Firearms Data: ATF Did Not Always Comply with the Appropriations Act Restriction and Should Better Adhere to Its Policies
Released: 2016-08-01T00:00:00

Letter

Background

ATF Roles and Responsibilities

ATF’s mission is to protect communities from violent criminals, criminal organizations, and illegal use and trafficking of firearms, among other things. To fulfill this mission, ATF has 25 field divisions located throughout the United States. To efficiently and effectively carry out its criminal enforcement responsibilities related to firearms, ATF maintains certain computerized information on firearms, firearms transactions, and firearms purchasers. To balance ATF’s law enforcement responsibility with the privacy of firearms owners, Congress has required FFLs to provide ATF certain information about firearms transactions and the ownership of firearms while placing restrictions on ATF’s maintenance and use of such data. In addition to its enforcement activities, ATF also regulates the firearms industry, including issuing firearms licenses to prospective FFLs, and conducting FFL qualification and compliance inspections.

Firearms Tracing Process

A critical component of ATF’s criminal enforcement mission is the tracing of firearms used in crimes to identify the first retail purchaser of a firearm from an FFL. The Gun Control Act of 1968, as amended, established a system requiring FFLs to record firearms transactions, maintain that information at their business premises, and make these records available to ATF for inspection and search under certain prescribed circumstances, such as during a firearms trace. The system was intended to permit law enforcement officials to trace firearms involved in crimes while allowing the records themselves to be maintained by the FFLs rather than by a governmental entity. Figure 1 shows one possible scenario in which a firearm is purchased at an FFL, the FFL maintains records on the purchase, the firearm is used in a crime, and a law enforcement agency recovers the firearm and submits it for tracing.

Through the use of these records maintained by FFLs and provided to ATF in certain circumstances, ATF provides firearms tracing services to federal, state, local, and foreign law enforcement agencies. The objective of the trace is to identify the first retail purchaser of the firearm. To carry out its firearms tracing responsibilities, ATF maintains a firearms tracing operation at NTC in Martinsburg, West Virginia. As shown in figure 2, NTC traces firearms suspected of being involved in crimes to the first retail purchaser to assist law enforcement agencies in identifying suspects.

NTC generally receives trace requests through eTrace, a web-based submission system, but also receives requests by fax, telephone, and mail. To conduct a trace, NTC must receive the recovered firearm’s description—including manufacturer and serial number—from the law enforcement agency. NTC determines the ownership of the firearm by first conducting automated checks of data systems that are maintained at NTC. If these automated checks do not identify a matching firearm description within the systems, an NTC analyst contacts the chain of distribution for the firearm—the series of businesses that are involved in manufacturing and selling the firearm. For example, after automated data system checks, an NTC analyst may call the manufacturer of the firearm, who informs NTC that the firearm was sold to a certain distributor. The NTC analyst will then call that distributor, and so on until the individual is identified. For many traces, an FFL in the chain of distribution has gone out of business, so an NTC analyst must consult the FFL’s out-of- business records, which are also maintained by NTC.

ATF documents each trace request and its results, and provides that information to the law enforcement requester. ATF considers a request completed when it traces the firearm to a retail purchaser, or when it cannot identify the purchaser for various reasons. For example, the description of the firearm as submitted by the requester may not have contained sufficient information to perform a trace. For fiscal year 2015, ATF received a total of 373,349 trace requests, completed 372,992 traces, and identified a retail FFL or a purchaser of the traced firearm in about 68 percent of the completed traces.

Statutory Data Restrictions

Since the passage of the Gun Control Act of 1968, Congress has passed provisions that place restrictions on ATF’s handling of FFL records. In 1978, citing to the general authorities contained in the Gun Control Act, ATF proposed regulations that would have required FFLs to report most of their firearms transactions to ATF through quarterly reports. Under the proposed regulations, these FFL reports of sales and other dispositions would not have identified a nonlicensed transferee, such as a retail purchaser, by name and address. These proposed regulations prompted concerns from those who believed that the reporting requirements would lead to the establishment of a system of firearms registration. Since then, Congress has placed restrictions on ATF’s use of funds to consolidate or centralize firearms records, as discussed below.

In 1978, the Treasury, Postal Service, and General Government Appropriations Act, 1979, prohibited the use of funds for administrative expenses in connection with the consolidation or centralization of FFL records at the agency, or the final issuance of the 1978 proposed regulations. This restriction was included in each of ATF’s annual appropriations through fiscal year 1993.

In 1993, the Treasury, Postal Service, and General Government Appropriations Act, 1994, removed the reference to the 1978 proposed rules, but expanded the prohibition to include the consolidation or centralization of portions of records, and to apply to the use of funds for salaries as well as administrative expenses. This provision was included in each of ATF’s annual appropriations through fiscal year 2011. “hat no funds appropriated herein or hereafter shall be available for salaries or administrative expenses in connection with consolidating or centralizing, within the Department of Justice, the records, or any portion thereof, of acquisition and disposition of firearms maintained by Federal firearms licensees.”

ATF Has 16 Data Systems That Contain Retail Firearms Purchaser Data; Selected Systems Are Involved in Tracing Process

ATF Has 16 Systems with Retail Purchaser Data

ATF collects and maintains data from the firearms industry to carry out its criminal and regulatory enforcement responsibilities, and has established 25 national ATF data systems relating to firearms to maintain the data it collects. Of these 25 data systems, the following 16 data systems contain retail firearms purchaser information: 1. Access 2000 (A2K) 2. ATF NICS Referral 3. Firearm Recovery Notification Program (FRNP) 4. Firearms and Explosives Import System 5. Firearms Information Reporting System 6. Firearms Tracing System 9. Multiple Sales (MS) 10. National Firearms Act System / National Firearms Registration and Transfer Record System 14. Out-of-Business Records Imaging System (OBRIS) 15. Suspect Person Database More details on these systems are provided in appendix II.

Four ATF Systems We Selected Are Used in the Firearms Tracing Process

From the 16 data systems that contain retail purchaser information, we selected 4 systems for an in-depth review of compliance with the appropriations act restriction on consolidation or centralization, and adherence to ATF policies: OBRIS, A2K, FRNP, and MS, including Demand Letter 3. See appendix I for our selection criteria. These systems are operated and maintained by NTC and play a significant role in the firearms tracing process as shown in figure 3.

OBRIS is a repository of nonsearchable images of firearms records that allows NTC employees to manually search for and retrieve records during a firearms trace using an FFL number and a firearm description (e.g., serial number). Out-of-business records are integral to the firearms tracing process. According to ATF officials, in approximately 35 to 38 percent of trace requests, there is at least one entity in the chain of distribution that has gone out of business. Therefore, in more than one- third of firearms trace requests, NTC analysts must consult OBRIS at least once. According to ATF data, as of May 5, 2016, there were 297,468,978 images of firearms records in OBRIS. Further, in fiscal year 2015, NTC accomplished 134,226 of 372,992 total completed trace requests using OBRIS.

OBRIS was developed in 2006 to assist NTC with maintaining the out-of- business FFL records that are received each year. By statute, when FFLs discontinue their businesses and there is no successor, the records required to be kept under the Gun Control Act of 1968, as amended, must be delivered within 30 days to the Attorney General. This includes all acquisition and disposition logbooks, firearms transactions records—such as Form 4473 that contains purchaser information—and other required records. NTC receives an average of about 1.9 million out-of-business records per month, of which a large percentage are paper-based.

Since 2006, when paper records are received from an FFL that has gone out of business, NTC scans them as TIFF image files and stores them in OBRIS. By design, the files are stored as images (with no optical character recognition) so that they cannot be searched using text queries. In addition, ATF sometimes receives electronic FFL out-of- business records in the forms of computer external removable drives and hard drives. In these cases, ATF converts the data to a nonsearchable format consistent with OBRIS records. During processing of OBRIS records, NTC conducts a quality-assurance process, including document sorting, scanning, and error checks on 100 percent of the records received. Officials stated that the imaged records are maintained indefinitely in OBRIS. For more information on OBRIS, see appendix III.

A2K

ATF implemented A2K in 1995 at the request of firearms industry members to allow manufacturer, importer, and wholesaler FFLs to more efficiently respond to requests from NTC for firearms traces. By statute, FFLs are required to respond within 24 hours to a firearms trace—a request from ATF for firearms disposition information—needed for a criminal investigation. Normally, when an NTC analyst contacts an FFL in the chain of distribution during a trace, the analyst contacts the FFL by phone, fax, or e-mail. ATF officials reported that this can be burdensome if the FFL receives a large number of trace requests, and that such requests can number more than 100 per day. With A2K—a voluntary program—the participating industry member uploads electronic firearms disposition records (i.e., information on the FFL or, in rare cases, the individual to whom the firearm was sold) onto a server that ATF owns and maintains, but is located at the site of the industry member. A2K provides a secure user web interface to this server, through which authorized NTC personnel can search—by firearm serial number only—to obtain disposition data for a firearm during a trace.

According to the A2K memorandum of understanding with industry members, each participating industry member maintains ownership over its data. Further, NTC access to A2K’s search function is limited to analysts conducting traces for each particular industry member. NTC analysts access A2K using a different URL and login information for each participating industry member, and can only retrieve the disposition data for the particular firearm they are tracing.

Participation in A2K is voluntary and, according to ATF officials and the three industry members we spoke with, can reduce an industry member’s costs associated with responding to firearms trace requests. According to ATF officials, as of April 25, 2016, there are 35 industry members using A2K, which account for 66 manufacturer, importer, and wholesaler FFLs. All three of the participating industry members we spoke with agreed that A2K has been beneficial since it reduces the industry member resources necessary to respond to trace requests. A2K also benefits NTC by providing immediate access to industry member data at all times, thereby allowing tracing operations to continue outside of normal business hours, which can be crucial for urgent trace requests. According to ATF data, as of March 17, 2016, there were 290,256,532 firearms in A2K. Further, in fiscal year 2015, NTC accomplished 130,982 of 372,992 total completed trace requests using A2K.

Established in 1991, FRNP (formerly known as the Suspect Gun Program) provides a criminal investigative service to ATF agents by maintaining a database of firearms that have not yet been recovered by law enforcement, but are suspected to be involved in criminal activity. An ATF agent submits firearms information to FRNP, in connection with a specific ATF criminal investigation, to flag a particular firearm so that in the event that it is recovered and traced at some future time, the requesting agent will be notified.

A request to enter a firearm into FRNP could start with an ATF agent recovering another firearm during an undercover investigation of illegal sales from a firearms trafficker. By searching eTrace, the agent may discover that the recovered firearm was part of a multiple sale with three other firearms. The ATF agent then may request that the other three firearms be entered into FRNP because they are associated with the firearm the agent recovered and, therefore, are likely to also be trafficked. ATF officials stated that, in this hypothetical case, it is likely that those three firearms, if recovered and traced in the future, would support a potential firearms trafficking case. If the firearms are in FRNP, if and when they are recovered and traced, NTC would notify the requesting agent, who could then contact the agency that recovered and traced the firearms to coordinate building such a case.

To enter a firearm into FRNP, an ATF agent submits ATF Form 3317.1 (see app. IV) to NTC. According to ATF, no other law enforcement agencies may submit firearms to FRNP or view information in the system; only ATF agents and NTC staff have access. When a firearm is recovered in a crime and is traced, NTC conducts an automated check to determine whether the firearm description in the trace request matches a firearm description in FRNP. If so, an analyst will validate that the entries match. If they do, NTC generally notifies the ATF agent who submitted the firearm for inclusion in FRNP that the firearm has been recovered and traced. Then, the analyst completes the trace and sends the results to the requester of the trace. Occasionally, in submitting the firearm to FRNP, the agent directs NTC to not complete the trace on the firearm in the event that the firearm is recovered and traced (i.e., not provide the trace results to the law enforcement agency who requested the trace). For example, an agent might want to prevent trace information from being released to protect an undercover operation or other investigation. According to ATF data, as of May 3, 2016, there were 174,928 firearms and the names of 8,705 unique persons (e.g., criminal suspects, firearms purchasers, associates) in FRNP, making up 41,964 total FRNP records. Further, in fiscal year 2015, NTC accomplished 110 of 372,992 total completed trace requests using FRNP. Also, according to ATF data, as of May 5, 2016, there were 23,227 firearms in FRNP that had been linked to a firearms trace.

Once the ATF investigation that led to the FRNP firearms submission has been closed, any FRNP entries associated with that investigation are to be labeled as “inactive” in FRNP. Information from inactive records is used to assist with the tracing process, but when a trace hits on an inactive FRNP record, NTC does not notify the ATF agent who submitted the firearm since the associated investigation is closed and the information would no longer be useful to the agent. According to our review of all FRNP records, as of July 2015, about 16 percent of the 41,625 records were designated “active” and about 84 percent were designated “inactive.” Inactive records remain in the system for tracing purposes. The original submission form is also preserved as a digital image.

MS was developed in 1995 to collect and track reports of the purchase by one individual of two or more pistols or revolvers, or both, at one time or during any 5 consecutive business days. FFLs are required by statute to report these sales to ATF. The multiple sales reports are completed by FFLs, submitted to NTC using ATF form 3310.4 (see app. V), and entered into MS. According to ATF, these reports, when cross-referenced with firearms trace information, serve as an important indicator in the detection of potential firearms trafficking. They can also allow successful tracing of older firearms that have reentered the retail market.

MS also maintains the information from Demand Letter 3 reports. In 2011, ATF issued Demand Letter 3 to dealer and pawnbroker FFLs located in Arizona, California, New Mexico and Texas. The letter requires these FFLs to prepare reports of the purchase or disposition of two or more semiautomatic rifles capable of accepting a detachable magazine and with a caliber greater than .22, at one time or during any 5 consecutive business days, to a person who is not an FFL. According to ATF, this information is intended to assist ATF in its efforts in investigating and combatting the illegal movement of firearms along and across the southwest border. Demand Letter 3 reports are completed by FFLs, submitted to NTC using ATF form 3310.12 (see app. VI), and entered into MS.

According to ATF officials and our observations, Demand Letter 3 and multiple sales reports are managed identically within MS. During a firearms trace, MS is automatically checked for a match with the firearm serial number. If a match is found, the trace time can be substantially shortened since the retail FFL and purchaser name to complete the trace are contained within the MS record. According to ATF data, as of May 3, 2016, there were 8,950,209 firearms in MS, making up 3,848,623 total MS records. Further, in fiscal year 2015, NTC accomplished 15,164 of 372,992 total completed trace requests using MS.

In November 1995, ATF implemented a policy to computerize multiple sales reports at NTC, which now also applies to Demand Letter 3 reports. The original multiple sales or Demand Letter 3 paper report received from the FFL is scanned in a nonsearchable, TIFF image format and tagged with the MS transaction number. The TIFF file is then stored in an image-only repository, and is retained indefinitely. However, as part of the computerization policy, ATF included a requirement for deleting firearms purchaser names from MS 2 years after the date of sale if such firearms are not connected to a trace. ATF preserves the remainder of the data, such as the firearm description, for the purpose of supporting investigations. In contrast, if an MS record is connected to a firearms trace, then ATF preserves the entire record, including purchaser information, in the system. MS reports are available to any ATF staff that has access to eTrace but not to outside law enforcement agencies with eTrace access. However, after the purchaser name in a MS record has been deleted in accordance with the 2-year deletion policy, only NTC officials have access to this information in the digital image of the original multiple sales or Demand Letter 3 reports. If an ATF agent needs to see the deleted information, the agent must contact NTC.

ATF Did Not Always Comply with the Appropriations Act Restriction and Does Not Consistently Adhere to Its Policies on Maintenance of Firearms Data

Of the four data systems we reviewed, two systems were in full compliance with the appropriations act restriction. The other two data systems did not always comply with the restriction, although ATF addressed the compliance issues during the course of our review. In addition, three data systems could better adhere to ATF policies. Specifically:

OBRIS complies with the appropriations act restriction and adheres to ATF policies.

A2K for in-business industry members’ records complies with the appropriations act restriction, but ATF’s collection and maintenance of A2K out-of-business records in A2K on a server at NTC violated the appropriations act restriction. ATF deleted the records from the server in March 2016. In addition, industry members may benefit from clearer ATF guidance to ensure that they are submitting out-of-business records as required.

FRNP generally complies with the appropriations act restriction.

However, a regional program using FRNP from 2007 through 2009 did not comply with the restriction, and ATF removed the data it collected through this program from FRNP in March 2016. Further, FRNP generally adheres to ATF policies, but a technical defect allows ATF agents to view and print FRNP data beyond what ATF policy permits.

MS complies with the appropriations act restriction, but ATF continues to inconsistently adhere to its own policy when deleting these records.

For a more detailed legal analysis of compliance with the appropriations act restriction, see appendix VII.

Framework for Legal Analysis Set Forth in 1996 Report

We previously considered ATF’s compliance with the restriction on using appropriated funds for consolidation or centralization in connection with ATF’s Microfilm Retrieval System and MS in 1996. In that report, we stated that the appropriations act restriction did not preclude all information practices and data systems that involved an element of consolidation or centralization. We interpreted the restriction in light of its purpose and in the context of other statutory provisions governing ATF’s acquisition and use of information on firearms. We found that the two systems complied with the appropriations act restriction on the grounds that ATF’s consolidation of records in these systems was incident to carrying out specific responsibilities set forth in the Gun Control Act of 1968, as amended, and that the systems did not aggregate data on firearms transactions in a manner that went beyond these purposes. We are employing a similar analytical approach to the systems under review here: we consider whether ATF’s aggregation of records in each system serves a statutory purpose, and how it relates to that purpose.

OBRIS Complies with the Appropriations Act Restriction and Adheres to ATF Data-Processing Policies

OBRIS complies with the appropriations act restriction and adheres to policies designed to help ensure that the system is in compliance with the restriction. FFLs are specifically required to submit records to ATF when going out of business, and the system limits the accessibility of key firearms records information, such as retail purchaser data. As we reported in 1996, ATF first issued regulations in 1968 requiring FFLs that permanently go out of business to deliver their firearms transaction records to the federal government within 30 days. This provided a means of accessing the records for firearms tracing purposes after an FFL went out of business. The legislative history related to ATF’s fiscal year 1979 appropriation did not provide any indication that Congress intended a change in ATF’s existing practice. In 1986, the Firearms Owners’ Protection Act (FOPA) codified this regulatory reporting requirement, affirming ATF’s authority to collect this information. In 1996, we also reported that the predecessor to OBRIS—the Microfilm Retrieval System—as designed, complied with the statutory data restrictions and that ATF operated the system consistently with its design. We found that the Microfilm Retrieval System included in a computerized index the information necessary to assist ATF in completing a firearms trace, and did not aggregate information in a manner beyond that necessary to implement the Gun Control Act. Notably, ATF’s system of microfilmed records did not capture and store certain key information, such as firearms purchaser information, in a searchable format.

In response to logistical challenges and technological advances, ATF developed OBRIS in 2006 as the repository to maintain digital images of out-of-business FFL records. ATF transitioned from using microfilm images of records to scanning records into OBRIS as digital images not searchable through character recognition, consistent with ATF’s design and use of its prior Microfilm Retrieval System. It is our view that, like its microfilm predecessor system, OBRIS also complies with the appropriations act restriction because OBRIS’s statutory basis and accessibility are essentially the same as the prior system. As with the prior system, OBRIS generally allows users to identify potentially relevant individual records through manual review by searching an index using an FFL number. Other information, specifically firearms purchaser information, remains stored in nonsearchable images, and is not accessible to ATF through a text search.

In OBRIS, ATF put data processing policies in place to maintain records in compliance with the appropriations act restriction. Specifically, when an FFL going out of business sends records to NTC, according to ATF policy and verified by our observations, NTC personnel follow policies to sort and scan the records in OBRIS in a manner that maintains the nonsearchability of the records. For example, NTC personnel spend extra time indexing the images by FFL number, and chronologically sorting FFL records, typically by month and by year. When tracing a firearm, according to ATF policy and verified by our observations, NTC personnel generally identify a group of FFL records through the FFL number index, then manually search the dates of the FFL records to narrow in on a group of records that might contain the firearm being traced. NTC personnel then manually skim through each record in this group until they identify the relevant firearm information. According to NTC officials, NTC staff sometimes search thousands of pages of records to find the record that matches the trace request. This policy for a manual process to maintain and use records in OBRIS helps to ensure its compliance with the appropriations act restriction. For more details on OBRIS’s data processing policies, see appendix III.

A2K for Out-of-Business Records Did Not Comply with the Appropriations Act Restriction, and ATF Could Improve Guidance to Industry

ATF maintains A2K for in-business industry members who store their own A2K data and maintained A2K for certain records of out-of-business industry members at NTC. ATF’s collection and maintenance of the records of out-of-business A2K industry members at NTC violated the appropriations act restriction on consolidation or centralization of firearms records. However, ATF officials transferred the records to OBRIS, and in March 2016 removed these records from A2K. In addition, industry members would benefit from clearer A2K guidance from ATF to ensure that they are submitting required out-of-business records.

A2K for In-Business Records Complies with the Appropriations Act Restriction

A2K for firearms records of in-business industry members complies with the appropriations act restriction on consolidation and centralization based on A2K’s statutory foundation and its features. ATF believes, and we agree, that A2K for in-business records appropriately balances the restriction on consolidating and centralizing firearms records with ATF’s need to access firearms information in support of its mission to enforce the Gun Control Act of 1968, as amended.

Federal law requires FFLs to provide firearms disposition information to ATF within 24 hours in response to a trace request in the course of a criminal investigation. ATF officials told us that they developed A2K in response to industry member requests for an automated option for responding to trace requests. Prior to A2K, FFLs could only respond to trace requests by having dedicated personnel research firearms disposition information and then submit that information to ATF by phone, fax, or e-mail. In contrast, A2K provides industry members—who voluntarily participate in A2K—with servers to facilitate automated electronic responses to ATF trace requests. Under A2K, industry members upload their electronic firearms disposition information onto the servers located at their premises on a regular basis. Industry members— not ATF—retain possession and control of their disposition records and, according to ATF officials, they may withdraw from A2K and remove their records from the servers at any time. A2K includes a secure user web interface to each of the servers and ATF may only obtain A2K disposition information by searching individual industry member servers by exact firearm serial number. Through this search, ATF obtains the same information from each industry member as it would otherwise obtain by phone, fax, or e-mail, and in similar disaggregated form.

A2K for Out-of-Business Records Did Not Comply with the Appropriations Act Restriction, and ATF Could Provide Clearer Guidance

Beginning in 2000, ATF maintained A2K disposition data from out-of- business industry members on a single partitioned server within NTC, and removed the records from the server in March 2016. ATF’s maintenance of the disposition records in this manner violated the appropriations act restriction on consolidation or centralization. This arrangement was not supported by any specific authority. As described earlier, A2K was designed as an alternative for FFLs to meet the requirement to respond promptly to ATF trace requests, which does not apply to FFLs once they go out of business. Another statutory provision requires FFLs to submit firearms records to ATF when they go out of business, and ATF has designed a separate system for this purpose—OBRIS—as described earlier.

A2K for out-of-business records functioned differently than OBRIS and went beyond the consolidation of out-of-business records in that system incident to specific responsibilities under the Gun Control Act. As discussed earlier, out-of-business records are maintained as nonsearchable digital images in OBRIS to comply with the appropriations act restriction, while at the same time allowing ATF to perform its tracing function. ATF completed traces using A2K disposition data from out-of- business industry members through the same type of secure user web interface as used while the industry members were in business. According to ATF, this was more efficient than relying on OBRIS to complete firearms traces. Our observations of A2K out-of-business searches in August 2015 confirmed ATF officials’ statements that these records were accessed in the same way as in-business records. Records were only retrievable by exact serial number search, in accordance with ATF policy. However, according to ATF officials, it would have been technically possible for ATF to reconfigure the server to allow the records to be queried by any field, including fields with retail purchaser information.

ATF agreed with our assessment that treating disposition information from industry members that go out of business in the same manner as disposition information from in-business industry members would violate the appropriations act restriction. After we raised concerns about A2K out-of-business records on the server at NTC, ATF told us that they had begun a process of transferring the out-of-business A2K records from the server into OBRIS as digital images. ATF permanently deleted the records from the out-of-business A2K server in March 2016.

In addition, ATF could provide clearer ATF guidance to ensure that industry members submit out-of-business records in accordance with the Gun Control Act of 1968, as amended. These industry members and their corresponding FFLs are required to provide transaction forms, acquisition records, and disposition records to ATF within 30 days of going out of business. However, it is unclear how the requirements apply to industry members’ A2K disposition data. A2K agreements specifically state that the A2K data belong to the industry member. Conversely, ATF requires that the ATF-owned A2K equipment be returned when industry members go out of business, which includes the hardware and software on which the data were housed at the industry member’s location.

The A2K memorandums of understanding and ATF guidance to industry members do not specify that industry members may retain the backup disk or how A2K data may be used to meet the out-of-business record submission requirements to ATF, if at all. All of the eight industry members that have gone out of business have provided their backup disks with data to ATF. According to ATF, six industry members separately provided their acquisition and disposition information, while the other two industry members, which were licensed importers, only provided invoices. According to ATF officials, discussions with these industry members did not include the industry member’s option to keep the backup disk where the data are stored or whether submitting the backup disk to ATF would fulfill part of the industry member’s submission requirement. Further, the three industry members we spoke with corroborated that ATF lacks guidance for its requirements related to industry members submitting out-of-business A2K data in accordance with the Gun Control Act, as amended.

Federal internal control standards require that agencies communicate necessary quality information with external parties to achieve agency objectives, which includes providing industry members with record submission guidance so that ATF has the necessary records for firearms tracing. According to ATF officials, ATF has not provided guidance to A2K industry members on how to submit out-of-business records because industry members already have the standard requirements that apply to all FFLs, and industry members have not asked for guidance specific to A2K. Industry members that we spoke to had not contemplated the process for providing A2K equipment and records to ATF because they did not anticipate going out of business. However, if ATF does not have all required out-of-business records, the agency may not be able to locate the first purchaser of a firearm during a trace, and thus may not be able to fulfill part of its mission. ATF officials agreed that providing such guidance—for example, in the A2K memorandum of understanding between an industry member and A2K—would be helpful to industry members to ensure that records are submitted to ATF as required. Industry members could benefit from clear ATF guidance on, for example, whether they are required to submit their A2K records in electronic format; whether they are allowed to only submit hard copy records; or what to do if one part of the company goes out of business, but A2K continues at the industry member’s remaining FFLs. Such ATF guidance could clarify how industry members may submit A2K data to fulfill a portion of Gun Control Act requirements.

FRNP Generally Complies with the Appropriations Act Restriction, but a Past Regional Program Did Not Comply, and ATF Agents Are Able to Access Information That Is Not Permitted by ATF Policy

FRNP generally complies with the appropriations act restriction and generally adheres to ATF policies that help ensure such compliance. However, a regional ATF program using FRNP from 2007 through 2009 was not in compliance with the appropriations act restriction. ATF deleted the data it collected through this program from FRNP in March 2016. In addition, a technical defect in one of ATF’s key data systems allows ATF agents to access FRNP records in a manner that is inconsistent with ATF policy.

FRNP Generally Complies with the Appropriations Act Restriction and Adheres to ATF Policies That Help Ensure Compliance

ATF gathers and combines specific firearms transaction data to a limited degree in FRNP in order to implement its statutory responsibilities related to firearms criminal enforcement and, in this respect, the system complies with the appropriations act restriction. By statute, ATF is responsible for enforcing the federal statutes regarding firearms, including those related to the illegal possession, use, transfer, or trafficking of firearms. FRNP was established to provide an investigative service to ATF agents by maintaining a database of firearms suspected of being involved in criminal activity and associated with an ATF criminal investigation. As discussed earlier, the appropriations act restriction does not preclude all information practices and data systems that involve an element of “consolidating or centralizing” FFL records. As designed, the aggregation of firearms transaction records in FRNP is incident to carrying out specific ATF criminal enforcement responsibilities and is limited to that purpose. Therefore, FRNP—when used for the purpose as a database of firearms suspected of being involved in criminal activity and associated with an ATF criminal investigation—complies with the appropriations act restriction. Moreover, based on our analysis of FRNP records, virtually all records in FRNP are associated with an ATF criminal investigation, and thus are related to ATF’s statutory responsibilities.

ATF policies for the implementation of FRNP support the conclusion that it complies with the appropriations act restriction, when operated as designed. ATF policies specify that ATF agents may submit a firearm for entry into FRNP if the firearm is associated with an active, nongeneral ATF criminal investigation and meets certain submission criteria. ATF agents must use a designated submission form when requesting that firearms information be entered in the FRNP system, which, among other things, contains a field for the agent to include an active, nongeneral investigation number. The form also contains a field to indicate the additional, specific submission criteria for the firearm, which align with ATF’s statutory responsibility of enforcing criminal statutes related to the illegal possession, use, transfer, or trafficking of firearms. These criteria include: (1) Large quantities of firearms purchased by individual; (2) Firearms suspected in trafficking, but not stolen from an FFL dealer; (3) FFL dealers suspected of performing firearms transactions without proper documentation; (4) Firearms purchased by suspected straw purchasers; and (5) Other—a category that the submitting agent is to explain on the form.

According to NTC procedures, and verified by our observations, upon receiving an FRNP submission form, an NTC analyst reviews the form for completeness and conducts several validation and verification steps. For example, the analyst uses ATF’s case-management system to verify that the investigation number on the FRNP submission form is active and that at least one criterion was selected on the submission form. Once the validation and verification checks are complete, the NTC analyst either enters the firearms information into FRNP or contacts the requesting ATF agent if information is missing or not in alignment with the criteria required for FRNP submission.

During our review of selected fields for all 41,625 FRNP records, and a generalizable sample of records and submission forms, we found that for the vast majority of firearms entered, ATF abided by its policy for entries to be associated with an active investigation. Out of the entire population of 41,625 records reviewed, less than 1/10 of 1 percent of records were not associated at all with an investigation number and, according to ATF officials, were likely data-entry errors or records entered for testing or training purposes. Moreover, based on our sample review, an estimated 96 percent of FRNP records were entered while the related criminal investigation was open. ATF officials stated that most of the remaining records—entered before the related investigation was open or after it was closed—were the result of data-entry errors or the result of investigation numbers being reopened at a later date. Additional, specific submission criteria were required to be noted on the FRNP submission form since November 2004. Based on our sample review, an estimated 97 percent of FRNP submission forms from November 2004 through July 2015 included the selection of at least one criterion. For an estimated 13 percent of these—or 23 submission forms in our sample—the “Other” criteria was selected, and all but 2 of these had an explanation for why the firearms were entered in FRNP. For example, in 1 submission form that contained an explanation for “Other,” business owners were suspected of selling firearms without a license. ATF officials could not definitively state why an estimated 3 percent of submissions from November 2004 through July 2015 did not contain criteria selection. Officials speculated, for example, that an NTC analyst may have obtained the criteria selection from the requesting agent by phone or e-mail and may not have noted his or her conversation in the FRNP file. However, officials acknowledged that the criteria selection is an important quality control and allows ATF the ability to audit records related to an investigation if necessary.

ATF officials told us that only names associated with the criminal investigation are entered in the FRNP system. These names are generally limited to suspects and purchasers, but ATF officials acknowledged that the names of victims or witnesses may be included in the system if they are associated with the criminal investigation, though this does not happen routinely. Based on our observations of FRNP entry procedures, an NTC analyst verifies that any names on the submission form match the names listed in the case-management system for that particular investigation, prior to entering the information in the FRNP system.

A Past ATF Regional Program Did Not Comply with the Appropriations Act Restriction

An ATF regional program conducted from 2007 through 2009 to enter firearms into FRNP—the Southwest Border Secondary Market Weapons of Choice (SWBWOC) Program—did not comply with the appropriations act restriction on consolidating or centralizing FFLs’ firearms records, because the individual firearms were not suspected of being involved in criminal activity associated with an ATF criminal investigation. During the course of our review, ATF reported that it planned to delete the related data from FRNP, and ATF did so in March 2016.

According to ATF officials, the SWBWOC Program was in place in ATF’s four southwest border field divisions in order to more effectively identify— during a trace—the purchasers of used firearms trafficked to Mexico. The program was implemented during routine regulatory inspections of FFLs in the region who were engaged primarily in the sale of used firearms—generally pawnbrokers. According to ATF, used firearms sales, referred to as “secondary market” sales, played a significant role in firearms trafficking to Mexico, particularly certain firearms most sought by the Mexican drug cartels, referred to as “weapons of choice.” According to ATF officials, this program was developed to record certain firearms in an effort to enhance ATF’s ability to trace those firearms to a retail purchaser in the event of crime-related recoveries of the firearms. As part of the program, during regulatory inspections, ATF investigators were to record any specified weapons of choice that were found in the FFLs’ inventory or sold or disposed of by the FFLs within the inspection period. According to ATF officials, the information recorded was limited to the serial number and description of the firearm, and was not to include any purchaser information. The firearms information was then submitted to FRNP for all of the used firearms identified during the inspection. If the firearm was subsequently recovered by law enforcement and submitted for a trace, NTC’s automatic checks on the firearm description would result in a match in the FRNP system. ATF would then be able to more quickly identify the FFL pawn shop that previously had the firearm in its inventory.

According to ATF officials and documentation, the program was cancelled on October 2, 2009, following ATF’s legal review of the process by which the firearms information entered during the program was recorded and submitted to FRNP. ATF’s legal review determined that the program was not consistent with the appropriations act restriction on consolidation or centralization. According to ATF officials, the program was not reviewed by the ATF Chief Counsel’s office prior to its initiation in June 2007. They stated that the program’s existence was the result of incomplete communication by ATF executives responsible for industry operations programs with ATF’s Chief Counsel prior to the implementation of the program. Upon learning of the program, ATF Counsel determined that FFL information on a firearm, in and of itself—even when unaccompanied by purchaser information—is not permitted to be collected and consolidated without a specific basis in statute or regulation, or a direct nexus to a law enforcement purpose, such as a criminal investigation. The ATF Chief Counsel’s office advised that the program be immediately terminated and, in October 2009, the program was cancelled and the firearms information already entered into FRNP during the program was marked as “Inactive.”

We concur with ATF’s assessment that the inclusion of firearms information from the program in FRNP did not comply with the appropriations act restriction. It is our view that information obtained from an FFL about a firearm in and of itself, and unaccompanied by purchaser information, is not permitted to be collected and consolidated within ATF without a specific basis in statute. As a result of our review, ATF officials deleted the records for the affected data from FRNP—855 records relating to 11,693 firearms—in March 2016.

ATF Agents Are Able to Access FRNP Information beyond What Is Permitted by ATF Policy

A technical defect in eTrace 4.0 allows ATF agents to view and print FRNP data beyond what ATF policy permits. These data include purchaser names and suspect names in a summary format called a Suspect Gun Summary Report. Any ATF agent with eTrace access can view or print these reports, including up to 500 FRNP records at one time. According to ATF officials, the eTrace defect occurred when the contractor developing eTrace 4.0 included a global print function for Suspect Gun Summary Reports—which can contain retail purchaser information—that was accessible from the search results screen. In December 2008, prior to the release of eTrace 4.0 in 2009, ATF provided the contractor with a list of the new system’s technical issues, including this FRNP printing defect. ATF officials explained that because all ATF eTrace users had the appropriate security clearances, and because there would not be a reason for ATF agents to access the Suspect Gun Summary Reports, the print issue was not considered a high-priority concern. However, ATF officials told us that no audit logs or access listings are available to determine how often ATF agents have accessed records containing purchaser information. Therefore, ATF has no assurance that the purchaser information entered in FRNP and accessible through eTrace is not being improperly accessed. eTrace is available to federal, state, and local law enforcement entities that have entered into an eTrace memorandum of understanding with ATF. ATF agents have access to information in eTrace that is unavailable to state and local law enforcement entities, such as FRNP data. However, according to eTrace system documentation, ATF agents are to be limited in their access to FRNP records. Specifically, ATF agents should only be able to view the firearm description and the name and contact information of the ATF case agent associated with the investigation, and not purchaser information or FFL information. If an ATF agent wanted further information about the FRNP data, the agent should have to contact the case agent. ATF officials told us that ATF’s policy is intended to provide FRNP information to ATF agents on a “need-to-know” basis in order to protect the security of ATF investigations, and protect gun owner information. Moreover, federal internal control standards specify that control activities to limit user access to information technology include restricting authorized users to the applications or functions commensurate with assigned responsibilities.

According to ATF officials, options are limited for resolving the global print function defect. ATF’s contract with the eTrace 4.0 developer has ended, and therefore ATF cannot contact the developer to fix the printing issue. ATF could have the issue resolved when a new version of eTrace, version 5.0, is released, but there is no timeline for the rollout of eTrace 5.0. ATF officials told us that, in the short term, one method to fix the printing issue would be to remove individuals’ names and identifying information from the FRNP system, so it is not available for Suspect Gun Summary Reports. The firearms information and case agent information would remain available to all ATF agents, and ATF officials indicated that they did not think that removing the identifying information would hamper ATF agents’ investigations. Developing and implementing short-term and long-term mechanisms to align the eTrace system capability with existing ATF policy to limit access to purchaser information for ATF agents could ensure that firearms purchaser information remains limited to those with a need to know.

MS Complies with the Appropriations Act Restriction, but ATF Continues to Inconsistently Adhere to ATF Policy When Deleting Records

MS complies with the appropriations act restriction; however, ATF lacks consistency among its MS deletion policy, system design, and policy implementation timing. Since we reported on MS in 1996, ATF has made minimal changes to the system itself, but the information contained in MS has changed with the inclusion of Demand Letter 3 reports, in addition to multiple sales reports.

Multiple Sales Reports and Demand Letter 3 Reports Maintained in MS Comply with the Appropriations Act Restriction

Multiple sales reports. By statute, FFLs are required to provide to ATF a multiple sales report whenever the FFL sells or otherwise disposes of, within any 5 consecutive business days, two or more pistols or revolvers, to an unlicensed person. The reports provide a means of monitoring and deterring illegal interstate commerce in pistols and revolvers by unlicensed persons. ATF’s maintenance of multiple sales reports in MS complies with the appropriations act restriction because of ATF’s statutory authority related to multiple sales reports, and the lack of significant changes to the maintenance of multiple sales reports in MS since we found it to be in compliance in 1996.

As we reported in 1996, ATF operates MS with specific statutory authority to collect multiple sales reports. In 1975, under the authority of the Gun Control Act of 1968, ATF first issued regulations requiring FFLs to prepare multiple sales reports and submit those reports to ATF. The legislative history related to ATF’s fiscal year 1979 appropriations act restriction did not provide any indication that Congress intended a change in ATF’s existing practice. In 1986, a provision of FOPA codified FFLs’ regulatory reporting requirement, affirming ATF’s authority to collect multiple sales reports. In addition, this provision required, among other things, FFLs to forward multiple sales reports to the office specified by ATF. Therefore, under this provision, ATF was given the statutory authority to specify that FFLs forward multiple sales reports to a central location. In our 1996 report, we examined MS and found that it did not violate the prohibition on the consolidation or centralization of firearms records because ATF’s collection and maintenance of records was incident to its specific statutory responsibility. As we noted at that time, multiple sales reports are retrievable by firearms and purchaser information, such as serial number and purchaser name. We did not identify any significant changes to the maintenance of the multiple sales reports since we last reported on ATF’s compliance with the statutory restriction that would support a different conclusion in connection with this review.

Demand Letter 3 reports. In 2011, in an effort to reduce gun trafficking from the United States to Mexico, ATF issued demand letters to FFLs classified as dealers or pawnbrokers in four southwest border states: Arizona, California, New Mexico, and Texas. The letter, referred to as Demand Letter 3, required these FFLs to submit a report to ATF on the sale or other disposition of two or more of a specific type of semiautomatic rifle, at one time or during any 5 consecutive business days, to an unlicensed person. Federal courts that have considered the issue have held that ATF’s collection of Demand Letter 3 reports are consistent with the appropriations act restriction. It is our view that ATF’s maintenance of Demand Letter 3 reports in MS is consistent with the appropriations act restriction in light of the statutory basis for Demand Letter 3, the courts’ decisions, and the way in which the records are maintained.

ATF has specific statutory authority to collect reports like Demand Letter 3 reports. As discussed, FFLs are required to maintain certain firearms records at their places of business. By statute, FFLs may be issued letters requiring them to provide their record information or any portion of information required to be maintained by the Gun Control Act of 1968, as amended, for periods and at times specified by the letter.

Some FFLs have challenged the legality of Demand Letter 3 reports for a number of reasons, including that it did not comply with the appropriations act restriction. Federal courts that have considered the issue have upheld ATF’s use of Demand Letter 3 as consistent with the appropriations act restriction. In one case before the U.S. Court of Appeals for the Tenth Circuit, the FFL contended that the demand letter created a national firearms registry in violation of the restriction on consolidation or centralization. The Tenth Circuit stated that the plain meaning of “consolidating or centralizing” does not prohibit the mere collection of some limited information. The court went on to state that the July 2011 demand letter requested very specific information from a limited segment of FFLs. In addition, the court pointed out that Congress authorized the issuance of the letters in 1986, after passing the first appropriations act restriction, and Congress could not have intended to authorize the record collection in statute while simultaneously prohibiting it in ATF’s annual appropriations act. In other similar cases, the courts have also held that ATF had the authority to issue the demand letter and that ATF’s issuance of the demand letter complied with the appropriations act restriction. In addition, Demand Letter 3 reports are maintained in MS in an identical manner to multiple sales reports.

ATF’s Long-Standing Struggle to Implement Its MS Deletion Policy Persists

Although not required by statute, ATF policy requires that firearms purchaser names be deleted from MS 2 years after the date of the reports, if the firearm has not been connected to a firearms trace. However, ATF’s method to identify records for deletion is not comprehensive and, therefore, 10,041 names that should have been deleted remained in MS until May 2016. According to ATF officials, because of MS system design limitations, analysts must write complex queries to locate such names in MS. For example, since the information needed to identify the correct records could exist in free-form fields, the success of the queries in comprehensively identifying all appropriate records depends on consistent data entry of several text phrases throughout the history of the system. In addition, ATF’s queries have inconsistently aligned with its system design—for instance, as the system was modified and updated, the query text remained aligned with the outdated system—and therefore these queries resulted in incomplete identification of records to be deleted. Changes to MS to address system query limitations would require a system-wide database enhancement, but there is currently not an operations and maintenance support contract in place for this system.

Moreover, even if the system could ensure that deletions capture all required records, ATF has inconsistently adhered to the timetable of deletions required by its policy. For example, according to ATF’s deletion log and our verification of the log, some records entered in 1997 were not deleted until November 2009—about 10 years after the required 2 years. As shown in table 1 below, ATF’s timing for implementing deletions did not adhere to ATF policy directives.

As shown in table 1 below, the ATF deletion policy for MS has changed over time including variations in the frequency of deletions (e.g., annually, monthly, weekly), and pauses to the deletion policy because of, according to ATF officials, litigation and requests from Congress. According to NTC officials, delayed deletions occurred because deleting a large number of records at once negatively affects the system, slowing system response time or stopping entirely the larger related data system. However, according to NTC’s deletion log and verified by our observations of NTC system queries, deletions were conducted in average increments of almost 100,000 records per day—representing on average a full year’s worth of records to be deleted. In addition, ATF confirmed that a single deletion of 290,942 records on one day in January 2011 did not affect the system. Therefore, system constraints do not seem to be the reason for the delayed deletion. ATF did not identify further causes for the delays in deletions.

ATF reported that the objective for its deletion policy was primarily to delete data that may not be useful because of its age and to safeguard privacy concerns related to retaining firearms purchaser data. Federal internal control standards require control activities to help ensure that management’s directives are carried out. Additionally, information systems and related control activities should be designed to achieve objectives and respond to risks. Specifically, an organization’s information system should be designed by considering the processes for which the information system will be used. For example, to alleviate the risk of not meeting the objectives established through the MS deletion policy, ATF must ensure the policy is consistent with the design of the MS data system and ATF must ensure that it meets the policy’s timeline requirements. In September 1996, we reported that ATF had not fully implemented its 2-year deletion requirement. During the course of our 1996 review, ATF provided documentation that it had subsequently deleted the required records and that it would conduct weekly deletions in the future. Similarly, as a result of our current review, according to ATF documentation, in May 2016, the agency deleted the 10,041 records that should have been deleted earlier. However, given that this has been a 20-year issue, it is critical that ATF develop consistency between its deletion policy, the design of the MS system, and the timeliness with which deletions are carried out. By aligning the MS system design and the timeliness of deletion practices with its policy, ATF could ensure that it maintains only useful purchaser information while safeguarding the privacy of firearms purchasers.

Conclusions

ATF has an important role in combatting the illegal use of firearms, and must balance this with protecting the privacy rights of law-abiding firearms owners. Of the four ATF firearms data systems we reviewed that contained firearms purchaser information, we found that certain aspects of two of these systems violated the appropriations act restriction on consolidating or centralizing FFL firearms records, but ATF resolved these issues during the course of our review. With regard to ATF policies on maintenance of firearms records, ATF should do more to ensure that these policies are followed and that they are clearly communicated. Specifically, providing guidance to industry members participating in A2K for how to submit their records when they go out of business would help ensure they submit required records to ATF. Without this clear guidance, ATF risks not being able to locate the first purchaser of a firearm during a trace, and thus may not be able to fulfill part of its mission. In addition, aligning eTrace system capability with ATF policy to limit access to firearms purchaser information in FRNP would ensure that such information is only provided to those with a need to know. Finally, aligning the MS system design and the timeliness of deletion practices with the MS deletion policy would help ATF maintain only useful purchaser data and safeguard the privacy of firearms purchasers.

Recommendations for Executive Action

In order to help ensure that ATF adheres to its policies and facilitates industry compliance with requirements, we recommend that the Deputy Director of ATF take the following three actions: provide guidance to FFLs participating in A2K for provision of out-of- business records to ATF, so that FFLs can better ensure that they are in compliance with statutory and regulatory requirements; develop and implement short-term and long-term mechanisms to align the eTrace system capability with existing ATF policy to limit access to FRNP purchaser information for ATF agents; and align the MS deletion policy, MS system design, and the timeliness of deletion practices to improve ATF’s compliance with the policy.

Agency Comments and Our Evaluation

We provided a draft of this report to ATF and DOJ on May 25, 2016 for review and comment. On June 16, 2016, ATF provided an email response, stating that the agency concurs with all three of our recommendations and is taking several actions to address them.

ATF concurred with our recommendation that ATF provide guidance to FFLs participating in A2K for provision of out-of-business records to ATF. ATF stated that the agency is modifying its standard Memorandum of Understanding with A2K participants to incorporate specific guidance regarding the procedures to be followed when a participant goes out of business. ATF also stated that, as a condition of participation, all current and future A2K participants will be required to adopt the revised Memorandum of Understanding. The implementation of such guidance in the Memorandum of Understanding for A2K participants should meet the intent of our recommendation.

ATF concurred with our recommendation that ATF develop and implement mechanisms to align the eTrace system capability with existing ATF policy to limit access to FRNP purchaser information for ATF agents. ATF stated that, in the short term, the agency will delete all purchaser information associated with a firearm entered into FRNP, and will no longer enter any purchaser information into FRNP. ATF stated that, in the long term, the agency will modify the Firearms Tracing System to remove the purchaser information fields from the FRNP module, and will modify eTrace as necessary to reflect this change. These short- and long-term plans, if fully implemented, should meet the intent of our recommendation.

ATF concurred with our recommendation that ATF align the MS deletion policy, MS system design, and the timeliness of deletion practices to improve ATF’s compliance with the policy. As we reported above, ATF stated that the agency deleted all purchaser names from MS that should have been deleted earlier. ATF also stated that the agency is implementing protocols to ensure that deleting purchaser names from MS aligns with ATF policy. If such protocols can be consistently implemented in future years, and address both the timeliness of deletions and the comprehensive identification of records for deletion, they should meet the intent of our recommendation.

On June 22, 2016, DOJ requested additional time for its Justice Management Division to review our conclusions regarding ATF’s compliance with the appropriations act restriction and the Antideficiency Act. As noted earlier, we solicited ATF’s interpretation of the restriction on consolidation or centralization of records as applied to each of the systems under review by letter of December 21, 2015, consistent with our standard procedures for the preparation of legal opinions. ATF responded to our inquiry on January 27, 2016, and its views are reflected in the report. Nevertheless, DOJ stated that ATF and DOJ officials had not followed DOJ’s own processes regarding potential violations of the Antideficiency Act, specifically promptly informing the Assistant Attorney General for Administration. As a result, DOJ requested additional time to review the appropriations law issues raised by the draft report.

As explained in appendix VII, ATF’s failure to comply with the prohibition on the consolidation or centralization of firearms records violated the Antideficiency Act, which requires the agency head to submit a report to the President, Congress, and the Comptroller General. The Office of Management and Budget (OMB) has published requirements for executive agencies for reporting Antideficiency Act violations in Circular A-11, and has advised executive agencies to report violations found by GAO. OMB has further advised that “f the agency does not agree that a violation has occurred, the report to the President, Congress, and the Comptroller General will explain the agency’s position.” We believe that the process set forth by OMB affords DOJ the opportunity to consider and express its views.

ATF also provided us written technical comments, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Deputy Director of ATF, the Attorney General of the United States, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact Diana C. Maurer at (202) 512-9627 or maurerd@gao.gov, or Helen T. Desaulniers at (202) 512-4740 or desaulniersh@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VIII.

Appendix I: Objectives, Scope, and Methodology

This report addresses the following objectives: 1. Identify the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) data systems that contain retail firearms purchaser data and describe the characteristics of selected systems. 2. Determine whether selected ATF data systems comply with the appropriations act restriction on consolidation or centralization of firearms records and ATF policies.

To calculate the estimated number of firearms in the United States in 2013, we used data from ATF’s February 2000 report on Commerce in Firearms in the United States and ATF’s 2015 Annual Statistical Update to this report. To calculate the approximate number of murders in which firearms were involved in 2014, we used data from the Federal Bureau of Investigation’s Uniform Crime Reports from 2014.

To address the first objective, we reviewed ATF policy and program documents to identify ATF data systems related to firearms. For the purposes of this report, “data systems” or “systems” refers to ATF’s data systems and system components, including what ATF refers to as “modules” of a larger system, and what ATF refers to as “programs” whose associated data are contained within related systems. These policy and program documents included, among other things, ATF orders, system descriptions, system user manuals, system training materials, and data submission forms. We compared this information to the systems identified in our September 1996 report, and conducted searches of publicly available information to develop a comprehensive and current list of systems. In order to identify the systems and better understand them and their contents, we spoke with ATF officials in headquarters and at ATF’s National Tracing Center (NTC). We also discussed these systems with ATF investigative and regulatory officials in the Baltimore and Los Angeles field offices, who provided varying perspectives due to geographic factors. These actions enabled us to confirm a comprehensive list of systems, and determine the presence of retail purchaser information within these systems.

We selected four systems for a more in-depth review: Out-of-Business Records Imaging System (OBRIS), Access 2000 (A2K), Firearm Recovery Notification Program (FRNP), and Multiple Sales (MS). Selected systems, at a minimum, contained retail purchaser information and contained original records—as opposed to systems that transmitted information, such as a system that only pulls data from another system in order to print a report or fill out a form. A system was more likely to be selected if (1) it contained data unrelated to a criminal investigation, (2) a large percentage of system records contained retail purchaser information, (3) the retail purchaser information was searchable, or (4) ATF initiated the system—as opposed to ATF being statutorily required to maintain the system. See table 2 for more details.

For the selected systems, we reviewed ATF data on the number of system records, among other things—for OBRIS and A2K for fiscal year 2015, and for FRNP and MS from fiscal years 2010 through 2015. We assessed the reliability of these data by interviewing ATF staff responsible for managing the data and reviewing relevant documentation, and concluded that these data were sufficiently reliable for the purposes of our report. We reviewed ATF policy and program documents to obtain in-depth descriptions of these selected systems, and discussed these systems with ATF officials. We visited NTC to observe the selected systems in operation.

To address the second objective, we reviewed relevant laws, including statutory data restrictions, and ATF policy and program documents relating to ATF’s firearms tracing operations and the selected systems. We also solicited the agency’s interpretation of the restriction on consolidation or centralization of records as applied to each of the systems, and interviewed ATF officials regarding the data systems’ compliance with that restriction and ATF policies. We visited NTC to observe how selected systems’ data are collected, used, and stored. For OBRIS, A2K, FRNP, and MS, we observed NTC analysts using the systems during firearms traces and observed the extent to which the systems are searchable for retail purchaser information. For OBRIS, FRNP, and MS, we observed NTC analysts receiving and entering data into the systems and processing the original data submissions—either electronically or through scanning and saving documents—including quality-control checks.

For A2K, we reviewed budgetary information to determine the source of funding for the system for fiscal year 2008 through fiscal year 2014. We also interviewed representatives from the contractor that manages A2K, and 3 of 35 industry members that use A2K, to better understand how the system functions. We selected industry members that had several years of experience using A2K and reflected variation in federal firearms licensee (FFL) size and type. Although our interviews with these industry members are not generalizable, they provided us with insight on the firearms industry’s use of A2K.

In order to evaluate the contents of FRNP for the presence of retail purchaser information and compliance with the appropriations act restriction and FRNP policies, we reviewed several fields of data for the entire population of records. During our site visit, we also reviewed additional fields of data for a generalizable sample of records and the associated submission forms that are used to populate the records.

For this sample, we compared selected data in the system to information on the forms, and collected information from the forms. We drew a stratified random probability sample of 434 records from a total population of 41,625 FRNP records entered from June 1991 through July 2015. With this probability sample, each member of the study population had a nonzero probability of being included, and that probability could be computed for any member. We stratified the population by active/inactive record status and new/old (based on a cutoff of Nov. 1, 2004). Each sample element was subsequently weighted in the analysis to account statistically for all the records, including those that were not selected. Because we followed a probability procedure based on random selections, our sample is only one of a large number of samples that we might have drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval. This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. All percentage estimates from the review of the generalizable sample of FRNP records have margins of error at the 95 percent confidence level of plus or minus 5 percentage points or less, unless otherwise noted.

For our review of the submission forms associated with FRNP records, we reviewed 195 forms entered into FRNP from November 2004 through July 2015 that were sampled from the “new” stratum. Prior to November 2004, the submission forms did not include selection options for criteria for entry into FRNP. We therefore only reviewed the more recent forms in order to assess the presence of criteria on these forms. Our review of these forms is generalizable to submission forms entered into FRNP from November 2004 through July 2015. All percentage estimates from the review of submission forms have margins of error at the 95 percent confidence level of plus or minus 3 percentage points or less, unless otherwise noted.

We assessed the reliability of the FRNP data by conducting electronic tests of the data for obvious errors and anomalies, interviewing staff responsible for managing the data, and reviewing relevant documentation, and concluded that these data were sufficiently reliable for the purposes of our report. For MS, we observed the process of querying to identify particular records.

We determined the selected data systems’ compliance with the appropriations act restriction, and compared them to multiple ATF policies on collection and maintenance of information, and criteria in Standards for Internal Control in the Federal Government related to control activities for communication and for the access to and design of information systems.

We conducted this performance audit from January 2015 to June 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Firearms- Related Data Systems

Data sources FFLs send reports to NTC on a specified form (ATF Form 3310.4)

Contents related to firearms purchaser information Firearms information (e.g., serial number, model), retail purchaser information (e.g., name, date of birth); FFL information (e.g., FFL name, FFL number)

Who can view the information About 396 ATF Firearms Tracing System (FTS) users, primarily NTC personnel, and the 3,050 ATF users, which includes ATF agents. ATF eTrace users outside of NTC are generally to be limited to viewing firearms and requesting agent information.

Exports information to eTrace; FIRES; FTS (Data related to MS are contained in FTS.)

Out-of-business FFLs send firearms transaction records to NTC, specifically acquisition and disposition logbooks and a specified form (ATF Form 4473)

Contents related to firearms purchaser information Retail purchaser information of prohibited individuals who attempted to purchase a firearm (e.g., name); firearms information (e.g., serial number, model)

Imports information from Federal Licensing System (FLS)

National Tracing Center (NTC)

Firearms information (e.g., serial number, model), retail purchaser information (e.g., name, date of birth); federal firearms licensee (FFL) information (e.g., FFL name, FFL number)

ATF employees; federal, state, local, and foreign law enforcement agencies. Non-ATF users have access to information on their own trace requests and those from agencies with which they have a memorandum of understanding.

Firearms information (e.g., serial number, model), retail purchaser information (e.g., name, address); FFL information (e.g., FFL name, FFL number)

Firearms information (e.g., serial number, model); retail purchaser, possessor, and associates information (e.g., first and last name); FFL information (e.g., city and state)

Contents related to firearms purchaser information Firearms information (e.g., serial number, model), retail purchaser information (e.g., name, date of birth); FFL information (e.g., FFL name, FFL number)

Firearms information (e.g., serial number, model), retail purchaser information (e.g. name); FFL information (e.g., FFL name, FFL number) eTrace; FIRES; FTS (Data related to Interstate Theft are contained in FTS.)

Firearms information (e.g., serial number, model), retail purchaser information (e.g., name, date of birth); FFL information (e.g., FFL name, FFL number). Original and subsequent purchasers are maintained as part of the system.

FLS; National Firearms Act Special Occupational Tax System (NSOT)

Contents related to firearms purchaser information Firearms information (e.g., serial number, model). Firearms possessor information—limited to first, middle, and last name—but that information is not searchable.

Firearms information (e.g., serial number, model); personal information for individuals including possessors, legal owners, or individuals who recovered the firearm (e.g., first and last name)

Collects information related to an individual currently under active criminal investigation who is suspected of illegally using or trafficking firearms.

Suspect information (e.g., name, identification numbers such as driver’s license number)

Data system Trace

Contents related to firearms purchaser information Firearms information (e.g., serial number, model), retail purchaser information (e.g., name, date of birth); FFL information (e.g., FFL name, FFL number)

Who can view the information ATF employees; federal, state, local, and foreign law enforcement agencies. Federal, state, local, and foreign law enforcement agencies only have access to information on their own trace requests and those from agencies with which they have a memorandum of understanding.

Exports information to Electronic Trace Operation Workflow Reporting System; eTrace; FIRES; FTS (Data related to Trace are contained in FTS.)

Under the Brady Handgun Violence Prevention Act, Pub. L. No. 103-159, 107 Stat. 1536 (1993), and implementing regulations, the Federal Bureau of Investigation, within DOJ, and designated state and local criminal justice agencies use NICS to conduct background checks on individuals seeking to purchase firearms from FFLs or obtain permits to possess, acquire, or carry firearms. NICS was established in 1998. FTS does not contain original records, rather it imports data from its subsystems in order to conduct analysis. NFRTR contains firearms purchaser information pursuant to Title 26 of the IRS code, 26 U.S.C. Chapter 53, regarding the registration and transfers of registration taxes. Specifically, it states that there should be a central registry, called the National Firearms Registration and Transfer Record, of all firearms as defined in the code, including machine guns, destructive devices such as bazookas and mortars, and “other” “gadget-type” weapons such as firearms made to resemble pens.

Appendix III: Out-of-Business Records Imaging System (OBRIS)

Appendix III: Out-of-Business Records Imaging System (OBRIS)

Since 1968, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has received several hundred million out-of-business records. According to ATF officials, as of May 5, 2016 there are about 8,060 boxes of paper records at the National Tracing Center (NTC) awaiting scanning into digital images before they are to be destroyed. At NTC, we observed these boxes lining the walls and stacked along cubicles and file cabinets, as shown in figure 4. The officials stated that, according to the General Services Administration, the facility floor will collapse if the number of boxes in the building increases to 10,000. Therefore, when the number of boxes approaches this quantity, NTC staff move the boxes to large shipping containers outside. Currently, there are three containers of boxes on the property, which contain records awaiting destruction.

Prior to digital imaging, records were housed on microfilm or in storage boxes, and the system was referred to simply as Microfilm Retrieval System. According to NTC officials, ATF is transitioning to digital imaging because of the benefits of improved image resolution, speed in accessing images, simultaneous accessibility of images to complete urgent traces, and less voluminous storage. The digitized records also helped mitigate the challenges of deteriorating microfilm images and maintaining the obsolete technology of microfilm. According to officials, NTC has completed the process of converting the microfilm records to digital images, and officials expect that the images will become fully available to NTC analysts for tracing during fiscal year 2016. Currently, access is limited to a single workstation within NTC. While ATF finalizes this effort, staff continue to access the records in the NTC microfilm archive in order to respond to trace requests, as shown in figure 5.

Before fiscal year 1991, ATF stored the out-of-business records in boxes with an NTC file number assigned to each federal firearms licensee (FFL). If, during a trace, ATF determined that the FFL who sold the firearm was out of business and had sent in its records, ATF employees were to locate the boxes containing the records and manually search them for the appropriate serial number. According to ATF, this was a time-consuming and labor-intensive process, which also created storage problems. In 1991, ATF began a major project to microfilm the out-of- business records and destroy the originals. Instead of in boxes, the out- of-business records were stored on microfilm cartridges, with the FFL numbers assigned to them. Although this system occupied much less space than the hard copies of the records, ATF officials said it was still time-consuming to conduct firearms traces because employees had to examine up to 3,000 images on each microfilm cartridge to locate a record. The officials stated that scanning records and creating digital images in OBRIS has sped up the ability to search for out-of-business records during a trace. According to the officials, it takes roughly 20 minutes to complete a trace with digital images and roughly 45 minutes using microfilm.

Appendix IV: Firearm Recovery Notification Program Submission Form

Appendix V: Multiple Sales Submission Form for Multiple Sales Reports

Appendix VI: Multiple Sales Submission Form for Demand Letter 3 Reports

Appendix VII: Legal Analysis of Compliance with the Restriction on Consolidation or Centralization of Firearms Records

A provision in the fiscal year 2012 appropriation for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) prohibits the use of the appropriation to consolidate or centralize records on the acquisition and disposition of firearms maintained by federal firearms licensees (FFL). This statutory restriction originated in the agency’s appropriation for fiscal year 1979 and, with some modification, was made permanent in fiscal year 2012. We reviewed whether ATF’s collection and maintenance of acquisition and disposition records in four data systems—Out-of-Business Records Imaging System (OBRIS), Access 2000 (A2K), Firearm Recovery Notification Program (FRNP), and Multiple Sales (MS)— violated this restriction.

As discussed below, we considered the critical characteristics of each data system and related ATF activities in light of the restriction and in the context of ATF’s statutory authorities. We conclude that ATF violated the restriction when it collected and maintained the disposition records of FFL participants in A2K on a single server within the National Tracing Center (NTC) after those FFLs had discontinued their operations. We also agree with ATF’s 2009 determination that the agency violated the restriction when it collected and maintained records of certain FFLs engaged primarily in the sale of used firearms as part of FRNP. ATF’s failure to comply with the restriction on consolidation or centralization also violated the Antideficiency Act. Under section 1351 of title 31, United States Code, the agency is required to report these violations to the President and Congress.

Background

ATF, a criminal and regulatory enforcement agency within the Department of Justice (DOJ), is responsible for the regulation of the firearms industry and enforcement of federal statutes regarding firearms, including criminal statutes related to the illegal possession, use, transfer, or trafficking of firearms. One component of ATF’s criminal enforcement mission involves the tracing of firearms used in crimes to identify the first retail purchaser of a firearm from an FFL. To conduct a trace, the requesting law enforcement agency must identify the manufacturer or importer of the firearm and its type, caliber, and serial number, as well as other information related to the recovery, crime, and possessor. According to ATF, NTC personnel must typically use the information provided by the law enforcement agency to contact the manufacturer or importer to determine when and to whom the firearm in question was sold. The manufacturer or importer may have sold the firearm to an FFL wholesaler. In that case, NTC personnel would contact the FFL wholesaler to determine when and to whom the firearm in question was sold, usually to an FFL retailer. The tracing process continues until NTC identifies the first retail purchaser who is a nonlicensee.

The Gun Control Act of 1968, as amended, established a system requiring FFLs to record firearms transactions, maintain that information at their business premises, and make such records available to ATF for inspection and search under certain prescribed circumstances. This system was intended to permit law enforcement officials to trace firearms involved in crimes as described above while allowing the records themselves to be maintained by the FFLs rather than by a governmental entity. As originally enacted, the Gun Control Act required FFLs to submit such reports and information as the Secretary of the Treasury prescribed by regulation and authorized the Secretary to prescribe such rules and regulations as deemed reasonably necessary to carry out the provisions of the act.

In 1978, citing the general authorities contained in the Gun Control Act, ATF proposed regulations that would have required FFLs to report most of their firearms transactions to ATF through quarterly reports. Under the proposed regulations, these FFL reports of sales and other dispositions would not have identified a nonlicensed transferee, such as a retail purchaser, by name and address. However, the proposed regulations prompted concerns from those who believed that the reporting requirements would lead to the establishment of a system of firearms registration. Congress included in ATF’s fiscal year 1979 appropriation for salaries and expenses a provision prohibiting the use of funds for administrative expenses for the consolidation or centralization of certain FFL records, or the final issuance of the 1978 proposed regulations. The provision continues to apply, with some modifications as described below. hat no funds appropriated herein shall be available for administrative expenses in connection with consolidating or centralizing within the Department of the Treasury the records of receipt and disposition of firearms maintained by Federal firearms licensees or for issuing or carrying out any provisions of the proposed rules of the Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms, on Firearms Regulations, as published in the Federal Register, volume 43, number 55, of March 21, 1978.

The Bureau of Alcohol, Tobacco, and Firearms (BATF) has proposed implementation of several new regulations regarding firearms. The proposed regulations, as published in the Federal Register of March 21, 1978 would require: (1) A unique serial number on each gun manufactured or imported into the United States. (2) Reporting of all thefts and losses of guns by manufacturers, wholesalers and dealers. (3) Reporting of all commercial transactions involving guns between manufacturers, wholesalers and dealers.

The Bureau would establish a centralized computer data bank to store the above information. It is important to note that the proposed regulations would create a central Federal computer record of commercial transactions involving all firearms—whether shotguns, rifles, or handguns. There are approximately 168,000 federally licensed firearms dealers, manufacturers, and importers. It is estimated that the proposed regulations would require submission of 700,000 reports annually involving 25 million to 45 million transactions.

It is the view of the Committee that the proposed regulations go beyond the intent of Congress when it passed the Gun Control Act of 1968. It would appear that BATF and the Department of Treasury are attempting to exceed their statutory authority and accomplish by regulation that which Congress has declined to legislate.

The reference to the 1978 proposed rules was removed from the annual provision as of the fiscal year 1994 appropriations act, but the prohibition against using funds for administrative expenses for consolidating or centralizing records was included in each of ATF’s annual appropriations through fiscal year 2012 in much the same form. In fiscal year 1994, the Treasury, Postal Service, and General Government Appropriations Act, 1994, expanded the prohibition to include the consolidation or centralization of portions of records and to apply to the use of funds for salaries as well as administrative expenses, stating “hat no funds appropriated herein shall be available for salaries or administrative expenses in connection with consolidating or centralizing, within the Department of the Treasury, the records, or any portion thereof, of acquisition and disposition of firearms maintained by Federal firearms licensees” (emphasis added). “hat no funds appropriated herein or hereafter shall be available for salaries or administrative expenses in connection with consolidating or centralizing, within the Department of Justice, the records, or any portion thereof, of acquisition and disposition of firearms maintained by Federal firearms licensees” (emphasis added).

The conference report accompanying the act explained that the provision had been made permanent.

We previously considered ATF’s compliance with the restriction on consolidation or centralization in 1996 in connection with the agency’s Microfilm Retrieval System and Multiple Sales System. We stated that the restriction did not preclude all information practices and data systems that involved an element of consolidation or centralization, but that it had to be interpreted in light of its purpose and in the context of other statutory provisions governing ATF’s acquisition and use of information on firearms. In this respect, our analyses reflected the well-established principle that statutory provisions should be construed harmoniously so as to give them maximum effect whenever possible, avoiding the conclusion that one statute implicitly repealed another in the absence of clear evidence to the contrary. We found that the two systems complied with the statutory restriction on the grounds that ATF’s consolidation of records was incident to carrying out specific responsibilities set forth in the Gun Control Act of 1968, as amended, and that the systems did not aggregate data on firearms transactions in a manner that went beyond these purposes. Thus, our analysis did not turn on the presence or absence of retail purchaser information in the system, but rather on the extent to which the aggregation of data corresponded to a statutory purpose. We employ a similar analytical approach, which ATF has also adopted, in assessing the four systems under review here, taking into account ATF’s statutory authorities and the critical characteristics of each system.

Discussion

Two of the four data systems we reviewed—OBRIS and MS—do not consolidate or centralize firearms in violation of the restriction contained in the fiscal year 2012 appropriations act. In contrast, ATF violated the restriction when it collected and maintained disposition records of FFL participants in A2K on a single server at NTC after they had discontinued their operations. ATF also violated the restriction when it collected and maintained records of certain FFLs engaged primarily in the sale of used firearms as part of FRNP.

OBRIS is ATF’s repository for records submitted by FFLs that have permanently discontinued their operations, as required by the Gun Control Act of 1968, as amended. Section 923(g)(1)(A) of title 18, United States Code, requires each FFL to maintain such records of importation, production, shipment, receipt, sale, or other disposition of firearms at its place of business as prescribed by the Attorney General. Under 18 U.S.C. § 923(g)(4), when a firearms business is discontinued and there is no successor, the records required to be maintained by FFLs must be delivered within 30 days to ATF.

ATF’s system for maintaining the records of out-of-business FFLs for its statutory tracing function has evolved over time in response to logistical challenges and technological advances. Prior to fiscal year 1991, ATF maintained out-of-business FFLs’ records in hard copy, with a file number assigned to each FFL. During a trace, if ATF determined that a firearm had been transferred or disposed of by an out-of-business FFL, ATF employees manually searched the FFL’s records until they found the records corresponding to the serial number of the firearm being traced. According to ATF, this was a time-consuming and labor-intensive process, and the volume of records created storage problems. In 1991, ATF began a major project to microfilm these records and destroy the originals. For fiscal year 1992, Congress appropriated $650,000 “solely for improvement of information retrieval systems at the National Firearms Tracing Center.” In fiscal year 1992, ATF began creating a computerized index of the microfilmed records containing the information necessary to identify whether ATF had a record relating to a firearm being traced. The index contained the following information: (1) the cartridge number of the microfilm; (2) an index number; (3) the serial number of the firearm; (4) the FFL number; and (5) the type of document on microfilm, i.e., a Firearms Transaction Record form or acquisition and disposition logbook pages. This information was stored on a database in ATF’s mainframe computer to allow searches. Other information, however, including a firearms purchaser’s name or other identifying information and the manufacturer, type, and model remained stored on microfilm cartridges and was not computerized. Therefore, this information was not accessible to ATF personnel through a text search.

In our 1996 report, we concluded that the Microfilm Retrieval System did not violate the restriction on consolidation or centralization due to its statutory underpinnings and design. ATF had initially required out-of- business FFLs to deliver their records to ATF through a 1968 regulation. We found no indication in its legislative history that the appropriations act restriction was intended to overturn this regulation and noted that, historically, out-of-business records had been maintained at a central location. We also explained that the Firearms Owners’ Protection Act of 1986 (FOPA) had codified the ATF regulation, affirming the agency’s authority to collect this information, and that a subsequent appropriations act had provided funding specifically for ATF’s microfilming effort. Finally, ATF’s system of microfilmed records did not capture and store certain key information, such as firearms purchaser information, in an automated file. In this regard, we found that the system did not aggregate information in a manner beyond that necessary to implement the Gun Control Act of 1968, as amended by FOPA.

Conversion of Records.—The conferees recognize the need for the ATF to begin converting tens of thousands of existing records of out-of-business Federal firearms dealers from film to digital images at the National Tracing Center. Once the out-of- business records are fully converted, the search time for these records will be reduced to an average of 5 minutes per search from the current average of 45 minutes per search. This significant time saving will ultimately reduce overall costs and increase efficiency at the National Tracing Center. Therefore, the conference agreement includes a $4,200,000 increase for the ATF to hire additional contract personnel to begin this conversion.

Similarly, the conference report accompanying the fiscal year 2006 appropriations act reflected the conferees’ support for ATF’s transition of out-of-business records to OBRIS.

Since 2006, NTC has converted records submitted by FFLs discontinuing their operations to digital images in OBRIS. Specifically, NTC sorts and scans records provided by out-of-business FFLs, converting and storing them in an image repository on an electronic server. Images stored in OBRIS are generally indexed by FFL number. The records themselves are stored as images without optical character recognition so that they cannot be searched or retrieved using text queries, but must be searched through the index, generally by FFL number. After narrowing down the possible records through an index search, an NTC analyst must manually scroll through digital images to identify the record of the particular firearm in question.

The technological changes represented by OBRIS do not compel a different conclusion regarding ATF’s compliance with the restriction on consolidation or centralization from the one we reached in 1996 with respect to the predecessor system. The statutory basis for OBRIS is the same as for the Microfilm Retrieval System and OBRIS makes records accessible to the same extent as that system, functioning in essentially the same manner though with enhanced technology. As with the prior microfilm system, users identify potentially relevant individual records through manual review after searching an index using an FFL number, or firearms information if available. In this regard, OBRIS, like its predecessor, does not aggregate records in a manner beyond that required to implement the Gun Control Act of 1968, as amended by FOPA.

A2K

We assessed A2K with regard to in-business records and out-of-business records. We conclude that A2K for in-business records complies with the restriction on consolidation or centralization, while A2K for out-of- business records violated the restriction.

A2K In-Business Records

The Gun Control Act of 1968, as amended, requires FFLs to provide firearms disposition information to ATF in response to a trace request. Specifically, section 923(g)(7) of title 18, United States Code, requires FFLs to respond within 24 hours to a request for records to determine the disposition of firearms in the course of a criminal investigation. Prior to the implementation of A2K, FFLs could only respond to such requests manually. A2K provides manufacturer, importer, and wholesaler FFLs with an automated alternative to facilitate their statutorily required response to ATF requests. he conferees are aware that the Access 2000 program was initiated by ATF to improve the efficiency and reduce the costs associated with firearms tracing incurred by Federal Firearms Licensees (FFLs). ATF and FFL importers, manufacturers, and wholesalers form a partnership in this effort. FFLs take their data from their mainframe computer and import it into a stand-alone server provided by the ATF. The National Tracing Center is connected to this server remotely by secure dial-up and obtains information on a firearm that is subject to a firearms trace. The conferees support this program, which reduces the administrative burdens of the FFL and allows the ATF around the clock access to the records. The ATF currently has 36 Access 2000 partners. The conferees encourage the ATF to place more emphasis on this program and expand the number of partners to the greatest extent possible.

According to ATF, as of April 25, 2016, there are 35 industry members representing 66 individual manufacturer, importer, and wholesaler FFLs currently participating in A2K.

ATF believes that A2K “… has appropriately balanced Congressional concerns related to the consolidation of firearm records with the necessity of being able to access firearm information in support of its underlying mission to enforce the Gun Control Act,” as amended. We agree. Given the statutory underpinning and features of the system for in-business FFLs, we conclude that ATF’s use of A2K for in-business records does not violate the restriction on the consolidation or centralization of firearms records. ATF’s use of A2K for in-business records is rooted in the specific statutory requirement that FFLs respond promptly to ATF trace requests in connection with criminal investigations. In addition, although the system allows FFLs to respond to ATF’s trace requests virtually, ATF obtains the same information as it would otherwise obtain by phone, fax, or e-mail and in similar disaggregated form, that is, through multiple servers located at individual FFLs. Moreover, industry members retain possession and control of their disposition records and, according to ATF officials, may withdraw from using A2K—and remove their records from the ATF- accessible servers—at any time. For these reasons, we do not view A2K for in-business records to constitute the type of data aggregation prohibited by the appropriations act restriction on the consolidation or centralization of records within DOJ.

A2K Out-of-Business Records

During the course of our review, we found that when participating industry members permanently discontinued their operations, the disposition data maintained in connection with A2K was transferred to ATF, and ATF used the data when conducting firearms traces. Specifically, when an A2K participant went out of business, an ATF contractor remotely transferred the data on the server to a backup disk and the industry member shipped the backup disk with intact disposition records, as well as the blank server, to ATF’s NTC. ATF officials placed the data from the backup disk on a single partitioned server at NTC and accessed the data for firearms traces using the same type of interface and URL as used while the industry member was in business. As a result, in response to an industry member–specific query using an exact firearm serial number, the A2K out-of-business server would automatically generate the disposition information related to that firearm serial number.

According to ATF, records of eight industry members were placed on the server at NTC from as early as late 2000 through mid-2012. While ATF estimated that there were approximately 20 million records associated with these industry members on the server, the agency did not have a means of ascertaining the actual number of records. The number of records on the ATF server would have been expected to grow as additional A2K participants discontinued their operations and provided their backup disks to ATF. However, during the course of our review, ATF officials told us that the agency planned to move all of the A2K records into OBRIS and that, once converted to OBRIS images, the records would be searchable like other OBRIS records. In January 2016, ATF officials reported that NTC was in the process of transferring all of the records from the A2K out-of-business records server to OBRIS and a quality-control process was under way to verify the accuracy of the transfer. They subsequently deleted all records from the server in March 2016.

We conclude that ATF’s use of A2K with respect to out-of-business records violated the restriction on consolidation or centralization. In contrast to the discrete servers in the possession of the in-business industry members, ATF combined disposition records across industry members on the single, though partitioned, A2K server at NTC. In addition, the records were stored on the single A2K server in a manner that made them more easily searchable than other out-of-business records. Unlike OBRIS, which requires the manual review of potentially relevant records identified through an index, the A2K server within NTC generated records automatically in response to an industry member– specific text query, that is, exact firearm serial number. In addition, according to NTC officials, they could have modified the structure of the NTC server to achieve further aggregation, by programming the system to allow text searches across a broader set of data fields. As a result, ATF could have searched for records by name or other personal identifier.

As explained earlier, our analysis of ATF’s aggregation of firearms records turns not on the presence or absence of retail purchaser information, but rather on the extent to which the aggregation of data corresponds to a statutory purpose. ATF’s maintenance of out-of- business industry members’ disposition records on a single server at NTC was not incident to the implementation of a specific statutory requirement. As discussed above, A2K was designed to allow in-business industry members to respond promptly to ATF trace requests as required by 18 U.S.C. § 923(g)(7) without having to dedicate personnel to this function. Section 923(g)(7), however, has no applicability to FFLs once they discontinue operations. A separate statutory provision, 18 U.S.C. § 923(g)(4), applies to FFLs that permanently discontinue their operations. ATF has long maintained a separate system—formerly the Microfilm Retrieval System and currently OBRIS—to hold the records submitted under that provision, and the disposition records that ATF maintained on the NTC server were among the types of records required to be submitted under section 923(g)(4) for which ATF had created that system. Therefore, we find no statutory underpinning for ATF’s maintenance of out-of-business A2K participants’ disposition records on the server at NTC.

Our implementation of A2K included strict security protocols to limit ATF access to only that information to which it is statutorily required, e.g., the next step in the distribution of the traced firearm. That is, ATF would simply have access to the same information it could obtain by calling the participating FFL. However, that calculus is altered when an FFL ceases participation in A2K. At that point, that FFL’s records become just like any other FFL records and, as such, must be stored in the same manner. Otherwise, records which were formerly accessible on a discrete basis under A2K would be readily accessible in a database which would, in our opinion based on the 1996 GAO Report, violate the appropriation rider. Our decision, therefore, was to ensure that A2K records have the same character and are retrievable in the same manner as any other out-of-business records.

In addition to removing all data from the A2K out-of-business records server, ATF officials reported that, going forward, the agency plans to convert records of A2K participants that go out of business directly into OBRIS images. However, they said, when such records are received by out-of-business FFLs, the time frame for converting the records into OBRIS images will depend on the backlog of electronic records awaiting conversion.

Similarly, ATF officials told us that they had anticipated that A2K participants would submit acquisition and disposition records together, consistent with the format provided for in ATF’s regulations, for inclusion in OBRIS. They had not expected that A2K participants would satisfy any part of their statutory responsibility by providing their backup disks to the agency. However, even if industry members’ submission of disposition data on the backup disks could be said to be in furtherance of the portion of the statutory requirement pertaining to disposition records, given the existence and successful functioning of OBRIS, we conclude that ATF’s maintenance of those records on the NTC server went beyond the purposes of the Gun Control Act of 1968, as amended.

We conclude that FRNP complies with the restriction on consolidation and centralization of firearms records when used as a tool for ATF agents in connection with an ATF criminal investigation. However, ATF’s use of FRNP to maintain information on firearms identified during regulatory inspections of FFLs under the Southwest Border Secondary Market Weapons of Choice Program (SWBWOC), as discussed below, was a violation of the restriction.

FRNP for Criminal Investigations

Under section 599A of title 28, United States Code, ATF is responsible for investigating criminal and regulatory violations of federal firearms laws, and for carrying out any other function related to the investigation of violent crime or domestic terrorism that is delegated to it by the Attorney General. Among other things, ATF is responsible for enforcing federal statutes regarding firearms, including those regarding illegal possession, use, transfer, or trafficking. FRNP, formerly known as the Suspect Gun Program, was established in 1991 within the Firearms Tracing System to provide an investigative service to ATF agents conducting criminal investigations. Through this program, ATF records information— manufacturer, serial number, and type—about firearms that have not yet been recovered by other law enforcement authorities, but are suspected of being involved in criminal activity and are associated with an ATF criminal investigation. When such firearms are recovered, ATF uses the information available through the program to notify the investigating ATF official and to coordinate the release of trace results to other law enforcement authorities with the ongoing ATF investigation.

To enter firearms information into the system, ATF agents investigating potential criminal activity involving firearms must identify the firearms at issue, the number of an open ATF criminal investigation, and at least one of five specified criteria for using the system. The five criteria correspond to bases for ATF investigation. ATF agents also indicate on the submission form whether NTC should release trace results to requesters of a trace for the firearms listed on the form. Where criminal investigations are ongoing and FRNP records are designated as “active,” NTC will notify the investigating ATF agent when the firearm described on the form is recovered. In addition, where the ATF agent has indicated that NTC should release trace information, NTC will notify the ATF agent and the requesting law enforcement agency of trace results. Where the ATF agent has indicated that NTC should not release trace information, the ATF agent is notified of the trace results and determines when that information may be released to the requesting law enforcement agency. For criminal investigations that have been closed, the FRNP record associated with the investigation is labeled “inactive,” although the records may provide investigative leads, according to ATF officials. In such cases, the ATF agent associated with the investigation is not notified of the recovery of the identified firearms or related trace requests, and the release of trace results to requesting law enforcement agencies proceeds without any delay.

ATF is authorized by statute to investigate violations of federal firearms laws. As described above, FRNP is designed for the limited purpose of facilitating ATF’s conduct of specific criminal investigations under its jurisdiction. The inclusion of data in FRNP requires an open ATF investigation of an identified criminal matter, which helps to ensure that the data are maintained only as needed to support this investigative purpose. Further, ATF requires its agents to identify with specificity the firearms relevant to the investigation. As we observed in 1996, the restriction on consolidation or centralization does not preclude all data systems that involve an element of consolidation. Where ATF adheres to the limitations incorporated in the design of FRNP, the maintenance of information through FRNP is incident to ATF’s exercise of its statutory authority to conduct criminal investigations and does not involve the aggregation of data in a manner that goes beyond that purpose. In this respect, we conclude that it does not represent a consolidation or centralization of records in violation of the statutory restriction.

Southwest Border Secondary Market Weapons of Choice Program

In response to our inquiries about FRNP data, ATF officials told us that in 2009, the ATF Chief Counsel had concluded that the agency had violated the appropriations restriction in connection with the system. Specifically, ATF officials told us that the agency had maintained records on the inventories of certain FFLs in violation of the restriction, from 2007 through 2009 under ATF’s Southwest Border Secondary Market Weapons of Choice (SWBWOC) Program. We agree with the ATF Chief Counsel’s conclusion that its collection and maintenance of information in connection with this program violated the restriction on the consolidation or centralization of firearms records.

In October 2005, the governments of the United States and Mexico instituted a cooperative effort to address surging drug cartel–driven violence in Mexico and along the southwest border of the United States. ATF’s main role in this initiative was to develop strategies and programs to stem the illegal trafficking of firearms from the United States to Mexico. ATF determined that used gun sales—referred to in the industry as “secondary market” sales—played a significant role in firearms trafficking to Mexico, particularly for the types of firearms most sought by the Mexican drug cartels, known as “weapons of choice.” Accordingly, in June 2007, the agency developed a protocol to be used during its annual inspections of FFLs in the region engaged primarily in the sale of used firearms. This protocol, known as the SWBWOC Program was intended to enhance ATF’s ability to track secondary market sales. It called for ATF investigators to record the serial number and description of all used weapons of choice in each FFL’s inventory and those sold or otherwise disposed of during the period covered by the inspection. Under the protocol, the investigators forwarded the information to the relevant ATF field division, which opened a single investigative file for all submissions from the area under its jurisdiction and determined whether any of the weapons had been traced since their last retail sale. After review, the field division forwarded the information to FRNP. According to ATF, the Dallas, Houston, and Los Angeles Field Divisions began to submit records from the SWBWOC Program to FRNP in July 2007, and the Phoenix Field Division began to do so in October 2007.

The SWBWOC Program was cancelled on October 2, 2009, following a review by ATF’s Office of Chief Counsel of the process by which the secondary market weapons of choice information had been recorded and submitted to FRNP. The Office of Chief Counsel determined that the SWBWOC Program was not consistent with the consolidation or centralization restriction. It advised that information obtained from an FFL about a firearm in and of itself and unaccompanied by purchaser information could not be collected and consolidated absent a specific basis in statute or regulation, or a direct nexus to discrete law enforcement purposes such as a specific criminal investigation. The Office of Chief Counsel found that the collection of information from FFLs under the SWBWOC Program lacked these essential, individualized characteristics.

We agree with ATF’s conclusion that the collection and maintenance of firearms information from the SWBWOC Program in FRNP exceeded the permissible scope of the appropriations act restriction. As discussed above, our analysis of ATF’s aggregation of firearms data turns not on the presence or absence of retail purchaser information, but rather on the extent to which the aggregation of data corresponds to a statutory purpose. Here, ATF collected and maintained acquisition and disposition data without a statutory foundation based on nothing more than the characteristics of the firearms. The collection and maintenance of information about a category of firearms, “weapons of choice,” from a category of FFLs, primarily pawnbrokers, did not pertain to a specific criminal investigation within the scope of ATF’s statutory investigative authority. Nor did it fall within the scope of ATF’s authority to conduct regulatory inspections. For this reason, we conclude that the program involved the type of aggregation of information contemplated by Congress when it passed the restriction on the consolidation or centralization of firearms records. ATF deleted the related data from FRNP in March 2016.

Multiple Sales and “Demand Letter 3” Reports

The Gun Control Act of 1968, as amended, requires FFLs to report transactions involving the sales of multiple firearms. Specifically, under 18 U.S.C. § 923(g)(3)(A), an FFL is required to report sales or other dispositions of two or more pistols or revolvers to a non-FFL at one time or during 5 consecutive business days. Under these circumstances, the FFL is required to report information about the firearms, such as type, serial number, manufacturer, and model, and the person acquiring the firearms, such as name, address, ethnicity, race, identification number, and type of identification to ATF. ATF enters data from these reports into the MS portion of its Firearms Tracing System so that it can monitor and deter illegal interstate commerce in pistols and revolvers.

Our 1996 report examined the Multiple Sales System and found that it did not violate the prohibition on the consolidation or centralization of firearms records because the collection and maintenance of records was incident to a specific statutory responsibility. In connection with our current review, we observed the functioning of the present system for reports of multiple sales. We found no changes since 1996 that would suggest a different conclusion with respect to ATF’s compliance with the appropriations act restriction.

As we reported in 1996, a regulatory requirement for FFLs to prepare and provide multiple sales reports to ATF existed before the prohibition on consolidation or centralization of firearms records was enacted in fiscal year 1979 and there was no indication in the legislative history that the prohibition was intended to overturn ATF’s existing practices with respect to multiple sales. In addition, we explained that the Firearms Owners’ Protection Act had codified the ATF regulation, affirming the agency’s authority to collect this information. FOPA’s requirement that FFLs send the reports “to the office specified” on an ATF form suggested that ATF could specify that the information be sent to a central location.

Our review of FOPA’s legislative history confirmed our interpretation of the statute. When considering the passage of FOPA, Congress clearly considered placing constraints on ATF’s maintenance of multiple sales reports, but declined to do so. Specifically, the Senate-passed version of FOPA prohibited the Secretary of the Treasury from maintaining multiple sales reports at a centralized location and from entering them into a computer for storage or retrieval. This provision was not included in the version of the bill that was ultimately passed. In light of the above, we reach the same conclusion as we did in 1996 and find that ATF’s use of MS complies with the restriction on the consolidation or centralization of firearms records.

In addition, ATF has collected and maintained information on the multiple sales of firearms under a separate authority, 18 U.S.C. § 923(g)(5)(A). Section 923(g)(5)(A) authorizes the Attorney General to require FFLs to submit information that they are required to maintain under the Gun Control Act of 1968, as amended. This provision was also included in FOPA. Relying on this authority, ATF issues “demand letters” requiring FFLs to provide ATF with specific information. In 2011, ATF issued a demand letter requiring certain FFLs in Arizona, California, New Mexico, and Texas to submit reports of multiple sales or other dispositions of particular types of semiautomatic rifles to non-FFLs (referred to as “Demand Letter 3” reports). These reports are submitted to ATF and included in the MS portion of its Firearms Tracing System. According to ATF, the information was intended to assist in its efforts to investigate and combat the illegal movement of firearms along and across the southwest border.

Several FFLs challenged the legality of ATF’s demand letter, asserting, among other things, that it would create a national firearms registry in violation of the fiscal year 2012 appropriations act restriction. In each of the cases, the court placed ATF’s initiative in its statutory context and held that the appropriations act did not prohibit ATF’s issuance of the demand letter. Similar to our 1996 analyses of the Out-of-Business Records and Multiple Sales Systems, the United States Court of Appeals for the Fifth Circuit examined the enactment of ATF’s authority to issue demand letters in relation to the appropriations act restriction. The court observed that ATF’s demand letter authority was enacted as part of FOPA and that because FOPA “clearly contemplate ATF’s collection of some firearms records,” the appropriations provision did not prohibit “any collection of firearms transaction records.” In this regard, the court further noted that the plain meaning of “consolidating or centralizing” did not prohibit the collection of a limited amount of information.

Other courts also emphasized that the ATF 2011 demand letter required FFLs to provide only a limited subset of the information that they were required to maintain, as opposed to the substantial amount of information that they believed would characterize a “consolidation or centralization.” For example, the Court of Appeals for the District of Columbia Circuit enumerated the limitations on ATF’s 2011 collection of information, noting that it applied to (1) FFLs in four states; (2) who are licensed dealers and pawnbrokers; (3) and who sell two or more rifles of a specific type; (4) to the same person; (5) in a 5-business-day period. The court found that because ATF sent the demand letter to a limited number of FFLs nationwide and required information on only a small number of transactions, “the . . . demand letter does not come close to creating a ‘national firearms registry.’” In light of the court decisions regarding ATF’s exercise of its statutory authority in this context, we conclude that the Demand Letter 3 initiative does not violate the restriction on the consolidation or centralization of firearms records.

Conclusion

Two of the data systems under review, OBRIS and MS, comply with the provision in ATF’s fiscal year 2012 appropriation prohibiting the use of funds for the consolidation or centralization of firearms records. ATF collects and maintains firearms transaction information in each system incident to the implementation of specific statutory authority and it does not exceed those statutory purposes. ATF’s A2K system for in-business FFLs and its maintenance of certain firearms information pertinent to criminal investigations in FRNP are likewise consistent with the appropriations act restriction. However, ATF’s collection and maintenance of out-of-business A2K records on the server at NTC violated the restriction, as did its collection and maintenance of data from certain FFLs as part of the SWBWOC Program. In both cases, ATF’s aggregation of information was not supported by any statutory purpose.

ATF’s failure to comply with the prohibition on the consolidation or centralization of firearms records also violated the Antideficiency Act. The Antideficiency Act prohibits making or authorizing an expenditure or obligation that exceeds available budget authority. As a result of the statutory prohibition, ATF had no appropriation available for the salaries or administrative expenses of consolidating or centralizing records, or portions of records, of the acquisition and disposition of firearms in connection with the SWBWOC Program or A2K for out-of-business records. The Antideficiency Act requires that the agency head “shall report immediately to the President and Congress all relevant facts and a statement of actions taken.” In addition, the agency must send a copy of the report to the Comptroller General on the same date it transmits the report to the President and Congress.

Appendix VIII: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to the contact named above, Dawn Locke (Assistant Director) and Rebecca Kuhlmann Taylor (Analyst-in-Charge) managed this work. In addition, Willie Commons III, Susan Czachor, Michele Fejfar, Justin Fisher, Farrah Graham, Melissa Hargy, Jan Montgomery, and Michelle Serfass made significant contributions to the report. Also contributing to this report were Dominick M. Dale, Juan R. Gobel, Eric D. Hauswirth, Ramon J. Rodriguez, and Eric Winter.