INDUSTRY NEWS: V16N4

BINARY EXPLODING TARGETS

By Robert Hausman

ATF has recently received inquiries about the applicability of the federal explosives law to binary exploding targets. The components of these binary targets (typically an oxidizer like ammonium nitrate and a fuel such as aluminum or another metal based powder) are not separately listed on the List of Explosive Materials and do not meet the definition of “Explosives” in 27 CFR 555.11. Therefore, ATF does not regulate the sale and distribution of these component chemicals, even when sold together in binary target “kits.”

However, when the binary components are combined, the resulting mixture is an explosive material subject to all requirements of 18 U.S.C. Chapter 40 and 2/ CFR Part 555. Accordingly, all such exploding targets must be stored in an explosives storage magazine as prescribed in the regulations found in 27 CFR, Part 555, Subpart K – Storage, unless they are in the process of being used.

Further, mixing the binary components together constitutes manufacturing explosives. Persons manufacturing explosives for their own personal, non-business use only (e.g., personal target practice) are not required to have a federal explosives license or permit. However, individuals or companies must obtain a federal explosives manufacturing license if they intend to engage in the business of manufacturing explosives for sale or distribution, or for their own business use. Such business uses include manufacturing binary targets for demonstration or product testing purposes.

Licensed manufacturers of exploding targets are subject to federal recordkeeping requirements and must comply with regulation concerning records of manufacture or acquisition, distribution, exportation, use, inventory and daily summaries of magazine transactions found in 27 CFR, Part 555, Subpart G – Records and Reports.

In addition, a federal explosives license or permit is required for the transport of explosive materials. Therefore, a person must obtain a federal explosives license or permit if they mix binary exploding targets and subsequently transport them to a shooting range or to any other location.

For further information on this topic, please contact the ATF Explosives Industry Programs Branch at eipb@atf.gov or (202) 648-7120.

Firearms Industry Trends

As of 2011, there were approximately 5,400 licensed firearms manufacturers and 950 licensed importers in the United States.

In 2009, the most recent calendar year for which information is available, manufacturers disposed of over 2.4 million handguns and more than 3 million rifles and shotguns into commerce.

Manufacturers’ export volume for calendar year 2009, the most recent year for which complete data is available, reached more than 194,000 firearms. Compared with the 2000 export volume of 188,460 firearms, the increase in firearms exported is significantly less than the increase in firearms imported.

The federal firearms licensee population decreased from a high of more than 286,000 in April 1993, to a low of 102,020 in March 2000, likely due in part to the increase in license fees and requirements to comply with state and local law implemented in 1993 and 1994. Since March 2000, the licensee population has slowly increased to the 2010 level of 118,487 licensees. Trend analysis indicates overall decreases in the number of dealer FFLs and a significant increase in the number of collector FFLs – with approximately 48% now licensed as collectors, approximately 45% as dealers and pawnbrokers, and 5% as manufacturers and importers.

Each year, a significant number of licensees choose to voluntarily cease operations or fail to renew their licenses. For example, during FY 2009, ATF issued over 13,700 new firearms licenses. However, during the same period, the total number of licensees increased by only 2,452.

The FFL eZ Check allows an FFL to verify a license prior to transferring a firearm to another licensee. In 2010, FFL eZ Check recorded more than 850,000 license verifications, showing increased usage each year for the tenth consecutive year.

Holder Found in Contempt of Congress

The top Republican leading the House investigation into Operation Fast and Furious has gotten a “bipartisan” floor vote to hold Attorney General Eric Holder in contempt of Congress, after his subcommittee already voted to do so.

“I believe they will (vote to hold him in contempt),” House Oversight and Government Reform Committee Chairman Darrell Issa, R-CA, told Fox News Sunday just before the vote. Both Republicans and Democrats will vote that – I believe it will be bipartisan,” Issa correctly predicted.

Issa kept his focus on the Justice Department, clarifying that he has no evidence the White House was involved in any Fast and Furious cover-up. But he repeatedly said Congress is trying to get to the bottom of why the Justice Department “lied” about the operation.

The comments underscored the apparent momentum among majority House Republicans behind the contempt push, following a committee contempt vote against Holder along party lines. That vote proceeded after Holder and Republicans were unable to reach an agreement over subpoenaed documents pertaining to the Obama administration’s Fast and Furious discussions.

Issa said the vote could have been delayed or even “eliminated” if the administration produced the subpoenaed documents the House is seeking. He noted the entire schedule is at the discretion of House Speaker John Boehner. “But we have to see the documents first,” he said.

With the lack of a resolution, Issa and his allies are teeing up a major election-year clash between the Executive and Legislative branches, and between Democrats and Republicans.

President Obama intervened; invoking executive privilege to protect the documents in question, but Republicans dismissed the claim and proceeded with the contempt vote. On the sidelines, minority House Democrats are pleading with Republicans to take a step back and work out the document dispute, despite the contempt. At the same time, both sides are antagonizing each other at the dais and in the press over what Democrats claim has become a political “witch hunt.”

But Issa defended the escalation, saying the committee is trying to obtain critical documents to help explain why Congress was initially told – incorrectly – in February 2011 that the government did not knowingly let guns “walk” across the U.S.-Mexico border. The department later issued a correction to that statement.

“We, in fact, are simply trying to get to the truth when we were told a lie,” Issa said. “It’s about the cover-up. Ultimately, Justice lied to the American people on February 4 (2011), and they didn’t make it right for 10 months.”

ATK Sales Up 12% in Security & Sporting Group

ATK (Federal Ammunition) reported that fourth-quarter sales were up 12% in its Sporting and Security Group, which includes ammunition for law enforcement, military and sporting applications as well as optics, reloading gear and sport-shooting and tactical accessories.

For the full year, Security and Sporting Group sales were up 8% compared to the previous year.

Texas Allows Suppressors for Hunting Non-Exotic Game

Officials in Texas have adopted rules allowing hunters to use suppressors on their firearms effective Sept. 1, joining a growing list of states permitting this device on sporting arms.

Sportsmen still will have to apply for specific permits for hunting with suppressors in addition to going through ATF’s procedure for acquiring the devices.

Forms 1, 4 – Seven Months for Processing

Turn-around times for ATF processing of a Form 1 or Form 4 is now stretching to seven months, reports the National Firearms Act Trade & Collectors Association. This is mostly attributed to the surge in suppressor ownership with suppressors taking up 70% of all transfer requests. ATF is said to be attempting to bring in additional staff, at least on a temporary basis to help ease the workload.

FFL’s Cannot Assist in Section A of Form 4473

ATF has recently received inquires regarding who may assist a buyer that is unable to read and/or write in the completion of an ATF Form 4473. Federal firearms licensees (FFL) have asked for clarification of the term “seller.”

The buyer must personally complete Section A of the ATF Form 4473 and certify (sign) that the answers are true, correct, and complete. However, if the buyer is unable to read and/or write, the answers (other than the signature) may be completed by another person, excluding the seller. Two persons (other than the seller) must then sign as witnesses to the buyer’s answers and signature.

ATF considers the term “seller” as any employee of the FFL. Therefore, no employee of the FFL (whether directly assisting the buyer or not) may assist the buyer with the completion of the ARF Form 4473 or sign as a witness to the buyer’s answers and signature.

Acceptance of Out-Of-State Driver’s Licenses

ATF has received questions from federal firearms licensees regarding the acceptance of an out-of-state driver’s license that show a current in-state residence address. For example, a purchaser who is in the military may have an Oklahoma driver’s license that shows a current Virginia residence address.

The Brady Act requires FFLs to identify the non-licensed transferee by examining a valid government-issued identification document that contains the photograph of the holder. 18 U.S.C. 922(t)(1)(C).

An out-of-state driver’s license with the purchaser’s current in-state residence address may be used to satisfy the Brady Act’s requirement for an identification document, provided that the driver’s license is valid and it contains the name, current in-state residence address, date of birth and photograph. However, if a licensee has reasonable cause to question the validity of an identification document, he or she should not proceed with the transfer until those questions can be resolved.

Real ID Act Identifications for Buying Guns

Dealers have questioned procedure when an unlicensed person wishes to purchase a firearm from a federal firearms licensee in a state that has adopted the REAL ID Act. For example, the unlicensed person presents a driver’s license that is marked across the face of the license in capital letters, “This Driver’s License Is Not Valid for Federal Identification Purposes.” Is such license an “identification document” that an FFL may utilize for identifying the purchaser in accordance with the Brady Law, 18 U.S.C. 922(t)?

ATF’s answer is Yes, provided the driver’s license or ID meets the requirements set forth by the Gun Control Act (GCA) and its implementing regulations. If the license or ID meets the definition of “identification document” as defined in 18 U.S.C. 1028(d) and 27 C.F.R. 478.11, it would be acceptable for purposes of the firearm transfer. 27 CFR 478.11 defines the term identification document as: “A document containing the name, residence address, date of birth, and photograph of the holder and which was made or issued by or under the authority of the United States Government, a state, political subdivision of a state, a foreign government, political subdivision of a foreign government, an international governmental or an international quasi-governmental organization which, when completed with information concerning a particular individual, is of a type intended or commonly accepted for the purpose of identification of individuals.”

Please note that the identification verification requirement to transfer a firearm is not considered an “official purpose” under the REAL ID Act. The Act defines “official purpose” as accessing Federal facilities, boarding Federally-regulated commercial aircraft, and entering nuclear power plants. Additionally, a driver’s license or ID containing a REAL ID Act compliant marking is not an alternative to NICS.

Single FFL – Multiple Trade Names

The Bureau of ATF has recently clarified its trade name policy to allow a single legal entity to maintain several different trade names on its federal firearms license (FFL).

Prior to this, it was ATF practice to allow only one trade name per legal entity on a FFL. Under the old policy, if a legal entity wished to brand its firearm product using multiple trade names, it would have to create several different firearms manufacturing or importing companies, each with a different trade name, Employer Identification Number, and FFL for the same location.

A legal entity must obtain FFLs for each location at which it operates a firearms business. For example, if your company has three different manufacturing facilities, you will need a manufacturing license for each location. If you manufacture and import, you will need both a Type 07-manufacturer and Type 08-importer license to be properly licensed, even if operations are performed at the same facility under the same trade name.

It is also important to remember that manufacturers and importers having licensed operations at one location under multiple trade names are still required to issue individual serial numbers when marking firearms pursuant to 27 CFR 478.92. For example, serial numbers and serial number schemes applied to firearms made or imported under trade name A must not duplicate serial numbers applied to firearms made or imported by the same company under trade names B, C, or D.

The only limit to the number of trade names that can be assigned to a single FFL is system capacity. ATF’s licensing database cannot currently accommodate more than 50 characters in the trade name fields. The Federal Firearms Licensing Center (FFLC) can work with you to construct a multiple trade name scheme for your FFL that fits within these parameters. Please keep in mind that the FFLC or your local ATF office may request verification of your legal right to use a particular trade name before issuing a license bearing that name.

Validity of Retailer-Issued Hunting Licenses

Firearms retailers have puzzled over whether a hunting license or permit issued by a retail store qualifies as a government-issued identification document that can be used as a supplement to another government-issued identification document.

An identification document is defined as a document containing the name, residence address, date of birth, and photograph of the holder and which was made or issued by or under the authority of the United States Government, a Stat, political subdivision of a state, a foreign government, political subdivision of a foreign government, an international government or an international quasi-governmental organization which, when completed with information concerning a particular individual, is of a type intended or commonly accepted for the purpose of identification of individual (27 CFR 478.11.

As outlined in ATF Rul. 2001-5, licensees may accept a combination of valid government-issued documents to satisfy the identification document requirements of the Brady Act. The required valid government-issued photo identification document bearing the name, photograph, and date of birth of the transferee may be supplemented by another valid, government-issued document showing the transferee’s residence address.

Whether a hunting license or permit issued by a retailer meets the definition of an identification document is state-law specific. This license or permit meets the definition of an identification document if the state in which the retailer is located has authorized the retailer to supply state-issued documents. If the state recognizes the hunting license or permit as government-issued, then this license or permit would qualify as being government-issued for the purposes of supplementing another government-issued identification document.

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.