INDUSTRY NEWS: NEW FIREARM SALES RULES IN EFFECT FOR CALIFORNIA

By Robert M. Hausman

The California Department of Justice has announced stringent sales rules regarding the new California Firearms License Check (CFLC) Program that went into effect July 1st.

On that date, all firms intending to ship firearms to an FFL dealer in California must, prior to delivery, obtain a verification approval number from the California Department of Justice (CADOJ) Bureau of Firearms. The verification approval number, which the Bureau of Firearms provides in a Firearms Shipment Approval letter, confirms that the intended recipient of the firearms shipment is properly licensed and listed in the state’s database of persons/entities authorized to receive firearms shipments. If the intended California FFL recipient is not listed in the state’s database, the proposed transaction will result in a Do Not Ship letter. It is a crime for the intended recipient to receive the firearms. This is way the state of California is dealing with the apparently large numbers of FFL-holders who do not have the required state license(s) to operate a firearms business.

Here’s the way it works. In order for a shipper to obtain a Firearms Shipment Approval letter from the Bureau of Firearms, the shipper must have the California FFL’s five digit Centralized List number. As a courtesy to impacted FFLs, the Bureau of Firearms has established an Internet application process at: http://webapps.doj.ca.gov/cflc/index.jsp. The CFLC Internet application can also be accessed through the California Attorney General’s website: http://ag.ca.gov/firearms. Click on “Enroll in CFLC,” and enter the information as directed.

After submitting the CFLC enrollment information, a CFLC Logon ID and Password will be sent back to the applicant by e-mail. Then, by using the CFLC Logon ID and Password, the company can log on to the CFLC site to obtain Firearms Shipment Approval letters. It should be noted that the new rules require a separate approval letter for each firearms shipment, even in those instances when a firm may be shipping firearms to the same dealer on a regular basis. Multiple firearms in a single shipment going to one address require only one approval letter.

The requirement to obtain a Firearms Shipment Approval letter only applies to holders of valid FFLs. Thus, an unlicensed person intending to ship a firearm to a California FFL does not need to obtain an approval letter before shipping a firearm into the state. For FFLs situated in California, these firms must either be listed on the Central List of firearms dealers pursuant to Penal Code Section 12071, or the Centralized List of exempted federal firearm licensees. Anytime a firearm is received from an FFL (whether the other FFL is located within, or outside of California) a Firearms Shipment Approval letter from the FFL shipper must be included with the firearm (Pen. Code § 12070, subd. (f) (1) (A)).

The CFLC program does not apply to FFLs with Type 03 (curio and relic collectors) and Type 06 (ammunition dealers) licenses.

It should be emphasized that all industry firms doing firearms shipments to California are affected by the new regulations. All firms, even those outside of California, must now obtain a Firearms Shipment Approval letter from the CA DOJ Bureau of Firearms prior to delivering a firearm to a California FFL.

Consequently, all firms intending to ship firearms to California must enroll in the CFLC program to obtain Firearms Shipment Approval letters prior to shipping firearms to California. Those firms who do not ship or transfer firearms to California FFLs are not affected by the CFLC program. However, should a firm decide to ship or transfer firearms to a California FFL in the future, it will be able to enroll in the CFLC Program at that time.

The onus for compliance is mainly on the FFL shipping the firearm as that is the one who must obtain a Firearms Shipment Approval letter from the CA DOJ Bureau of Firearms. The firearms cannot be legally shipped without a verification approval number. The California FFL who receives the firearm must be on the Centralized List and must keep the verification approval number from the Firearms Shipment Approval letter on file for three years. A copy of the Firearms Shipment Approval letter must be included with the firearms shipment. A copy should also be kept with the shippers’ office records.

There’s more… The CADOJ Bureau of Firearms must be notified if the number of firearms that are to be shipped changes, or the shipment is cancelled after a Firearms Shipment Approval letter has been issued. In either of these scenarios, a Firearms Shipment Modification/Cancellation Form must be requested from the Bureau of Firearms which must be returned so that the Bureau can reconcile the shipment information upon inspection of the California FFL’s shipment records.

A copy of the legislation that mandates the CFLC program (bill AB 2521, Chapter 784, Session 2005-2006) can be obtained from www.legislature.ca.gov or by calling the California Legislative Bill Room at (916) 445-2323.

Company Notes

Smith & Wesson has been particularly successful with its tactical line of pistols and rifles. While on the market for a relatively short time, S&W says it has secured commitments from 348 law enforcement and security agencies for some version of its M&P pistol line, including sizeable agencies such as the Colorado State Police, and the Atlanta, Charlotte and Syracuse police departments. Since its introduction, this pistol has won over 80% of all law enforcement test and evaluations in which it has participated, the company says. S&W’s M&P15 tactical rifle has been selected by 160 law enforcement and security agencies.

TR&Z USA to Offer Steel-Cased Ammo

TR&Z USA, the importer of PRVI Partizan (PPU) Ammunition from Bosnia and Serbia, is apparently noticing the success of the Russian steel cased ammunition on the market (notable examples are the Wolf and Barnaul brands), as trade sources indicate the importer is planning to shortly introduce a new, economically priced line of steel-cased ammunition. It is not yet known where this new steel-cased ammunition is produced.

The after-effects of a significant PPU Spring price increase may be inducing the move to steel as well, as brass-cased PPU ammunition is now priced (at wholesale) at a level comparable to American-made ammunition, such as that produced by Remington and Winchester, thereby wiping out the competitive advantage of the imported product with an unfamiliar name but with a (formerly) very attractive price. As an example, Federal’s American Eagle XM193 .223/5.56×45 ammo is now available to retailers at a price lower than PPU’s XM193 version.

Finally, PPU (according to a usually reliable trade source) is said to be tooling up to produce 5.7x28mm ammo for certain firearm models in the FNH USA line. Available in unrestricted form in two versions, currently FN SS195LF (lead-free jacketed hollow point) ammunition is produced in Belgium. The SS197 (loaded with a blue-tipped Hornady V-Max bullet) is loaded by Fiocchi in its Missouri plant.

FNH USA Gives Exclusive Ammo Rights to ATK

FNH USA, as per the provisions of a May 29, 2008 signed agreement with ATK Commercial Products, has given exclusive distribution rights for the U.S. commercial market for 5.7x28mm SS197SR ammunition to ATK. The agreement became effective July 1st.

Rick DeMilt, FNH USA’s senior vice president of sales and marketing, says the move is intended to broaden the availability of the 5.7x28mm round and thus make FN firearms chambered for the 5.7 round more mainstream. It is hoped the ammunition will become more widely available through the ATK distribution network.

All restricted military and law enforcement rounds, as well as the SS195LF lead free round, will continue to be available from FNH USA. The short supply situation of FN ammo has actually helped those retailers and wholesalers who have been able to obtain it as both types of sellers have enjoyed particularly good margins with the product. Now that the SS197SR will become more widely available, it may even wind up being sold at Wal-Mart before long. It is conceivable some wholesalers will turn their attention to marketing the SS195LF round, which has the cache of being made in Europe and is the original round for the 5.7 series of firearms and the better performer of the two loads.

Extreme Shock Drops Fang Face Line

While seemingly one of its more popular and enduring offerings, Mullins Extreme Shock Ammunition has dropped the “Fang Face” design in every caliber.

Fang Face bullets contain very sharp pointed edges, resembling an animal’s fangs. Marketed as super-premium self-defense rounds, the product was designed to induce massive bleeding and trauma as it tore through flesh.

The company is continuing to produce the “Air Freedom” (a reduced penetration round supposedly developed for sky marshals) and its “Enhanced Penetration” rounds. Extreme Shock is introducing a new line of CT2 ammunition, containing compressed copper projectiles designed for tactical training.

H&K Wins Spanish Army Contract

Oberndorfer-Germany based Heckler & Koch Group has won a contract from the Spanish Army for the production of a new, light machine gun designated the MG4 E in 5.56×45. In accordance with the deal, the Spanish Army stated a requirement of a minimum of 1,800 light machine guns, distributed over a four year period.

The Turkish Army has tested the HK416 and reportedly decided to adopt it as a replacement for the currently issued G3 rifle. It is yet unknown whether the weapons will be produced by H&K in Germany or locally by a national Turkish manufacturer.

Heckler & Koch has announced it will end its relationship with the Blackwater Training Center after German media reported that the US-run military-training firm was using its guns in Iraq and Afghanistan. H&K reportedly was not given permission by the German government to provide Blackwater with firearms. The U.S. based Heckler & Koch was supposed to provide Blackwater with guns for training purposes only.

ATF Letter on Barrel Importation

In a recent Open Letter to licensed importers, ATF issued a clarification on the ability to import certain firearm barrels under 18 U.S.C §925(d)(3) for official use by a government agency.

By way of a prior Open Letter dated July 13, 2005, ATF advised industry that, pursuant to the provisions of 18 U.S.C. § 925(d)(3), ATF would no longer approve ATF Form 6 applications for the importation of any frames, receivers, or barrels for firearms that would be prohibited from importation if assembled.

Afterward, questions were raised regarding the importation of barrels for the official use of a government agency. Pursuant to 18U.S.C. § 925(a)(1), ATF has the authority to approve ATF Form 6 applications seeking to import barrels for nonsporting, NFA, and surplus military firearms when the application is accompanied by a purchase order or government contract indicating that the barrels are for the official use of a Federal, State, or local government agency.

Importers are reminded that the exemption is only for the importation of barrels for, or on behalf of government agencies. ATF will continue to deny all other ATF Form 6 applications seeking to import frames, receivers, or barrels for firearms that would be prohibited from importation if assembled.

ATF Advisory on Security Firm Practices

ATF has issued a mid-June Open Letter advising security firms and other persons who have federal firearms licenses (FFLs), and who may temporarily assign firearms to their unlicensed employees in furtherance of legitimate business purposes, of the statutory and regulatory requirements that affect them.

Security companies with FFLs that temporarily assign firearms to unlicensed employees for bona fide business purposes generally are not required under the GCA to maintain records associated with the assignment of that firearm.

For example, when a security firm assigns a firearm to an employee during a particular shift in furtherance of bona fide licensee business use, and the employee is responsible for returning the firearm to the licensee after the shift is completed and no ATF Form 4473 or National Instant Criminal Background Check System (NICS) check is required. This is because the temporary assignment of the firearm to the employee is not a transfer or disposition for purposes of the Gun Control Act.

Businesses can only carry out their operations through their employees, and a temporary assignment of a firearm to an employee for bona fide business purposes is neither a transfer nor a disposition. Accordingly, the licensee is not required to log the firearm out of the Acquisition & Disposition (A&D) Record.

Similarly, background checks and record keeping requirements typically do not apply if the firearms are issued to employees temporarily for legitimate business purposes. A bona fide business purpose, in this context, is limited to the temporary assignment of a FFL’s firearm(s) to an FFL employee for purposes integral to the licensee’s business operations, such as temporary assignments by FFLs that have entered into valid contracts to provide protective services, training related to such services, or assignments to sales personnel for purposes of demonstrations or display. Bona fide business purposes would not include assignments of firearms that are merely incidental to the licensee’s operations, such as when an FFL loans a firearm to an employee for personal use, or permanently assigns a firearm to a specific employee. These transactions are considered transfers or other dispositions that would trigger record keeping and NICS requirements.

In any case in which an FFL loans, rents, permanently assigns, or otherwise transfers or disposes of a firearm to any person, including an employee of the FFL, an ATF Form 4473 and NICS background check must be completed prior to the transfer. The licensee must also record the disposition of the firearm in the A&D Record.

Finally, in the case of all firearms transfers or dispositions, licensees or any other persons shall not knowingly transfer or otherwise dispose of a firearm to another person who they know or have reasonable cause to believe is prohibited. (See 18 U.S.C. §§ 922(d); 922(g)) In addition, in any instance in which a firearm temporarily assigned or issued to an employee is not returned to the FFL, the licensee must report the theft or loss of the firearm to ATF within 48 hours of discovery by filing an ATF Form 3310.11, Federal Licensee Inventory Theft/Loss Report, to the ATF National Tracing Center.

Inventory and Firearms Accountability

Inventory and firearms accountability are among the key components of any federal firearms licensee inspection. An FFL may be revoked for failing to properly account for the disposition of firearms. Therefore, in any case in which a firearm is recorded in a licensee’s acquisition records and the firearm is not stored on the licensee’s premises, or at a separate place of storage, the licensee will be asked to provide sufficient documentation verifying the firearm’s location. This documentation may include the daily logbook recommended below.

In the limited circumstances described above where licensees temporarily assign firearms to employees for business purposes, ATF recommends a number of best practices to improve the traceability of firearms and protect the public. ATF strongly recommends recording the issuance of a firearm for legitimate business uses: (1) to an employee for any period of time; or (2) from a licensee’s licensed premises to an appropriate responsible person or authorized employee at an alternate location.

ATF recommends that licensees record this information in a daily logbook and/or maintain other documentation that records the temporary assignment of each firearm to a particular employee. The record should reflect the complete name of the individual temporarily assigned the firearm, the address where the firearm is assigned, annotate the date of assignment and return, and include identifying firearm information consistent with 27 C.F.R. § 478.125 (manufacturer/importer, model, serial number, type, caliber or gauge).

Additionally, ATF suggests that records at the assigned alternate location should similarly reflect this information. ATF believes that these records will significantly improve the accountability of firearms by licensees and establish good internal controls.

The author publishes two of the small arms industry’s most widely read trade newsletters. The International Firearms Trade covers the world firearms scene, and The New Firearms Business covers the domestic market. Visit www.FirearmsGroup.com. He may be reached at: FirearmsB@aol.com.