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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5092 Engrossed in House (EH)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
109th CONGRESS
  2d Session
                                H. R. 5092

_______________________________________________________________________

                                 AN ACT

 
 To modernize and reform the Bureau of Alcohol, Tobacco, Firearms, and 
                              Explosives.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bureau of Alcohol, Tobacco, 
Firearms, and Explosives (BATFE) Modernization and Reform Act of 
2006''.

SEC. 2. GRADUATED PENALTIES FOR CIVIL VIOLATIONS BY FEDERAL FIREARMS 
              LICENSEES.

    (a) In General.--Section 923 of title 18, United States Code, is 
amended by striking subsections (e) and (f) and inserting the 
following:
    ``(e)(1)(A) If the Attorney General determines that a licensee 
under this section has willfully violated any provision of this chapter 
or any regulation prescribed under this chapter, the Attorney General 
may--
            ``(i) if the violation is of a minor nature--
                    ``(I) impose on the licensee a civil money penalty 
                of not more than $1,000 for each such violation, except 
                that the total amount of penalties imposed on a 
                licensee under this subclause for violations arising 
                from a single inspection or examination shall not 
                exceed $5,000; or
                    ``(II) suspend the license for not more than 30 
                days, and specify the circumstances under which the 
                suspension is to be terminated, if, in the period for 
                which the license is in effect, there have been at 
                least 2 prior occasions on which the licensee has been 
                determined to have violated this chapter; or
            ``(ii) if the violation is of a serious nature--
                    ``(I) impose on the licensee a civil money penalty 
                of not more than $2,500 for each such violation, except 
                that the total amount of penalties imposed on a 
                licensee under this subclause for a violations arising 
                from a single inspection or examination shall not 
                exceed $15,000;
                    ``(II) suspend the license for not more than 90 
                days, and specify the circumstances under which the 
                suspension is to be terminated;
                    ``(III) revoke the license; or
                    ``(IV) take the actions described in subclauses (I) 
                and (II), or subclauses (I) and (III).
    ``(B)(i)(I) In determining the amount of a civil money penalty to 
impose under subparagraph (A) on a licensee, the nature and severity of 
the violation involved, the size of the firearms business operated by 
the licensee, and the prior record of the licensee shall be considered.
    ``(II) On request of the licensee, the Attorney General may 
consider the ability of the licensee to pay a civil money penalty, and 
may allow the licensee to submit documents and information to establish 
the ability of the licensee to pay. The Attorney General shall not make 
part of any public record any document or information so submitted, and 
shall return to the licensee any such document or information.
    ``(III) The total amount of penalties imposed on a licensee under 
subparagraph (A) with respect to violations of a minor nature and of a 
serious nature arising from a single inspection or examination shall 
not exceed $15,000.
    ``(ii) For purposes of subparagraph (A), violation of a provision 
of this chapter with respect to 2 or more firearms during a single 
transaction shall be considered a single violation of the provision.
    ``(iii) The Attorney General may defer, or suspend, in whole or in 
part, the imposition of a civil money penalty on a licensee whose 
license is suspended under this paragraph.
    ``(C) For purposes of subparagraph (A):
            ``(i) A violation of this chapter shall be considered to be 
        of a serious nature if the violation--
                    ``(I) results in or could have resulted in the 
                transfer of a firearm or ammunition to a person 
                prohibited from possessing or receiving the firearm or 
                ammunition under this chapter or under State or local 
                law;
                    ``(II) obstructs or could have obstructed  a  bona 
                fide criminal investigation or prosecution, or an 
                inspection or examination under this chapter; or
                    ``(III) prevents or could have prevented a licensee 
                from complying with subsection (a)(7), (a)(8), (b)(1), 
                (b)(3), (b)(4), (j), (k), (o), or (p) of section 922, 
                subsection (g)(7) of this section, or subsection (b) or 
                (h) of section 924.
            ``(ii) A violation of this chapter shall be considered to 
        be of a minor nature if the violation is not of a serious 
        nature.
    ``(D) The Attorney General may not commence an enforcement action 
under subparagraph (A) with respect to a violation, after the 5-year 
period that begins with--
            ``(i) the date the violation occurred; or
            ``(ii) if the licensee intentionally obstructed discovery 
        of the violation, the date the violation is discovered.
    ``(2)(A) Not less than 30 days before the effective date of any 
penalty imposed on a licensee by reason of a determination made under 
paragraph (1), the Attorney General shall send the licensee a written 
notice--
            ``(i) of the determination, and the grounds on which the 
        determination was made;
            ``(ii) of the nature of the penalty; and
            ``(iii) that the licensee may, within 30 days after receipt 
        of the notice, request a hearing to review the determination.
    ``(B) A hearing to review a determination made under paragraph (1) 
with respect to a licensee shall not be held unless the licensee 
requests such a hearing within 30 days after receiving the notice of 
the determination sent pursuant to subparagraph (A).
    ``(C) On timely receipt from the licensee of a request for such a 
review, the Attorney General shall stay the imposition under paragraph 
(1) of any penalty involved, pending resolution of the review, unless, 
in the case of a suspension or revocation of a licensee, the Attorney 
General establishes, at a hearing before an administrative law judge, 
by clear and convincing evidence, that the continued operation by the 
licensee of the business poses an immediate and grave threat to public 
safety.
    ``(3)(A) Within 90 days after timely receipt from a licensee of a 
request to review a determination made under paragraph (1) (or at such 
later time as is agreed to by the Attorney General and the licensee), 
an administrative law judge shall hold a hearing, at a location 
convenient to the licensee, to review the determination.
    ``(B) Not less than 30 days before the hearing, the Attorney 
General shall deliver to the licensee--
            ``(i) a document identifying each person whom the Attorney 
        General intends to call as a witness during the hearing;
            ``(ii) a copy of each document which will be introduced as 
        evidence at the hearing; and
            ``(iii) copies of all documents on which the determination 
        is based.
    ``(C) Within 90 days after the hearing, the administrative law 
judge shall issue a written decision setting forth findings of fact and 
conclusions of law, and a decision as to whether to affirm, modify, or 
reverse the determination.
    ``(D) On request of the licensee, the Attorney General shall stay 
the effective date of any penalty, suspension, or revocation until 
there has been a final, nonreviewable judgment with respect to the 
determination involved, unless, in the case of a suspension or 
revocation of a licensee, the Attorney General establishes, at a 
hearing before an administrative law judge, by clear and convincing 
evidence, that the continued operation by the licensee of the business 
poses an immediate and grave threat to public safety.
    ``(E) The action of an administrative law judge under this 
subsection shall be considered final agency action for all purposes, 
and may be reviewed only as provided in subsection (f).
    ``(4) This subsection shall not be interpreted to affect the 
authority of the Attorney General under section 922(t)(5).
    ``(f)(1) Within 60 days after a party receives a notice issued 
under subsection (d)(3) of a decision to deny a license, or a notice 
issued under subsection (e)(3)(C) of a determination to impose a civil 
money penalty or to suspend or revoke a license, the party may file a 
petition with the United States district court for the district in 
which the party resides or has a principal place of business for a de 
novo review of the decision or determination.
    ``(2) In a proceeding conducted under this paragraph, the court 
shall, on application of a party, consider any evidence submitted by 
the parties to the proceeding whether or not the evidence was 
considered at the hearing held under subsection (d)(3) or (e)(3).
    ``(3) If the court decides that the decision or determination was 
not authorized, the court shall order the Attorney General to take such 
action as may be necessary to comply with the judgment of the court.
    ``(4) If criminal proceedings are instituted against a licensee 
alleging any violation of this chapter or of a regulation prescribed 
under this chapter, and the licensee is acquitted of the charges, or 
the proceedings are terminated, other than upon motion of the 
Government before trial on the charges, the Attorney General shall be 
absolutely barred from denying a license under this chapter, suspending 
or revoking a license granted under this chapter, or imposing a civil 
money penalty under subsection (e), if the action would be based in 
whole or in part on the facts which form the basis of the criminal 
charges.
    ``(5) The Attorney General may not institute a proceeding to 
suspend or revoke a license granted under this chapter, or to impose a 
civil money penalty under subsection (e), more than 1 year after the 
filing of the indictment or information.''.
    (b) Conforming Amendment to Procedure Applicable to Denial of 
Application for License.--Section 923(d) of such title is amended by 
adding at the end the following:
    ``(3) If the Attorney General denies an application for a license, 
an administrative law judge of the Department of Justice shall, on 
request by the aggrieved party, promptly hold a hearing to review the 
denial, at a location convenient to the aggrieved party. If, after the 
hearing, the administrative law judge decides not to reverse the 
denial, the administrative law judge shall give notice of the final 
denial decision to the aggrieved party.''.

SEC. 3. CONSIDERATION OF FEDERAL FIREARMS LICENSE APPLICATIONS.

    (a) In General.--Section 923(d) of title 18, United States Code, as 
amended by section 2(b) of this Act, is amended by redesignating 
paragraphs (2) and (3) as paragraphs (3) and (4) and inserting after 
paragraph (1) the following:
    ``(2) The Attorney General shall make a preliminary determination 
as to whether to approve or deny an application submitted under 
subsection (a) or (b). If the preliminary determination is to deny the 
application, the Attorney General shall notify the applicant in writing 
of the preliminary determination and the reasons for the preliminary 
determination, and shall afford the applicant an opportunity to 
supplement the application with additional information and to request a 
hearing on the application. If the applicant, in a timely manner, 
requests such a hearing, the Attorney General shall hold the hearing at 
a location convenient to the applicant, and shall notify the applicant 
in writing of the time and place of the hearing.''.
    (b) Conforming Amendment.--Section 923(f) of such title, as amended 
by section 2(a) of this Act, is amended by striking ``(d)(3)'' each 
place it appears and inserting ``(d)(4)''.

SEC. 4. DEFINITION OF WILLFULLY.

    Section 923(e) of title 18, United States Code, as amended by 
section 2(a) of this Act, is amended by adding at the end the 
following:
    ``(5) For purposes of this subsection, the term `willfully' means, 
with respect to conduct of a person, that the person knew of a legal 
duty, and engaged in the conduct knowingly and in intentional disregard 
of the duty.''.

SEC. 5. ESTABLISHMENT OF FORMAL INSPECTION, EXAMINATION, AND 
              INVESTIGATIVE GUIDELINES.

    The Attorney General shall establish guidelines for how the Bureau 
of Alcohol, Tobacco, Firearms, and Explosives is to conduct 
inspections, examinations, or investigations of possible violations of 
chapters 40 and 44 of title 18, United States Code.

SEC. 6. REVIEW BY THE INSPECTOR GENERAL OF THE DEPARTMENT OF JUSTICE OF 
              THE GUN SHOW ENFORCEMENT PROGRAM; REPORT.

    (a) Review.--The Inspector General of the Department of Justice 
shall conduct a review of the operations of the Bureau of Alcohol, 
Tobacco, Firearms, and Explosives, for the purpose of assessing the 
manner in which the Bureau conducts the gun show enforcement program 
and blanket residency checks of prospective and actual firearms 
purchasers.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Inspector General of the Department of Justice shall 
submit to the Committee on the Judiciary of the House of 
Representatives and the Committee on the Judiciary of the Senate a 
written report that contains the findings of the review required by 
subsection (a), and includes such recommendations as may be 
appropriate.

SEC. 7. LIMITATIONS ON USE OF FIREARMS PURCHASER INFORMATION.

    Section 923(g)(1)(D) of title 18, United States Code, is amended in 
the last sentence by inserting ``, except that information identifying 
a person who has purchased or received firearms or ammunition and who 
is not prohibited from doing so may not be so made available or so 
provided unless the agency involved has certified that the agency will 
not disclose the information to any entity other than a court, federal, 
State or local law enforcement agency, or prosecutor'' before the 
period.

SEC. 8. LIQUIDATION OF INVENTORY IN FEDERAL FIREARMS LICENSE 
              EXPIRATION, SURRENDER, OR REVOCATION CASES.

    Section 923 of title 18, United States Code, is amended by adding 
at the end the following:
    ``(m)(1) Except as provided in paragraph (2), a person whose 
license issued under this chapter is expired, surrendered, or revoked 
shall be afforded 60 days from the effective date of the expiration, 
surrender, or revocation to liquidate the firearms inventory of the 
person, which time may be extended upon a showing of reasonable cause. 
During such 60-day period (including any extension of the period), the 
license involved shall continue to be considered valid.
    ``(2) Paragraph (1) shall not apply with respect to a person if a 
United States District Court for the judicial district in which the 
person resides or in which the principal place of business of the 
person subject to the license is located finds, by clear and convincing 
evidence, that the continued operation by the person of the business 
poses an immediate and grave threat to public safety.''.

SEC. 9. OPPORTUNITY TO CURE VIOLATIONS AFTER ACQUISITION OF FIREARMS 
              BUSINESS.

    Section 923 of title 18, United States Code, is further amended by 
adding at the end the following:
    ``(n) If the Attorney General is made aware that a business 
licensed under this chapter has transferred to a surviving spouse or 
child of the licensee, to an executor, administrator, or other legal 
representative of a deceased licensee; or to a receiver or trustee in 
bankruptcy, or an assignee for benefit of creditors, and, before the 
transfer, or on the first inspection or examination by the Attorney 
General of the records of the licensee after the transfer, the licensee 
is found to be operating the business in violation of this chapter, the 
Attorney General--
            ``(1) shall notify the transferee of the violation by the 
        transferor; and
            ``(2) shall not presume that the transferee is committing 
        the violation.''.

SEC. 10. STANDARDS FOR CRIMINAL VIOLATIONS OF RECORDKEEPING 
              REQUIREMENTS.

    Section 922(m) of title 18, United States Code, is amended--
            (1) by striking ``any false entry'' and inserting ``a 
        materially false entry'';
            (2) by striking ``appropriate entry'' and inserting ``a 
        materially significant entry''; and
            (3) by striking ``properly maintain'' and inserting 
        ``retain custody of''.

SEC. 11. AUTHORITY TO COLLECT INFORMATION ON EXPLOSIVES STORED UNDER 
              STATE LAW; REGULATIONS GOVERNING STORAGE OF EXPLOSIVES 
              MADE APPLICABLE TO STORAGE OF EXPLOSIVES BY AGENCIES 
              OPERATING UNDER STATE LAW.

    (a) Authority to Collect Information on Explosives Stored Under 
State Law.--
            (1) In general.--Section 846 of title 18, United States 
        Code, is amended by adding at the end the following:
    ``(c) Each agency operating under the law of any State or political 
subdivision thereof that stores or keeps explosive materials shall 
submit to the Attorney General, at such time as the Attorney General 
shall prescribe in regulations, a written report that specifies each 
location at which the agency stores or keeps explosive materials that 
have been shipped or transported in interstate or foreign commerce, and 
the types and amounts of such explosive materials that are stored or 
kept at the location.''.
            (2) Regulations.--Within 6 months after the date of the 
        enactment of this section, the Attorney General shall prescribe 
        the regulations referred to in section 846(c) of title 18, 
        United States Code.
    (b) Regulations Governing Storage of Explosives Made Applicable to 
Storage of Explosives by Agencies Operating Under State Law.--Subpart K 
of part 555 of subchapter C of chapter II of title 27, Code of Federal 
Regulations, shall apply with respect to the storage by agencies 
operating under the law of any State or political subdivision thereof 
of explosive materials that have been shipped or transported in 
interstate or foreign commerce.

SEC. 12. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect at 
the end of the 180-day period that begins 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.
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