting in the identification of retail

licensees or purchasers increased to about 52 percent.

Page 31 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix II 

Description of ATF’s Firearms Tracing

Process

Figure II.2: Number of Traces ATF

Completed and Those Completed by

Tracing Firearm to a Retail Licensee or

Purchaser, FYs 1992-1995

Number

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

1992 1993 1994 1995

Fiscal year

Trace requests completed

Trace requests completed that identified a retail licensee

or a purchaser

Source: ATF.

Page 32 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix III 

ATF’s Firearms-Related Data Systems

System Contents Function

1. Annual Firearms Manufacturing and

Exportation Report System

Contains firearms data but does not

identify retail firearms purchasers.

Tracks firearms production and exports

data that are gathered annually from

licensed manufacturers and exporters for

regulatory enforcement.

2. Area Office Program Contains firearms data but does not

identify retail firearms purchasers.

Tracks inspectors’ assignments, certain

performance measures, and workflow data

within ATF’s Office of Regulatory

Enforcement.

3. Criminal Enforcement Investigative

Reportsa

Contains firearms data collected for

criminal investigative purposes that, in

some cases, may identify retail firearms

purchasers.b

Automates the preparation of three ATF

reports: Investigative Case Summary,

Report of Investigation, and Property Taken

Into ATF’s Custody for criminal

enforcement.

4. Federal Excise Tax System Contains firearms data but does not

identify retail firearms purchasers.

Tracks information on tax payments,

including tax returns and return information,

from more than 10,000 excise taxpayersc

for regulatory enforcement.

a. Firearms and

Ammunition Excise

Tax Subsystem

Contains firearms data but does not

identify retail firearms purchasers.

Used to manage sales information about

firearms and ammunition manufacturers,

who are required to pay federal excise

taxes, to determine whether the proper

amounts of tax were paid when due for

regulatory enforcement.

5. Federal Licensing System Contains firearms data but does not

identify retail firearms purchasers.

Tracks applications and permits for federal

firearms and explosives licenses for

regulatory and criminal enforcement.

6. Firearms and Explosives Import

System

Contains firearms data that identify the

consignees of firearms, who, in some

cases, may be retail firearms purchasers.d

Tracks information on the importation of

firearms and explosives into the United

States and their release into commerce by

the U.S. Customs Service for regulatory

enforcement.

7. Firearms Tracing Systeme Contains firearms data that identify retail

firearms purchasers.

Collects and tracks data on traces of

firearms suspected of being involved in a

crime to assist law enforcement agencies

in identifying suspects for regulatory and

criminal enforcement.

a. Federal Firearms Licensees Theft

Subsystem

Contains firearms data but does not

identify retail firearms purchasers.

Collects and tracks data on firearms stolen,

or missing in inventory, from federal

firearms licensees’ place of business for

regulatory and criminal enforcement.

b. Interstate Theft Subsystem Contains firearms data that identify the

consignees of firearms, who, in some

cases, may be retail firearms purchasers.d

Collects and tracks, for criminal

enforcement purposes, information on

thefts of firearms during interstate shipment

between the manufacturer and the

wholesaler, the wholesaler and the retailer,

or retailers.

(continued)

Page 33 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix III 

ATF’s Firearms-Related Data Systems

System Contents Function

c. Multiple Sales Subsysteme Contains firearms data that

identify retail firearms purchasers.

Collects and tracks data on purchasers of

two or more pistols and/or revolvers at one

time or during any 5 consecutive business

days for regulatory and criminal

enforcement.

8. Firearms Tracking Systeme Contains firearms data that

identify retail firearms purchasers.

Collects and tracks data (derived from the

Firearms Tracing System) on firearms

recovered in ATF’s field divisions’

geographic areas of responsibility for

criminal enforcement. Allows ATF to

analyze information concerning problem

dealers, questionable purchasers, and

other descriptive firearms data.

9. Law Enforcement Management

Information System

Contains firearms data but does not

identify retail firearms purchasers.

Tracks all aspects of special agents’ duty

time by various categories, including court

time, investigative time, and leave for

criminal enforcement. Also maintains

information on individual cases, including

information on the type of case,

defendants, and seizures.

10. Leads, Investigations, and Cases

System

Contains firearms data but does not

identify retail firearms purchasers.

Collects and tracks data for regulatory

enforcement by name and address of

subject, alleged firearms excise tax

violation, action taken, business type,

potential leads, investigations, product

detention, and reporting offices.

11. National Firearms Act Databasee Contains firearms data that identify retail

firearms purchasers.

Collects and tracks data from applications

and forms submitted by manufacturers,

dealers, and owners of machine guns,

destructive devices, and certain other

firearms to monitor and enforce these

classes of firearms for regulatory and

criminal enforcement.

12. Out-of-Business Records Systeme Contains firearms data that identify retail

firearms purchasers.

Collects, indexes, and retrieves

microfilmed copies of firearms transaction

records of federal firearms licensees who

have permanently gone out of business for

regulatory and criminal enforcement.

13. Project Leade Contains firearms data that identify retail

firearms purchasers.

Analyzes firearms data contained in the

Firearms Tracing System by ATF’s field

divisions’ geographic areas of

responsibility for their use in identifying and

investigating suspected firearms traffickers,

“straw” purchasers, and licensees

suspected of being involved in criminal

activity for regulatory and criminal

enforcement.

(continued)

Page 34 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix III 

ATF’s Firearms-Related Data Systems

System Contents Function

14. Special Occupational Tax System Contains firearms data but does not

identify retail firearms purchasers.

Tracks the tax payment records of

taxpayers in certain occupations, including

manufacturers of firearms and persons

dealing in commodities regulated by the

National Firearms Act, who are required to

pay special occupational taxes for

regulatory enforcement.

aThe Criminal Enforcement Investigative Reports program is not a database. It is a word

processing application that can be queried by case number, but not by name, to generate

investigative reports.

bData collected on a defendant could identify him or her as the retail purchaser or possessor of a

specific firearm. For example, a defendant may be identified as a retail firearms purchaser in an

investigative report relating to a potential criminal violation(s). However, the data on defendants in

the system are not in a readily retrievable form, i.e., the system has no specific data field on retail

firearms purchasers.

cAlcohol, tobacco, firearms, and ammunition producers and other selected taxpayers.

dAlthough the consignees of firearms that are imported or shipped interstate could, in some

cases, be retail purchasers, they cannot be specifically identified as such through the system

alone, i.e., the system has no specific data field on retail firearms purchasers.

eSee appendix IV for a detailed description.

Source: ATF.

Page 35 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

This appendix describes the five national data systems and one subsystem

that ATF identified as containing sufficient data, or automated interfaces to

related databases, to readily identify the retail purchaser or possessor of a

specific firearm. The descriptions in tables IV.1 through IV.5 include data

sources, data input, data location, authorized users,4

 and security

measures.

Firearms Tracing

System

The Firearms Tracing System collects and tracks data on traces of

firearms suspected of being involved in a crime to assist law enforcement

in identifying suspects. Trace data are used by law enforcement agencies

worldwide. In addition, the Firearms Tracing System contains three

subsystems: (1) Interstate Theft, (2) Federal Firearms Licensees Theft, and

(3) Multiple Sales. As shown in tables IV.1 and IV.1a, the overall System

and the Multiple Sales Subsystem contain firearms purchaser data.

According to ATF, the data collected in the Firearms Tracing System are

firearms trace-specific duplicates of firearms transaction data kept by

licensees pursuant to 18 U.S.C. 923(g). Section 923(g) requires licensees to

maintain firearms data at their place of business and to make the

information in those records available to ATF for certain purposes.

Specifically, section 923(g)(7) requires licensees to respond within 24

hours after the receipt of a request from the Secretary of the Treasury for

information contained in their records as may be required for determining

the disposition of one or more firearms in the course of a bona fide

criminal investigation.

4

An “authorized user” is a user who has an approved user personal identification and password that

allows access to the system with defined access rights and privileges (i.e., read only, write, delete,

modify, etc.) to the system data.

Page 36 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

Table IV.1: Characteristics of the Firearms Tracing System

Data sources Data input Data location Authorized users Security measures

Data are from the trace

request form (ATF Form

7520.5), telephone

requests, and the results

of the traces.

Data in the system

include serial number,

make, model, type, and

caliber of firearm; trace

requester’s name;

reasons for the trace;

possessor of the weapon

at the time of recovery;

place of recovery; name

and address of the

licensee to whom the

firearm was transferred;

and name, address, date

of birth, and place of

birth of the individual

purchaser.

Data are maintained on a

mainframe computer

system at the National

Data Center in Falling

Waters, West Virginia.

About 40 National

Tracing Center personnel

have complete access to

the system. About 60

contractors and special

agents in certain field

divisions have restricted

access. In addition, ATF

agents and other law

enforcement personnel

nationwide have

electronic access to the

system, through the

National Law

Enforcement

Telecommunications

Network, only for

purposes of submitting a

trace request.

The electronic data are

protected by the

Resource Access and

Control Facility (RACF).a

User access privileges

are defined by the RACF

administrator with the

permissions approved by

the National Tracing

Center and user’s first

line supervisor. The hard

copy data are protected

by provisions of ATF’s

Physical Security

Program order.b

aRACF is an IBM software program that controls who can log in, where they can go within the

system once logged in, what they can do (read, write, modify, delete), when they can do it, and

from where they can do it.

bATF’s Order 1720.1c, Physical Security Program, requires the protection of hard copy data from

unauthorized use by personnel and destruction from natural and malicious intent.

Source: ATF.

Page 37 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

Multiple Sales Subsystem The Multiple Sales Subsystem collects and tracks information on

purchasers of two or more pistols and/or revolvers at one time or during

any 5 consecutive business days. Data are used to conduct traces of

firearms suspected of being used in crimes and to develop investigative

leads as part of Project Lead, which is discussed later in this appendix.

A provision of the Gun Control Act of 1968, as amended, 18 U.S.C.

923(g)(3)(A) requires federal firearms licensees to report these

transactions. The implementing regulation is at 27 C.F.R. 178.126a.

Table IV.1a: Characteristics of the Multiple Sales Subsystem

Data sources Data input Data location Authorized users Security measures

Data are taken from the

multiple sale reports (ATF

Form 3310.4).

Data in the system

include the name,

address, date of birth,

place of birth, race, and

sex of purchasers; the

serial number, make,

model, type, and caliber

of firearms purchased;

and the name, address

and license number of

the federal firearms

licensee.

Data are maintained on a

mainframe computer at

the National Data Center.

About 40 National

Tracing Center personnel

have complete access to

the system. About 60

contractors and special

agents in certain field

divisions have restricted

access.

The electronic data are

protected by the RACF. a

User access privileges

are defined by the RACF

administrator with the

permissions approved by

the National Tracing

Center and user’s first

line supervisor. The hard

copy data are protected

by provisions of ATF’s

Physical Security

Program order.b

aRACF is an IBM software program that controls who can log in, where they can go within the

system once logged in, what they can do (read, write, modify, delete), when they can do it, and

from where they can do it.

bATF’s Order 1720.1c, Physical Security Program, requires the protection of hard copy data from

unauthorized use by personnel and destruction from natural and malicious intent.

Source: ATF.

Page 38 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

Firearms Tracking

System

The Firearms Tracking System was designed to enable ATF to study

firearms recovered in ATF field divisions’ geographic areas of responsibility

and analyze information concerning problem dealers, questionable

purchasers, and other descriptive firearms data. It was developed as an

investigative tool to be used by ATF field divisions. This system was

designed to be an interim system and was to be replaced by Project Lead,

which is discussed next. However, as of July 1996, ATF field offices could

use the Firearms Tracking System, Project Lead, or both.

According to ATF, the data in this system are the same as the trace data in

the Firearms Tracing System. Therefore, the statutory authority for the

data collected is the same as that for the Firearms Tracing System.

Table IV.2: Characteristics of the Firearms Tracking System

Data sources Data input Data location Authorized users Security measures

Data are manually derived

directly from the

completed trace reports.

Data in the system

include the type of

firearms; name of the

dealer, purchaser, and

possessor of traced

firearms; recovery

location; type of crime;

quantity of firearms in a

multiple sale report; and

agency and project

identification.

Data are maintained on

either the local area

network server or on a

personal computer hard

drive.

ATF special agents in

about 10 field divisions

have or had access to

their divisions’ systems.

Only ATF personnel with

authorized identifications

and passwords can

access data in the

Firearms Tracking

System.

Source: ATF.

Page 39 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

Project Lead Project Lead is currently a personal computer-based system designed to

analyze firearms data contained in the Firearms Tracing System by ATF’s

field divisions’ geographic areas of responsibility. The field divisions use

the data to help identify and investigate suspected firearms traffickers,

“straw” purchasers, and federal firearms licensees suspected of

involvement in criminal activity. ATF plans to make Project Lead a

mainframe system at the National Data Center.

Since, according to ATF, the data in this system are obtained directly from

the Firearms Tracing System, the statutory authority for the data collected

is the same as that for the Firearms Tracing System.

Table IV.3: Characteristics of Project Lead

Data sources Data input Data location Authorized users Security measures

Data are directly from the

Firearms Tracing System.

Data in the system are

exact replicas of data in

the Firearms Tracing

System. This includes

firearms recovered that

are suspected of being

involved in a crime and

traced by the National

Tracing Center (includes

the purchasers’ or

possessors’ names;

multiple sales reported

by licensees; names of

individuals associated

with the recovery of a

firearm, e.g., names of

people associated with a

vehicle in which a firearm

was recovered; and the

recovery locations of

firearms.

Data from the Firearms

Tracing System are

periodically downloaded

to and maintained on

stand-alone computers in

certain ATF field

divisions.

Selected ATF special

agents and inspectors in

the field divisions have

access to data that are

appropriate to their

geographic area of

responsibility.

The electronic data are

protected by users’

authorized identifications

and passwords built into

the Project Lead

application. The hard

copy data are protected

by provisions of ATF’s

Physical Security

Program order.a

aATF’s Order 1720.1c, Physical Security Program, requires the protection of hard copy data from

unauthorized use by personnel and destruction from natural and malicious intent.

Source: ATF.

Page 40 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

Out-Of-Business

Records System

The Out-of-Business Records System was designed to collect, index, and

retrieve microfilmed copies of firearms transactions records that federal

firearms licensees have forwarded to ATF when the licensees permanently

discontinued their business operations. The data are used to conduct

traces of firearms suspected of being used in crimes.

A provision of the Gun Control Act of 1968, as amended, 18 U.S.C.

923(g)(4), requires federal firearms licensees who permanently

discontinue their business to forward their records to ATF within 30 days

after the discontinuance. The implementing regulation is at 27 C.F.R.

178.127.

Table IV.4: Characteristics of the Out-Of-Business Records System

Data sources Data input Data location Authorized users Security measures

Data are from records of

out-of-business federal

firearms licensees. These

records include

acquisition and disposition

logbooks and firearms

transaction records (ATF

Form 4473).

The microfilm system

contains an exact

photographic image of

the firearms transaction

record. The record

contains, among other

things, the name and

address of the firearms

purchaser. These

records are indexed on a

minicomputer. The index

system contains, among

other things, microfilm

cartridge numbers, film

frame numbers, and

serial numbers of

firearms recorded on

each cartridge.

The microfilm cartridges

containing microfilmed

records are maintained

in file cabinets at the

National Tracing Center.

The computerized index

data that are captured by

a minicomputer are

stored on a mainframe

computer system at the

National Data Center.

About 100 National

Tracing Center personnel

and contractors have

complete access to the

system.

The electronic data in the

index system are

protected by the RACFa

on the mainframe and by

users’ personal

identification and

passwords on the

minicomputer. The hard

copy data are protected

by provisions of ATF’s

Physical Security

Program order.b

aRACF is an IBM software program that controls who can log in, where they can go within the

system once logged in, what they can do (read, write, modify, delete), when they can do it, and

from where they can do it.

bATF’s Order 1720.1c, Physical Security Program, requires the protection of hard copy data from

unauthorized use by personnel and destruction from natural and malicious intent.

Source: ATF.

Page 41 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IV 

ATF Data Systems That Contain Retail

Firearms Purchaser Data

National Firearms Act

Database

The National Firearms Act Database contains data on certain classes of

firearms, such as machine guns and destructive devices, as defined by the

National Firearms Act of 1934, 26 U.S.C. Chapter 53. (This act was

recodified as Title II of the Gun Control Act of 1968.) The act requires the

registration of these defined categories of weapons and requires that the

Secretary of the Treasury collect transfer taxes and maintain a central

registry of these firearms, which is known as the National Firearms

Registry and Transfer Record. (Implementing regulations are set forth in

27 C.F.R. Part 179.) ATF uses this system to monitor and enforce these

classes of firearms. Federal, state, and local law enforcement agencies use

the data for criminal prosecutions.

Table IV.5: Characteristics of the National Firearms Act Database

Data sources Data input Data location Authorized users Security measures

Data are from applications

and other forms submitted

by manufacturers, dealers,

and owners of Title II

firearms.

Data in the system

include the type, model,

and serial number of

firearm; the name and

address of the retail

purchaser or possessor;

and the amount of tax

paid and other

accounting data, such as

the date the tax was paid.

Electronic data are

maintained on a

mainframe computer at

the National Data Center.

ATF captures about 40

percent of the data from

the applications and

forms into an electronic

format. Hard copies of

the applications, forms,

and correspondence are

maintained in ATF files or

on microfilm or computer

disks. They are filed at

ATF headquarters or the

National Archives and

Records Administration

warehouses in the

Washington, D.C., area.

Fifteen National Firearms

Act Branch personnel

and special agents

assigned to the

Enforcement Operations

Center of the National

Communications Center,

Intelligence Division,

Criminal Enforcement

Program, have access to

the system.

The electronic data are

protected by RACF.a

User access privileges

are defined by the RACF

administrator with the

permissions approved by

the National Firearms Act

Branch and user’s first

line supervisor. The hard

copy data are protected

by provisions of ATF’s

Physical Security

Program order.b

aRACF is an IBM software program that controls who can log in, where they can go within the

system once logged in, what they can do (read, write, modify, delete), when they can do it, and

from where they can do it.

bATF’s Order 1720.1c, Physical Security Program, requires the protection of hard copy data from

unauthorized use by personnel and destruction from natural and malicious intent.

Source: ATF.

Page 42 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix V 

Description of ATF’s Out-Of-Business

Records System

When firearms licensees discontinue their businesses, ATF needs access to

their records for tracing purposes. To ensure that it had access to these

records, shortly after the passage of the Gun Control Act, ATF issued a

regulation requiring federal firearms licensees who permanently

discontinued their businesses to forward their records to ATF within 30

days following the discontinuance (27 C.F.R. 178.127). The Firearms

Owners’ Protection Act codified this reporting requirement (18 U.S.C.

923(g)(4)). Accordingly, since the enactment of the Gun Control Act, ATF

has maintained the out-of-business records at a central location, currently

the National Tracing Center.5

Before fiscal year 1991, ATF stored the out-of-business records in boxes

with a Tracing Center file number assigned to each licensee. If during a

trace ATF determined that the firearms licensee who sold the firearm was

out of business and had sent in his or her records, ATF employees were to

locate the boxes containing the records and manually search them for the

appropriate serial number. According to ATF, this was a time-consuming

and labor-intensive process, which also created storage problems for ATF.

In 1991, ATF began a major project to microfilm the out-of-business records

and destroy the originals. Instead of in boxes, the out-of-business records

were stored on microfilm cartridges, with the firearms licensee numbers

assigned to them. Although this system occupied much less space than the

hard copies of the records, ATF officials said it was still time consuming to

conduct firearms traces because employees had to examine up to 3,000

images on each microfilm cartridge to locate a record.

In fiscal year 1992, ATF began using a minicomputer to create a

computerized index of the out-of-business microfilm records containing

the information necessary to identify whether ATF had a record relating to

a firearm being traced. The index contains the following key information:

(1) the cartridge number of the microfilm; (2) an index number; (3) the

serial number of the firearm; (4) the federal firearms licensee number; and

(5) the type of document on microfilm, i.e., a Firearms Transaction Record

(ATF Form 4473) or acquisition and disposition logbook pages. The index

information that is captured by the minicomputer is then stored on a

database in ATF’s mainframe computer to allow searches of the index

information by an employee. The other information, including the firearms

purchaser’s name or other identifying information and firearms

5

The ATF regulation allows firearms licensees who discontinue their businesses to deliver their

records to any ATF office in the region in which the business was located. The local office is to

forward them to the Tracing Center.

Page 43 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix V 

Description of ATF’s Out-Of-Business

Records System

manufacturer, type, and model, remains on the microfilm cartridges and

must be viewed with a microfilm reader.

Since the establishment of the computerized out-of-business records

index, ATF does not begin a trace by contacting firearms manufacturers

and importers. Rather it queries the Out-of-Business Records System to

determine if the firearm being traced is contained in the records of an

out-of-business licensee. To perform a query of the system, employees are

to enter the serial number of the firearm in question into the mainframe

computer’s database. If the serial number is matched with a particular

out-of-business licensee record, the query will produce a list of one or

more microfilm cartridges indicating the cartridge number and frame

where the serial number in question may be found. After locating the

appropriate cartridges, the employee is to use the location information in

the index to search the microfilm frames to locate the record containing

the serial number. Since the index does not associate a firearm’s serial

number with the manufacturer and type or model, the employee may need

to examine several frames on one or more cartridges to locate a record.

After locating the record, the employee is to examine the record to identify

the purchaser of the firearm. If the identified purchaser is not another

licensee, the trace is considered complete. If the purchaser is another

licensee, the Tracing Center is to contact the licensee. If the serial number

is not located in the out-of-business records, the Tracing Center is then to

contact the manufacturer or importer to determine who purchased the

firearm.

According to ATF officials, the indexed Out-of-Business Records System

has (1) greatly reduced the need to contact manufacturers, importers, and

other licensees and (2) reduced the time and cost, including storage costs,

necessary to conduct firearm traces.

As shown in table V.1, during fiscal years 1992 through 1995, ATF received

out-of-business records from 68,660 firearms licensees. ATF officials

estimated that during this period, ATF spent about $9.6 million, including

the cost of contract employees (65 as of July 1996), to process and

maintain out-of-business records. According to ATF officials, ATF is

receiving an increased number of records primarily because the number of

licensees going out of business has increased, and more of these licensees

have sent in their records. The number of licensees who have gone out of

business more than doubled, from 34,663 in fiscal year 1992 to 75,569 in

Page 44 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix V 

Description of ATF’s Out-Of-Business

Records System

fiscal year 1995.6 About 43 percent of the licensees who went out of

business in fiscal year 1995 sent in their records, compared to about 25

percent in fiscal year 1992—an increase of about 75 percent. ATF officials

estimated that during fiscal years 1992 through 1995, ATF microfilmed

about 47 million documents contained in about 20,000 boxes. Although ATF

does not systematically collect data on the number of traces involving

out-of-business records, ATF officials estimated that ATF used the

out-of-business records to help complete about 42 percent of all

completed trace requests during this period. ATF had no information on the

number of completed traces that identified retail firearms licensees or

purchasers and involved the use of out-of-business records.

Table V.1: Disposition of Records of

Federal Firearms Licensees Who Went

Out of Business, FYs 1992-1995

Sent records to ATF

Did not send

records to ATF

Out-of-business federal firearms licensees

Fiscal year Number Percent Number Percent Total

1992 8,692 25 25,971 75 34,663

1993 7,189 17 34,195 83 41,384

1994 20,504 32 42,699 68 63,203

1995 32,275 43 43,294 57 75,569

Total 68,660 32 146,159 68 214,819

Source: GAO analysis of ATF data.

6

See Federal Firearms Licensees: Various Factors Have Contributed to the Decline in the Number of

Dealers (GAO/GGD-96-78, Mar. 29, 1996).

Page 45 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VI 

Description of ATF’s Multiple Sales System

Since 1975, federal firearms licensees have been required by regulation (27

C.F.R. 178.126a) and subsequently by law (18 U.S.C. 923(g)(3)(A)) to

report all transactions in which an unlicensed person7

 has acquired two or

more pistols and/or revolvers8

 at one time or during any 5 consecutive

business days (referred to as a multiple sale). As ATF stated at the time the

regulation was issued, the purpose for requiring multiple sale reports was

to enable ATF to “monitor and deter illegal interstate commerce in pistols

and revolvers by unlicensed persons.”9

The Firearms Owners’ Protection Act of 1986 codified the multiple sale

regulatory reporting requirement. Also, in November 1993, under Title II of

Public Law 103-159, federal firearms licensees were required to send a

copy of the multiple sale report to the state or local law enforcement

agency in whose jurisdiction the sale or other disposition took place.

Under 18 U.S.C. 923(g)(3)(A), ATF can specify the multiple sale reporting

form and designate the ATF office where the report is to be sent. Currently,

federal firearms licensees are required to send multiple sale reports to the

ATF criminal enforcement field division located in their respective area.

Reports are to be sent no later than the close of business on the day that

the multiple sale occurs. In addition, licensees are required by regulation

to retain a copy of the multiple sale reports.

Before November 1995, ATF required that multiple sale reports be

maintained by its field divisions. According to ATF, these divisions in the

past maintained multiple sale reports in a variety of ways: some used local

computer information tracking systems, others used alphabetical card

files, and before 1987 some used the Department of the Treasury’s

Enforcement Communications System (TECS),10 a law enforcement data

system that includes centralized databases used by Treasury and other law

enforcement agencies.

7

Multiple sales between federal firearms licensees are not required to be reported.

8

As defined in 27 C.F.R. 178.11, a pistol is “[a] weapon originally designed, made, and intended to fire a

projectile (bullet) from one or more barrels when held in one hand, and having (a) a chamber(s) as a

integral part(s) of, or permanently aligned with, the bore(s); and (b) a short stock designed to be

gripped by one hand and at an angle to and extending below the line of the bore(s).” The regulations

also define a revolver as “[a] projectile weapon, of the pistol type, having a breechloading chambered

cylinder so arranged that the cocking of the hammer or movement of the trigger rotates it and brings

the next cartridge in line with the barrel for firing.”

9

40 Fed. Reg. 19,201 (May 2, 1975).

10According to ATF officials, those ATF criminal enforcement field divisions using TECS stopped using

the system when multiple sale report data were lost during a TECS system upgrade in 1987. The lost

data were rebuilt manually from information collected from ATF field divisions.

Page 46 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VI 

Description of ATF’s Multiple Sales System

According to ATF policy, field divisions are to use multiple sale reports to

develop investigative leads for those persons who engage in business as

unlicensed firearms dealers or who transport or sell firearms illegally in

interstate commerce. These reports are to provide an investigative tool to

identify traffickers and other violators of federal firearms laws.

In an August 1993 memorandum on gun dealer licensing, the President

listed a number of steps that ATF could take to ensure compliance with

federal firearms licensing requirements, including increasing scrutiny of

licensees’ multiple sale reports and providing automated access to those

reports. Further, according to ATF, plans to automate multiple sale reports

were included in the President’s firearms initiative, and Congress

appropriated fiscal year 1995 funds to implement the initiative.

In November 1995, ATF began implementing a new policy to process and

computerize multiple sale reports at its National Tracing Center. Field

divisions were instructed to forward their multiple sale reports to the

Tracing Center for processing.11

ATF’s decision to computerize multiple sale reports at the Tracing Center

was based on a test conducted from June through October 1995. In

June 1995, to provide the capability for computerizing multiple sale

reports, ATF upgraded its Firearms Tracing System by developing a

Multiple Sales Subsystem. This system allows the entry of multiple sale

information directly into the Firearms Tracing System. ATF then tested the

system by entering multiple sale reports forwarded by three field divisions.

Following successful completion of the test, ATF issued its new policy.

ATF decided to computerize the handling of multiple sale reports at the

Tracing Center for several reasons. First, by computerizing the reports as

part of ATF’s Firearms Tracing System, multiple sale information became

readily available for firearms traces. When maintained locally by field

divisions, multiple sale reports were not readily available for firearms

tracing. Second, and most important according to the Chief of the

Firearms Enforcement Division, by entering multiple sale information into

the Firearms Tracing System, the information would be available to field

divisions through Project Lead. ATF, through Project Lead, provides

11In the future, ATF plans to have federal firearms licensees send multiple sale reports directly to the

Tracing Center, eliminating entirely the handling of the reports by field divisions. However, according

to the Chief of the Firearms Enforcement Division, distributing revised multiple sale report forms to

federal firearms licensees may not occur for a year or two. ATF has a large inventory of the current

multiple sale report forms designating field divisions as recipients of the reports. Therefore, for cost

reasons, ATF would like to deplete the existing supply of forms before distributing a revised version.

Page 47 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VI 

Description of ATF’s Multiple Sales System

monthly firearms trace information along with multiple sale and other data

on computer diskettes to its field divisions to develop investigative leads.12

Once the Tracing Center receives multiple sale reports from field

divisions, the information is entered into the Multiple Sales System. The

data entered includes (1) purchaser information such as name, address,

date of birth, place of birth, race, and sex; (2) firearms identification

information, including serial numbers of pistols and/or revolvers

purchased; and (3) federal firearms licensee identification information.

Multiple sale data in the system are retrievable by purchaser name and

firearm serial number. After the information is entered into the system, the

multiple sale reports are to be microfilmed, and the original reports are to

be destroyed. The current ATF Form 3310.4—Report of Multiple Sale or

Other Disposition of Pistols and Revolvers—showing the information

requested of licensees is reproduced in appendix VII.

The Tracing Center has been processing multiple sale reports received

from field divisions since June 1995. Through June 1996, the Tracing

Center had entered data on 91,599 multiple sale reports and had 521

firearms traces linked to multiple sale reports. The Special Agent in

Charge of the National Tracing Center estimated that in the future the

Center will receive 130,000 multiple sale reports annually. This official

estimated that each multiple sale report includes an average of 2.3

firearms. Table VI.1 provides monthly data on the number of multiple sale

reports processed at the Tracing Center along with the number of firearms

linked to multiple sale reports.

12Project Lead is a computer software program that allows ATF criminal enforcement field divisions to

query and manipulate data downloaded from the Firearms Tracing System. These data include

firearms dealer and purchaser information from firearms traces and information from all multiple sale

reports, including purchaser and firearms information. ATF criminal enforcement field divisions are

provided information that is applicable to their respective geographic area of responsibility.

Page 48 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VI 

Description of ATF’s Multiple Sales System

Table VI.1: Number of Multiple Sale Reports Processed at the National Tracing Center and Firearms Traces Linked to

Multiple Sale Reports, June 1995-June 1996

Month

Multiple sale

reports receiveda

Multiple sale

reports enteredb

Multiple sale

firearms entered

Firearms traces

entered

Firearms traced

to multiple sale

reports

June 1995 N/A 795 1,831 6,814 0

July 1995 N/A 2,403 5,489 5,962 14

Aug. 1995 N/A 6,867 15,838 4,648 7

Sept. 1995 6,332 4,685 10,812 6,264 6

Oct. 1995 13,894 2,788 6,455 6,906 3

Nov. 1995 17,846 5,374 12,546 5,391 24

Dec. 1995 19,954 4,851 11,164 6,102 14

Jan. 1996 11,650 3,671 8,419 7,661 23

Feb. 1996 15,200 8,270 19,040 8,192 24

Mar. 1996 17,716 12,344 27,842 11,523 40

Apr. 1996 12,598 19,117 43,696 18,617 158

May 1996 8,699 14,877 33,344 10,324 157

June 1996 10,248 5,557 12,906 8,653 51

Total 134,137 91,599 209,382 107,057 521

N/A = ATF did not maintain data.

aThree field divisions—Atlanta, Birmingham, and Dallas—forwarded reports to the National

Tracing Center from June through October 1995. In November, all field divisions were instructed

to forward reports to the Tracing Center.

bAccording to ATF officials at the Tracing Center, as of April 30, 1996, approximately 25 percent

of the multiple sale reports forwarded by field divisions were missing critical data and could not

be entered into the Multiple Sales Subsystem. According to the Chief of the Firearms and

Explosives Regulatory Division, Tracing Center personnel were to begin contacting licensees to

obtain missing information on future reports. If unsuccessful, they were to forward incomplete

multiple sale reports to ATF inspectors for face-to-face contact with licensees.

Source: ATF.

As part of its November 1995 policy to computerize multiple sale reports at

the Tracing Center, ATF included a requirement for purging firearms

purchaser data not identified in firearms traces. The requirement calls for

purging the purchaser data not identified in a trace 2 years after the date of

the sale. The remainder of the data entered for each multiple sale, such as

firearms descriptive data, is not to be purged and is to remain in the

system to be used as investigative intelligence. In contrast, all multiple sale

data identified in firearms traces, including purchaser data, is not to be

purged from the system. According to the Chief of the Firearms

Enforcement Division, the primary reason for purging purchaser data over

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Appendix VI 

Description of ATF’s Multiple Sales System

2 years old is to delete data that may not be useful. The Special Agent in

Charge of the National Tracing Center said that ATF is sensitive for privacy

reasons to retaining firearms purchaser data that may have lost its utility.

Page 50 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VII 

Report of Multiple Sale or Other Disposition

of Pistols and Revolvers

Page 51 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VIII 

Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

We were asked to evaluate ATF’s interpretation of data restrictions

contained in 18 U.S.C. 926(a) and in a rider to its annual appropriation act.

We have reviewed the relevant laws, legislative history, and ATF legal

opinions and met with ATF lawyers regarding their interpretation. Set forth

below are the relevant statutory provisions, our analysis of ATF’s

interpretation of these provisions, and our analysis of the application of

these restrictions to the two ATF data systems that we reviewed in detail,

the Out-of-Business Records System and the Multiple Sales System.

Although we agree with ATF’s interpretation of 18 U.S.C. 926(a), we believe

that ATF’s interpretation of the restriction in its annual appropriation was

too narrow.13 However, we found that the two data systems that we

reviewed did not violate the data restrictions.

Background The Gun Control Act of 1968 established a system requiring federal

firearms licensees to record firearms transactions, maintain that

information at their business premises, and make such records available to

ATF for inspection and search under certain prescribed circumstances.

This system was intended to permit law enforcement officials to trace

firearms involved in crimes while allowing the records themselves to be

maintained by the licensees rather than by a governmental entity. As

originally enacted, the Gun Control Act required licensees to submit such

reports and information as the Secretary of the Treasury prescribed by

regulation and authorized the Secretary to prescribe such rules and

regulations as deemed reasonably necessary to carry out the provisions of

the act.14

The Appropriation

Rider

In 1978, pursuant to the general authorities contained in the Gun Control

Act, ATF proposed regulations that would have required licensees to report

virtually all of their firearms transactions to ATF through quarterly reports.15

Under the proposed regulations, these licensee reports of sales and other

dispositions would not have identified a nonlicensed transferee by name

and address. These proposed regulations prompted criticism from those

who believed that the reporting requirements would lead to the

establishment of a system of firearms registration. In response to this

criticism, Congress placed a rider in ATF’s fiscal year 1979 appropriation

13In response to a draft of this report, ATF has revised its analysis of the restriction. See ATF’s written

comments in appendix IX.

14See 18 U.S.C. 923(g) and 926 (1976 ed.).

1543 Fed. Reg. 11,800 (Mar. 21, 1978).

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Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

act prohibiting the centralization or consolidation of licensee records and

specifically prohibiting final issuance of the 1978 proposed regulations.

The rider provided

“[t]hat no funds appropriated herein shall be available for administrative expenses in

connection with consolidating or centralizing within the Department of the Treasury the

records of receipt and disposition of firearms maintained by Federal firearms licensees or

for issuing or carrying out any provisions of the proposed rules of the Department of the

Treasury, Bureau of Alcohol, Tobacco and Firearms, on Firearms Regulations, as published

in the Federal Register, volume 43, number 55, of March 21, 1978.”16

The Senate Appropriations Committee report explained the purpose of the

rider as follows:

“The Bureau of Alcohol, Tobacco, and Firearms (BATF) has proposed implementation of

several new regulations regarding firearms. The proposed regulations, as published in the

Federal Register of March 21, 1978 would require:

“(1) A unique serial number on each gun manufactured or imported into the United States.

“(2) Reporting of all thefts and losses of guns by manufacturers, wholesalers and dealers.

“(3) Reporting of all commercial transactions involving guns between manufacturers,

wholesalers and dealers.

“The Bureau would establish a centralized computer data bank to store the above

information. It is important to note that the proposed regulations would create a central

Federal computer record of commercial transactions involving all firearms—whether

shotguns, rifles, or handguns. There are approximately 168,000 federally licensed firearms

dealers, manufacturers, and importers. It is estimated that the proposed regulations would

require submission of 700,000 reports annually involving 25 million to 45 million

transactions.

“It is the view of the Committee that the proposed regulations go beyond the intent of

Congress when it passed the Gun Control Act of 1968. It would appear that BATF and the

Department of Treasury are attempting to exceed their statutory authority and accomplish

by regulation that which Congress has declined to legislate.”17

While the reference to the 1978 proposed rules was later dropped, the

general prohibition against the centralization or consolidation of records

16P.L. 95-429, 92 Stat. 1002 (Oct. 10, 1978).

17S. Rep. No. 95-939, 95th Cong., 2d Sess. at 11-12 (1978); see also H.R. Rep. No. 95-1249, 95th Cong., 2d

Sess. at 9-10 (1978).

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Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

has been included in each of ATF’s annual appropriations since fiscal year

1979. The fiscal year 1996 appropriation rider prohibits the consolidation

or centralization of “the records, or any portion thereof, of acquisition and

disposition of firearms maintained by Federal firearms licensees” within

the Department of the Treasury.18

18 U.S.C. 926(a) Congress passed the second data restriction as part of the Firearms

Owners’ Protection Act (FOPA) in 1986. Specifically, the act amended 18

U.S.C. 926 to provide in part:

“(a) The Secretary may prescribe only such rules and regulations as are necessary to carry

out the provisions of this chapter, including—“(1) regulations providing that a person

licensed under this chapter, when dealing with another person so licensed, shall provide

such other licensed person a certified copy of this license;

“(2) regulations providing for the issuance, at a reasonable cost, to a person licensed under

this chapter, of certified copies of his license for use as provided under regulations issued

under paragraph (1) of this subsection; and

“(3) regulations providing for effective receipt and secure storage of firearms relinquished

by or seized from persons described in subsection (d)(8) or (g)(8) of section 922.

“No such rule or regulation prescribed after the date of the enactment of the Firearms

Owners’ Protection Act [May 19, 1986] may require that records required to be maintained

under this chapter or any portion of the contents of such records, be recorded at or

transferred to a facility owned, managed, or controlled by the United States or any State or

any political subdivision thereof, nor that any system of registration of firearms, firearms

owners, or firearms transactions or dispositions be established. Nothing in this section

expands or restricts the Secretary’s authority to inquire into the disposition of any firearm

in the course of a criminal investigation.” (Emphasis supplied.)

This data restriction was one of several amendments to the Gun Control

Act made by FOPA to limit ATF’s authority over licensees and their records.

For example, FOPA amended section 923 of title 18 to provide that licensed

“importers, manufacturers, and dealers shall not be required to submit to

the Secretary reports and information with respect to such records [they

are required to maintain] and the contents thereof, except as expressly

required by this section.”19 The act went on to codify in section 923 several

reporting requirements that ATF previously had imposed on licensees by

18P.L. 104-52, 109 Stat. 471 (Nov. 19, 1995).

1918 U.S.C. 923(g)(1)(A).

Page 54 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VIII 

Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

regulation, including those related to out-of-business licensee records and

reports of multiple handgun sales.20

ATF’s Legal

Interpretation

ATF’s interpretation of the data restrictions in the annual appropriation

rider and section 926(a) was contained in a number of opinions and

correspondence that ATF provided to us during the course of the audit.

These opinions generally address whether the data restrictions prohibit

the establishment of a specific data system or apply to information

gathered during the course of ATF audits of a licensee’s compliance with

recordkeeping requirements. On the basis of its interpretation of the two

provisions, as set forth below, ATF concluded in each instance that the

provisions did not apply to the systems or information collections at issue.

Essentially, ATF maintained that the restrictions in section 926(a) and the

appropriation act rider have the same effect, and that they only were

“intended to preclude future [post-FOPA] regulations imposing additional

reporting requirements upon licensees.”21 Thus, ATF viewed the data

restrictions as having no application to the agency’s internal information

practices—i.e., they did not restrict what ATF did with information it had

acquired from licensees through pre-FOPA reporting requirements or other

means.22

ATF’s interpretation relied on the language and context of section 926 and

related provisions (primarily section 923), as well as the language and

context of the 1979 appropriation rider, which was enacted to counter the

broad reporting requirements that ATF sought to impose on licensees

through the 1978 proposed rulemaking. ATF maintained that the basic

effect of FOPA—codifying certain former regulatory reporting requirements

in section 923 and restricting the agency’s authority to prescribe rules and

regulations in section 926—was to preempt any additional reporting

requirements that the agency might impose on licensees. ATF also cited the

principle of deference to be accorded an agency’s interpretation of laws

that it administers.

20See 18 U.S.C. 923(g)(3) and (4).

21See, for example, Memorandum dated April 21, 1989, from the Assistant Chief Counsel (Firearms and

Explosives), ATF, to the Chief, Firearms and Explosives Division, captioned “North Atlantic Region

Firearms Initiative.”

22In response to a draft of this report, ATF has revised its analysis of the restriction. See ATF’s written

comments in appendix IX.

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Appendix VIII 

Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

Analysis of ATF’s

Interpretation

We agreed with ATF’s interpretation of the data restrictions as far as it

went; clearly the data restrictions apply to rules or regulations that would

impose additional reporting requirements upon licensees. The question

was whether they have any effect beyond such reporting requirements,

and, in particular, whether they restrict how ATF compiles or otherwise

uses firearms transaction records once they have been acquired from

licensees through current reporting requirements or other means.

With regard to the restriction in section 926(a), we agree with ATF that it is

limited to prescribing rules and regulations. The appropriation rider,

however, contains no language that would limit its application either to

prescribing rules and regulations or to imposing additional reporting

requirements on licensees. The original version of the rider did refer to the

1978 proposed rulemaking, but it was not limited to that proposal. The

reference to the 1978 proposal was dropped in fiscal year 1994. Moreover,

given its structure and language—prohibiting the use of appropriations in

connection with consolidating or centralizing certain records within the

Department of the Treasury—the rider appears to encompass ATF’s

internal operations.

The ATF opinions we reviewed did not analyze the appropriation rider,

other than to treat it as “similar to” the section 926 restriction. However,

we believe that the appropriation rider clearly has legal effect independent

of section 926. Congress enacted it for a number of years predating FOPA

and has continued to enact it for each subsequent year. In fact, the

language of the appropriation rider was expanded in fiscal year 1994 to

include portions of licensee firearms records.23 There also are significant

differences in the language of the two provisions—most notably, the

absence from the rider of any limitation on its coverage to rules or

regulations. Also, there is no indication in the legislative history of FOPA

that section 926 was intended to subsume or otherwise affect the

appropriation rider. Finally, the appropriation rider was originally

intended to prevent ATF from obtaining and computerizing large volumes

of information on firearms transactions in a manner that was viewed as

“accomplish[ing] by regulation that which Congress has declined to

legislate.” It would be incongruous to conclude that the appropriation

rider would not reach efforts to accomplish the same result through means

other than regulatory requirements imposed on licensees.

Therefore, in our view, ATF’s interpretation that the appropriation rider

applied only to the issuance of rules and regulations that impose

23P.L. 103-123, 107 Stat. 1229 (Oct. 28, 1993).

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Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

additional reporting requirements on licensees, and did not reach ATF’s

internal information practices, was not supported by the statutory

language or legislative history of the rider.

Determining the extent to which the appropriation rider restricts ATF’s

internal information practices poses more difficult questions. The

appropriation rider applies to “consolidating or centralizing, within the

Department of the Treasury, the records, or any portion thereof, of

acquisition and disposition of firearms maintained by Federal firearms

licensees.” However, we do not believe that the rider precludes all

information practices and data systems that involve an element of

“consolidating or centralizing” licensee records.

As discussed above, the legislative history of the rider indicates that it was

originally enacted in response to an ATF proposal that was viewed as a

wholesale aggregation of licensee firearms transaction records that went

“beyond the intent of Congress when it passed the Gun Control Act of

1968.” There is no evidence in the legislative history that the rider was

intended to overturn existing ATF information practices or data systems.

Indeed, FOPA, which amended the Gun Control Act and was enacted 8

years after the original rider was passed, reaffirmed several long-standing

ATF information practices. The rider must be interpreted in light of its

purpose and in the context of the other statutory provisions governing

ATF’s acquisition and use of information contained in the Gun Control Act,

as amended.

Pursuant to the Gun Control Act, ATF is responsible for certain regulatory

functions, such as licensing and monitoring firearms licensees, as well as

certain law enforcement functions, such as the tracing of firearms. The

act, as amended, contains specific statutory authorities that allow ATF to

obtain certain firearms transaction information from licensees. Section

923 contains licensee recordkeeping and reporting authorities, as well as

the authorities for ATF to conduct inspections and searches of licensee

business premises for certain purposes. To implement these

responsibilities and authorities, ATF necessarily gathers specific firearms

transaction data and must centralize or consolidate the data to some

degree.

However, as discussed above, section 926(a) precludes ATF from issuing

post-FOPA rules or regulations that require that any system of registration

of firearms, firearms owners, or firearms transactions or dispositions be

established. The legislative history of FOPA indicates a clear congressional

Page 57 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VIII 

Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

concern that such a registry not be established. For example, the Senate

report accompanying an earlier version of FOPA stated:

“the Committee wishes to emphasize that, notwithstanding any other provision of law, the

authority granted under 18 U.S.C. 923(g)(3), (4) and (5), as well as that contained in

paragraph (1), as amended, are not to be construed to authorize the United States or any

state or political subdivision thereof, to use the information obtained from any records or

forms which are required to be maintained for inspection or submission by licensees under

Chapter 44 to establish any system of registration of firearms, firearms owners, or firearms

transactions or dispositions.”24

Therefore, to the extent that the centralization or consolidation of records

is incident to carrying out a specific ATF responsibility and does not entail

the aggregation of data on firearms transactions in a manner that would go

beyond the purposes of the Gun Control Act of 1968, as amended, we do

not believe that the rider would be violated.

ATF’s Out-Of-Business

Records System and

Multiple Sales System

Comply With Data

Restrictions

We reviewed two ATF data systems, the Out-of-Business Records System

and the Multiple Sales System, to determine if they comply with the data

restrictions. We found that the systems do not violate the restrictions.

Out-Of-Business Records

System

Shortly after the passage of the Gun Control Act of 1968, ATF issued

regulations requiring firearms licensees who permanently discontinued

their businesses to forward their records to ATF within 30 days following

the discontinuance. In 1986, FOPA codified this regulatory reporting

requirement.25

According to ATF, prior to 1991 the out-of-business records were

maintained at a central location in boxes, with a file number assigned to

each firearms licensee. If ATF determined during a trace that a firearm had

24S. Rep. No. 98-583, 98th Cong., 2d Sess. at 18 (1984).

2518 U.S.C. 923(g)(4). The provision states, “Where a firearms or ammunition business is discontinued

and succeeded by a new licensee, the records required to be kept by this chapter shall appropriately

reflect such facts and shall be delivered to the successor. Where discontinuance of the business is

absolute, such records shall be delivered within thirty days after the business discontinuance to the

Secretary [of the Treasury]. However, where State law or local ordinance requires the delivery of

records to other responsible authority, the Secretary may arrange for the delivery of such records to

such other responsible authority.”

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Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

been sold by a firearms licensee who was out of business, an ATF employee

manually searched the records for the appropriate serial number.

According to ATF, this was a time-consuming and labor-intensive process,

and the volume of records created storage problems.

In 1991, ATF began a major project to microfilm these records. In fiscal

year 1992, ATF established a computerized index of the microfilm records.

The index contains the following information: (1) the cartridge number of

the microfilm, (2) an index number, (3) the serial number of the firearm,

(4) the federal firearms licensee number, and (5) the type of document on

microfilm. The other information on the microfilm frames, including the

firearms purchaser’s name or other identifying information, remains

stored on the microfilm and is not computerized. The Out-of-Business

Records System is described in detail in appendix V.

We believe that ATF’s Out-of-Business Records System does not violate the

data restrictions. As noted previously, 18 U.S.C. 926(a) prohibits ATF from

prescribing certain rules or regulations after the date of enactment of FOPA.

At the same time it added the section 926(a) restriction, Congress codified

at 18 U.S.C. 923(g)(4) the then-existing regulatory requirement that

licensees who permanently go out of business send these records to ATF.

ATF’s current regulatory requirement concerning the out-of-business

records predates FOPA and, thus, is not subject to section 926(a).26

With regard to the annual appropriation rider, in our view, the

Out-of-Business Records System does not violate the general prohibition

on “consolidation or centralization” of firearms acquisition and disposition

records. The regulatory requirement that licensees send these records to

ATF existed before the appropriation rider was first passed for fiscal year

1979, and there is no indication in the legislative history that the rider was

intended to overturn ATF’s existing practices concerning the acquisition or

use of licensee information. According to ATF, the out-of-business records

historically have been maintained at a central location.

Moreover, FOPA provided ATF with specific statutory authority to collect

these records. In the legislative history of FOPA, there is evidence that

Congress considered placing constraints on ATF’s maintenance of

out-of-business records but did not do so. The Senate-passed version of

FOPA prohibited the Secretary of the Treasury from maintaining

out-of-business records at a centralized location and from entering them

26While some revisions have been made since the enactment of FOPA, these revisions do not expand

the scope of the regulation. See 27 C.F.R. 178.127 (1995).

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into a computer for storage or retrieval.27 This restrictive provision was

dropped from the version of the bill enacted by Congress.

Lastly, in fiscal year 1992, Congress appropriated $650,000 “for

improvement of information retrieval systems at the National Firearms

Tracing Center.”28 These funds were for the microfilming of the

out-of-business records. For fiscal year 1995, Congress appropriated funds

for the President’s firearms initiative, which included a request for funding

of the Out-of-Business Records System.29 Congress provided these funds in

the same legislation that contained the rider restricting consolidation and

centralization of licensee data. According to ATF, the system solved storage

and trace timing problems, thereby enhancing ATF’s tracing capabilities. At

the same time, the system does not computerize certain key information,

such as firearms purchaser information. In conclusion, we believe that the

system for maintaining the out-of-business records does not violate either

data restriction provision.

Multiple Sales System Since 1975, federal firearms licensees have been required by regulation

and subsequently by law30 to report all transactions in which an unlicensed

person has acquired two or more pistols and/or revolvers at one time or

during any 5 consecutive business days (referred to as a multiple sale).

The purpose of the multiple sale reporting requirement was to enable ATF

to “monitor and deter illegal interstate commerce in pistols and revolvers

by unlicensed persons.”31

According to ATF, the multiple sale reports have historically been

maintained at local ATF field divisions. In November 1995, ATF issued a new

policy to centralize and computerize multiple sale reports at its National

Tracing Center. The Multiple Sales Subsystem is described in detail in

appendix VI.

27S. 49, 99th Cong., 1st Sess. (1985).

28P.L. 102-141, 105 Stat. 836 (Oct. 28, 1991).

29P.L. 103-329, 108 Stat. 2384 (Sept. 30, 1994); see S. Rep. No. 103-286, 103d Cong., 2d Sess. at 19 (1994).

3018 U.S.C. 923(g)(3)(A), as added by FOPA. The provision states, “Each licensee shall prepare a report

of multiple sales or other dispositions whenever the licensee sells or otherwise disposes of, at one time

or during any five consecutive business days, two or more pistols, or revolvers, or any combination of

pistols and revolvers totalling two or more, to an unlicensed person. The report shall be prepared on a

form specified by the Secretary [of the Treasury] 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 multiple sale or other disposition occurs.”

3140 Fed. Reg. 19,201 (May 2, 1975).

Page 60 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VIII 

Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

We believe that ATF’s Multiple Sales System complies with the data

restrictions. As discussed earlier, the prohibitions in section 926(a) only

apply to certain rules or regulations prescribed after the enactment of

FOPA. In the same act, Congress codified the then-existing regulatory

requirement that federal firearms licensees prepare these multiple sale

reports and forward them to ATF. ATF’s current regulatory requirement

concerning the multiple sale reports predates FOPA and, thus, is not subject

to section 926(a).32

With regard to the annual appropriation rider, in our view, the Multiple

Sales System does not violate the general prohibition on the

“consolidation or centralization” of firearms acquisition and disposition

records. The requirement that licensees prepare these reports and send

them to ATF existed in regulation before the first appropriation rider was

passed in fiscal year 1979, and there is no indication in the legislative

history that the rider was intended to overturn ATF’s existing practices

concerning the acquisition or use of licensee information.

Although the multiple sale reports historically have been maintained at the

field level, the provisions and legislative history of FOPA, which gave ATF

specific statutory authority to collect these records, indicate that ATF

would not be precluded from computerizing the multiple sale reports. FOPA

requires that licensees send the reports “to the office specified” on the ATF

form.33 Under this provision, ATF could specify that licensees forward the

multiple sale reports to a central location. In addition, the legislative

history of the act indicates that Congress considered placing constraints

on ATF’s maintenance of multiple sale reports but did not do so. The

Senate-passed version of FOPA prohibited the Secretary of the Treasury

from maintaining multiple sale reports at a centralized location and from

entering them into a computer for storage or retrieval.34 This restrictive

provision was dropped from the version of the bill enacted by Congress.

Lastly, for fiscal year 1995, Congress appropriated funds to implement the

President’s firearms initiative, which included plans to automate multiple

sale reports.35 Congress provided these funds in the same legislation that

contained the rider restricting consolidation and centralization of licensee

32The regulations are codified at 27 C.F.R. 178.126a (1995). While some revisions have been made since

the enactment of FOPA, the requirement concerning licensee reports to ATF has not changed.

3318 U.S.C. 923(g)(3)(A).

34S. 49, 99th Cong., 1st Sess. (1985).

35P.L. 103-329, 108 Stat. 2384 (Sept. 30, 1994); see S. Rep. No. 103-286, 103d Cong., 2d Sess. at 19 (1994).

Page 61 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix VIII 

Legal Analysis of Statutory Restrictions

Concerning Federal Firearms Licensee Data

data. In conclusion, we believe that the current Multiple Sales System does

not violate either data restriction provision.

Page 62 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 63 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 64 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 65 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 66 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 67 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 68 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 69 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 70 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 71 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 72 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 73 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

Page 74 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix IX 

Comments From the Bureau of Alcohol,

Tobacco and Firearms

The following is GAO’s comment on ATF’s August 23, 1996, letter.

GAO Comment 1. Concurrent with ATF’s Chief Counsel’s review of the unaudited systems

in appendix IV, ATF’s Office of Science and Information Technology

recategorized several of the ATF data systems discussed in appendix III.

One of these systems, the Firearms Explosives and Import System, was

determined not to identify retail firearms purchasers and thus we deleted

it from appendix IV.

Page 75 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
Appendix X 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Daniel C. Harris, Assistant Director

Katrina R. Moss, Evaluator-in-Charge

Samuel A. Caldrone, Senior Evaluator

Lou V.B. Smith, Evaluator

Barry J. Seltser, Supervisory Social Science Analyst

Pamela V. Williams, Communications Analyst

Michael Little, Communications Analyst

Accounting and

Information

Management Division,

Washington, D.C.

Ronald B. Bageant, Assistant Director

Brian C. Spencer, Technical Assistant Director

Office of the General

Counsel, Washington,

D.C.

Jan B. Montgomery, Assistant General Counsel

Rosemary Healy, Senior Attorney

(187015) Page 76 GAO/GGD-96-174 ATF Compliance with Firearms Licensee Data Restrictions
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