‘‘(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 li-
censee 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 en-
forcement 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 deter-
mination 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 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 impo-
sition under paragraph (1) of any penalty involved, pend-
ing resolution of the review, unless, in the case of a suspen-
sion or revocation of a licensee, the Attorney General estab-
lishes, at a hearing before an administrative law judge, by 
clear and convincing evidence, that— 
‘‘(i) the licensee or the principal owner of the 
business subject to the license has been indicted and 
charged with a criminal violation of this chapter; and 
‘‘(ii) 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 li-
censee of a request to review a determination made under 
paragraph (1) (or at such later time as is agreed to by the 
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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 At-
torney General shall deliver to the licensee— 
‘‘(i) a document identifying each person whom 
the Attorney General intends to call as a witness dur-
ing 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 deter-
mination is based. 
‘‘(C) Within 90 days after the hearing, the administra-
tive 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 judg-
ment with respect to the determination involved, unless, in 
the case of a suspension or revocation of a licensee, the At-
torney General establishes, at a hearing before an adminis-
trative law judge, by clear and convincing evidence, that— 
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‘‘(i) the licensee or the principal owner of the 
business subject to the license has been indicted and 
charged with a criminal violation of this chapter; and 
‘‘(ii) 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 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 de-
termination 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 evi-
dence submitted by the parties to the proceeding whether 
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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 determina-
tion 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 regula-
tion prescribed under this chapter, and the licensee is ac-
quitted 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 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 AMENDMENTS.— 
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(1) PROCEDURE APPLICABLE TO DENIAL OF AP-
PLICATION 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 administra-
tive law judge decides not to reverse the denial, the adminis-
trative law judge shall give notice of the final denial deci-
sion to the aggrieved party.’’. 
(2) ELIMINATION
OF
REDUNDANT
PENALTY.— 
Section 924 of such title is amended by striking sub-
section (p). 
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 applica-
tion submitted under subsection (a) or (b). If the prelimi-
nary determination is to deny the application, the Attorney 
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General shall notify the applicant in writing of the prelimi-
nary determination and the reasons for the preliminary de-
termination, and shall afford the applicant an opportunity 
to supplement the application with additional information 
and to request a hearing on the application. If the appli-
cant, in a timely manner, requests such a hearing, the At-
torney General shall hold the hearing at a location conven-
ient 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 ‘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 Explosives 
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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 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 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 pur-
chasers. 
(b) REPORT.—Not later than 1 year after the date of 
the enactment of this Act, the Inspector General of the De-
partment of Justice shall submit to the Committee on the 
Judiciary of the House of Representatives and the Com-
mittee 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 appro-
priate. 
SEC. 7. LIMITATIONS ON USE OF FIREARMS PURCHASER IN-
FORMATION. 
Section 923(g)(1)(D) of title 18, United States Code, 
is amended in the last sentence by inserting ‘‘, except that 
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information identifying a person who has purchased or re-
ceived 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 FIRE-
ARMS LICENSE EXPIRATION, SURRENDER, OR 
REVOCATION CASES. 
Section 923 of title 18, United States Code, is amended 
by adding at the end the following: 
‘‘(m) 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 rev-
ocation 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 con-
sidered valid.’’. 
SEC. 9. OPPORTUNITY TO CURE VIOLATIONS AFTER ACQUI-
SITION OF FIREARMS BUSINESS. 
Section 923 of title 18, United States Code, is further 
amended by adding at the end the following: 
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‘‘(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, ad-
ministrator, or other legal representative of a deceased li-
censee; or to a receiver or trustee in bankruptcy, or an as-
signee for benefit of creditors, and, before the transfer, or 
on the first inspection or examination by the Attorney Gen-
eral of the records of the licensee after the transfer, the li-
censee 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 com-
mitting the violation.’’. 
SEC. 10. STANDARDS FOR CRIMINAL VIOLATIONS OF REC-
ORDKEEPING 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 insert-
ing ‘‘a materially significant entry’’; and 
(3) by striking ‘‘properly maintain’’ and insert-
ing ‘‘retain custody of’’. 
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SEC. 11. 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. 
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Union Calendar No. 401 
109TH CONGRESS 
2D SESSION 
H. R. 5092 
[Report No. 109–672] 
A BILL 
To modernize and reform the Bureau of Alcohol, 
Tobacco, Firearms, and Explosives. 
SEPTEMBER 21, 2006 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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