109TH CONGRESS 

2D SESSION H. R. 5092

AN ACT

To modernize and reform the Bureau of Alcohol, Tobacco, 

Firearms, and Explosives.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Bureau of Alcohol, 

3 Tobacco, Firearms, and Explosives (BATFE) Moderniza4 tion and Reform Act of 2006’’. 

5 SEC. 2. GRADUATED PENALTIES FOR CIVIL VIOLATIONS BY 

6 FEDERAL FIREARMS LICENSEES. 

7 (a) IN GENERAL.—Section 923 of title 18, United 

8 States Code, is amended by striking subsections (e) and 

9 (f) and inserting the following: 

10 ‘‘(e)(1)(A) If the Attorney General determines that 

11 a licensee under this section has willfully violated any pro12 vision of this chapter or any regulation prescribed under 

13 this chapter, the Attorney General may—

14 ‘‘(i) if the violation is of a minor nature—

15 ‘‘(I) impose on the licensee a civil money 

16 penalty of not more than $1,000 for each such 

17 violation, except that the total amount of pen18 alties imposed on a licensee under this sub19 clause for violations arising from a single in20 spection or examination shall not exceed 

21 $5,000; or 

22 ‘‘(II) suspend the license for not more than 

23 30 days, and specify the circumstances under 

24 which the suspension is to be terminated, if, in 

25 the period for which the license is in effect, 

26 there have been at least 2 prior occasions on 
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1 which the licensee has been determined to have 

2 violated this chapter; or 

3 ‘‘(ii) if the violation is of a serious nature—

4 ‘‘(I) impose on the licensee a civil money 

5 penalty of not more than $2,500 for each such 

6 violation, except that the total amount of pen7 alties imposed on a licensee under this sub8 clause for a violations arising from a single in9 spection or examination shall not exceed 

10 $15,000; 

11 ‘‘(II) suspend the license for not more than 

12 90 days, and specify the circumstances under 

13 which the suspension is to be terminated; 

14 ‘‘(III) revoke the license; or 

15 ‘‘(IV) take the actions described in sub16 clauses (I) and (II), or subclauses (I) and (III). 

17 ‘‘(B)(i)(I) In determining the amount of a civil money 

18 penalty to impose under subparagraph (A) on a licensee, 

19 the nature and severity of the violation involved, the size 

20 of the firearms business operated by the licensee, and the 

21 prior record of the licensee shall be considered. 

22 ‘‘(II) On request of the licensee, the Attorney General 

23 may consider the ability of the licensee to pay a civil 

24 money penalty, and may allow the licensee to submit docu25 ments and information to establish the ability of the li-
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1 censee to pay. The Attorney General shall not make part 

2 of any public record any document or information so sub3 mitted, and shall return to the licensee any such document 

4 or information. 

5 ‘‘(III) The total amount of penalties imposed on a 

6 licensee under subparagraph (A) with respect to violations 

7 of a minor nature and of a serious nature arising from 

8 a single inspection or examination shall not exceed 

9 $15,000. 

10 ‘‘(ii) For purposes of subparagraph (A), violation of 

11 a provision of this chapter with respect to 2 or more fire12 arms during a single transaction shall be considered a sin13 gle violation of the provision. 

14 ‘‘(iii) The Attorney General may defer, or suspend, 

15 in whole or in part, the imposition of a civil money penalty 

16 on a licensee whose license is suspended under this para17 graph. 

18 ‘‘(C) For purposes of subparagraph (A): 

19 ‘‘(i) A violation of this chapter shall be consid20 ered to be of a serious nature if the violation—

21 ‘‘(I) results in or could have resulted in the 

22 transfer of a firearm or ammunition to a person 

23 prohibited from possessing or receiving the fire24 arm or ammunition under this chapter or under 

25 State or local law; 
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1 ‘‘(II) obstructs or could have obstructed

2 a bona fide criminal investigation or prosecu3 tion, or an inspection or examination under this 

4 chapter; or 

5 ‘‘(III) prevents or could have prevented a 

6 licensee from complying with subsection (a)(7), 

7 (a)(8), (b)(1), (b)(3), (b)(4), (j), (k), (o), or (p) 

8 of section 922, subsection (g)(7) of this section, 

9 or subsection (b) or (h) of section 924. 

10 ‘‘(ii) A violation of this chapter shall be consid11 ered to be of a minor nature if the violation is not 

12 of a serious nature. 

13 ‘‘(D) The Attorney General may not commence an 

14 enforcement action under subparagraph (A) with respect 

15 to a violation, after the 5-year period that begins with—

16 ‘‘(i) the date the violation occurred; or 

17 ‘‘(ii) if the licensee intentionally obstructed dis18 covery of the violation, the date the violation is dis19 covered. 

20 ‘‘(2)(A) Not less than 30 days before the effective 

21 date of any penalty imposed on a licensee by reason of 

22 a determination made under paragraph (1), the Attorney 

23 General shall send the licensee a written notice—

24 ‘‘(i) of the determination, and the grounds on 

25 which the determination was made; 
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1 ‘‘(ii) of the nature of the penalty; and 

2 ‘‘(iii) that the licensee may, within 30 days 

3 after receipt of the notice, request a hearing to re4 view the determination. 

5 ‘‘(B) A hearing to review a determination made under 

6 paragraph (1) with respect to a licensee shall not be held 

7 unless the licensee requests such a hearing within 30 days 

8 after receiving the notice of the determination sent pursu9 ant to subparagraph (A). 

10 ‘‘(C) On timely receipt from the licensee of a request 

11 for such a review, the Attorney General shall stay the im12 position under paragraph (1) of any penalty involved, 

13 pending resolution of the review, unless, in the case of a 

14 suspension or revocation of a licensee, the Attorney Gen15 eral establishes, at a hearing before an administrative law 

16 judge, by clear and convincing evidence, that the continued 

17 operation by the licensee of the business poses an imme18 diate and grave threat to public safety. 

19 ‘‘(3)(A) Within 90 days after timely receipt from a 

20 licensee of a request to review a determination made under 

21 paragraph (1) (or at such later time as is agreed to by 

22 the Attorney General and the licensee), an administrative 

23 law judge shall hold a hearing, at a location convenient 

24 to the licensee, to review the determination. 
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1 ‘‘(B) Not less than 30 days before the hearing, the 

2 Attorney General shall deliver to the licensee—

3 ‘‘(i) a document identifying each person whom 

4 the Attorney General intends to call as a witness 

5 during the hearing; 

6 ‘‘(ii) a copy of each document which will be in7 troduced as evidence at the hearing; and 

8 ‘‘(iii) copies of all documents on which the de9 termination is based. 

10 ‘‘(C) Within 90 days after the hearing, the adminis11 trative law judge shall issue a written decision setting 

12 forth findings of fact and conclusions of law, and a deci13 sion as to whether to affirm, modify, or reverse the deter14 mination. 

15 ‘‘(D) On request of the licensee, the Attorney General 

16 shall stay the effective date of any penalty, suspension, 

17 or revocation until there has been a final, nonreviewable 

18 judgment with respect to the determination involved, un19 less, in the case of a suspension or revocation of a licensee, 

20 the Attorney General establishes, at a hearing before an 

21 administrative law judge, by clear and convincing evi22 dence, that the continued operation by the licensee of the 

23 business poses an immediate and grave threat to public 

24 safety. 
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1 ‘‘(E) The action of an administrative law judge under 

2 this subsection shall be considered final agency action for 

3 all purposes, and may be reviewed only as provided in sub4 section (f). 

5 ‘‘(4) This subsection shall not be interpreted to affect 

6 the authority of the Attorney General under section 

7 922(t)(5). 

8 ‘‘(f)(1) Within 60 days after a party receives a notice 

9 issued under subsection (d)(3) of a decision to deny a li10 cense, or a notice issued under subsection (e)(3)(C) of a 

11 determination to impose a civil money penalty or to sus12 pend or revoke a license, the party may file a petition with 

13 the United States district court for the district in which 

14 the party resides or has a principal place of business for 

15 a de novo review of the decision or determination. 

16 ‘‘(2) In a proceeding conducted under this paragraph, 

17 the court shall, on application of a party, consider any evi18 dence submitted by the parties to the proceeding whether 

19 or not the evidence was considered at the hearing held 

20 under subsection (d)(3) or (e)(3). 

21 ‘‘(3) If the court decides that the decision or deter22 mination was not authorized, the court shall order the At23 torney General to take such action as may be necessary 

24 to comply with the judgment of the court. 
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1 ‘‘(4) If criminal proceedings are instituted against a 

2 licensee alleging any violation of this chapter or of a regu3 lation prescribed under this chapter, and the licensee is 

4 acquitted of the charges, or the proceedings are termi5 nated, other than upon motion of the Government before 

6 trial on the charges, the Attorney General shall be abso7 lutely barred from denying a license under this chapter, 

8 suspending or revoking a license granted under this chap9 ter, or imposing a civil money penalty under subsection 

10 (e), if the action would be based in whole or in part on 

11 the facts which form the basis of the criminal charges. 

12 ‘‘(5) The Attorney General may not institute a pro13 ceeding to suspend or revoke a license granted under this 

14 chapter, or to impose a civil money penalty under sub15 section (e), more than 1 year after the filing of the indict16 ment or information.’’. 

17 (b) CONFORMING AMENDMENT TO PROCEDURE AP18 PLICABLE TO DENIAL OF APPLICATION FOR LICENSE.—

19 Section 923(d) of such title is amended by adding at the 

20 end the following: 

21 ‘‘(3) If the Attorney General denies an application 

22 for a license, an administrative law judge of the Depart23 ment of Justice shall, on request by the aggrieved party, 

24 promptly hold a hearing to review the denial, at a location 

25 convenient to the aggrieved party. If, after the hearing, 
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1 the administrative law judge decides not to reverse the de2 nial, the administrative law judge shall give notice of the 

3 final denial decision to the aggrieved party.’’. 

4 SEC. 3. CONSIDERATION OF FEDERAL FIREARMS LICENSE 

5 APPLICATIONS. 

6 (a) IN GENERAL.—Section 923(d) of title 18, United 

7 States Code, as amended by section 2(b) of this Act, is 

8 amended by redesignating paragraphs (2) and (3) as para9 graphs (3) and (4) and inserting after paragraph (1) the 

10 following: 

11 ‘‘(2) The Attorney General shall make a preliminary 

12 determination as to whether to approve or deny an appli13 cation submitted under subsection (a) or (b). If the pre14 liminary determination is to deny the application, the At15 torney General shall notify the applicant in writing of the 

16 preliminary determination and the reasons for the prelimi17 nary determination, and shall afford the applicant an op18 portunity to supplement the application with additional in19 formation and to request a hearing on the application. If 

20 the applicant, in a timely manner, requests such a hearing, 

21 the Attorney General shall hold the hearing at a location 

22 convenient to the applicant, and shall notify the applicant 

23 in writing of the time and place of the hearing.’’. 

24 (b) CONFORMING AMENDMENT.—Section 923(f) of 

25 such title, as amended by section 2(a) of this Act, is 
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1 amended by striking ‘‘(d)(3)’’ each place it appears and 

2 inserting ‘‘(d)(4)’’. 

3 SEC. 4. DEFINITION OF WILLFULLY. 

4 Section 923(e) of title 18, United States Code, as 

5 amended by section 2(a) of this Act, is amended by adding 

6 at the end the following: 

7 ‘‘(5) For purposes of this subsection, the term ‘will8 fully’ means, with respect to conduct of a person, that the 

9 person knew of a legal duty, and engaged in the conduct 

10 knowingly and in intentional disregard of the duty.’’. 

11 SEC. 5. ESTABLISHMENT OF FORMAL INSPECTION, EXAM12 INATION, AND INVESTIGATIVE GUIDELINES. 

13 The Attorney General shall establish guidelines for 

14 how the Bureau of Alcohol, Tobacco, Firearms, and Ex15 plosives is to conduct inspections, examinations, or inves16 tigations of possible violations of chapters 40 and 44 of 

17 title 18, United States Code. 

18 SEC. 6. REVIEW BY THE INSPECTOR GENERAL OF THE DE19 PARTMENT OF JUSTICE OF THE GUN SHOW 

20 ENFORCEMENT PROGRAM; REPORT. 

21 (a) REVIEW.—The Inspector General of the Depart22 ment of Justice shall conduct a review of the operations 

23 of the Bureau of Alcohol, Tobacco, Firearms, and Explo24 sives, for the purpose of assessing the manner in which 

25 the Bureau conducts the gun show enforcement program 
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1 and blanket residency checks of prospective and actual 

2 firearms purchasers. 

3 (b) REPORT.—Not later than 1 year after the date 

4 of the enactment of this Act, the Inspector General of the 

5 Department of Justice shall submit to the Committee on 

6 the Judiciary of the House of Representatives and the 

7 Committee on the Judiciary of the Senate a written report 

8 that contains the findings of the review required by sub9 section (a), and includes such recommendations as may 

10 be appropriate. 

11 SEC. 7. LIMITATIONS ON USE OF FIREARMS PURCHASER 

12 INFORMATION. 

13 Section 923(g)(1)(D) of title 18, United States Code, 

14 is amended in the last sentence by inserting ‘‘, except that 

15 information identifying a person who has purchased or re16 ceived firearms or ammunition and who is not prohibited 

17 from doing so may not be so made available or so provided 

18 unless the agency involved has certified that the agency 

19 will not disclose the information to any entity other than 

20 a court, federal, State or local law enforcement agency, 

21 or prosecutor’’ before the period. 
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1 SEC. 8. LIQUIDATION OF INVENTORY IN FEDERAL FIRE2 ARMS LICENSE EXPIRATION, SURRENDER, OR 

3 REVOCATION CASES. 

4 Section 923 of title 18, United States Code, is 

5 amended by adding at the end the following: 

6 ‘‘(m)(1) Except as provided in paragraph (2), a per7 son whose license issued under this chapter is expired, sur8 rendered, or revoked shall be afforded 60 days from the 

9 effective date of the expiration, surrender, or revocation 

10 to liquidate the firearms inventory of the person, which 

11 time may be extended upon a showing of reasonable cause. 

12 During such 60-day period (including any extension of the 

13 period), the license involved shall continue to be considered 

14 valid. 

15 ‘‘(2) Paragraph (1) shall not apply with respect to 

16 a person if a United States District Court for the judicial 

17 district in which the person resides or in which the prin18 cipal place of business of the person subject to the license 

19 is located finds, by clear and convincing evidence, that the 

20 continued operation by the person of the business poses 

21 an immediate and grave threat to public safety.’’. 

22 SEC. 9. OPPORTUNITY TO CURE VIOLATIONS AFTER ACQUI23 SITION OF FIREARMS BUSINESS. 

24 Section 923 of title 18, United States Code, is further 

25 amended by adding at the end the following: 
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1 ‘‘(n) If the Attorney General is made aware that a 

2 business licensed under this chapter has transferred to a 

3 surviving spouse or child of the licensee, to an executor, 

4 administrator, or other legal representative of a deceased 

5 licensee; or to a receiver or trustee in bankruptcy, or an 

6 assignee for benefit of creditors, and, before the transfer, 

7 or on the first inspection or examination by the Attorney 

8 General of the records of the licensee after the transfer, 

9 the licensee is found to be operating the business in viola10 tion of this chapter, the Attorney General—

11 ‘‘(1) shall notify the transferee of the violation 

12 by the transferor; and 

13 ‘‘(2) shall not presume that the transferee is 

14 committing the violation.’’. 

15 SEC. 10. STANDARDS FOR CRIMINAL VIOLATIONS OF REC16 ORDKEEPING REQUIREMENTS. 

17 Section 922(m) of title 18, United States Code, is 

18 amended—

19 (1) by striking ‘‘any false entry’’ and inserting 

20 ‘‘a materially false entry’’; 

21 (2) by striking ‘‘appropriate entry’’ and insert22 ing ‘‘a materially significant entry’’; and 

23 (3) by striking ‘‘properly maintain’’ and insert24 ing ‘‘retain custody of’’. 
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1 SEC. 11. AUTHORITY TO COLLECT INFORMATION ON EX2 PLOSIVES STORED UNDER STATE LAW; REGU3 LATIONS GOVERNING STORAGE OF EXPLO4 SIVES MADE APPLICABLE TO STORAGE OF 

5 EXPLOSIVES BY AGENCIES OPERATING 

6 UNDER STATE LAW. 

7 (a) AUTHORITY TO COLLECT INFORMATION ON EX8 PLOSIVES STORED UNDER STATE LAW.—

9 (1) IN GENERAL.—Section 846 of title 18, 

10 United States Code, is amended by adding at the 

11 end the following: 

12 ‘‘(c) Each agency operating under the law of any 

13 State or political subdivision thereof that stores or keeps 

14 explosive materials shall submit to the Attorney General, 

15 at such time as the Attorney General shall prescribe in 

16 regulations, a written report that specifies each location 

17 at which the agency stores or keeps explosive materials 

18 that have been shipped or transported in interstate or for19 eign commerce, and the types and amounts of such explo20 sive materials that are stored or kept at the location.’’. 

21 (2) REGULATIONS.—Within 6 months after the 

22 date of the enactment of this section, the Attorney 

23 General shall prescribe the regulations referred to in 

24 section 846(c) of title 18, United States Code. 

25 (b) REGULATIONS GOVERNING STORAGE OF EXPLO26 SIVES MADE APPLICABLE TO STORAGE OF EXPLOSIVES
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1 BY AGENCIES OPERATING UNDER STATE LAW.—Subpart 

2 K of part 555 of subchapter C of chapter II of title 27, 

3 Code of Federal Regulations, shall apply with respect to 

4 the storage by agencies operating under the law of any 

5 State or political subdivision thereof of explosive materials 

6 that have been shipped or transported in interstate or for7 eign commerce. 

8 SEC. 12. EFFECTIVE DATE. 

9 This Act and the amendments made by this Act shall 

10 take effect at the end of the 180-day period that begins 

11 with the date of the enactment of this Act. 

Passed the House of Representatives September 26, 

2006. 

Attest:

Clerk. 

109TH CONGRESS 

2D SESSION H. R. 5092

AN ACT

To modernize and reform the Bureau of Alcohol, 

Tobacco, Firearms, and Explosives.