The Current State of Federal Firearms Regulation [Part II]

Jeremy Lerner

The problems inherent in the statutory and regulatory structure discussed in my previous post lend themselves to a variety of potential reforms. In this post, I will outline many potential reforms and their intended effects on the distribution system as a whole. I recognize that some are more politically feasible than others. But, as noted, there are serious holes within the distribution system that require serious fixes.

a.  Federal Firearms License Qualification

The current regime for determining FFL eligibility is inadequate. The licensing requirements are too low to effectively screen out potentially unscrupulous retailers and present an extremely low barrier to entry. As a preliminary matter, this can best be addressed by (1) limiting eligibility for licensees to those who operate out of business premises; (2) requiring that all qualification inspections be conducted in-person; and (3) mandating specific requirements for firearms storage.

i.  Business Premises

As the current structure exists, a federal firearms licensee is permitted to operate out of either a business or residential facility, the latter of which includes single-family dwellings, apartment buildings, motels, and public housing.[1] The operation of a federal firearms dealer out of residential premises presents several troubling implications. Residential units are inherently located within residential neighborhoods and are typically less equipped with security features commonly associated with business units. At the close of daily operations, business owners activate security features in place including alarm systems and commercial, or security, roll-up gates. This secures the facility against theft and protects business assets. In contrast, it is exceedingly rare for a residential unit, whether host to a licensee or not, to have installed these extensive security measures. A passerby would surely be surprised to see his neighbor’s home boarded with a roll-up metal gate. Notably, for diversion purposes, this makes residential dealers easier targets for theft. While there would certainly be resistance to further restrictions on licensing, such a reform is relatively palatable. After all, licensees are, by statute, those engaged in the firearms business. It is then logically reasonable to require that those engaged in the firearms business operate out of business premises.

ii.  In-Person Qualification Inspections

As noted in my prior post, not all qualification inspections are conducted in person. Rather, several qualification inspections each year are conducted over the telephone, and, of those dealers “inspected” over the telephone, not all receive follow-up compliance inspections within twelve months. This presents a serious problem—dealers are permitted to enter the market without inspection of their facilities (whether business or residential) and are entitled to begin distributing firearms. The solution to this problem is in part financial and in part institutional. The BATF simply does not have the monetary resources to conduct all inspections in person. As a 2013 Report by the Office of the Inspector General indicated, the BATF needed approximately 200,000 additional hours of investigator time to complete its inspections.[2]

Institutionally, though, there are several avenues for reform. Much of the reason that qualification inspections do not occur in person, and that compliance inspections occur irregularly, is that the BATF is forced to prioritize non-FFL inspections over FFL inspections.[3] In addition to establishing qualification requirements and monitoring compliance of FFLs, the BATF is also tasked with similar duties for federal explosives licensees, or FELs. The key difference, though, is that the Safe Explosives Act, governing federal explosives licensees, requires that qualification inspections be conducted within ninety days of receipt of the application and that compliance inspections be conducted every three years.[4] Because no similar statutory requirement exists for FFLs, the BATF is, in essence, forced to prioritize FEL inspection over FFL inspection.

While perhaps arduous, the solution to this problem is to amend § 922 to require qualification and compliance inspections to be conducted within certain timeframes. Even if these timeframes are longer than those established for FELs, or three to five years as the BATF outlined as its goal,[5] it still places a statutory obligation on the BATF and reduces the likelihood that such FFL inspections are relegated to the back of the resource allocation line. Alternately, if the current regulations remain in place allowing telephone qualification inspections, the time period for the required follow-up compliance inspection—currently one year—should be shortened.

iii.  Requirements for Storage

Currently, § 923 requires that any prospective licensee must certify that “secure gun storage or safety devices will be available at any place in which firearms are sold under the license to persons who are not licensees.”[6] In relevant part, gun storage or safety device is defined as a “safe, gun safe, gun case, lock box or other device that is designed to be or can be used to store a firearm and that is designed to be unlocked only by means of a key, a combination, or other similar means.”[7] Importantly, these provisions do not require that firearms be stored at all within these facilities, much less in a particular way, and provide licensees with a large degree of flexibility in how to meet the requirements outlined in § 923. Rather, the statute simply requires that the licensee certify that such devices are available at the place in which guns are sold.

In order to reduce the number of firearms diverted by theft or loss each year, the storage requirements could be tightened through either legislative revision or the promulgation of a BATF regulation. In particular, such revision would outline specific procedures for storage and mandate storage during specific times. For example, the regulation could state that during business hours, firearms must be stored securely (i.e. in a locked glass case) and can be taken out of storage only under the supervision of the licensee or manager (i.e. to show the customer). And after business hours, firearm inventory and ammunition must be stored securely. While this may seem extremely simple, such a regulation would close the current loophole that dealers need only have such facilities available. This type of change to existing law is entirely logical. After all, retailers are required to have such storage facilities on the premises by statute. This change merely mandates that they be used accordingly.

b.  FFL Compliance

As discussed in my prior post, compliance inspections are the primary means by which the BATF ensures responsible distribution of firearms in the United States. Currently, such inspections are performed infrequently and irregularly. As noted with respect to qualification inspections, the solution to this problem is in part financial and in part institutional. The BATF simply needs additional resources and FFL compliance inspections needs to be prioritized within the BATF bureaucracy. As the arguments are largely the same as discussed in the prior section, I will not rearticulate them here.

c.  Revocation

Finally, the revocation process as outlined in § 922(e) presents a serious opportunity for reform. Compliance inspections, though conducted infrequently, consistently reveal violations that undermine the core efforts of the regulatory system. But, in spite of such violations, the Attorney General rarely initiates the revocation process and rarer still, actually revokes the license of a non-compliant FFL. This is, in large part, based on the enormous amount of process provided to a licensee facing revocation, discouraging the Attorney General from expending the necessary time and cost and instead, encouraging the Attorney General to pursue alternate remedial measures. This structure enables deviant FFLs to continue operation for several years, or indefinitely, without a credible threat of revocation.

In order to incentivize the Attorney General to pursue revocation more often, and thus make the threat of revocation more credible, the revocation process must be streamlined. This is not to say that the licensee at risk of revocation should be stripped of certain procedure currently afforded, but rather that the process needs to be reigned in to a shorter and less costly timeframe. Keep in mind that revocation proceedings under current regulations often span longer than a year, and in some cases, beyond the two-year mark.[8] An appropriate timeframe could be twelve months, and this could be accomplished by shortening the timeframe during which a licensee can invoke process. For example, instead of stating that the Attorney General will “promptly hold a hearing to review his denial or revocation,” the statute could be revised to say that on request, such hearing will be held within seven days. Instead of a sixty-day period to file action with the District Court, the licensee could only be entitled to thirty days.

While these limitations may seem unnecessarily restrictive, it is important to remember that licensees are permitted to continue selling or distributing firearms throughout the revocation process. Thus, even after a licensee has been found non-compliant, alternate remedial actions have been taken, and revocation proceedings have been initiated, that licensee, in some cases, may be permitted to continue operating for two years. In the alternative to shortening the timeframe in which process must be exercised, I suggest imposing restrictions on sale or increased oversight on the particular FFL during the revocation process. This could limit the risk of increased diversion during this period.

d.  Conclusion

In the United States, the regulation of firearms distribution is concentrated on federal firearms licensees through a complex interplay of federal statutes and BATF regulations. These statutes and regulations establish that, in order to engage in the business of importing, manufacturing, or dealing in firearms, one must obtain a firearms license. Such license grants both rights and obligations—namely, the right to distribute firearms and the obligation to comply with all relevant laws that mandate, among other requirements, verifying purchaser eligibility, diligent recordkeeping, and secure storage. However, there are several flaws inherent in the regulatory system and its administration by the BATF, especially with respect to qualification, compliance, and revocation. In order to more effectively oversee the distribution of firearms, and particularly, to stem the flow of firearms into secondary markets, these problems need to be addressed both at the legislative and agency levels.


[1] See U.S. Dep’t Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives, OMB No. 1140-0018, Application for Federal Firearms License (May 2005) available at https://www.atf.gov/files/forms/download/atf-f-5310-12.pdf.

[2] U.S. Dep’t of Justice, Office of the Inspector General, Evaluation and Inspections Div., Review of ATF’s Federal Firearms Licensee Inspection Program ii (April 2013) [hereinafter Dep’t of Justice, BATF Inspection Review] available at http://www.justice.gov/oig/reports/2013/e1305.pdf.

[3] See Dep’t of Justice, BATF Inspection Review, supra note 2, at 24.

[4] Id.

[5] Id. at ii.

[6] 18 U.S.C. § 923(d)(1)(G) (2012).

[7] 18 U.S.C. § 921(a)(34) (2012).

[8] Dep’t of Justice, BATF Inspection Review, supra note 2, at 31.