The full text of the letter is provided below:

U.S. Department of Justice
Bureau of Alcohol, Tobacco, Firearms and Explosives
Office of Enforcement Programs and Services
Washington, DC 20226
www.atf.gov

OPEN LETTER TO ALL FEDERAL FIREARMS LICENSEES
Impact of Final Rule 2021-05F on Partially Complete AR-15/M-16 Type Receivers

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is issuing this open letter to further assist the firearms industry and the public in understanding whether a “partially complete, disassembled, or nonfunctional” receiver of an AR-15/M-16 variant weapon has reached a stage of manufacture such that it “may readily be completed, assembled, restored, or otherwise converted” to a functional receiver, and is therefore classified as a “frame or receiver” or “firearm” in accordance with the final rule titled “Definition of ‘Frame or Receiver’ and Identification of Firearms (Final Rule 2021R-05F), which became effective August 24, 2022. In particular, the following addresses items that are clearly identifiable as an unfinished component part of a weapon—specifically, partially complete, disassembled, or nonfunctional AR-type receivers (also known as receiver ‘billets’ or ‘blanks’).

Summary

As stated in Final Rule 2021-05F and the regulatory text, a partially complete AR-type receiver with no indexing or machining of any kind performed in the area of the fire control cavity is not classified as a “frame or receiver” or “firearm” provided that it is not sold, distributed, or marketed with any associated templates, jigs, molds, equipment, tools, instructions, or guides, such as within a receiver parts kit. 27 CFR 478.12(c), Example 4. Consistent with Final Rule 2021R-05F and the regulatory text, ATF is providing the visual aids below to further illustrate the section of an “unfinished” item that, with further manufacture, machining, or processing, will constitute the “fire control cavity;” the second set of visual aids illustrates the stage of manufacture or machining at which that item becomes a receiver as defined in Final Rule 2021R- 05F.

Background

The Gun Control Act (GCA) defines the term “firearm” as: “…(A) any weapon (including a starter gun) which will or is designed to or may readily be converted to expel a projectile by the action of an explosive; (B) the frame or receiver of any such weapon; (C) any firearm muffler or firearm silencer; or (D) any destructive device. Such term does not include an antique firearm.” 18 U.S.C. § 921(a)(3). The GCA implementing regulations now define the terms “frame” and “receiver” by describing a single housing or structural component for one specific

fire control component of a given weapon—for example, a single housing is specified for particular weapons such as a “handgun” and a “rifle.” 27 CFR 478.12(a). Moreover, 27 CFR 478.12(f)(1) also provides that the terms “frame” and “receiver” “shall include the specific part of a complete weapon … determined (classified) by the Director to be defined as a firearm frame or receiver prior to April 26, 2022.” As explicitly set out in the regulations, 27 CFR 478.12(f)(1)(i), for AR-15/M-16 variant firearms, “[t]he receiver is the lower part of the weapon that provides housing for the trigger mechanism and hammer (i.e., lower receiver).”

A current regulation, 27 CFR 478.12(c), explains when a clearly identifiable component of a weapon that is partially complete, disassembled, or nonfunctional is a “frame” or “receiver”:

The terms ‘frame’ and ‘receiver’ shall include a partially complete, disassembled, or nonfunctional frame or receiver, including a frame or receiver parts kit, that is designed to or may readily be completed, assembled, restored, or otherwise converted to function as a frame or receiver, i.e., to house or provide a structure for the primary energized component of a handgun, breech blocking or sealing component of a projectile weapon other than a handgun, or internal sound reduction component of a firearm muffler or firearm silencer, as the case may be. The terms shall not include a forging, casting, printing, extrusion, unmachined body, or similar article that has not yet reached a stage of manufacture where it is clearly identifiable as an unfinished component part of a weapon (e.g., unformed block of metal, liquid polymer, or other raw material). When issuing a classification, the Director may consider any associated templates, jigs, molds, equipment, tools, instructions, guides, or marketing materials that are sold, distributed, or possessed with the item or kit, or otherwise made available by the seller or distributor of the item or kit to the purchaser or recipient of the item or kit.

Sections 478.11 and 479.11 also define “readily” as:

A process, action, or physical state that is fairly or reasonably efficient, quick, and easy, but not necessarily the most efficient, speediest, or easiest process, action, or physical state. With respect to the classification of firearms, factors relevant in making this determination include the following:

1. Time, i.e., how long it takes to finish the process;
2. Ease, i.e., how difficult it is to do so;
3. Expertise, i.e., what knowledge and skills are required;
4. Equipment, i.e., what tools are required;
5. Parts availability, i.e., whether additional parts are required, and how easily they can be obtained;
6. Expense, i.e., how much it costs;
7. Scope, i.e., the extent to which the subject of the process must be changed to finish it; and
8. Feasibility, i.e., whether the process would damage or destroy the subject of the process, or cause it to malfunction.

The above list of factors is a non-exhaustive list, but represents factors that have been identified by Federal courts as being relevant to a “readily” analysis with respect to firearms.

Analysis

There are many partially complete, disassembled, or nonfunctional AR-type “receivers” being marketed as so-called “80%” receivers. However, Federal firearms statutes and supplemental regulations do not employ terms such as “80%,” “80% finished,” or “80% complete.” These are merely terms used by some to market these items; they are not based upon application of the term “readily” in the GCA or Final Rule 2021-05F. As used in the GCA and the Final Rule, the term “readily” does not involve evaluation of a percentage of completion for an item that, when completed, will function as a frame or receiver. Rather, the analysis examines how efficiently, quickly, and easily a clearly identifiable component part of a weapon can be completed, assembled, restored, or otherwise converted to house or provide a structure for the applicable fire control component.

In an AR-15 variant weapon, the “fire control cavity” is the critical area of the receiver because this area “provides housing for the trigger mechanism and hammer.” 27 CFR 478.12(f)(1)(i). To be a “functional” receiver, an AR-type receiver must include a cavity sufficient to house the relevant internal parts, including a hole for a selector and 2 pin holes (trigger pin and hammer pin) in precise locations. Removing or indexing any material in this critical area, or completing or indexing any of these holes, is therefore a crucial step in producing a functional receiver.

Thus, in order not to be considered “readily” completed to function, ATF has determined that a partially complete AR-type receiver must have no indexing or machining of any kind performed in the area of the trigger/hammer (fire control) cavity. A partially complete AR-type receiver with no indexing or machining of any kind performed in the area of the fire control cavity is not classified as a “receiver,” or “firearm,” if not sold, distributed, or marketed with any associated templates, jigs, molds, equipment, tools, instructions, or guides, such as within a receiver parts kit.

Because the front of the takedown-pin lug clearance area merges with the back of the fire control cavity in a functional AR-type receiver, it was necessary for ATF to determine the point at which the takedown-pin lug clearance area stops, and the fire control cavity begins. ATF has determined that drilling or milling a standard 0.800-inch takedown-pin area, measured from immediately forward of the front of the buffer retainer hole next to the fire control cavity, does not impact the ability of the fire control cavity to house the trigger mechanism and hammer.

Provided this length is not exceeded, the fire control cavity remains “without critical interior areas having been indexed, machined, or formed” as stated in 27 CFR 478.12(c), Example 4.

The following illustration demonstrates the fire control cavity of an AR-type receiver:

It is important that persons engaged in the business of manufacturing, importing, or dealing in these items do not take any steps to avoid licensing (18 U.S.C. §§ 922(a)(1), 923(a)), serialization (§ 923(i); 27 CFR 478.92(a)(2)), recordkeeping (§ 923(g)(1)(A); 27 CFR 478/125(i)), and other requirements and prohibitions of the law by selling or shipping the parts or parts kits in more than one box or shipment to the same person, or by conspiring with others to do so (18 U.S.C. §§ 2, 371).

Further, although unfinished frames or receivers that do not meet the definition of a “firearm” are not subject to regulation under GCA provisions, they are still considered “defense articles” on the U.S. Munitions Import List and, therefore, require an approved Application and Permit for Importation of Firearms, Ammunition and Implements of War (ATF Form 6) for importation into the United States under 27 CFR 447.41; 447.22, and are also subject to export controls*.

This information is provided to assist the firearms industry and general public in understanding whether a partially complete AR-type receiver has reached the stage of manufacture where it is classified as a “receiver” or “firearm.” If persons remain unclear with respect to a specific model or configuration, they can voluntarily submit a request, under penalty of perjury, with a sample to ATF in accordance with 27 CFR 478.92(c) (GCA) or 479.102(c) (NFA). If you have any questions, please contact the Firearms & Ammunition Technology Division at fire_tech@atf.gov or (304) 616-4300.

Digitally signed by Andrew Graham, Acting Assistant Director, Enforcement Programs and Services
Digitally signed by William Henderson, Acting Assistant Director, Field Operations

* Exporters should consult with the U.S. Departments of Commerce and State to determine applicable requirements.

On April 26, 2022, the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) published Final Rule 2021R-05F (the “Final Rule”) overhauling the definition of firearm “frame or receiver” and amending the marking requirements for firearms. ATF published the Final Rule almost a year after it released a Notice of Proposed Rulemaking (“NPRM”) (86 FR 27720 (May 21, 2021)). As we explained last year in our 2-part alert, this new rule will significantly change ATF’s regulations implementing the Gun Control Act of 1968 (“GCA”), the National Firearms Act (“NFA”), and the import provisions of the Arms Export Control Act (“AECA”), and is the first major change to the definitions of “firearm” and “frame or receiver” since ATF first promulgated regulations implementing Title I of the GCA in 1968.

The Final Rule takes effect on August 24, 2022. To help you prepare for these changes, we are putting out a multi-part alert highlighting key aspects of the Final Rule and recommended practices to adapt to the regulatory changes. To begin, this Part 1 will review the new definition of “frame or receiver.” In Part 2 we will review the new definition of “Privately Made Firearm” and the related controls. Part 3 will examine the changes to the firearm marking and licensee recordkeeping requirements.

I. An Overview of the New Definition “Frame or Receiver”

A. Structure

The Final Rule creates a new § 478.12 to house the definition of “frame or receiver”. The structure of the definition is different from what ATF originally proposed in the NPRM because of the high number of comments expressing concern over the convoluted structure originally presented. The regulations implementing the National Firearms Act and the Arms Export Control Act, 27 C.F.R. Parts 479 and 447 respectively, will also be revised to cross-reference the new definition of “frame or receiver” in 27 C.F.R. § 478.12.

The definition includes several examples to illustrate the following: (1) grandfathered prior classifications; (2) which part of common firearm models is the frame or receiver; and (3) partially complete, disassembled, or nonfunctional frame or receiver that would be considered a frame or receiver because it can be readily completed, assembled, restored, or otherwise converted to a functional state.

A new term that will play an important role in firearm and frame or receiver classifications is “readily,” which is added to §§ 478.11 and 479.11. “Readily” is part of the statutory definition of “firearm,” which includes a weapon that will, is designed to, or may readily be converted to expel a projectile, and also the ‘‘frame’’ or ‘‘receiver’’ of any such weapon. 18 U.S.C. 921(a)(3)(A), (B). However, ATF has never defined the term until now. ATF first introduced “readily” in the NPRM and received many comments in opposition to the definition. Nevertheless, only minor changes have been made to the term in the Final Rule. “Readily” will play a very important role in determining whether a frame or receiver has been destroyed, and in classifications of partially complete, disassembled, or nonfunctional frames or receivers.

B. Single Housing or Structural Component

One of the key changes made to the definition of “frame or receiver” was to center the definition around only one housing or structural component for a given type of weapon. ATF made this change in response to comments, and it is a marked improvement over the NPRM, which referenced “any housing for any fire control component.”

The Final Rule also creates three distinct sub-definitions. One is for “frame,” which applies to handguns and handgun variants. ‘‘Receiver’’ applies to rifles, shotguns, or projectile weapons other than handguns. The third sub-definition is for frame or receiver applicable to firearm mufflers and silencers.

C. Prior Classifications

To ensure that industry members and others can rely on ATF’s prior classifications, the Final Rule grandfathers most prior ATF classifications, and variants thereof, into the new definition of “frame or receiver.” The Final Rule also provides examples and diagrams of some of those weapons, such as the AR-15 rifle and Ruger Mark IV pistol.

CAUTION! ATF classifications of partially complete, disassembled, or nonfunctional frames or receivers as not falling within the definition of firearm “frame or receiver” prior to this rule ARE NOT GRANDFATHERED! Any such classifications, including parts kits, would need to be resubmitted for evaluation. The resubmission should include any associated templates, jigs, molds, equipment, tools, instructions, guides, or marketing materials that are sold, distributed, or possessed with the item or kit, or otherwise made available by the seller or distributor of the item or kit to the purchaser or recipient of the item or kit. ATF will take this into consideration when making the classification determination.

If persons remain unclear which specific portion of a weapon or device falls within the definitions of “frame” or “receiver,” then they may voluntarily submit a request to ATF Firearms Technology Industry Services Branch for a classification determination.

II. Working with the New Definition of “Frame or Receiver”

Despite the changes to the structure of “frame or receiver” in the Final Rule, the definition is dense and includes several paragraphs and subparagraphs. This style of regulatory structure can be challenging to work through, so we provide an order of review to help guide you through the new definition.

Rather than trying to swallow this definition whole (danger, choking hazard), we offer the following yes/no questions to determine which portion of the “frame or receiver” definition applies to your firearm or part. As you review these questions, we recommend having the complete new § 478.12 handy for cross-referencing purposes, especially because our approach does not follow the strict order of the definition in the hopes of creating a more digestible flow.

Question 1: Is your frame or receiver melted, crushed, shredded, or cut according to ATF-approved methods?

☐ NO – proceed to Question 2.
☐ YES – your item is “destroyed” and is not a controlled “frame” or “receiver” pursuant to § 478.12(e).

Notes:

• The term “destroyed” means the frame or receiver has been permanently altered such that it may not “readily” (see new definition in §§ 478.11 and 479.11) be completed, assembled, restored, or otherwise converted to function as a frame or receiver (defined in § 478.12(a)).
• Destruction can be accomplished by completely melting, crushing, or shredding the frame or receiver, or torch cutting according to ATF specifications.

Question 2: Is your piece a blank or a disassembled, partially complete, or nonfunctional frame or receiver?

☐ NO – proceed to Question 3.
☐ YES – refer to § 478.12(c) to determine whether it is a controlled frame or receiver. If it is designed to or may “readily” be completed, assembled, restored, or otherwise converted to function as a frame or receiver, it is controlled as a frame or receiver (defined in § 478.12(a)).

Notes:

• “Readily” is a new defined term in § 478.11.
• What is not considered a frame or receiver: forging, casting, printing, extrusion, unmachined body, or similar article that has not yet reached a stage of manufacture where it is clearly identifiable as an unfinished component part of a weapon, for example an unformed block of metal, liquid polymer, or other raw material.
• § 478.12(c) contains examples to show what could be considered a controlled frame or receiver compared to what may not rise to the level of control.
• Prior ATF classification letters concerning partially complete, disassembled, or nonfunctional frames or receivers, including parts kits: If you have an ATF classification letter issued prior to April 26, 2022, ruling the partially complete, disassembled, or nonfunctional frame or receiver, including a parts kit, was not, or did not include, a firearm frame or receiver (either under the old § 478.11 or old § 479.11), this letter is no longer valid. If your business involves such items, whether it is importing, selling/transferring, or acquiring for use in further manufacturing and assembly operations, you should consider obtaining a new classification determination from ATF under the new rules. When issuing a classification, ATF may consider any associated templates, jigs, molds, equipment, tools, instructions, guides, or marketing materials that are sold, distributed, or possessed with the item or kit, or otherwise made available by the seller or distributor of the item or kit to the purchaser or recipient of the item or kit. See § 478.12(f)(2).

Question 3: Did ATF issue a classification determination ruling on which part of the firearm is the controlled frame or receiver before April 22, 2022?

☐ NO – proceed to Question 4.
☐ YES – refer to § 478.12(f)(1). Such determination is grandfathered in and remains valid under the new definitions. These firearms are exempt from the new definitions and the marking requirements under the Final Rule.

Notes:

• This question is not for partially complete, disassembled or nonfunctional frames or receivers. For these items, refer to Question 2.
• Any such part marked with an “importer’s or manufacturer’s serial number” (new definition added to § 478.11) is presumed to be the controlled frame or receiver of the weapon unless there is an official ATF determination or other reliable evidence showing that such part is not the frame or receiver.
• Some examples of such prior determinations include: (i) AR-15/M-16 variant firearms; (ii) Ruger Mark IV pistol; (iii) Benelli 121 M1 shotgun; and (iv) Vickers/Maxim, Browning 1919, M2 and box-type machine guns and semi-automatic “variants” (defined in § 478.12(a)(3)).

Question 4: Is it a firearm muffler or silencer? Refer to § 478.11 for the definition of “firearm muffler or silencer.”

☐ NO – proceed to Question 5.
☐ YES – refer to § 478.12(b). For firearm mufflers and silencers, the frame and receiver is the part that provides housing or a structure for the primary internal component designed to reduce the sound of a projectile. The frame or receiver does not include a removable end cap of an outer tube or modular piece.

Notes:

• The Final Rule adds a new definition to § 478.11 for “complete muffler or silencer device” which is important for determining when and what to mark with the required identifying information. We will address this in more detail in Part 3 to our Alert.
• ATF references baffles, baffling material, expansion chamber, or equivalent as the primary internal component designed to reduce the sound of a projectile.
• For the part that provides housing or structure, ATF cites to an outer tube or modular piece.
• If the firearm muffler or silencer is modular, the frame or receiver means the principal housing attached to the weapon that expels a projectile, even if an adapter or other attachments are required to connect the part to the weapon.

Question 5: Is it a “frame” (for handguns) or a “receiver” (for rifles, shotguns, and other weapons that expel a projectile other than handguns) not captured by Questions 1-4 above? Refer to § 478.12(a) for the definitions of “frame” and “receiver”.

☐ “Frame” as defined in § 478.12(a)(1).
☐ “Receiver” as defined in § 478.12(a)(2).
☐ Item is a “multi-piece frame or receiver” not captured under 478.12(a). Refer to 478.12(d). (A “multi-piece frame or receiver” is defined as “a frame or receiver that may be disassembled into multiple modular subparts, i.e., standardized units that may be replaced or exchanged.” It does not include an internal frame of a pistol that is a complete removable chassis that provides housing for the energized component, unless the chassis itself may be disassembled.)
☐ None of the above. Item is not a “frame or receiver” under the new definition. If after performing this analysis doubt remains as to the proper classification, or which specific portion of a weapon or device falls within the definitions of “frame” or “receiver,” you may voluntarily submit a request to the ATF Firearms Technology Industry Services Branch for a classification determination.

Notes:

• “Variants” and “variants thereof” are defined in § 478.12(a)(3)).
• § 478.12(a)(4) lists several examples of common firearm models and “variants thereof” with illustrations showing which part is the frame or receiver under the new definition. The examples listed are: (i) hinged or single framed revolvers; (ii) hammer-fired semi-automatic pistols; (iii) Glock variant striker-fired semi-automatic pistols; (iv) Sig Sauer P250/P320 variant semiautomatic pistols (internal removable chassis; distinguished from a multi-piece frame unless the chassis can be disassembled); (v) bolt action rifles; (vi) break action, lever action, or pump action rifles and shotguns; (vii) AK variant firearms; (viii) Steyr AUG variant firearms; (ix) Thompson machine guns and semi-automatic variants, and L1A1, FN FAL, FN FNC, MP38, MP40, and SIG 550 firearms, and HK machine guns and semi-automatic variants; and (x) Sten, Sterling, and Kel-Tec SUB-2000 firearms.

III. Conclusion

This concludes part 1 of our Alert on ATF’s new definition for “frame or receiver”. Part 2 will address the impact of the Final Rule on “privately made firearms.”

The above alert is for informational purposes only and is not intended to be construed or used as legal advice. Receipt of this alert does not establish an attorney-client relationship. Questions about this alert may be directed to Johanna Reeves: 202-715-9941, jreeves@reevesdola.com.

How U.S. Foreign Policy and National Security Concerns Impact International Trade

Many companies in the firearms and ammunition industries are increasing their efforts in global trade. There are many reasons for doing this, not the least of which is the significant downturn in the U.S. market since President Trump took office. As demand in the United States has decreased, companies are looking to the international marketplace to fill the gap. In addition, the Trump Administration has rolled out new policies to spur exports of U.S. military equipment abroad, including finally moving forward with the complete overhaul of the export controls over most firearms and ammunition. These so-called “transition rules” (see my 2-part Legally Armed series in Small Arms Review, Vol. 22, No. 8 (October 2018) and Vol. 22, No. 9 (November 2018)) are expected to be finalized at the end of 2018 or in the first quarter of 2019.

Despite the many draws, however, the decision to enter into the global marketplace must take into consideration the enormous amount of government oversight and risks inherent to bureaucratic permissions. As many readers know, a fundamental principle of the U.S. import/export control laws is that appropriate government authorization must be in place prior to either exporting or importing firearms or ammunition, as well as all parts, components, accessories and attachments. That authorization can be a license, agreement or other form of authorization (e.g., license or permit exemption, retransfer approval) issued by the controlling agency of the U.S. Government. Without such authorization, the company cannot lawfully proceed with an export or an import, as the case may be.

The licensing process is cumbersome and expensive. Noteworthy is the fact that many U.S. businesses have been deterred from venturing into foreign markets because of the complexity of U.S. import and export laws governing firearms and ammunition. But for those who have decided to play in this sandbox, the challenges do not end with getting authorization from the U.S. Government. There may be limitations on the license or permit (the dreaded license “provisos”) or required notifications (example, submitting a list of serial numbers of all firearms actually received by the foreign customer). But these pain points are often outweighed by the overall pleasure in obtaining the approval.

It is too tempting to take for granted that once an authorization is received it will remain valid for the term granted on the license. A done deal, so to speak. But such complacency presumes that the geopolitical relationships of the United States and its allies remain static. Nothing could be farther from the truth. Always lurking beneath the surface is the possibility that the U.S. Government may take away the permission to export or import at any time. Government authorization to export or import is not irrevocable. Indeed the ability of a U.S. company to engage in international trade is not a guaranteed right. With a rapidly changing international marketplace, it is vital that U.S. businesses keep this in mind.

When faced with a revocation, suspension or an amendment that changes the scope of an open authorization, companies may wonder how the U.S. Government has the authority to seemingly take away something that had been previously granted. The question may arise as whether such an action is a “taking” of property and if a company’s “due process” has been infringed in violation of the Fifth Amendment to the Constitution.

Though decided several years ago, the B-West Imports, Inc. v. U.S. case, 75 F.3d 633 (Fed. Cir. 1996), still stands as precedence and is illustrative of the U.S. Government’s broad authority to revoke, suspend or amend approved import or export authorizations. In this case, several munitions importers challenged a federal ban on the importation of defense articles from China. The ban originated in a press conference President Clinton gave on May 26, 1994, in which he announced the renewal of the Most Favored Nation trading status for China. Despite extending this status, however, President Clinton also made clear that his administration would implement certain trade sanctions against the country because of China’s continuing human rights abuses. One of the sanctions was a ban on the importation of munitions from China.

Two days after the president made this announcement, the Secretary of State advised the Secretary of the Treasury (at that time, the U.S. Treasury had jurisdiction over imports of defense articles under the Arms Export Control Act or “AECA”) to “take all necessary steps to prohibit the import of all defense articles enumerated in the U.S. Munitions Import List.” Consequently, the U.S. Customs Service advised its agents that the embargo was effective on May 28, 1994, and that all permits for importing munitions from China had been rendered null and void. The Bureau of Alcohol, Tobacco and Firearms (ATF) advised permit holders that in light of the embargo, all permits were revoked, effective immediately. Subsequently, the U.S. Congress passed legislation that provided some relief to importers by allowing shipments in transit to the United States in a Customs Bonded Warehouse or Foreign Trade Zone as of May 26, 1994.

The plaintiffs in the case, B-West Imports, Hing Long Trading Co., K-Sports Imports, Inc., Century Arms, Inc., Intrac Corporation, Northwest Imports, J’s Pacific Enterprise, Inc., and Sportarms of Florida, filed suit in the U.S. Court of International Trade (CIT). They argued the government’s actions exceeded the scope of authority granted by the AECA and that the revocation of import permits violated the Due Process and Takings Clauses of the Fifth Amendment to the U.S. Constitution. The CIT granted the government’s motion for summary judgment and dismissed the complaint, finding the AECA authorized the President to order a ban on importing arms from China because of the statutory grant of authority to “control” arms imports, and such control includes the ability to totally prohibit such imports. Further, the lower court held that ATF was authorized to implement the ban by revoking or withholding regulatory approval (i.e., the permits). The court rejected plaintiffs’ constitutional claims on the grounds that there was no statute or regulation that gave the parties a property right to import firearms or other munitions into the United States from China. In other words, by virtue of granting a permit or license to import products into the United States, the government does not confer to the permit holder a legitimate claim of entitlement that invokes the government’s obligations under the Due Process Clause. According to the court, because the statutes and regulations governing arms imports make it clear that the business of importing into the United States is subject to such extensive government controls, the government’s denial or revocation of an import permit cannot be regarded as a taking of property within the meaning of the Takings Clause. See generally, B-West Imports, Inc. v. U.S., 880 F.Supp 853 (Ct. Int’l Trade 1995).

On appeal, the U.S. Court of Appeals for the Federal Circuit affirmed the lower court’s decision, finding no statute or regulation that grants a right to engage in the import of defense articles. Indeed the appellate court reiterated that nothing in the statute or regulations state or imply that an authorization, once granted, becomes irrevocable. As there is no right infringed, there is no valid due process argument to be made that a revocation of an open import permit constitutes a taking of property.

To drive home this point, the appellate court cites the Mitchell Arms, Inc. v. United States case (7 F.3d 212 (Fed. Cir. 1993)), another case in which the court rejected a takings claim. In the Mitchell case, ATF revoked import permits for certain “assault weapons,” resulting in Mitchell losing the opportunity to sell the firearms in the United States under an existing contract. The Mitchell court held that ATF’s revocation of the import permits did not amount to a taking under the Constitution.

Mitchell’s expectation of selling the assault rifles in domestic commerce was not inherent in its ownership of the rifles. Rather, it was totally dependent upon the import permits issued by ATF. In short, Mitchell’s ability to import the rifles and sell them in the United States was at all times entirely subject to the exercise of ATF’s regulatory power. Consequently, any expectation which arose on Mitchell’s part as a result of the import permits did not constitute a property right protected by the Fifth Amendment.
Mitchell at 217.

This same rationale is equally applicable to export licenses issued by the Directorate of Defense Trade Controls (DDTC). The receipt of an export approval from DDTC necessarily comes with it the chance that it could be revoked, suspended or amended by DDTC for foreign policy or national security reasons. Section 38 of the AECA grants the President the authority to control the import and export of defense articles “in furtherance of world peace and the security and foreign policy of the United States.” As the B-West court points out, the U.S. Government’s authority to act in foreign affairs is broadly construed and has been held to include the ability to prohibit particular export and import activities, even if previously licensed.

With this broad authority comes the known commercial risk that approved licenses and permits may be suspended or revoked by the same government agency that granted them in the first place. Companies assume this risk when they choose to engage in heavily regulated activity, like importing and exporting firearms and other munitions. With the rapidly changing international landscape, it is more important than ever that companies keep this in mind when participating in international trade. Maintaining a robust compliance program, screening each transaction for prohibited parties, countries and end-uses, and generally keeping aware of current events can go a long way in staying ahead in the export control game.

The government giveth, the government taketh away.

•••

The information contained in this article is for general informational and educational purposes only and is not intended to be construed or used as legal advice or as legal opinion. You should not rely or act on any information contained in this article without first seeking the advice of an attorney. Receipt of this article does not establish an attorney-client relationship.

About the author

Johanna Reeves is the founding partner of the law firm Reeves & Dola, LLP in Washington, DC (www.reevesdola.com). For more than fifteen years she has dedicated her practice to advising and representing U.S. companies on compliance matters arising under the federal firearms laws and U.S. export controls. Since 2011, Johanna has served as Executive Director for the Firearms and Ammunition Import/Export Roundtable (F.A.I.R.) Trade Group (http://fairtradegroup.org). She has also served as a member of the Defense Trade Advisory Group (DTAG) since 2016. Johanna can be reached at jreeves@reevesdola.com or 202-715-9941.

For several months, representatives from the Office of Enforcement Programs and Services (EPS) and Field Operations (FO) at the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) have visited firearms and explosives manufacturing facilities across the country as part of a long-range plan to reinforce relationships with these industry partners. In their travels from Massachusetts to California, and Florida to Arizona, EPS Assistant Director (AD) Marvin Richardson has emphasized the value of ATF-industry collaboration. “ATF can work smarter when we learn more about the firearms and explosives industries, and when the industries learn more about ATF,” he said.

AD Richardson launched the new initiative in December 2014, shortly after taking the reins of ATF’s EPS directorate, which develops and delivers policy guidance and technical support regarding the firearms and explosives industries. As the former EPS Deputy Assistant Director (DAD), AD Richardson already understood the importance of both industries as he stressed the need “…to visit with them, to learn more about their respective industries, to build relationships, and to establish trust.”

To date, AD Richardson, EPS DAD Curtis Gilbert, and other ATF representatives have visited industries such as firearms manufacturers Smith & Wesson, Colt Manufacturing, Heckler & Koch, Glock, BPI Outdoors, Taurus Manufacturing, Tracking Point Precision Rifles, Mega Arms, American Sporting Suppliers, and Rio Ammunition. Wholesaler visits have included RSR Group, and Hill Country Wholesalers. Retailer visits have included BIG 5, Gander Mountain, Bass Pro, and Vance Outdoors. Explosives industry visits have included Austin Powder, Orica, Detotec North America, United Launch Alliance, Entertainment Fireworks Inc. The Cape Canaveral Explosives, and Orica. Pawnbroker Visits have included EZ Corp and Cash America. At the same time, ATF continues to participate in industry events such as the Orchid Advisors Firearms Industry Compliance Conference in May, The FireArms Import/Export Roundtable (FAIR) in August, and the Institute of Makers of Explosives’ spring meeting in Arizona, among others.

Early results suggest a positive response from explosives and firearms industry representatives who have hosted and shared information with ATF visitors. In addition, ATF representatives have appreciated the face-to-face meetings that have allowed them to strengthen relationships with firearms and explosives industries.

And while the goal was to establish regular ATF visits and interaction, industry members have visited ATF to discuss regulatory issues and other matters.

On a recent trip, ATF Headquarters directorates EPS and Field Operations, and ATF Boston Field Division representatives met with officials from O.F. Mossberg, Taurus International Manufacturing Inc., and other manufacturers. Participants included EPS AD Richardson; Daniel Kumor, Special Agent in Charge, Boston Field Division; Ken Houchens, Director of Industry Operations (DIO), Boston Field Division; Nealy Earl, Area Supervisor, Hartford Area Office; Michael Fronczak, DIO, Baltimore-Washington Field Divisions; Alphonso Hughes, Firearms and Explosives Services Division Division Chief; Max Kingery, Firearms Technology Branch Chief; John Badowski, Firearms Industry Technical Advisor; Eric Epstein, Senior Policy Counsel (firearms and explosives); Andrew Lange, Office of Regulatory Affairs Division Chief; and Ed Courtney, Firearms Industry Programs Branch Chief.

Future visits with other industry members are in the works.

ATF Offers an Olive Branch to the NFATCA

The last year and a half has been a roller coaster ride for ATF on many fronts. From Fast and Furious to a host of new players and a stance with the industry: the likes of which we have never seen before. To say that they have maintained an arm’s length from us would be an understatement. We wrote about this stance and wondered why after so many years of such close work, why the Bureau took such an unfriendly stance with the entire industry. As you know, the NFATCA, F.A.I.R., and the NSSF have worked together over the last seven years to break down the barriers that had existed for so long. Not only have industry representatives worked closer than ever before with ATF members but ATF members have worked on the inside of the industry at every facet, in order to better understand our operations. This effort has yielded not only some rather serious results, like the NFA Handbook, a draft of the Firearms Technology Handbook, and numerous regulations, but has also served to save many issues that could have had catastrophic results, if not handled as a joint effort between ATF and the industry.

As with any organization, the make up often changes and personnel that you worked hard to develop a great relationship move on. People get promoted, people retire, and in many cases the organization shifts, to continue to make progress. What is important in this make up is not only a rock solid board of directors at the NFATCA level but a rock solid management team at ATF that can work closely with industry members to make change in a positive direction – change that is reflective in better public safety and change that encourages growth in the industry, which changes how the regulatory process works. Tremendous efforts in this arena have occurred during the last few years which have made both employees at ATF and members of the industry take notice that this process can in fact work, especially if we move together. The problem occurs either when someone in the industry or someone inside ATF takes on a position that this effort is not as beneficial as one would believe. During the last two years new appointments have occurred that have made some members of ATF sit back and take the position that their role is to regulate, and that getting closer to the industry that they must regulated is not always the best solution to any problem. This happens in most cases when appointments are made to positions where a new member of the management team is not gun friendly and operates from the position that more regulations are necessary from a greater distance. The end result in many cases is catastrophic. Even the best relationships will break down under this kind of regulatory strain.

We know that working together within the congressional boundaries that are allowed is the only way that we will make the progress we both need to make the industry a safer place. That has been the NFATCA goal for nearly seven years and we will continue to push in that direction. For about two years now the NFATCA and our sister organizations have been working to find more appropriate ways to regulate the firearms business with the laws and our Constitution, and continue to build our relationship with the government. We spent the first five years of our existence tearing down the wall that kept us from working closer to ATF and we are not about to give up any ground unless we are forced to. Time and patience often yield some phenomenal results, and so was the case in October this year.

From a deafening silence, the NFA-TCA received a call in October by two members of the executive ATF staff. That invitation focused on a dinner that would serve the purpose of getting ATF and the industry back to the table to discuss refueling the engine of success through top level briefs and discussions. It was a welcome call and the ensuing discussion has yielded results that have been missing for two years. In our first meeting and the follow-on sessions we have addressed many of the issues which are concerns for the industry in making forward progress. Items that we discussed included status of the impending drop of the CLEO signature, defining small arms and small arms ammunition, among a few. The beginning result of these sessions is to establish a dialogue that continuously focuses on the needs of both sides. The industry works closely with the various branches to establish requirements for new issues and the Bureau is working closely with the industry to address any needs for new policy or procedures that may affect industry operations. This dialogue has yielded several great successes and there are many more in the works. Specific challenges with the NFA and FTB branches are discussed and potential solutions discussed that both parties are working to come to a workable solution. These issues are all of the things that the NFATCA came to the table seven years ago to work closer with the industry in resolving.

At this writing, ATF and the industry are working diligently, almost on a daily basis, to resolve a number of issues. Having a more powerful presence with more factual material at NFATCA events is just one example of ATF is coming to the table. Soon to come will be Webinars specifically designed for the NFA community, staged by ATF. These and many more events will be forthcoming in the future. All, to bring us back together to work as a team, making life in the firearms industry easier for everyone. Many of these results will be seen at Small Arms Review of the West, the SHOT show, and Knob Creek, and the NRA show in 2012. Together the NFATCA and ATF are truly working the issues as a team.

Come share in the fun and the activities necessary to support the industry’s relationship with ATF. Come join the NFATCA today and help make a difference. The opportunities are there for the taking. Visit us at www.nfatca.org.

The cash-strapped Bureau of ATF expects its impending staffing cuts will slow down its criminal investigations and processing of firearm license applications. The cuts to about 5% of ATF’s 5,100-person workforce, would affect about 250 to 275 employees.

There will likely be fewer people processing license applications, which will slow down that process.

The Senate Appropriations Committee approved $1.1 billion for ATF in mid-September – $22 million less than the 2011 level and $57 million below its budget request.

ATF may see as many as 400 employees take early retirement. It expects to save between $15 and $20 million by reducing its ranks.

ATF Inspection Findings

Following is a review of the inspection findings by ATF as presented by Harry L. McCabe, ATF Deputy Assistant Director of Field Operations at SHOT Show 2011.

As of January 2011, there were 47,444 Type 01 (dealer) licensees, 6,941 Type 02 (pawnbroker), 57,393 (collector) Type 03, 1,789 Type 06 (manufacturer of ammunition), 4,487 Type 07 (manufacturer of firearms), 774 Type 08 (importer), 40 Type 09 (destructive device dealer), 242 Type 10 (destructive device manufacturer), and 146 Type 11 (destructive device importer) licensees.

Some 10,538 inspections were completed during fiscal year 2010.

Of the compliance inspections performed during fiscal year 2010, 5,293 had no report of violation or 50.23%; violations were found in 1,366 inspections or 12.96%.

A warning letter was issued in 1,408 cases or 13.36% of violations; a warning conference was held in 820 cases or 7.78%; and a revoke/deny renewal was held in 67 or 0.64% of cases.

The FFL was surrendered in 33 cases or 0.31%; some 1,373 FFLs went out of business or 13.03%; and 178 cases or 1.69% of inspections were resolved by other means.

The total number of FFL inspections climbed from the years 2005 through 2009, going from about 5,000 in 2005 to close to 12,000 in 2009, but dropped in 2010 to 10,538.

The number of FFL’s with no violations grew from about 38% in 2005 to about 53% in 2009 but then began to decline slightly.

The revoked/denied renewal of FFL rate declined from about 2.5% in 2005 to about 0.6% in 2010.

Most Frequent Violations

The most frequent violation found was failure to timely or accurately record entries in the bound record (occurring in 2,380 cases in FY 2010, 2,194 cases in FY 2009, and 2,893 cases in FY 2010).

The second most frequent violation found was that the transferee did not complete Section A of the Form 4473. This occurred in 1,938 cases in FY2010; 1,707 cases in FY2009; and 2,158 cases in FY 2008.

A failure to complete forms as indicated in instructions was the third most frequent violation. This occurred in 1,785 cases in FY 2010; 1,578 cases in FY2009: and 1,846 cases in FY 2008.

The fourth most frequent violation was that the licensee did not record on Form 4473 the date on which NICS was contacted. This occurred in 1,540 cases in FY 2010; 1,385 cases in FY 2009; and 1,818 cases in FY 2008.

The fifth most frequent violation found was that the licensee failed to obtain and/or document the purchaser’s identification. This occurred in 1,425 cases in FY 2010; 1,206 cases in FY 2009; and 1,627 cases in FY 2008.

The sixth most frequent violation was that the licensee failed to report multiple handgun sales. This occurred in 1,166 cases in FY 2010; 928 cases in FY 2009; and 1,159 cases in FY 2008.

Finally, the seventh most frequent violation was that the licensee did not sign and date the Form 4473. This was found to occur in 1,152 cases in FY 2010; 993 cases in 2009; and 1,279 cases in FY 2008.

Other more frequent violations were: licensee failed to properly identify the firearm; licensee failed to require proper evidence of residency for a lawful alien; and, licensee disposed of firearm to a person he/she had reasonable cause to believe was prohibited.

A total of 22,270 firearms were found to be missing from FFL’s inventories in FY 2008; 18,323 in FY 2009 and, 21,041 in FY 2010. The foregoing totals do not include those guns that were later ‘found’ after initially seeming ‘lost’.

For FY 2011, ATF expects to have 624 Industry Operations Investigators or “inspectors.” The total number of IOI’s has remained constant from 2005 through 2010 at about 600.

The total number of FFL Application Inspections has been growing since 2007 from about 5,100 to about 7,500 in FY 2010.

The number of FFL applications denied, abandoned or withdrawn has remained constant over the last five years at about 1,000.

NRA Plans Appeal in Federal Age Limit Case

A federal judge in the Northern District of Texas ruled in late-September that the federal ban on dealer sales of handguns to those within the ages of 18 to 20 does not violate the Second Amendment. The National Rifle Association plans to file a prompt appeal of the court’s ruling to the U.S. Fifth Circuit Court of Appeals.

“We strongly disagree with this ruling,” Chris Cox, executive director of the NRA Institute for Legislative Action said. “As we said when we filed this case, adults 18 and up have fought and died for American freedom throughout our country’s history. They are adults for virtually every legal purpose under federal and state law, and that should include the ability to buy handguns from licensed dealers. Our fellow plaintiffs in this case are law-abiding and responsible young adults. We plan to defend their rights to the end.”

The case is Jennings V. Bureau of ATF. A related case challenging Texas’ ban on issuing concealed carry licenses to young adults in the same age group is still pending in the same court.

Smith & Wesson 1st Quarter Fiscal 2012 Financials

Total company net revenue for the first quarter was $99.2 million, up 4.5% from the year-ago quarter. Firearm division revenue was $91.7 million, an 18% increase over the first quarter last year, and was strong across nearly all product lines, particularly in Smith & Wesson brand handguns, which recorded a 26.6% year-over-year revenue increase for the quarter. Security solutions division revenue was $7.5 million for the first quarter, down 56.4% from the year-ago quarter.

Gross profit was $28.1 million, or 28.4% of revenue, compared with gross profit of $32.2 million, or 34% of revenue, for the year-ago quarter, and included the impact of direct costs associated with the consolidation of the Thompson/Center Arms business to Springfield, Massachusetts. Excluding those direct costs, first quarter gross profit margin would have been 29.6%.

Golden Out at S&W

Michael Golden is out as Smith & Wesson’s president and CEO, in a sudden announcement.

In response, the Board has appointed P. James Debney in his place as President and CEO. Debney previously served as Vice President of the company and president of the firearms division.

The change is effective immediately. Golden will continue as Co-vice Chairman of the Board.

Debney, 44, has been president of S&W’s firearms division since November 2009. Prior to that, he was President of Presto Products Company, a $500 million plastic products business.

ATK Relocating HQ to N. Virginia

ATK is relocating its corporate headquarters on October 1st to Arlington, Virginia where the company will expand its office space.

The company will continue to maintain a presence in Minnesota with approximately 210 employees.

Beretta Wins U.S. Army Contract

The U.S. Army has announced that Beretta U.S.A. has been awarded a purchase order for 15,778 Beretta 92FS pistols and cleaning kits.

Delivery of the pistols will begin in early December or January and will proceed at the rate of 6,000 per month.

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.

ATF has provided guidance in the form of examples of operations that would or would not be considered manufacturing under the Gun Control Act. Generally, a person should obtain a license as a manufacturer of firearms if the person: 1) is performing operations that create firearms or alter firearms (in the case of alterations, the work is not being performed at the request of customers, rather the person who is altering the firearms is purchasing them, making the changes, and then resells them); 2) is performing the operations as a regular course of business or trade; and 3) is performing the operations for the purpose of sale or distribution of the firearms.

The information is presented using a variety of scenarios and case-by-case answers:

Scenario 1. A company produces a quantity of firearm frames or receivers for sale to customers who will assemble firearms.

A. The company is engaged in the business of manufacturing firearms and should be licensed as a manufacturer of firearms.

Scenario 2. A company produces frames or receivers for another company that assembles and sells the firearms.

A. Both companies are engaged in the business of manufacturing firearms, and each should be licensed as a manufacturer of firearms.

Scenario 3. A company provides frames to a subcontractor company that performs machining operations on the frames and returns the frames to the original company that assembles and sells the completed firearms.

A. Both companies are engaged in the business of manufacturing firearms and should be licensed as manufacturers of firearms.

Scenario 4. A company produces barrels for firearms and sells the barrels to another company that assembles and sells complete firearms.

A. Since barrels are not firearms, the company that manufactures the barrels is not a manufacturer of firearms. The company that assembles and sells the firearms should be licensed as a manufacturer of firearms.

Scenario 5. A company receives firearm frames from individual customers, attaches stocks and barrels, and returns the firearm to the customers for the customers’ personal use. The operations performed on the firearms were not for the purpose of sale or distribution.

A. The company should be licensed as a dealer or gunsmith, not as a manufacturer of firearms.

Scenario 6. A company acquires one receiver, assembles one firearm, and sells the firearm.

A. The company is not manufacturing firearms as a regular course of trade or business and is not engaged in the business of manufacturing firearms. This company does not need to be licensed as a manufacturer.

Scenario 7. An individual acquires frames or receivers and assembles firearms for his or her personal use, not for sale or distribution.

A. The individual is not manufacturing firearms for sale or distribution and is not required to be a licensed manufacturer.

Scenario 8. A gunsmith regularly buys military-type firearms, Mausers, etc., and “sporterizes” them for resale.

A. The gunsmith is in the business of manufacturing firearms and should be licensed as a manufacturer.

Scenario 9. A gunsmith buys semiautomatic pistols and modifies the slides to accept a new style of sights. The sights are not usually sold with these firearms and do not attach to the existing mounting openings. The gunsmith offers these firearms for sale.

A. This would be considered the manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.

Scenario 10. A gunsmith buys government model pistols and installs “drop-in” precision trigger parts or other “drop-in” parts for the purpose of resale.

A. This would be considered the manufacturing of firearms, as the gunsmith is purchasing the firearms, modifying the firearms, and selling them. The gunsmith should be licensed as a manufacturer.

Scenario 11. A gunsmith buys surplus military rifles, bends the bolts to accept a scope, and then drills the receivers for a scope base. The gunsmith offers these firearms for sale.

A. This would be considered the manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.

Scenario 12. A gunsmith buys surplus military rifles or pistols and removes the stocks, adds new stocks or pistol grips, cleans the firearms and then sends the firearms to a separate contractor for bluing. These firearms are then sold to the public.

A. This would be considered manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.

Scenario 13. A company purchases surplus firearms, cleans the firearms, then offers them for sale to the public.

A. The company does not need to be licensed as a manufacturer.

Scenario 14. A company produces firearms or firearm receivers and sends the firearm/receivers out for coloring (bluing, camouflaging, phosphating, or plating) and/or heat treating. Do the companies performing the colorization and/or heat treating need to be licensed as manufacturers, and are the companies required to place their markings on the firearm?

A. ATF has determined that both colorization and heat treating of firearms are manufacturing processes. The companies performing the processes are required to be licensed as manufacturers. If the companies providing colorization and/or heat treating have not received variances to adopt the original manufacturer’s markings, they would be required to place their own markings on any firearm on which they perform the manufacturing process of colorization and/or heat treating.

ATK’s Second Quarter Sales Rose by a Third

First fiscal quarter sales in the Alliant Techsystems’ Armament Systems group rose 32% to $442 million, compared to $336 million in the prior-year quarter. The ATK division produces commercial and military ammunition and gun systems, propellants and advanced energetics. ATK’s overall first-quarter earnings rose 9% when compared to the same period the previous year, with sales for the quarter surpassing $1.1 billion.

Winchester Ammunition Has Record 2nd Quarter

The Olin Corporation’s Winchester Ammunition Division second quarter pretax earnings of $9.5 million represent a record second quarter for the business. Winchester’s results reflect the combination of improved volumes and pricing.

Winchester second quarter 2008 sales were $116.1 million, compared with $99.8 million in the second quarter of 2007. The combination of higher selling prices and higher sales volumes were responsible for the increase. Winchester segment income for the second quarter was $9.5 million, compared to $5.6 million in the second quarter of 2007.

The favorable impact of higher volumes and increased selling prices was partially offset by the continued increase in the cost of raw materials, including copper, lead, zinc, steel, and resins.

Firearms/Ammo Sales Rose in 2008’s First Quarter

Sales by firearm and ammunition manufacturers were up 9.7% in the first quarter of 2008, led by a 17.3% increase in ammunition sales, a 5% rise in handgun sales and a 6.7% increase in long gun sales, according to extrapolated figures based on the latest Pittman-Robertson federal excise tax collection report.

Excise taxes are calculated as a percentage of wholesale receipts, paid quarterly by firearm and ammunition manufacturers, and earmarked for state wildlife conservation and habitat restoration programs. These statistics are based solely on U.S. civilian sales and do not include sales to military, police, etc.

During the quarter, $76.8 million was generated for conservation through excise tax collections, compared to $70.1 million in the same period in 2007. From January through March, $19.9 million was collected for pistols and revolvers, $30.3 million for long guns and $26.4 million for ammunition. The latest tax collections suggest overall sales of $716.4 million, not including retail markup or final retail sales.

Sturm, Ruger’s Second Quarter Results Off

Reflecting a general downturn in sales for sporting firearms experienced as of late, Sturm, Ruger & Co., one of the largest American firearms producers reported its 2008 second calendar quarter sales declined as compared to the second quarter of last year. Sales during the first half of 2008 were also off in comparison to the first half of 2007.

Net firearms sales were $36,839,000 in 2008’s second quarter, versus $39,567,000 in the corresponding quarter of 2007.

The company’s castings sales continued a declining trend over the past several years. Net castings sales were $1,825,000 in the latest quarter, as compared to $2,540,000 in the second quarter a year ago.

Sturm, Ruger’s total net sales were $38,664,000 in the second quarter of 2008, versus $42,107,000 in the second quarter of 2007.

After deducting the cost of products sold, Ruger’s gross profit during 2008’s second quarter was $8,495,000 versus $13,128,000 during 2007’s second quarter. For the first six months, gross profit was $19,150,000 in 2008 versus $28,692,000 in the first half of 2007. Management issued no comment on the results.

Sturm, Ruger Shipping Retrofitted SR9s

Retrofitted SR9 pistols (which had been recalled due to an ability to sometimes fire when dropped) have begun shipping from Sturm, Ruger. Several parts have been changed in the new design, including:

• The Trigger Assembly – Several parts in the trigger assembly were changed with the most notable being the trigger itself. The original trigger lever was comprised of an inner and outer ‘shoe’, with the inner shoe being not visible. The new design has a visible inner trigger similar in shape to that of Glock handguns. The redesign reduces trigger overtravel and when the inner trigger blade is depressed, the length-of-pull is reduced.
  
• Magazine Latches – The magazine latches have been redesigned to allow them to work with any SR9 magazine variation.
  
• Magazine Disconnect & Magazine Disconnect Spring, Striker Block & Striker Block Spring – These parts have been replaced with different units.
  

Remington Wins U.S. Army Rifle Contract

A $12 million contract from the U.S. Army-TACOM (Tank-Automotive and Armament Command) for the M24 Sniper Weapon Systems has been awarded to Remington Arms Co. 2008 marks the twentieth year that the M24 rifle and its variants have been used by the U.S. Army and Air Force. The rifle system is based on the Model 700 bolt action platform.

Colt’s Army Contract Up For Renewal in 2009

Colt’s contract for 5.56mm carbines with the U.S. Army reportedly comes up for renewal in 2009. The last time an Army solicitation for competitive procurement of 5.56mm carbines was issued (in 2006) it reportedly was withdrawn once the primary manufacturer (Colt) dropped its prices.

Iraqi Army Seeks American Arms

Iraq is reported as moving to switch its forces to the American 5.56mm M16/M4, as replacements for the Kalashnikov-derivative assault rifles. In 2006, Iraq is reported as purchasing/receiving 50,750 M16A2 rifles and 50,750 M4A1 carbines. In 2007, some 123,544 M16A4 Rifles and 12,035 M4 Carbines were sent to Iraq. The goal is reportedly to outfit the entire Iraqi army. The latest request for Iraq reportedly involves 100,000 M16A4 assault rifles, 140,000 M16A4 magazines, 100,000 M4 weapons, 4,000 AN/PVS-7D night vision devices, 1,100 40mm grenade launchers and 3,300 9mm pistols with holsters.

New Hybrid Vest from American Body Armor

American Body Armor, a subsidiary of BAE Systems Products Group, has announced the availability of XTREME Force Body Armor, an update of their XTREME Armor line. Using new Spectra Shield II along with Twaron – a bullet resistant fabric, the two materials have been combined into a hybrid vest that’s said to be both stronger and more flexible than previous vests.

NRA Foundation Receives Top Grade

For the sixth consecutive year, the NRA Foundation has received a four-star rating from Charity Navigator, America’s largest independent evaluator of charities. Rated for efficiency and effectiveness, four stars is Charity Navigator’s highest rating.

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. He may be reached at: FirearmsB@aol.com.

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.

There are many semiautomatic variants of newly manufactured NFA firearms available to the military firearms enthusiast. Most people can live with the fact that they are operationally different due to the 1986 ban on the manufacture of machine guns for civilian ownership. Other changes, much more noticeable, also take place to meet the other Title I requirements including barrel length and overall length.

While the semiautomatic mechanism is currently “written in stone” at the present time, there is no prohibition on the civilian manufacture of any other NFA category, including silencers, destructive devices (DD), Any Other Weapons (AOW), Short Barreled Shotguns (SBS), and the focus of this article, Short Barreled Rifles (SBR). While you can’t alter the function, you can certainly get it back to that look you would like, simply by registering it as a Title II firearm prior to making any modifications.

Some popular rifles that get “altered back” to their more original look by using the same barrel length as their fully automatic brethren include the AR-15 and all its variants, and the Uzi carbine. Both are quite simple by mechanical standards and only require a swap in parts with minimal tooling, if any, being necessary. The FN PS90, which seems to be growing in popularity by enormous proportions, looks great with a shorter barrel as well; just like the original P90. The physical swap, while not beyond the abilities of many serious enthusiasts, is much more entailed than those previously mentioned and is thus the subject of this article.

The Legal Stuff Must be Taken Care of First

Before altering any firearm from a Title I to a Title II firearm, it is most important that prior approval from the Bureau of Alcohol, Tobacco, Firearms & Explosives be obtained. It is even necessary to obtain their approval before purchasing the parts to complete the conversion and own them in conjunction with your host firearm.

The form an individual will be using to register and “manufacture” the SBR will be an ATF Form 1 (5320.1) Application to Make and Register a Firearm. It is extremely similar in appearance to the familiar Form 4 used to transfer a machine gun to an individual. The basic information is the same, except you determine the information to be filled in regarding the firearm. If you are starting with an existing firearm, as is the case of our PS90 example, the original manufacturer and serial number is used. Any changes you propose to make will be listed in the new description, including barrel length, caliber, overall length, etc.

You will need to affix a recent passport photograph to the completed form and obtain a Law Enforcement Certification, again, just like the Form 4. It must be submitted in duplicate and accompanied by a pair of BATFE NFA Fingerprint cards (available from most local Class III Dealers or can be obtained directly from BATFE) as well as the Certification of Compliance with 18U.S.C. 922(g)(5)(B) (BATFE Form 5330.20). This form is often referred to as the Citizenship Certification. With the exception of the Fingerprint cards, all these forms can be obtained from the BATFE Website www.atf.gov or from the extremely beneficial website www.TitleII.com, formerly known as Danbrew’s PDF Document Center.

Include a check in the amount of $200 for the manufacturing fee payable to “The Department of Justice” with your package, and you can start your planning. Your approved form can show up anytime from 6 weeks to 12 weeks from mailing, and at that point you can start procuring the parts needed to undertake your project and start assembling the new configuration.

Getting to know the PS90

The FN PS90 is a compact Bullpup design with a very short overall length. This makes it even more attractive to bring through the Registered SBR process. With the short barrel, it is extremely compact and packs a big punch compared to similar sized firearms, usually available in pistol calibers. Its slim aesthetics are only exemplified by the unique, horizontal magazine, which lies flat, snapped over the top of the action with absolutely no protrusion in any direction. Basic disassembly for normal maintenance is very simple and requires no tools.

The PS90 is divided into 4 major components; the barreled receiver, the bolt group, the stock and the hammer pack. To field strip the PS90 the first thing you do is remove the magazine, inspect and clear the action and make sure no ammo is present. The next step is to pull the cocking handle rearward to cock the hammer, and than let the handle return to its forward position. Depress the barrel support lock located forward of the chamber area and slide the barrel and receiver assembly completely out the front. Next, tip the receiver down towards the front and slide the bolt group out the same opening as the receiver. Then, slide the butt plate at the rear of the firearm up, and off. The last thing to remove is the hammer pack located under the butt plate you just removed. The hammer group release lever is lifted up and the entire self-contained hammer pack is removed by sliding rearward from the stock. At this point the FN PS90 is field stripped enough for general maintenance and is quickly and easily reassembled.

SBR’ing the FN PS90

The PS90 is a very different creature from most other systems on the market. With many firearms, when factory short barrels are not an option, most people just cut the original barrel to the desired length, re-crown and thread if desired. In the case of the PS90, this isn’t the only option. The barrel on this gun is actually hidden under a much larger barrel shroud, and is blind pinned behind the flash hider. This shroud, from the barrel locking nut area, all the way to the tip of the flash hider is a one-piece unit and must be completely removed before proceeding. The original barrel is only usable again for your project if you cut it to the right length, re-crown and re-thread it for the proper barrel nut. Your other option is to procure a correct length barrel and correct barrel nut to finish your project and save the other parts for future projects or trading materials. Either way, you will need a new barrel nut as the old shroud is no longer useful in any capacity. Everything necessary to complete this project came directly from CMMG (www.cmmginc.com) including excellent directions with all questions asked. A new barrel was installed and a special barrel nut was supplied and utilized, converting the threads to the popular 1/2×28 to allow use of common muzzle accessories. The original barrel nut with the original P90 Flash Hider is also available to complete that “factory look” if that is what you are going for.

If you do wish to try and salvage your original barrel for future use or other projects you can drill out the blind pin located directly behind the flash hider. After removing this pin, the sleeve, also acting as the barrel retaining nut, can be removed and the barrel is allowed to be slid out through the rear of the receiver. If you don’t care about salvaging the barrel and sleeve for future replacement as is, you can simply cut through the barrel and sleeve behind the flash hider, remove the barrel sleeve to the front and remove the barrel through the rear of the receiver. The barrel will still be usable for a short barrel project in the future.

Special Tools & Flying Springs

No one likes flying springs, especially when we don’t know where they came from in the first place, what they looked like, or how to replace them even if we did find them. The special tools refer to some minor modifications necessary to some common wrenches to allow them to fit in the confined spaces of the barrel and the barrel nut.

We will discuss the necessary modified tools first. The two wrenches that needed to be modified for this project include a metric 15mm and a 19mm. Since the spaces they need to fit are very thin, some material must be removed from the width of most standard wrenches. This can be accomplished with a bench mounted belt sander in short order. For a point of reference, the space the 15mm wrench needed to fit in measured only .235 inches wide while the unmodified wrench dialed in at .290 inches wide.

For the flying springs, it is important to know that the barrel, when in place, acts as a host for 3 captive springs. If the old barrel were to be quickly withdrawn from the rear of the receiver there would be nothing to hold the springs in their necessary position and have the potential to create a major problem. To address the spring placement concern, a range rod of a similar diameter can be used pushing the old barrel out (from front to back) with it, while capturing all the springs in their normal position. When the new barrel is inserted from the rear of the receiver, it slowly pushes the range rod out (to the front), recapturing the springs in their intended location again. With the new, short barrel in place the barrel nut was added at the front of the receiver and the barrel was tightened from the rear of the receiver while the front nut was held captive in the receiver and assisted with the 19mm wrench. With a tightening of the barrel nut, and reassembling the PS90, your SBR project is complete.

Do It Yourself or Hire a Pro?

Even though it is completely legal to manufacture your own SBR, some people choose to have a licensed Title II Manufacturer do the work for them. There are a few key reasons it may be advantageous to subcontract this work out. First, once you are approved by BATFE to complete your SBR, you must engrave your name on the receiver as the new manufacturer. Some people don’t want their own name engraved on a firearm as the manufacturer for reasons of liability or for concern about possible future sale. Others choose to have someone else do the work for them just because of time or mechanical constraints.

The process of hiring a licensed Title II Manufacturer to do this work for you is almost as easy as building it yourself on the Form 1 earlier described. In this case, the gun is sent to the manufacturer with a request to remanufacture it to an SBR, and a BAFTE Form 4 is completed to transfer the gun back to you once completed. It is the same federal tax ($200) and approximately the same time frame. The form is almost identical and the Title II Manufacturer is the one who engraves their business name on your firearm. Some manufacturers who do this work are CMMG, Inc. and TROSUSA, both well known in the FN arena.

Online Support

As the author was researching sources of information for this project, several businesses and helpful online communities were discovered. If you have any questions about the FN PS90, or are simply a new fan, you can visit either of the following websites that contain a lot of information: www.fnforum.com and www.fivesevenforum.com. Both were very helpful. For BATFE forms to complete the legal registration before engaging in the project, you will find everything you need at www.titleii.com. For general questions about NFA, the folks at “Tom Bowers Board” www.subguns.com are always happy to help out. For parts, accessories and heavy technical support we highly recommend CMMG at www.cmmginc.com.

PS90 Parts & Accessories
CMMG, Inc
Ph: (660) 248-2293
Fax: (660) 248-2290
www.cmmginc.com

SBR Conversions & Accessories
Mark McWillis
P.O. Box 680
Clackamas, OR 97015
Ph: (503) 358-3708
www.trosusa.com

For many years the industry and user communities have been asking questions about what they can and can not do with suppressors that are registered to them, that have either damage or defects that need repair. ATF has released the following Question and Answer series regarding these issues, and these will be posted on their websites. The answers are consistent with standard Class 2 community procedures as have been described in the past by ATF, with one or two small exceptions- in this case, the answer has been clarified about whether an original manufacturer can replace the registered tube for a customer… the answer has always been “No” if it was not that specific manufacturers product, but now the answer is narrowed so that only suppressors that have never left the manufacturers facility may be replaced with the same serial numbered unit. We’ll bring the readers a further analysis in an upcoming issue.

U.S. Department of Justice
Bureau of Alcohol, Tobacco,
Firearms and Explosives
Washington, DC 20226
April 17, 2008
Frequently Asked Questions – Silencers

Q1:What part of a silencer must be marked?

A: The silencer must be marked in accordance with 27 C.F.R. §§ 478.92 and 479.102. The regulations require that the markings be conspicuous and legible, meaning that the markings may be placed on any external part, such as the outer tube or end cap.

ATF strongly recommends that manufacturers place all required markings on the outer tube of the silencer, as this is the accepted industry standard. Moreover, this practice eliminates the need to remark in the event an end cap bearing the markings is damaged and requires replacement.

Q2:May a Federal firearms licensee repair a silencer by replacing worn or damaged components?

A: A person who is licensed under the Gun Control Act (GCA) to manufacture firearms and who has paid the special (occupational) tax to manufacture National Firearms Act (NFA) firearms may replace a component part or parts of a silencer. Repairs may not be done if they result in removal, obliteration, or alteration of the serial number, as this would violate 18 U.S.C. § 922(k). If a silencer part bearing the serial number, other than the outer tube, must be replaced, the new part must be marked with the same serial number as the replacement part.

The term “repair” does not include replacement of the outer tube of the silencer. The outer tube is the largest single part of the silencer, the main structural component of the silencer, and is the part to which all other component parts are attached. The replacement of the outer tube is so significant an event that it amounts to the “making” of a new silencer. As such, the new silencer must be marked, registered and transferred in accordance with the NFA and GCA.

In the event that identical replacement parts for a silencer are not available, new and different component parts may be used as long as the silencer retains the same dimensions and caliber. In addition, the repair may result in a minimal reduction in the length of the outer tube due to rethreading, but repair may not increase the length of the outer tube. Increasing the length of the outer tube significantly affects the performance of the silencer and results in the “making” of a new silencer. As stated above, a new silencer must be marked, registered and transferred in accordance with the NFA and GCA. Reducing the length of the tube by a minimal amount in order to repair a silencer is often necessary to replace damaged end caps, as the tube must be rethreaded. Such minimal reduction of the length of the tube uses all of the original parts, does not significantly affect performance of the silencer, and may be done as part of a repair process without making a new silencer.

Persons other than qualified manufacturers may repair silencers, but replacement parts are “silencers” as defined in 18 U.S.C. § 921(a)(24) that must be registered and transferred in accordance with the NFA and GCA.

Q3:May the outer tube of a registered silencer be repaired due to damage? If so, may the repair be done by someone other than the original manufacturer?

A: damaged outer tube may be repaired by any Federal firearms licensee qualified to perform gunsmithing or by the registered owner. The repair may not alter the dimensions or caliber of the silencer, except that the length of the outer tube may be reduced, as set forth above. The repair may not be performed if it results in the removal, obliteration, or alteration of the serial number, as this would violate 18 U.S.C. § 922(k). In that case, the silencer may be returned to the registered owner in its original, damaged condition or destroyed. A replacement silencer must be registered and transferred to the registrant of the damaged silencer in the same manner as a new silencer, subject to the registration and transfer procedures of the NFA and GCA.

Q4:If the outer tube is destroyed or damaged beyond repair, may it be replaced?

A: Unless the outer tube is replaced by the manufacturer prior to its removal from the manufacturing premises for purposes of sale or distribution (see Q6), the replacement of the outer tube amounts to the making of a new silencer. For the registered owner to fabricate a new outer tube, he or she must submit an ATF Form 1, Application to Make and Register a Firearm, pay the making tax of $200, and receive ATF approval. The application to make should indicate that the new tube is being fabricated for use in replacing a damaged outer tube on a registered silencer, and the application should indicate the make, model and serial number of the registered silencer. It would be helpful for the applicant to include a copy of the approved registration for the silencer. Assembly of the newly fabricated tube with the other parts of the registered silencer does not require an additional application to make nor payment of another making tax, as the one Form 1 will provide permission to fabricate the new tube and to assemble it with the old silencer parts. The replacement tube must be marked in accordance with 27 C.F.R. § 479.102. The registrant may use the same serial number that appeared on the damaged tube.

If the registered owner wishes to acquire a replacement tube from a person other than a qualified manufacturer, the replacement tube must be registered as a new silencer by the other person and transferred to the registered owner in accordance with the NFA and GCA. The other person must submit an ATF Form 1, pay the $200 making tax, and receive ATF approval to make the replacement tube. The replacement tube must be marked in accordance with 27 C.F.R. §§ 478.92 and 479.102. The other person would then transfer the replacement tube to the owner of the damaged silencer, subject to the transfer tax, in accordance with the NFA and GCA. The new tube may be then be assembled with the other parts. The original damaged silencer should be reported to the NFA Branch as destroyed.

Alternatively, a qualified manufacturer may replace the tube, report the manufacture on ATF Form 2, Notice of Firearms Manufactured or Imported, and transfer the replacement tube to the owner in accordance with the NFA and GCA. The transfer must comply with the $200 transfer tax and all other provisions of the NFA, as it would be a new silencer. The replacement tube must also be marked in accordance with 27 C.F.R. §§ 478.92 and 479.102. The required markings include an individual serial number and the name, city, and State of the manufacturer who replaced the tube. The replacement tube may not be marked with the name, city, and State of the original manufacturer of the silencer, as this would be a false marking. Although the new tube is a new silencer for purposes of the NFA, it would be a replacement firearm of the same type as the original silencer, and it may be returned directly to the registrant in interstate commerce in accordance with 18 U.S.C. § 922(a)(2). The original damaged silencer should be reported to the NFA Branch as destroyed.

Q5:May a repair change the dimensions or caliber of a silencer?

A: If alterations to a silencer would increase the overall length or change the diameter or caliber of a silencer, this is the making of a new silencer, as opposed to a repair. The new silencer must be registered and transferred in accordance with the NFA and the GCA. Alterations to a registered silencer that result in a minimal reduction in the overall length for purposes of rethreading are permissible as repairs. However, the reduction in length may not result in the removal, obliteration, or alteration of the existing serial number, as this would violate 18 U.S.C. § 922(k). If such a repair is necessary, the damaged silencer should be destroyed or returned to the registrant. If it is destroyed, destruction should be reported to the NFA Branch. Any replacement silencer must be registered and transferred in accordance with the NFA and the GCA. See Q2 and Q3 for further information on repairs.

Q6:If a silencer is found to be defective due to the manufacturing process, may it be replaced?

A: A silencer may be replaced only under the following circumstances:

1. A manufacturer of silencers licensed as a manufacturer under the GCA who has paid special (occupational) tax under the NFA;
2. prior to the time the silencer has left the manufacturer’s premises;
3. determines that a silencer of its own manufacture is defective.

If all the above criteria are satisfied, the manufacturer may destroy the defective silencer and replace it with another silencer. If the silencer has already been registered, the replacement silencer may be marked with the same serial number and markings as the original silencer. If the destruction is prior to registration on Form 2, the replacement silencer may be marked with the same serial number or another serial number. See also Q2, Q3, and Q4.

The second denial of a Bureau of Alcohol, Tobacco, Firearms & Explosives motion for summary judgment in a suit brought against it by a licensee, underscores some of the reasons why three U.S. senators (two from Idaho and another from Louisiana), have placed a hold on the confirmation of Michael J. Sullivan as director of the industry’s regulator.

The suit, Jim’s Pawn Shop, Inc. d/b/a/ Jim’s Gun Jobbery v. Carton Bowers, Director of Industry Operations, Charlotte Field Division, Bureau of ATF, filed in the U.S. District Court for the Eastern District of North Carolina, stems from the June 2005 revocation of the shop’s FFL for allegedly “willfully violating the Gun Control Act of 1968 (GCA).”

The suit could be important for all licensees as its outcome hinges on the definition of actions constituting a “willful” violation of the regulations. The suit also seemingly confirms (though ATF has long-denied it) that the agency may indeed have a “zero tolerance” policy for record-keeping errors on the part of licensees. An affidavit filed in the case quotes an ATF inspector as saying licensees cannot make mistakes. This standard is higher than the standard ATF itself is able to achieve.

The retailer does not dispute the various violations found by ATF, but contends that the violations were not willful, as is required for revocation of a license.

In the latest hearing on ATF’s motion for summary judgment (a motion made to have the case dismissed), the agency argued that “a willful violation of the administrative provisions of the GCA occurs when a federal firearms licensee displays a “purposeful disregard or plain indifference to a known legal obligation” and cited another firearms case from 2006, RSM, Inc. v. Herbert, which ATF claimed supported its “willful” definition.

The court, however, disagreed, stating that “while willfulness may be inferred from an individual’s plain indifference to a legal requirement, a licensee’s repeated violations of the GCA do not necessarily compel a finding of willfulness as a matter of law.

The court distinguished between the present case and that of RSM, which involved a dealer who had been cited for over 900 violations after having been twice counseled for previous violations. The violations for which Jim’s Pawn Shop was cited did not rise to the level of those involved in RSM, the court found.

During the hearing, evidence was presented countering the willfulness claims, such as the licensee’s attempts to be helpful in addressing issues raised during ATF’s inspections. A report was also cited by an ATF hearing officer who said the retailer “went to great lengths” to determine the disposition of all firearms acquired but not found on the premises.

Particularly important was an affidavit filed by the retailer whose daughter had asked an ATF inspector how she could correct a mistake that she might make…and his response was that she “could not make a mistake,” giving credence to the view that the agency has a zero tolerance policy for errors on the part of licensees.

The court further noted that Jim’s Pawn sold about 4,000 firearms annually. While 1,600 violations were found during ATF’s 1996 inspection, the number “dropped considerably” in subsequent inspections. The court noted that this was evidence that Jim’s was not indifferent to the requirements of the GCA.

In conclusion, the court found ATF had failed to meet its burden to show evidence of genuine issue of material fact as to the willfulness of the licensee’s actions. A bench trial of the matter is scheduled.

U.S. Firearm Production Gained in 2006

Firearm production during the year 2006 increased in all categories according to the latest available statistics compiled by the Bureau of Alcohol, Tobacco, Firearms & Explosives.

• Pistol production increased to 1,021,260 during 2006, compared to a total of 803,425 during 2005.
  
• Revolver manufacture totaled 382,069 in 2006, versus 274,205 the year before.
• Rifle production witnessed a more modest gain to 1,496,505 as opposed to 1,431,372 in 2005.
• Shotgun manufacturers produced 714,618 in 2006 as compared to 709,313 in 2005.
• Miscellaneous firearms produced in 2006 totaled 35,872 compared to 23,179 the year before.
• Firearm exports from the U.S. saw very significant gains. Some 144,779 pistols were exported from the U.S. in 2006 versus 19,196 in 2005.
  
• Revolver exports dipped slightly to 28,120 in 2006 from 29,271 in 2005.
• Rifle exports jumped to a total of 102,829 in 2006 versus 92,098 in 2005
• Shotgun exports were 57,771, a significant increase over the 46,129 exported during 2005.
• Miscellaneous firearm exports came to 34,022 in 2006 compared to 7,988 in 2005.

Sanetti Chosen to Lead NSSF

Sturm, Ruger & Company, Inc. has announced that its President, Stephen L. Sanetti, has left the company to accept the position of President and Chief Executive Officer of the National Shooting Sports Foundation, the trade association for the firearms industry.

Sanetti was hired by Bill Ruger in 1980 to be Ruger’s first general counsel and rose up through the executive ranks to become, in 2003, president and chief operating officer and vice chairman of the Board of Directors. A founding member of the industry’s Firearms Litigation Support Committee, Sanetti helped direct the successful coordinated response to municipal lawsuits that threatened the firearms industry in the late 1990s.

The connection between the NSSF and Ruger has always been strong. Bill Ruger was a founding member of its Board of Governors in 1961. It is the trade association for the shooting, hunting, and firearms industry, with a membership of over 4,000 manufacturers, distributors, retailers, sportsmen’s organizations, and publishers.

“I am delighted that the NSSF Board has chosen Steve Sanetti to be its next CEO,” said Ruger CEO Michael Fifer. “His knowledge of the industry and the issues confronting it, together with his vast product acumen make him a natural for this important and publicly visible position. I look forward to continued close ties between Ruger and the NSSF with Steve Sanetti as its CEO, as we all strive to preserve our heritage of hunting, shooting, and responsible firearms use. While Steve’s vast industry experience and passion for firearms will be missed by Ruger, we will share in the industry’s good fortune of having Steve lead the NSSF,” Fifer concluded.

“It was no easy decision to depart Sturm, Ruger, since I’ve devoted my life to it since I left the Army 30 years ago,” said Sanetti. “But I feel an even higher calling where I can, I hope, be of assistance to the entire firearms industry.”

There was widespread praise within the industry for the choice of Sanetti to replace semi-retiring Doug Painter at the NSSF helm. Trade sources within the industry indicate that Sanetti’s decision to leave Sturm, Ruger after so many years was reportedly due to conflicts in management style between Sanetti and Ruger’s board, which has taken a more active role in managing the company as of late.

AR-15 Rifles Strong Sellers

AR-15 style rifles are said to be selling strongly – particularly in the southwest. One retailer, who had frequently exhibited at gun shows to obtain much needed revenue to keep his business going, has since discontinued attendance at the shows as his shop has become so busy selling the black rifles.

Micro-Stamping Bill Stalls in Connecticut

The General Assembly has set aside a proposal requiring any newly made semiautomatic pistols sold in Connecticut after Jan. 1, 2010, to employ a fledgling technology that would brand an alphanumeric code on bullet cartridges when fired. The industry made a unified stand against the bill with companies such as Colt’s, Marlin, O.F. Mossberg, Sturm, Ruger, Remington, Smith & Wesson, ATK-Federal Cartridge, and Winchester Ammunition taking part.

Prominent Anti-Industry Lawyer Sentenced

William S. Lerach, a former partner of the law firm Milberg Weiss, responsible for representing numerous cities in litigation against the firearms industry, has been sentenced to two years in federal prison and ordered to forfeit $7.75 million for concealing illegal payments to a plaintiff, following his guilty plea to a charge of conspiracy to obstruct justice.

The frivolous lawsuits against the industry filed by Milberg Weiss led to the passage of the Protection of Lawful Commerce in Arms Act.

Lerach, of La Jolla, California, admitted to an arrangement in which his law firm made payments to people to be on call as plaintiffs in class-action lawsuits that were filed against publicly-traded companies when their stock prices dropped.

Prosecutors for the U.S. Attorney’s office of the Central District of California, who worked on the case for seven years, say that Lerach and others lined up the plaintiffs ahead of time to gain an illegal advantage over other law firms engaged in the same suits. By being designated the lead plaintiff, the law firms stood to reap a larger share of any eventual lawyers’ fees awarded.

Prosecutors say that in more than 150 of the firm’s class-action cases from the 1970s to 2005, the law firm earned more than $216 million in attorneys’ fees, and paid out $11 million to the on-call plaintiffs.

Lerach will serve his time in a minimum-security federal prison in California.

Background Checks Rise

Data released by the FBI’s National Instant Criminal Background Check System (NICS) shows 942,556 checks were reported in January, a 5.3% increase from the 894,608 reported in January 2007.

Adjusted state figures show background checks up by 3.4% year-over-year. In 2007, NICS reported a total of 11,177,335 background checks, an increase of 4.1% compared to 2006.

The increase in background checks coincides with an increase in excise tax collections from firearms and ammunition manufacturers, another key economic indicator for the firearms industry.

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.