II 
109TH CONGRESS 
2D SESSION 
H. R. 5092 
IN THE SENATE OF THE UNITED STATES 
SEPTEMBER 27, 2006 
Received 
AN ACT 
To modernize and reform the Bureau of Alcohol, Tobacco, 
Firearms, and Explosives. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Bureau of Alcohol, 
Tobacco, Firearms, and Explosives (BATFE) Moderniza-
tion 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 pro-
vision 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 pen-
alties imposed on a licensee under this sub-
clause for violations arising from a single in-
spection 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 
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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 pen-
alties imposed on a licensee under this sub-
clause for a violations arising from a single in-
spection 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 sub-
clauses (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 docu-
ments and information to establish the ability of the li-
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censee to pay. The Attorney General shall not make part 
of any public record any document or information so sub-
mitted, 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 fire-
arms during a single transaction shall be considered a sin-
gle 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 para-
graph. 
‘‘(C) For purposes of subparagraph (A): 
‘‘(i) A violation of this chapter shall be consid-
ered 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 fire-
arm or ammunition under this chapter or under 
State or local law; 
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‘‘(II) obstructs or could have obstructed
a
bona fide criminal investigation or prosecu-
tion, 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 consid-
ered 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 dis-
covery of the violation, the date the violation is dis-
covered. 
‘‘(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; 
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‘‘(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 re-
view 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 pursu-
ant to subparagraph (A). 
‘‘(C) On timely receipt from the licensee of a request 
for such a review, the Attorney General shall stay the im-
position 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 Gen-
eral 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 imme-
diate 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. 
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‘‘(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 in-
troduced as evidence at the hearing; and 
‘‘(iii) copies of all documents on which the de-
termination is based. 
‘‘(C) Within 90 days after the hearing, the adminis-
trative law judge shall issue a written decision setting 
forth findings of fact and conclusions of law, and a deci-
sion as to whether to affirm, modify, or reverse the deter-
mination. 
‘‘(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, un-
less, 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 evi-
dence, that the continued operation by the licensee of the 
business poses an immediate and grave threat to public 
safety. 
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‘‘(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 sub-
section (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 li-
cense, or a notice issued under subsection (e)(3)(C) of a 
determination to impose a civil money penalty or to sus-
pend 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 evi-
dence 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 deter-
mination was not authorized, the court shall order the At-
torney General to take such action as may be necessary 
to comply with the judgment of the court. 
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‘‘(4) If criminal proceedings are instituted against a 
licensee alleging any violation of this chapter or of a regu-
lation prescribed under this chapter, and the licensee is 
acquitted of the charges, or the proceedings are termi-
nated, other than upon motion of the Government before 
trial on the charges, the Attorney General shall be abso-
lutely barred from denying a license under this chapter, 
suspending or revoking a license granted under this chap-
ter, 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 pro-
ceeding to suspend or revoke a license granted under this 
chapter, or to impose a civil money penalty under sub-
section (e), more than 1 year after the filing of the indict-
ment or information.’’. 
(b) CONFORMING AMENDMENT TO PROCEDURE AP-
PLICABLE 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 Depart-
ment 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, 
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the administrative law judge decides not to reverse the de-
nial, 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 para-
graphs (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 appli-
cation submitted under subsection (a) or (b). If the pre-
liminary determination is to deny the application, the At-
torney General shall notify the applicant in writing of the 
preliminary determination and the reasons for the prelimi-
nary determination, and shall afford the applicant an op-
portunity to supplement the application with additional in-
formation 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 
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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 ‘will-
fully’ 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, EXAM-
INATION, AND INVESTIGATIVE GUIDELINES. 
The Attorney General shall establish guidelines for 
how the Bureau of Alcohol, Tobacco, Firearms, and Ex-
plosives is to conduct inspections, examinations, or inves-
tigations of possible violations of chapters 40 and 44 of 
title 18, United States Code. 
SEC. 6. REVIEW BY THE INSPECTOR GENERAL OF THE DE-
PARTMENT OF JUSTICE OF THE GUN SHOW 
ENFORCEMENT PROGRAM; REPORT. 
(a) REVIEW.—The Inspector General of the Depart-
ment of Justice shall conduct a review of the operations 
of the Bureau of Alcohol, Tobacco, Firearms, and Explo-
sives, for the purpose of assessing the manner in which 
the Bureau conducts the gun show enforcement program 
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