[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Rules and Regulations]
[Pages 31285-31288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13392]


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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 478

[Docket No. ATF 17F; AG Order No. 3160-2010 (2008R-10P)]


Decision-Making Authority Regarding the Denial, Suspension, or 
Revocation of a Federal Firearms License, or Imposition of a Civil Fine

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

ACTION: Final rule.

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SUMMARY: The Department of Justice has adopted as final, without 
change, an interim rule that amended the regulations of the Bureau of 
Alcohol, Tobacco, Firearms, and Explosives (``ATF'') to delegate to the 
Director of ATF the authority to serve as the deciding official 
regarding the denial, suspension, or revocation of federal firearms 
licenses, or the imposition of a civil fine. Under the interim rule, 
the Director has the flexibility to delegate to another ATF official 
the authority to decide a revocation or denial matter, or may exercise 
that authority himself. Because the Director can redelegate authority 
to take action as the final agency decision-maker to Headquarters 
officials, field officials, or some combination thereof, such 
flexibility allows ATF to more efficiently conduct denial, suspension, 
and revocation hearings, and make the determination whether to impose a 
civil fine. This gives the agency the ability to ensure consistency in 
decision-making and to address any case backlogs that may occur.

DATES: This rule is effective August 2, 2010.

FOR FURTHER INFORMATION CONTACT: James P. Ficaretta, Enforcement 
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and 
Explosives; U.S. Department of Justice; 99 New York Avenue, NE., 
Washington, DC 20226; telephone: 202-648-7094.

SUPPLEMENTARY INFORMATION: 

[[Page 31286]]

I. Background

    The Attorney General is responsible for enforcing the provisions of 
the Gun Control Act of 1968 (``the Act''), 18 U.S.C. Chapter 44. He has 
delegated that responsibility to the Director of ATF, subject to the 
direction of the Attorney General and the Deputy Attorney General. 28 
CFR 0.130(a). ATF has promulgated regulations that implement the 
provisions of the Act in 27 CFR part 478.
    The regulations in Subpart E of Part 478, Sec. Sec.  478.71-78, 
relate to proceedings involving federal firearms licenses, including 
the denial, suspension, and revocation of a license, and the imposition 
of a civil fine. Prior to the 2009 amendments under the interim rule, 
Sec.  478 provided as follows: Under Sec.  478.71, whenever the 
Director of Industry Operations (``DIO'') had reason to believe that an 
applicant was not qualified to receive a license under the provisions 
of Sec.  478.47, he could issue a notice of denial, on ATF Form 4498, 
to the applicant. The notice would set forth the matters of fact and 
law relied upon in determining that the application should be denied, 
and would afford the applicant 15 days from the date of receipt of the 
notice in which to request a hearing to review the denial. If no 
request for a hearing was filed within such time, the application would 
be disapproved and a copy, so marked, would be returned to the 
applicant.
    Under Sec.  478.72, an applicant who had been denied an original or 
renewal license could file a request with the DIO for a hearing to 
review the denial of the application. On conclusion of the hearing and 
after consideration of all relevant facts and circumstances presented 
by the applicant or his representative, the DIO would render a decision 
confirming or reversing the denial of the application. If the decision 
was that the denial should stand, a certified copy of the DIO's 
findings and conclusions would be furnished to the applicant with a 
final notice of denial, ATF Form 4501. In addition, a copy of the 
application, marked ``Disapproved,'' would be furnished to the 
applicant. If the decision was that the license applied for should be 
issued, the applicant would be so notified, in writing, and the license 
would be issued.
    Section 478.73 provided that whenever the DIO had reason to believe 
that a firearms licensee had willfully violated any provision of the 
Act or part 478, a notice of revocation of the license (ATF Form 4500), 
could be issued. In addition, a notice of revocation, suspension, or 
imposition of a civil fine could be issued on Form 4500 whenever the 
DIO had reason to believe that a licensee had knowingly transferred a 
firearm to an unlicensed person and knowingly failed to comply with the 
requirements of 18 U.S.C. 922(t)(1), relating to a NICS (National 
Instant Criminal Background Check System) background check.
    As specified in Sec.  478.74, a licensee who had received a notice 
of suspension or revocation of a license, or imposition of a civil 
fine, could file a request for a hearing with the DIO. On conclusion of 
the hearing and after consideration of all the relevant presentations 
made by the licensee or the licensee's representative, the DIO would 
render a decision and prepare a brief summary of the findings and 
conclusions on which the decision was based. If the decision was that 
the license should be revoked or, in actions under 18 U.S.C. 922(t)(5), 
that the license should be revoked or suspended, or that a civil fine 
should be imposed, a certified copy of the summary would be furnished 
to the licensee with the final notice of revocation, suspension, or 
imposition of a civil fine on ATF Form 4501. If the decision was that 
the license should not be revoked, or, in actions under 18 U.S.C. 
922(t)(5), that the license should not be revoked or suspended, and a 
civil fine should not be imposed, the licensee would be notified in 
writing.
    Under Sec.  478.76, an applicant or licensee could be represented 
by an attorney, certified public accountant, or other person recognized 
to practice before ATF, provided certain requirements were met. The DIO 
could be represented in proceedings by an attorney in the office of the 
Assistant Chief Counsel or Division Counsel who was authorized to 
execute and file motions, briefs, and other papers in the proceeding, 
on behalf of the DIO, in his own name as ``Attorney for the 
Government.''
    Section 478.78 provided that if a licensee was dissatisfied with a 
post-hearing decision revoking or suspending the license, denying the 
application, or imposing a civil fine, he could file a petition for 
judicial review of such action. In such case, when the DIO found that 
justice so required, the DIO could postpone the effective date of 
suspension or revocation of a license, or authorize continued 
operations under the expired license pending judicial review.

II. Interim Rule

    The Department of Justice published an interim rule with request 
for comments at 74 FR 1875 on January 14, 2009 (ATF 27P) that amended 
ATF's regulations to redesignate the Director, as opposed to the DIO, 
as the deciding official in matters dealing with the denial of an 
original or renewal firearms license, the suspension or revocation of a 
license, and the imposition of a civil fine. ATF determined that 
delegating the final authority with respect to those matters to the 
Director is necessary and proper. ATF further maintained that the 
Director should be able to redelegate this authority to the DIO or any 
other agency official through issuance of a delegation order, not 
through regulation. This approach is consistent with other regulations 
in part 478. For example, Sec.  478.144 provides that the Director is 
the deciding authority with respect to applications for relief from 
firearms disabilities. Pursuant to ATF Order 1120.4 (69 FR 55462, 
September 14, 2004), the authority to make determinations on 
applications for relief from federal firearms disabilities was 
delegated to the Assistant Director (Enforcement Programs and 
Services).
    These changes to the decision-making and related delegation 
authority were the only substantial changes made by the interim rule. 
All other aspects of the ATF processes, including notice and review 
provisions, remained the same. ATF believes that it is appropriate for 
the Director to have more flexibility to delegate or directly exercise 
authority to conduct a hearing and decide denial, suspension, or 
revocation of a federal firearms license, or the imposition of a civil 
fine. Such flexibility allows ATF to more efficiently conduct 
revocation and denial hearings, because the Director can designate 
Headquarters officials, field officials, or some combination thereof, 
as the final agency decision-maker. That flexibility gives the agency 
the ability to ensure consistency in decision-making and to address any 
case backlogs that may occur.
    Comments on the interim rule were to be submitted to ATF on or 
before April 14, 2009.

III. Comment Analysis and Department Response

    In response to the interim rule, ATF received three comments. Two 
commenters supported the interim regulations, while one commenter 
expressed opposition. Essentially, the opposing commenter expressed a 
concern that under the interim regulations the Director's decision is 
not subject to review.
    According to the commenter:

    The only other times in the state of American government, aside 
from the Presidency, where one person is afforded the opportunity to 
make decisions affecting

[[Page 31287]]

others without a system of checks and balances is by a judge. Even 
then, there is an appeals process by which this one individual's 
interpretation of legal circumstances may be reviewed. * * * To 
afford the director of a government agency, or any other appointed 
individual for that matter, the ability to ``legislate'' freely as 
he deems necessary regarding the denial, suspension, or revocation 
of a federally issued license seems not only unconstitutional, but 
potentially unethical if this one man's ruling is subject to a 
political agenda.

Department Response

    ATF understands the issues and the concerns that the commenter 
raised; however, the due process ``system of checks and balances'' is 
already incorporated into the procedures for denying, suspending, or 
revoking a federal firearms license, or imposing a civil fine. Prior to 
any adverse decision, ATF must provide notice to the affected applicant 
or license holder and provide that person with an opportunity to 
present evidence in a hearing. Before the interim rule became 
effective, the DIO for each field division had the authority to issue 
the final decision. The interim rule vests this same authority to issue 
a final decision in the ATF Director. The Director may, in turn, 
delegate that authority to Headquarters officials, field officials, or 
some combination thereof. This gives the Director the ability to more 
effectively decide licensing cases and ensure consistency in decision-
making.
    Regardless which ATF official is authorized to make a final 
decision, ATF must provide notice and an opportunity to present 
evidence. Moreover, Congress has provided, under 18 U.S.C. 923(f), for 
federal court review of the final notice denying a person's application 
or revoking the person's license. In such a judicial review, the courts 
are not bound by the evidence that had been previously presented during 
the administrative proceedings before the agency decision. If the court 
decides that the agency was not authorized to deny the application or 
to revoke the license, the court shall order the agency to take such 
action as may be necessary to comply with the judgment of the court. 
Nothing in this rule change would alter or affect the person's due 
process rights to judicial review as they stood prior to the change. 
The change simply elevates final decision-making authority to the 
Director. Therefore, no changes to the rule need to be made to ensure 
minimum constitutional due process requirements are satisfied.

IV. Final Rule

    The Department has determined that an amendment of the interim 
regulations is not warranted and it is, therefore, adopting the interim 
rule as a final rule without change.

How This Document Complies With the Federal Administrative Requirements 
for Rulemaking

A. Executive Order 12866
    The Attorney General has determined that this rule is not a 
``significant regulatory action'' under Executive Order 12866, section 
3(f), Regulatory Planning and Review. This rule will not have an annual 
effect on the economy of $100 million, nor will it adversely affect in 
a material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health, or safety, or State, 
local or tribal governments or communities.
    This is a rule of agency organization, procedure, and practice. It 
merely redesignates the Director as the deciding official with respect 
to the denial, suspension, or revocation of a federal firearms license 
and the imposition of a civil fine.
B. Executive Order 13132
    This regulation will not have substantial direct effects on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, the Attorney General has determined that this 
regulation will not have sufficient federalism implications to warrant 
the preparation of a federalism summary impact statement.
C. Executive Order 12988
    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice 
Reform.
D. Regulatory Flexibility Act
    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an 
agency to conduct a regulatory flexibility analysis of any rule subject 
to notice and comment rulemaking requirements unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. See 5 U.S.C. 605(b). The 
interim rule was not subject to notice and comment rulemaking 
requirements. Id. 553(b)(A). This final rule, which adopts the interim 
regulations, is a rule of agency organization, procedure, and practice. 
It merely delegates to the Director the authority to make decisions 
with respect to the denial, suspension, imposition of a civil fine, or 
revocation of federal firearms licenses.
E. Small Business Regulatory Enforcement Fairness Act of 1996
    This rule is not a major rule as defined by section 251 of the 
Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 
804. This rule will not result in an annual effect on the economy of 
$100 million or more; a major increase in costs or prices; or 
significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
companies to compete with foreign-based companies in domestic and 
export markets.
F. Unfunded Mandates Reform Act of 1995
    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector of $100 
million or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.
G. Paperwork Reduction Act
    This rule does not impose any new reporting or recordkeeping 
requirements under the Paperwork Reduction Act.

Disclosure

    Copies of the interim rule, the comment received in response to the 
interim rule, and this final rule will be available for public 
inspection by appointment during normal business hours at: ATF Reading 
Room, Room 1E-063, 99 New York Avenue, NE., Washington, DC 20226; 
telephone: (202) 648-7080.

Drafting Information

    The author of this document is James P. Ficaretta; Enforcement 
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and 
Explosives.

List of Subjects in 27 CFR Part 478

    Administrative practice and procedure, Arms and ammunition, 
Authority delegations, Customs duties and inspection, Domestic 
violence, Exports, Imports, Law enforcement personnel, Military 
personnel, Penalties, Reporting requirements, Research, Seizures and 
forfeitures, and Transportation.

[[Page 31288]]

Authority and Issuance

PART 478--COMMERCE IN FIREARMS AND AMMUNITION

    Accordingly, the interim rule amending 27 CFR part 478, which was 
published at 74 FR 1875 on January 14, 2009, is adopted as a final rule 
without change.

    Dated: May 27, 2010.
Eric H. Holder, Jr.,
Attorney General.
[FR Doc. 2010-13392 Filed 6-2-10; 8:45 am]
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