Commerce in Firearms and Ammunition-Reporting Theft or Loss of Firearms in Transit (2007R-9P), 1307-1318 [2016-00112]

Agencies

• Department of Justice
• Bureau of Alcohol, Tobacco, Firearms and Explosives

[Federal Register Volume 81, Number 7 (Tuesday, January 12, 2016)]
[Rules and Regulations]
[Pages 1307-1318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00112]


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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 478

[Docket No. ATF 40F; AG Order No. 3607-2016]
RIN 1140-AA41


Commerce in Firearms and Ammunition--Reporting Theft or Loss of 
Firearms in Transit (2007R-9P)

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); 
Department of Justice.

ACTION: Final rule.

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SUMMARY: The Department of Justice is amending the regulations of the 
Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) concerning 
the statutory reporting requirement for firearms that have been stolen 
or lost. The final rule specifies that when a Federal firearms licensee 
(FFL) discovers a firearm it shipped was stolen or lost in transit, the 
transferor/sender FFL must report the theft or loss to ATF and to the 
appropriate local authorities within 48 hours of discovery. The rule 
also reduces an FFL's reporting burden when a theft or loss involves a 
firearm registered under the National Firearms Act (NFA) and ensures 
consistent reporting to ATF's NFA Branch. In addition, the rule 
specifies that transferor/sender FFLs must reflect the theft or loss of 
a firearm as a disposition entry in their required records not later 
than 7 days following discovery of the theft or loss; moreover, if an 
FFL reported the theft or loss of a firearm and later discovers its 
whereabouts, the FFL must advise ATF that the firearm has been located 
and must re-enter the firearm into its required records as an 
acquisition or disposition entry as appropriate.

DATES: This rule is effective February 11, 2016.

FOR FURTHER INFORMATION CONTACT: Denise Brown, Office of Regulatory 
Affairs, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, 
Firearms, and Explosives, U.S. Department of Justice, 99 New York

[[Page 1308]]

Avenue NE., Washington, DC 20226; telephone: (202) 648-7070.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Gun Control Act of 1968 (GCA), as amended by the Violent Crime 
Control and Law Enforcement Act of 1994, requires each licensed 
importer, licensed manufacturer, licensed dealer, or licensed collector 
of firearms to report the theft or loss of a firearm from the 
licensee's inventory or collection to the Bureau of Alcohol, Tobacco, 
Firearms, and Explosives (ATF) and to the appropriate local authorities 
within 48 hours after the theft or loss is discovered. See 18 U.S.C. 
923(g)(6) (requiring licensees to report thefts or losses to the 
Attorney General and to the appropriate local authorities); 28 CFR 
0.130(a) (delegating the Attorney General's functions and powers to the 
Director of ATF).
    The regulation that implements section 923(g)(6) is 27 CFR 478.39a. 
This regulation provides that each Federal firearms licensee (FFL) must 
report the theft or loss of a firearm from the FFL's inventory 
(including any firearm which has been transferred from the FFL's 
inventory to a personal collection and held as a personal firearm for 
at least 1 year), or from the collection of a licensed collector, 
within 48 hours after the theft or loss is discovered. FFLs must report 
such thefts or losses by telephoning 1-888-930-9275 (nationwide ATF 
toll-free number) and by preparing a Federal Firearms Licensee Firearms 
Inventory Theft/Loss Report, ATF Form 3310.11 (Form 3310.11), in 
accordance with the instructions on the form. The FFL must also report 
the theft or loss of a firearm to the appropriate local authorities.
    When there has been a theft or loss of a firearm registered under 
the National Firearms Act (NFA), 26 U.S.C. 5801 et seq., such as a 
short-barreled rifle or short-barreled shotgun, silencer, machinegun, 
or destructive device, see 26 U.S.C. 5841, 5845, 27 CFR 479.141 imposes 
a separate and additional reporting requirement. Section 479.141 states 
that whenever any registered NFA firearm is stolen or lost, the person 
who has lost possession must, immediately upon discovery of such theft 
or loss, make a report to the Director of ATF showing the following: 
name and address of the person in whose name the firearm is registered; 
kind of firearm; serial number; model; caliber; manufacturer of the 
firearm; date and place of theft or loss; and complete statement of 
facts and circumstances surrounding such theft or loss. Accordingly, 
when an FFL loses possession of an NFA firearm, it has reporting 
obligations under both 27 CFR 479.141 and 27 CFR 478.39a.
    Currently, an FFL reporting the theft or loss of a registered NFA 
firearm prepares and submits Form 3310.11 to ATF's National Tracing 
Center (NTC), the receiving office designated on the form, to meet the 
27 CFR 478.39a requirements. In addition, the FFL must submit a 
separate notification to the Director of ATF to meet the requirements 
of 27 CFR 479.141. Because no form is directly associated with the 
separate notification to the Director, FFLs submit a letter to the NFA 
Branch of ATF, as directed in the ``Important Notice'' section of Form 
3310.11. As a backup to this requirement, when NTC receives a completed 
Form 3310.11 involving the theft or loss of an NFA firearm, it 
currently forwards a copy of the completed form to the NFA Branch, as 
the completed form often contains more information than the letters 
FFLs submit to the NFA Branch. Form 3310.11 does not, however, ask for 
the name and address of the person in whose name the firearm is 
registered, which is required to be reported under 27 CFR 479.141. 
Therefore, the NFA Branch may not currently be receiving consistent and 
complete information regarding the theft or loss of a registered 
firearm.
    The instructions on Form 3310.11 also provide that FFLs must 
reflect the theft or loss of a firearm as a disposition entry in the 
Record of Acquisition and Disposition (A&D Record) required by subpart 
H of 27 CFR part 478 (formerly 178). The disposition entry should 
indicate whether the incident is a theft or loss, the ATF-Issued 
Incident Number, and the Incident Number provided by the local law 
enforcement agency. The instructions further state that should any of 
the firearms be located, they should be re-entered into the A&D Record 
as an acquisition entry. In addition, the ``Important Notice'' section 
on Form 3310.11 provides that an FFL who reports a firearm as missing 
and later discover its whereabouts should advise ATF that the firearm 
has been located.
    The text of the statutory reporting requirement, 18 U.S.C. 
923(g)(6)--which obligates licensees to report the theft or loss of a 
firearm ``from the licensee's inventory''--does not clearly address the 
reporting of a firearm that has been stolen or lost in transit. That 
is, the statute does not expressly address whether such a firearm 
should be considered part of the inventory of the transferring/shipping 
FFL, a recipient FFL, or the common carrier transporting the firearm. 
Similarly, current regulations do not address reporting requirements 
arising from firearms stolen or lost in transit, including whether the 
firearms are considered stolen or lost from the inventory of the 
sending or receiving FFL. This gap in the regulations likely results in 
no one reporting the theft or loss of a firearm stolen or lost in 
transit--an anomalous result that the Department believes is contrary 
to congressional intent in mandating the reporting of thefts and losses 
generally. Clarifying this responsibility is thus important to the 
effective administration of the GCA and NFA. Congress delegated the 
authority to prescribe necessary rules and regulations to carry out the 
provisions of the GCA and NFA to the Attorney General, who has 
delegated to ATF the authority to investigate, administer, and enforce 
those laws. See 18 U.S.C. 926(a); 26 U.S.C. 7801(a)(2)(A)(i), 7805(a); 
28 CFR 0.130(a).

II. Initial Notice of Proposed Rulemaking

    On August 28, 2000, in ATF Notice No. 902, ATF published in the 
Federal Register a Notice of Proposed Rulemaking (NPRM) proposing 
several amendments to the firearms regulations. 65 FR 52054 (Aug. 28, 
2000). Among those amendments, ATF proposed specifying that, when a 
firearm is stolen or lost in transit between licensees, for reporting 
purposes, the firearm is considered stolen or lost from the 
transferor's/sender's inventory. ATF noted that in Fiscal Year (FY) 
1999, there were 1,271 crime gun traces in which an FFL claimed to have 
never received the firearm shipped to it and no one reported the theft 
or loss to ATF.\1\ As proposed in 2000, a firearm stolen or lost in 
transit between licensees, for reporting purposes, would be considered 
stolen or lost from the transferor's/sender's inventory. Further, as 
proposed, the transferor/sender of the stolen or missing firearm would 
have been required to report to ATF and to the appropriate local 
authorities the theft or loss of the firearm within 48 hours after the 
transferor/sender discovered the theft or loss. In addition, to enable 
the transferor/sender of the stolen or lost firearm to obtain the 
knowledge necessary to comply with the theft or loss reporting 
requirements and fulfill the statutory responsibility of maintaining 
accurate records, ATF proposed that the transferor/sender be

[[Page 1309]]

required to have or establish commercial business practices that 
confirm whether the transferee/buyer of the firearm ultimately received 
the firearm.
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    \1\ A crime gun is any firearm that is illegally possessed, used 
in a crime, or suspected by law enforcement officials of having been 
used in a crime or act of terrorism.
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    As a result of the comments received in response to various issues 
addressed in the document, the Department decided to study the issues 
further, and it subsequently withdrew these proposals. See 69 FR 37757 
(June 28, 2004).

III. 2014 Notice of Proposed Rulemaking

    On August 12, 2014, ATF published in the Federal Register another 
NPRM proposing to amend the regulations in subpart C of part 478, 
section 478.39a (ATF Notice No. 40P) (``2014 NPRM'' or ``proposed 
rule''). See 79 FR 47033. The proposed rule was intended to clarify 
that, when an FFL discovers a firearm that it shipped was stolen or 
lost in transit, that transferor/sender FFL would be the one 
responsible for reporting the theft or loss to ATF and to the 
appropriate local authorities.
    The NPRM specified a time period within which to reflect the theft 
or loss of a firearm as a disposition entry--i.e., not later than 7 
days following the discovery of the theft or loss--and required, rather 
than recommended, that the disposition entry in the FFL's A&D Record 
include specified information. Under the regulations as proposed, if an 
FFL reported a firearm stolen or lost and later discovered its 
whereabouts, the FFL would be required to advise ATF that the firearm 
has been located and re-enter the firearm into the required records as 
an acquisition or disposition entry as appropriate. The proposed rule 
was intended to reduce an FFL's reporting burden when a theft or loss 
involves a firearm registered under the NFA by having the FFL submit 
one Form 3310.11 to ATF to satisfy the requirements of both 27 CFR 
478.39a and 27 CFR 479.141.
    The proposed rule retained the same general approach for 
transferor/sender FFLs to report thefts or losses in transit as the 
2000 NPRM, although there are some important differences. Unlike the 
2000 NPRM, the 2014 NPRM did not propose to require FFLs to establish 
commercial business practices that would enable the FFL to verify that 
the transferee/buyer of a shipped firearm actually received the 
firearm. The 2014 NPRM merely solicited comments on whether a 
transferor/sender FFL should be required to obtain and retain 
confirmation of receipt. In addition, unlike the 2000 NPRM, the 2014 
NPRM proposed to reduce the reporting burden with respect to NFA 
firearms. The 2014 NPRM also clarified that firearms lost or stolen in 
transit between FFLs and non-FFLs (not just between FFLs) would be 
included in the transactions that must be reported by a transferor/
sender FFL. Finally, the proposed rule would require the A&D Records to 
be updated within 7 days of discovery of the theft or loss.
    As stated in the 2014 NPRM, theft or loss of firearms in transit 
continues to be a problem. In its 2000 NPRM, ATF stated that in FY 
1999, there were 1,271 crime gun traces in which an FFL claimed to have 
never received the firearm shipped to it and no one reported the theft 
or loss to ATF. More recent data from NTC shows that from FY 2010 
through FY 2014, there was an average of 1,333 crime gun traces per 
year where the firearm was traced back to an FFL that claimed it never 
received the firearm allegedly shipped to it, but no theft or loss was 
reported to ATF. ATF recognizes that this figure may include some 
firearms lost or stolen at the licensed premises while not in transit 
(i.e., prior to or after shipment). However, because there are numerous 
firearms lost or stolen that have not been traced, the full count of 
firearms lost or stolen in transit may be significantly higher. The 
omission in the regulations regarding reporting the theft or loss of a 
firearm in transit adversely affects ATF's and local law enforcement's 
investigative and tracing capabilities. For those reasons, the 
Department proposed amending the regulations to specify who is 
responsible for reporting the theft or loss of a firearm in transit.
    As previously noted, the statutory provision requiring licensees to 
report lost or stolen firearms, 18 U.S.C. 923(g)(6), does not clearly 
address situations in which a firearm is lost or stolen in transit. The 
Department proposed to interpret section 923(g)(6)'s requirement that a 
licensee ``report the theft or loss of a firearm from the licensee's 
inventory'' to include a responsibility to report a theft or loss that 
occurs once the licensee has placed a firearm in shipment. Accordingly, 
the proposed rule specified that, when a firearm is stolen or lost in 
transit on a common or contract carrier,\2\ for reporting purposes the 
firearm is considered stolen or lost from the transferor's/sender's 
inventory. The proposed rule would apply to transfers from a licensee 
to a nonlicensee, including interstate shipments for firearms repair 
and replacement, qualified interstate shipments to law enforcement 
officers for official duty, and intrastate transactions under 18 U.S.C. 
922(c), 27 CFR 478.96, and ATF Procedure 2013-2. In all such 
transactions, the transferor/sender would be the only FFL involved in 
the transaction, and it would be reasonable for that FFL to assume 
responsibility to make a report to ATF if the shipment is lost or 
stolen in transit before the transferee acquires possession. The 
proposed rule would not require transferor/sender FFLs to establish 
commercial business practices to affirmatively verify or retain 
confirmation of receipt; instead, the rule would allow a transferor/
sender FFL to rely on notification by the transferee/buyer, the common 
or contract carrier, or any other person that the shipment was not 
received. Only upon receiving such notification would the FFL be 
required to report the theft or loss and change its records 
accordingly.
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    \2\ For purposes of this rule, the Department considers the U.S. 
Postal Service a ``common or contract carrier.''
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    The 2014 proposed rule retained most of the current procedures for 
licensees reporting the theft or loss of firearms subject to the GCA, 
in accordance with the instructions on Form 3310.11. For example, 
Instruction 7 on Form 3310.11 provides that FFLs must reflect the theft 
or loss of a firearm as a disposition entry in the A&D Record that is 
required by subpart H of part 478 (formerly 178). The form also 
provides that the disposition entry should indicate whether the 
incident is a theft or loss, include the ATF-Issued Incident Number, 
and include the Incident Number provided by the local law enforcement 
agency. The proposed rule set out these procedures in a new paragraph 
(e) of 27 CFR 478.39a with two modifications: (1) The rule would 
prescribe a time period to reflect the theft or loss of a firearm as a 
disposition entry (i.e., not later than 7 days following discovery of 
the theft or loss); and (2) it would require, rather than recommend, 
that the disposition entry include specified information. The proposed 
7-day time period for reporting would be consistent with the firearms 
receipt and disposition reporting requirement for licensed dealers in 
27 CFR 478.125(e), which requires the ``sale or other disposition of a 
firearm'' to be recorded ``not later than 7 days following the date of 
such transaction.'' The Department considers a theft or loss to be a 
disposition that must be reported within this time period.
    In addition, the ``Important Notice'' section of Form 3310.11 
provides that licensees who report firearms as missing and later 
discover their whereabouts should advise ATF that the firearms

[[Page 1310]]

have been located, and Instruction 8 provides that licensees should re-
enter these located firearms into the A&D Record as an acquisition 
entry. The proposed rule combined and set out these procedures in a new 
paragraph (f) of 27 CFR 478.39a with three modifications. The proposed 
rule would: (1) Change the phrase ``should advise ATF'' to ``shall 
advise the [ATF] Director''; (2) change the phrase ``should re-enter'' 
to ``shall re-enter''; and (3) specify that the re-entry is to be 
recorded as an acquisition or disposition entry as appropriate. Making 
mandatory both the advising of ATF and the re-entry of the located 
firearm into the A&D Record would help to improve the accuracy of NTC 
data, which would greatly assist law enforcement in solving violent 
crimes and enhancing public safety.
    The proposed rule would also reduce a licensee's reporting burden 
to ATF for the theft or loss of a registered NFA firearm by allowing 
submission of one Form 3310.11 to meet the requirements of 27 CFR 
478.39a and 27 CFR 479.141. Currently, if a licensee's registered NFA 
firearm is lost or stolen, the licensee prepares and submits Form 
3310.11 to ATF's NTC to comply with the 27 CFR 478.39a requirements, 
which specify that Form 3310.11 be used. The licensee also provides to 
ATF's NFA Branch a separate notification--typically in the form of a 
letter--to comply with 27 CFR 479.141. The proposed rule would revise 
27 CFR 478.39a to stipulate that a licensee's submission of a completed 
Form 3310.11 to ATF for the theft or loss of a registered NFA firearm 
satisfies the notification requirements under both 27 CFR 478.39a and 
27 CFR 479.141. This would reduce the FFLs' reporting burden and help 
to ensure that information about lost or stolen registered NFA firearms 
is consistently reported to ATF.
    The comment period for Notice No. 40P closed on November 10, 2014.

IV. Analysis of Comments and Department Response

    All public comments were considered in preparing this final rule. 
In response to Notice 40P, ATF received 14 comments. Comments were 
submitted by individuals, corporations and other legal entities, FFLs, 
and trade associations.
    Five commenters supported the proposed rule. Commenters who agreed 
with the proposed rule did so primarily because they believed that the 
implementation of the rule would help stop the unreported theft or loss 
of firearms in transit. One commenter agreed with the proposed rule in 
its entirety because it would allow police to quickly investigate and 
possibly return missing firearms and simplify FFLs' reporting of stolen 
or lost firearms registered under the NFA, thus making that process 
more efficient for both FFLs and ATF.
    Nine commenters disagreed with the proposed rule. Commenters who 
opposed the proposed rule did so for a variety of reasons, with the 
most common objection relating to ATF's lack of authority to request 
theft or loss reports of firearms once the firearms have allegedly been 
transferred from the transferor/sender FFL's inventory. One commenter 
opposed the proposed rule on ``philosophical[]'' grounds, claiming that 
there is over-regulation of commerce by the United States in general, 
and concluding that ``any regulation of transactions involving small 
arms are uniquely inappropriate a subject for regulation by the 
national government because of the special provisions of the second 
amendment to the Constitution.''
    Another commenter opposed the proposed rule because he believed 
that the rule's imposition of the reporting obligation on the 
transferring/sending FFL was at odds with ATF's alleged ``statement to 
the press'' that the rule ``applies to'' carriers. He further stated 
that ``[a]s written the regulation is ripe for abuse, should be 
rewritten so that the ATF can understand its own intent.'' Another 
commenter noted that ``[c]urrent ATF rules are clear regarding the 
manufacturer's responsibility to report lost or stolen firearms that 
are under their control. The proposed new rule imposes an unrealistic 
burden on manufacturers to report same after the firearm has left its 
premise and has exited its disposition log.'' One commenter stated that 
the ``issue of firearms lost in transit does not need solving because 
it is not a problem,'' and that ATF is ``trying to solve a problem that 
does not exist.'' The following sections address the specific comments 
on the proposed rule.

A. Legal Authority

Comments Received
    Regarding the comment that the transaction of small arms is not an 
appropriate subject for regulation by the national government because 
of the Second Amendment, the Department does not believe anything in 
this rule is inconsistent with that constitutional amendment. Congress 
has long regulated the transportation and shipment of firearms,\3\ and 
courts have not interpreted the Second Amendment as limiting the 
authority of Congress to enact such laws.\4\
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    \3\ Long before enactment of the Gun Control Act of 1968, 
Congress imposed limitations on the shipment of firearms. See, e.g., 
Nonmailable Firearms Act of 1927, Public Law 69-583, 44 Stat. 1059 
(codified at 18 U.S.C. 1715) (restricting mailing and delivery of 
concealable firearms); Federal Firearms Act of 1938, Public Law 75-
785, 52 Stat. 1250 (codified at 15 U.S.C. 901 et seq.) (repealed 
1968) (restricting interstate shipment of firearms).
    \4\ See District of Columbia v. Heller, 554 U.S. 570, 626-27 
(2008) (``[N]othing in [the Supreme Court's] opinion [interpreting 
the Second Amendment] should be taken to cast doubt on . . . laws 
imposing conditions and qualifications on the commercial sale of 
arms.''); United States v. Decastro, 682 F.3d 160, 168-69 (2d Cir. 
2012) (statute prohibiting transporting into one's state of 
residence firearms acquired outside the state did not infringe the 
right to keep and bear arms under the Second Amendment).
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    Some commenters asserted that ATF lacks the legal authority to 
impose the proposed rule because, in 18 U.S.C. 923(g)(6), Congress only 
mandated reporting of lost or stolen firearms when those firearms are 
currently in the ``inventory or collection'' of the FFL. These 
commenters argued that ATF impermissibly exceeded its statutory bounds 
in interpreting the requirement that licensees report ``the theft or 
loss of a firearm from the licensee's inventory'' to require licensees 
to report the theft or loss of firearms after the firearms are no 
longer in the transferring FFL's possession or on their premises; such 
an interpretation, the commenters argued, is at odds with the plain 
meaning of the word ``inventory.'' Citing Black's Law Dictionary, two 
Merriam-Webster dictionaries, and the Internal Revenue Code, the 
commenters defined the term ``inventory'' to mean that the goods in 
question must physically be held ``on hand'' or ``in stock.'' The 
commenters thus argued, in essence, that the reporting requirement in 
section 923(g)(6) only applies to firearms stolen or lost from the 
licensee personally or from the licensee's business premises. Another 
commenter stated that ATF lacks regulatory authority to impose best 
business practices on FFLs to monitor shipments of firearms once the 
firearms depart the FFLs' facilities.
Department Response
    Congress delegated the authority to prescribe rules and regulations 
to carry out the provisions of the GCA to the Attorney General, who has 
delegated to ATF the authority to investigate, administer, and enforce 
those laws. See 28 U.S.C. 599A; 18 U.S.C. 926(a); 28 CFR 0.130(a). The 
Attorney General (and, derivatively, ATF) also has authority, pursuant 
to 18 U.S.C. 923(g)(1)(A) and 923(g)(2), to promulgate regulations on 
how

[[Page 1311]]

licensees must maintain records of shipment, receipt, sale, or other 
disposition of firearms. It is unlawful under 18 U.S.C. 922(m) for 
licensees to fail to make an appropriate entry in a required record. 
Additionally, pursuant to 28 U.S.C. 599A, 18 U.S.C. 926(a), and 28 CFR 
0.130(a), ATF has the authority and responsibility to interpret and 
enforce the GCA provisions prohibiting the theft of firearms. See 18 
U.S.C. 922(i) (transporting or shipping stolen firearms in interstate 
or foreign commerce), 922(j) (receiving, possessing, concealing, 
storing, bartering, selling, disposing, or pledging or accepting as 
security for a loan any stolen firearm which has moved in, is moving 
in, or will move in interstate or foreign commerce), 922(u) (stealing a 
firearm that has been shipped or transported in interstate or foreign 
commerce from the person or premises of an FFL), 924(l) (stealing a 
firearm which is moving in or has moved in interstate commerce), 924(m) 
(stealing a firearm from a licensee).
    The present rulemaking reflects ATF's interpretation of the theft 
or loss reporting requirement set forth in the GCA, 18 U.S.C. 
923(g)(6). Congress did not define the term ``inventory'' or the phrase 
``from the licensee's inventory'' in 18 U.S.C. 923(g)(6) or elsewhere 
in the GCA. Nor did Congress expressly limit the licensee's reporting 
obligation to firearms that are lost or stolen from the licensee's 
premises: unlike 18 U.S.C. 922(u), for instance, which makes it 
unlawful to steal ``from the person or the premises of a person who is 
licensed . . . any firearm in the licensee's business inventory'' 
(emphasis added), section 923(g)(6)'s reporting requirement is not 
limited to firearms taken ``from the person or premises'' of the 
licensee.
    Commenters argued that, in the absence of a statutory definition of 
the word ``inventory,'' the Department must use the word's plain or 
ordinary meaning, and they offered various definitions culled from a 
few sources in an effort to elucidate what that meaning is. But rather 
than revealing a clear commonality, the definitions in the commenters' 
cited sources instead show that the word ``inventory'' can take on 
slightly different meanings suited to the particular contexts in which 
it used.\5\ In the context of Federal firearms regulation, a licensee's 
``inventory'' can, and does, include firearms that are not either ``on 
hand'' or owned by the licensee. For instance, FFLs may transport some 
or all of their firearms away from a particular licensed premises--to a 
warehouse where the firearms will be kept ``solely for storage,'' for 
example. See 27 CFR 478.50(a). Or an FFL may have on hand firearms that 
the FFL does not own, but which have been pawned, consigned, or stored 
with the FFL by the firearms' owners. See 18 U.S.C. 921(a)(11)(C), 
921(a)(12).\6\ Similarly, licensed dealers may have on hand firearms 
that they are repairing or configuring for the firearms' owners. See 18 
U.S.C. 921(a)(11)(B).
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    \5\ See Black's Law Dictionary 901-02 (9th ed. 2009) (first 
definition: ``[a] detailed list of assets; esp., an executor's or 
administrator's detailed list of the probate-estate assets''; second 
definition, as used in accounting: ``[t]he portion of a financial 
statement reflecting the value of a business's raw materials, works-
in-progress, and finished products''; third definition: ``[r]aw 
materials or goods in stock''; fourth definition, as used in 
bankruptcy: ``[p]ersonal property leased or furnished, held for sale 
or lease, or to be furnished under a contract for service; raw 
materials, work in process, or materials used or consumed in a 
business, including farm products such as crops or livestock''); 
Merriam-Webster Online Dictionary (definition 1a: ``an itemized list 
of current assets as (1): a catalog of the property of an individual 
or estate [or] (2): a list of goods on hand''; definition 1b: ``a 
survey of natural resources''; definition 3: ``the quantity of goods 
or materials on hand''), https://www.merriam-webster.com/dictionary/inventory; 26 U.S.C. 865(i)(1), 1221(a)(1) (describing ``inventory 
property'' as ``stock in trade of the taxpayer or other property of 
a kind which would properly be included in the inventory of the 
taxpayer if on hand at the close of the taxable year, or property 
held by the taxpayer primarily for sale to customers in the ordinary 
course of his trade or business'').
    \6\ See also Firearms Transaction Record, ATF Rul. 76-15 
(July1976) (recordkeeping requirements for pawned firearms); 
Engaging in the Business of Dealing in Firearms (Auctioneers), ATF 
Rul. 96-2 (Sept. 1996) (auctioneers must obtain a license as a 
dealer to take possession of firearms consigned for auction); ATF, 
Federal Firearms Licensee Quick Reference and Best Practices Guide, 
ATF Pub. No. 5300.15, at 8 (rev. Aug. 2010) (all firearms 
acquisitions must be documented in the A&D book, including pawned 
and consignment firearms), https://www.atf.gov/file/58676/download; 
Return of Firearms Received for Appraisal, FFL Newsletter (ATF, 
Washington, DC), Apr. 2015, at 4 (licensees must record firearms 
received for appraisal as a transaction on ATF Form 4473), https://www.atf.gov/file/11691/download; Shot Show Q & A, FFL Newsletter 
(ATF, Washington, DC), Jan. 2007, at 7, Q9 (licensees must treat 
firearms received for storage as acquisitions), https://www.atf.gov/file/56436/download.
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    Elsewhere in the law, physical possession is often neither 
necessary nor sufficient for something to be counted as inventory. The 
section of the Uniform Commercial Code (UCC) governing secured 
transactions, for example, defines ``inventory'' to include not only 
goods ``held by a person,'' but also goods ``furnished by a person,'' 
and ``leased by a person,'' irrespective of who has them. U.C.C. 9-
102(a)(48); see also Matter of Watertown Tractor & Equip. Co., 289 
NW.2d 288, 293-94 (Wis. 1980) (holding that equipment constitutes a 
lessor's ``inventory'' when in the possession of a lessee). The Supreme 
Court has even held that a farmer's corn futures are considered the 
farmer's ``inventory'' for tax purposes, even though they are 
considered capital assets in the hands of a holding company. See 
Arkansas Best Corp. v. Comm'r, 485 U.S. 212, 219-22 (1988).
    Given its many meanings, the Department is of the view that the 
word ``inventory'' is ambiguous, and that Congress did not specifically 
intend--by use of the word--to deprive the Department of the authority 
to require FFLs to report the loss or theft of firearms in transit. 
That view is supported by multiple dictionaries that define inventory 
broadly to encompass any goods and articles that might appropriately be 
listed on an inventory. See, e.g., 5 The Oxford English Dictionary 453-
54 (1978) (defining inventory broadly as, inter alia, ``[t]he lot or 
stock of goods, etc., which are or may be made the subject of an 
inventory''); Funk & Wagnalls New Standard Dictionary of the English 
Language 1289 (1946) (defining inventory broadly as, inter alia, 
``[a]rticles which constitute or are to constitute the inventory''). In 
light of the range of items that can appear on an inventory--for 
example, ``the goods and chattels, rights and credits, and in some 
cases, the land and tenements of a person or persons,'' 2 Bouvier's Law 
Dictionary and Concise Encyclopedia 1681 (3d rev. 1914)--the word 
``inventory'' can be open-ended.
    In the context of section 923(g)(6) specifically, the Department 
believes that the obligation to report lost or stolen ``firearm[s] from 
the licensee's inventory'' is best understood to encompass firearms 
that are not yet in the physical possession of a transferee that the 
transferor is best positioned to monitor and control. The Department 
believes that this interpretation of the word ``inventory'' is 
consistent with the flexible, context-specific character of the term as 
used elsewhere in the law.
    Further, it is more logical--and more consistent with the GCA 
scheme--to consider an in-transit firearm as part of the shipping FFL's 
inventory and thereby place the reporting obligation on the transferor/
sender licensee rather than the firearm's intended recipient. The GCA 
scheme relies on firearms dealers to control commerce in firearms. See 
Huddleston v. United States, 415 U.S. 814, 824 (1974) (``The principal 
agent of federal enforcement [of laws regulating interstate commerce in 
firearms] is the dealer.''). The transferors/senders covered by this 
rule will be licensees who are subject to the reporting requirement 
under section 923(g)(6)--but not every intended

[[Page 1312]]

recipient in firearms transactions will necessarily be a licensee. 
Thus, placing the reporting obligation on the transferor/sender 
licensee ensures that, for every firearm transaction, there will be an 
FFL responsible for reporting any discovered thefts or losses that 
occur along the way. The Department believes that this will ensure more 
consistent reporting of stolen or lost firearms, thereby fulfilling the 
GCA's purpose of ``strengthen[ing] Federal regulation of interstate 
firearms traffic,'' H.R. Rep. No. 90-1577, at 7 (1968), and furthering 
the aim of the Violent Crime Control and Law Enforcement Act of 1994 to 
``enhance public safety,'' H.R. Rep. No. 103-711, at 1 (1994) (Conf. 
Rep.).
    In reaching its interpretation of 923(g)(6)'s reporting mandate, 
the Department considered whether the ``inventory'' determination 
should be made in accordance with the variable approach of the UCC 
regarding the transfer of title for risk of loss purposes. The 
Department determined that neither the text nor the purpose of the GCA 
counseled in favor of adopting the UCC approach to determining in whose 
``inventory'' a firearm belongs. As explained in the proposed rule, the 
UCC approach focuses on the ownership of the goods being shipped for 
the purposes of allocating the risk of loss, but the primary focus of 
the GCA and its implementing regulations is, instead, the tracking of 
the acquisition and disposition of firearms. Accordingly--and as the 
Department will explain in further detail below--the Department is of 
the view that the statutory obligation on firearms licensees to report 
a theft or loss should not turn on technicalities of commercial law 
regarding whether the seller or buyer has title to, or bears the risk 
of loss of, the shipped firearms.
    Instead, under the final rule, the theft or loss reporting 
requirement will always remain with the transferor/sender FFL, who will 
know how and when firearms sent to the transferee were shipped. As the 
Department reasoned in the 2014 NPRM, the transferee will have an 
incentive to notify the transferor about any discrepancies in the 
shipment because the transferee would not want to pay for an item the 
transferee did not actually receive. Upon being contacted by the 
transferee about a shipment discrepancy, the transferor FFL will be in 
the best position to verify the theft or loss by reviewing its 
transaction records and the shipping information from the carrier. The 
transferor could also be in a position to discover that the discrepancy 
was instead due to recordkeeping or other human error. Indeed, 
regardless of whether the transferee or transferor arranges the 
shipment, the transferor will know how and when the firearms were 
shipped. Moreover, if a firearm is stolen or lost in transit, the 
notation in the transferor's/sender's acquisition and disposition book 
indicating the firearm was disposed of to a particular transferee/buyer 
would be inaccurate.
    The Department's interpretation that in-transit firearms remain in 
the transferring/sending FFL's ``inventory'' for purposes of section 
923(g)(6) is further supported by the fact that an FFL's delivery of 
firearms to a common or contract carrier for transport does not result 
in a ``disposition'' or ``transfer'' unless and until the firearms are 
received by the transferee. The Department does not believe that the 
GCA scheme, which sets forth procedures for conveying firearms by 
carriers,\7\ supports the conclusion that delivering firearms to the 
carrier for transport is a ``transfer'' or ``disposition'' to that 
carrier. Under the GCA and current regulations, the carrier is not said 
to maintain an ``inventory'' of firearms, and the disposition records 
of the transferring FFL do not reflect the carrier as a person to whom 
firearms are disposed. If an FFL's submission of firearms to a carrier 
were a ``disposition'' or ``transfer,'' such an interpretation would 
lead to results that Congress very likely did not intend. Specifically, 
the transferring FFL would be required to treat carriers like any other 
unlicensed person by: (1) Having an employee of the carrier complete 
ATF Form 4473 prior to receiving any firearms for shipment; \8\ (2) 
checking identification and conducting background checks on the 
carrier's employees; \9\ (3) recording bound book entries as 
dispositions to the carrier, rather than to the actual transferees or 
purchasers of the firearms; \10\ and (4) possibly completing multiple 
sales or other disposition reports when applicable.\11\ Moreover, 
unless similar disposition requirements were also imposed on the 
carriers' subsequent transfer of the firearms to their purchasers, the 
firearms could potentially end up in the hands of criminals, and would 
not be traceable if later used in crimes.
---------------------------------------------------------------------------

    \7\ See 18 U.S.C. 922(e) (requiring notice to the common or 
contract carrier of firearms being transported or shipped), 922(f) 
(prohibiting common or contract carriers from violating the GCA, and 
requiring them to obtain acknowledgment of receipt of packages 
containing firearms); 27 CFR 478.31 (same); Open Letter to All 
Common and Contract Carriers from John W. Magaw, Director, ATF (Jan. 
1, 1994), https://www.nibin.gov/press/releases/historical/010194-openletter-contract-carriers.html.
    \8\ See 18 U.S.C. 922(b)(5), 923(g)(1)(A); 27 CFR 478.124(c).
    \9\ See 18 U.S.C. 922(t)(1); 27 CFR 478.102.
    \10\ See 18 U.S.C. 923(g)(1)(A); 27 CFR 478.122(d), 478.123(d), 
478.125(e).
    \11\ See 18 U.S.C. 923(g)(3)(A); 27 CFR 478.126a.
---------------------------------------------------------------------------

    Finally, the Department's interpreting the phrase ``firearm[s] from 
the licensee's inventory'' to encompass firearms that a licensee has 
placed in transit accords with the congressional intent behind the GCA 
more generally. The GCA is a comprehensive statutory scheme designed to 
closely track the acquisition and disposition of firearms to ensure 
that firearms do not fall into the hands of criminals, and so that the 
firearms can be traced if later found to have been used in crime. 
Accordingly, section 923(g)(6) mandates that ``[e]ach licensee shall 
report the theft or loss of a firearm from the licensee's inventory or 
collection.'' To be sure, Congress did not specifically address whether 
licensees must report the theft or loss of firearms in transit once the 
licensee ships the firearm to another recipient. Nor did Congress 
address how those firearms must be recorded in the transferor/sender 
FFL's acquisition and disposition records. But the text of 923(g)(6) 
does not foreclose the Department's interpretation of the term 
``inventory.'' And the final rule reasonably answers the questions left 
unaddressed by Congress by interpreting the reporting requirement to 
include a firearm stolen or lost from the licensee's inventory while in 
transit with a carrier, and by providing guidance on how FFLs must 
update their records in such situations. Adopting a contrary 
interpretation of the statutory language to the effect that thefts or 
losses of firearms in transit need not be reported by any FFL, on the 
theory that firearms in transit should not be deemed to be part of the 
transferor/seller's inventory nor part of the intended recipient's 
inventory, would operate to defeat the statutory goal of reporting 
thefts and losses of firearms. Commenters who oppose the rule have 
offered no persuasive reason why Congress would have intended in-
transit stolen or lost firearms to go unreported once a licensee 
discovers the theft or loss, and the Department sees none.
    For all those reasons, the Department's determination that the 
statutory obligation to report ``the theft or loss of a firearm from 
the licensee's inventory'' in section 923(g)(6) encompasses an 
obligation to report the theft or loss of a firearm that the licensee 
has shipped amounts to a reasonable construction of the GCA.\12\
---------------------------------------------------------------------------

    \12\ The Department acknowledges its previous statements that 
section 923(g)(6) does not address the reporting of thefts or losses 
of firearms in interstate shipments. See ATF, Safety and Security 
Information for Federal Firearms Licensees, ATF Pub. No. 3317.2, at 
1 (rev. Feb. 2010), https://www.atf.gov/file/58656/download; FFL or 
Interstate Theft Procedures and Information, FFL Newsletter (ATF, 
Washington, DC), Aug. 1998, at 5, https://www.atf.gov/file/56391/download. To the extent that the Department's prior statements, or 
ones like it, can be understood as the Department taking a position 
inconsistent with the interpretation of 923(g)(6) set forth in this 
final rule, the Department is ``at liberty to depart from its 
longstanding interpretation of a statute'' so long as it ``provides 
a reasoned explanation for its decision.'' TRT Telecomms. Corp. v. 
FCC, 857 F.2d 1535, 1550 (D.C. Cir. 1988); see also FCC v. Fox 
Television Stations, Inc., 556 U.S. 502, 514-15 (2009). The 
Department has explained above why it now interprets the term 
``inventory'' in 923(g)(6) to encompass firearms that an FFL has 
shipped.

---------------------------------------------------------------------------

[[Page 1313]]

    With regard to the comment concerning ATF's authority to require 
``best practices'' to monitor shipments of firearms once the shipments 
depart the FFL's facility, the final rule does not require FFLs to 
monitor their shipments. Again, FFLs will only be required to report 
thefts and losses once they discover a theft or loss.

B. Commercial Business Practices

Comments Received
    One commenter argued that the proposed rule is inconsistent with 
established commercial business practices. Citing U.C.C. 2-319, the 
commenter asserted that ``firearms are almost universally shipped 
`F.O.B. Factory,' '' indicating that once physical custody has passed 
at the place of shipment, so has legal title to the firearms and risk 
of loss.
Department Response
    The Department disputes the commenter's factual assertion that 
firearms ``are almost universally shipped `F.O.B. Factory.' '' The 
Department believes that transferor/sender FFLs generally select the 
means by which the firearms in their inventory are shipped and secure 
insurance from the carriers for the value of the firearms. While these 
costs may be passed along to buyers in the purchase contracts, the 
Department believes that in many, if not most, cases, the transferor/
sender FFL is legally responsible for any losses incurred in transit. 
This is because many, if not most, firearm purchase contracts require 
delivery at a specified destination.\13\ For this reason, if a firearm 
is lost or stolen in transit, the shipping FFL usually sends a 
replacement firearm.
---------------------------------------------------------------------------

    \13\ See U.C.C. 2-401(2) (``Unless otherwise explicitly agreed 
title passes to the buyer at the time and place at which the seller 
completes his performance with reference to the physical delivery of 
the goods . . . [and] if the contract requires delivery at 
destination, title passes on tender there.'')
---------------------------------------------------------------------------

    Even if the commenter's factual assertion were proven correct, 
however, the Department would nonetheless adhere to the position it 
expressed in the proposed rule that the UCC should not be used to 
determine the responsibility for reporting thefts and losses of 
firearms in transit. Adopting the variable UCC approach for reporting 
firearms stolen or lost in transit would be problematic for FFLs to 
apply and for ATF to enforce. Instead of being able to follow a single, 
consistent rule holding the transferor FFL responsible for reporting 
stolen or lost firearms in every transaction (should a theft or loss be 
discovered), FFLs in a transaction would need to examine each 
individual contract to determine who has the reporting responsibility. 
For that same reason, it would be impracticable for ATF to ensure 
regulatory reporting compliance under the variable UCC approach.
    The UCC does not address whether a merchant must report thefts or 
losses of goods in transit; rather, the UCC approach focuses on the 
ownership of the goods being shipped and allocating the risk of loss 
for purposes of commercial law. By contrast, the primary focus of the 
GCA and its implementing regulations is on the acquisition, 
disposition, and misuse of firearms in service of public safety 
objectives. See United States v. One Assortment of 89 Firearms, 465 
U.S. 354, 364 (1984) (``In enacting the 1968 gun control legislation, 
Congress was concerned with the widespread traffic in firearms and with 
their general availability to those whose possession thereof was 
contrary to the public interest.'' (internal quotation marks omitted)); 
Barrett v. United States, 423 U.S. 212, 220 (1976) (``The history of 
the 1968 Act reflects a . . . concern with keeping firearms out of the 
hands of categories of potentially irresponsible persons . . . . Its 
broadly stated principal purpose was `to make it possible to keep 
firearms out of the hands of those not legally entitled to possess them 
. . . .' '' (quoting S. Rep. No. 1501, at 22 (1968))); H.R. Rep. No. 
103-711, at 1 (the 1994 amendments were intended to ``enhance public 
safety''). The Department thus interprets the GCA to impose reporting 
and recordkeeping requirements on licensees in certain circumstances 
regardless of whether the licensee has title to, or bears the risk of 
loss of, the firearm in question.
    Other Federal agency regulations support the conclusion that 
transferors should be required to report the theft or loss of regulated 
goods in transit. For example, since 1974, the Drug Enforcement 
Administration (DEA) has required by rule that suppliers--i.e., 
transferors--are responsible for reporting in-transit losses of 
controlled substances by common or contract carriers upon discovery of 
the theft or loss. See 21 CFR 1301.74(c). The DEA also imposes a duty 
on suppliers to select common or contract carriers that provide 
adequate security to guard against in-transit losses, see 21 CFR 
1301.74(e), and to report theft and loss information to the DEA on a 
standard form, see 21 CFR 1301.74(c), to help the DEA to determine the 
patterns and methods of diversion of controlled substances. See 38 FR 
31840 (Nov. 19, 1973) (proposed rule); 39 FR 26022 (July 16, 1974) 
(final rule); see generally Larry K. Houck, The Drug Enforcement 
Administration's Final Rule on Theft and Significant Loss Reporting: We 
Can See More Clearly Now, 61 Food & Drug L.J. 1 (2006). ATF believes 
that many of the arguments informing DEA's decision to require 
suppliers to notify DEA of in-transit thefts and losses are applicable 
to this rulemaking.

C. Method of Reporting Theft or Loss of Firearms

Comments Received
    Five commenters supported the requirement to report a theft or loss 
of firearms in transit in part or in the requirement's entirety. One 
commenter supported the use of Form 3310.11 to report the theft or loss 
of firearms in transit to simultaneously meet the requirements of 
Sec. Sec.  478.39a and 479.141. Another commenter supported the 
requirement that FFLs notify local authorities as well as ATF, stating 
that ``[t]his is a very serious issue and the more authorities that are 
notified of the issue, the more likely it is to be resolved.'' The same 
commenter also agreed that transferring/sending FFLs should have the 
responsibility to report a theft or loss of a firearm in transit 
because a transferring/sending FFL has access to the shipping history 
and, therefore, should have better knowledge of the firearm's 
whereabouts and would be able to ``effectively report'' the theft or 
loss of the firearm.
    Two commenters made statements to the effect that ``[t]he updated 
regulations will help strengthen our nation['s] ability to track 
firearms that are lost or stolen while in transit'' and that a single 
method of reporting such thefts and losses to ATF and local authorities 
should be adopted. Although those two commenters supported notification 
of theft or loss by the transferring/sending

[[Page 1314]]

FFL, they suggested that the requirement to inform local law 
enforcement of shipping losses or suspected thefts should be eliminated 
because many local authorities often refuse to take the report. They 
also suggested that the requirement to make a report to local 
authorities should be clarified because, as one commenter put it, 
currently the regulation is ``particularly vague about who exactly the 
appropriate local authorities would be. If a firearm is being shipped 
from Philadelphia to Orlando and it gets lost in Atlanta[,] who are the 
proper local authorities to contact?'' Another commenter suggested that 
reporting to local authorities could be simplified by updating Form 
3310.11 to be applicable for both ATF and local authorities.
    Several commenters who opposed the proposed rule did so based on 
the claim that, once a firearm is logged out of the transferring/
sending FFL's A&D Record, it is no longer the responsibility of that 
FFL. One commenter asserted that the shipping companies instead have 
responsibility for the shipment and should therefore be required to 
report any in-transit thefts or losses.
    Three commenters had practical concerns about the transferor/sender 
licensee bearing the responsibility to report the theft or loss of a 
firearm in transit because, even though a transferor/sender might 
receive confirmation that the firearms were delivered, such 
confirmation might not reflect whether the full amount of firearms was 
received; that discrepancy might only become apparent once the 
recipient compares the shipping invoice to the specific firearms 
ordered. Those commenters stated that the transferee in such a 
situation would be in a better position to know and report whether a 
firearm was received. The commenters explained that the transferee 
would have more incentive to report a firearm shipment stolen or lost 
because businesses are not in the habit of paying for products they do 
not actually receive.
Department Response
    The reporting statute, 18 U.S.C. 923(g)(6), requires FFLs to report 
the theft or loss of firearms from their inventories or collections not 
only to the Attorney General (delegated to ATF) but also to ``the 
appropriate local authorities.'' Thus, as a statutory requirement, the 
report must be submitted to such local authorities even if it is 
refused. The Department believes that if the report is made to the 
local authorities with proper jurisdiction over the incident (i.e., the 
``appropriate'' authorities), the chance that the report would be 
refused is greatly reduced. More specifically, if the location of the 
loss or theft is known, the local law enforcement agency at that 
location would be the ``appropriate local authorit[y].'' Otherwise, the 
transferor/sender should report the theft or loss to the local law 
enforcement agency at the shipper's location--the same agency the FFL 
would contact in the event of any other missing or stolen property. Not 
only does the theft or loss report provide local law enforcement 
officers with the information necessary to commence an investigation to 
pursue the offenders and locate the property, such reporting may also 
assist the FFL in filing an insurance claim to recover the value of the 
firearms. Because the Department agrees with the commenters that 
clarification concerning local authority reporting would provide 
helpful guidance to licensees, the rule has been modified accordingly.
    The Department does not agree with one commenter's suggestion that 
common or contract carriers should be held legally responsible under 
this rule for reporting the theft or loss of firearms while in transit. 
The commenter who proposed that the reporting obligation lie with the 
carriers did not cite any statutory authority under which such a 
requirement could be imposed. Congress did not ignore the role of 
common or contract carriers in firearms transactions in the GCA. For 
example, it is unlawful for a common or contract carrier to transport 
or deliver any firearm shipment in violation of the GCA, or to deliver 
a firearm without obtaining written acknowledgment of receipt. See 18 
U.S.C. 922(f)(1)-(2). Yet Congress did not impose any express 
requirement on carriers to report the theft or loss of firearms they 
transport. If Congress had intended that the theft or loss of firearms 
in transit be reported by carriers, it likely would have drafted the 
law to state that requirement and specify the carriers' responsibility 
to file reports.
    Instead, the GCA's scheme relies on firearms dealers to control 
commerce in firearms and places the burden of reporting stolen and lost 
firearms on licensees. As we have explained, it is reasonable to 
interpret the phrase ``from the licensee's inventory'' to require 
transferor/sender licensees to report the thefts or losses of firearms 
they have placed in transit. In addition, the transferor/sender FFL is 
in the best position to verify the theft or loss by reviewing its 
records and the shipping information from the carrier that was 
utilized. The transferor/sender FFL may also discover that the 
discrepancy is due to a recordkeeping or other human error, or a theft 
or loss at the licensed premises, rather than a theft or loss in 
transit. To be sure, ATF has long encouraged carriers to file theft and 
loss reports and issued ATF Form 3310.6, Interstate Firearms Shipment 
Theft/Loss Report, to assist carriers in reporting. However, ATF 
considers such reporting merely voluntary, not clearly required by 
statute.
    Regarding the comment alleging that ATF made a conflicting 
statement to the press to the effect that this rulemaking would apply 
to ``the carriers'' rather than FFLs, ATF has not been able to locate 
any such statement. Both the 2000 and 2014 proposed rules consistently 
identified the transferor/sender licensee as the person who would be 
responsible for reporting thefts and losses of firearms in transit.

D. Burden on FFLs To Report and Update Records

Comments Received
    One commenter agreed with the basic process outlined in the 
proposed rule, but stated that the rule should clarify the type of 
shipping documents the transferring FFL must retain and for how long. 
Additionally, the commenter suggested that the proposed time frame for 
licensees to update their A&D Records to reflect a theft or loss--``7 
days following discovery of the theft or loss''--be extended to a 
longer term. The same commenter also recommended that disposition 
entries for shipped items not be entered into the A&D Record until the 
shipment has been received (by the transferee) or declared lost (by the 
carrier). The commenter asked for clarification on when the 
``discovery'' of the theft or loss occurs if the transferor/sender is 
waiting for proof of delivery to make a ``final disposition entry.'' 
The commenter further suggested that maintaining the complete 
electronic tracking record would be a good idea, but that the licensee 
should be able to dispose of the records a week after the carrier's 
tracking system (or the recipient's acknowledgment) indicates that the 
shipment has been received, because otherwise the paperwork could 
become burdensome.
    Another commenter argued that no signature should be required for a 
shipment and that the rule should not require proof of delivery to be 
retained. The commenter explained that ``[t]his burden should not fall 
on the shipping [FFL],'' because ``someone acting nefariously on the 
receiving end could refute any signature or proof of delivery very 
easily.''

[[Page 1315]]

    Another commenter opposed the rule on the basis that the 
transferor/sender cannot know that the firearm has been stolen or lost 
in transit until the intended recipient or the carrier notifies the 
transferor/sender, and the commenter did not know what would constitute 
notification. The same commenter further asserted that if FFLs are to 
timely report theft or loss of firearms in transit they must rely upon 
shipping companies to ``provide accurate information.''
    Two other commenters believed that imposing the burden on 
manufacturers--particularly those that ship thousands of firearms--to 
report the theft or loss of firearms no longer under the manufacturers' 
control would be unrealistic. As one commenter complained, ``The 
resulting logistical burden would be enormous, and require an estimated 
2-3 full time personnel to manually track, log and store documentation 
related to the hundreds or thousands of open orders on any given day.'' 
Another commenter projected that ATF's estimated time of 24 minutes to 
complete Form 3310.11 was too low.
Department Response
    In light of comments received, the Department has chosen not to 
implement a recordkeeping requirement related to shipment and delivery 
paperwork at this time. While the 2000 proposed rule would have 
required FFLs to establish commercial business practices to verify 
delivery, this final rule does not require licensees to track shipments 
or receive verification of receipt. There is only a reporting 
requirement once the transferor/sender FFL discovers that one or more 
firearms have been lost or stolen in transit. As stated previously, the 
FFL's discovery may come from contact with the intended recipient, the 
common or contract carrier, a witness, or some other person. In 
accordance with section 923(g)(6), licensees are required to report the 
theft or loss in transit to ATF and appropriate local authorities 
within 48 hours after discovery.\14\ The Department believes that, in 
many cases, transferor/sender FFLs are already reporting such thefts 
and losses to law enforcement authorities and insurance companies to 
recover the firearms and obtain compensation for their losses.
---------------------------------------------------------------------------

    \14\ For further guidance concerning the discovery and reporting 
of stolen and lost firearms, see ATF, Safety and Security 
Information for Federal Firearms Licensees, ATF Pub. No. 3317.2 
(rev. Feb. 2010), https://www.atf.gov/file/58656/download; Open 
Letter to All Federal Firearms Licensees from Carson W. Carroll, 
Assistant Director, Enforcement Programs & Services, ATF (Jan. 14, 
2009), https://www.atf.gov/file/60871/download.
---------------------------------------------------------------------------

    Licensees will have up to 7 days to reflect the theft or loss of 
the firearm with a correct disposition entry in the A&D Record. This is 
consistent with the longstanding firearms disposition reporting 
requirement for licensed dealers under 27 CFR 478.125(e). ATF 
understands that there will be instances in which licensees must make 
corrections to the existing disposition information in their A&D 
Records to reflect the theft or loss of firearms. In those instances, 
the FFL should draw a single line through the disposition information. 
If there is room in the disposition block, the FFL should record the 
date of the theft or loss, the ATF-Issued Incident Number, and the 
local authority Incident Number. The licensee should then initial and 
date the changes. Alternatively, if there is no room in the disposition 
block to legibly record the required information, the FFL should line-
out the disposition information and initial and date the change. The 
FFL should then make a new entry in the next available line in the 
current A&D Record. In that case, the FFL must enter a reference to the 
new book, page, and line number in the disposition side of the updated 
record, and use the new entry to record the date of the theft or loss, 
the ATF-Issued Incident Number, and the local authority Incident 
Number.
    Though the number of responding FFLs will grow due to the expansion 
of the reporting requirements, the estimate of 24 minutes' average 
completion time for Form 3310.11 will not increase. Form 3310.11 has 
been utilized since 1994 for the reporting of firearms thefts and 
losses and this rulemaking makes no significant changes to Form 3310.11 
that would lead to an increase in the time required to complete it.

E. Benefit to Law Enforcement

Comments Received
    One commenter supported the proposed rule because the rule ``would 
close a loophole in federal regulations that lets thousands of lost and 
stolen guns go unreported.'' The commenter believed that if FFLs were 
required to promptly report guns lost and stolen, illegal gun 
trafficking would be curtailed and guns would be kept out of the hands 
of dangerous criminals.
    Several commenters asserted that requiring the reporting of 
firearms stolen or lost in transit would not lead to any appreciable 
benefits. They questioned whether such reporting would make ATF or 
local police more successful in an investigation or in tracing 
firearms. They suggested that the costs of imposing the reporting 
requirement on licensees exceed any benefits to law enforcement.
Department Response
    The moment the theft of a firearm occurs, the firearm has been 
diverted to an illegal channel and is a threat to public safety. The 
knowledge that a particular firearm has been diverted is important to 
law enforcement at the local and Federal levels. A law enforcement 
agency cannot charge a suspect in possession of a firearm with a theft 
if there is no information that the firearm was stolen. An agency may 
not retain a firearm from a suspect if there is no information that the 
property was stolen. And an agency that has retained such a firearm 
cannot return the firearm to its rightful owner if there is no 
information about who the rightful owner might be. Without proper 
reporting of thefts, law enforcement may not be able link the person(s) 
who stole the firearm with the suspect who ultimately is found in 
possession of the firearm.
    In addition, even where a report is made to local law enforcement, 
in-transit shipments often result in interstate or cross-jurisdictional 
activities. Such activities are the purview of Federal law enforcement, 
which is designed to bridge jurisdictional gaps and provide assets not 
available to local law enforcement. ATF has found patterns in thefts in 
interstate shipments that can only be developed through the examination 
of aggregate data. This data often includes seemingly separate and 
unrelated individual incidents of theft over a period of time, which, 
when analyzed in the aggregate, reveal commonalities that allow ATF to 
dismantle larger criminal schemes. This process is highly dependent 
upon the collection of accurate interstate shipment theft information.
    In FY 2015, 313 firearms that interstate carriers had voluntarily 
reported as lost or stolen were recovered and traced by law enforcement 
agencies. In the past 5 years, 25 firearms that interstate carriers had 
voluntarily reported as lost or stolen were recovered and traced and 
the recovering agency reported that they were engaged in a homicide 
investigation involving the recovered firearm. Carriers voluntarily 
reported that information to ATF, and those numbers do not reflect the 
additional amount of firearms lost or stolen in transit that will be 
reported to ATF by FFLs pursuant to this rule. Such additional 
reporting will allow law enforcement to open more criminal

[[Page 1316]]

investigations to locate criminals, deter thefts, and promote better 
controls by carriers to prevent losses. This additional reporting 
should also result in the return of more lost or stolen firearms to 
their rightful owners.
    In addition to ensuring that thefts and losses of firearms are 
reported, the procedures outlined in this rule seek to eliminate 
redundancy in reporting. By designating the transferor/sender FFL as 
the required reporting party, confusion about who needs to report the 
incident will be reduced.

V. Final Rule

    This final rule adopts, with minor changes, the proposed amendment 
to 27 CFR 478.39a requiring the transferor/sender FFL to notify ATF and 
the appropriate local authorities when a firearm is stolen or lost in 
transit. For purposes of this final rule, the Department considers the 
U.S. Postal Service a ``common or contract carrier.'' Therefore, the 
regulatory text of the proposed Sec.  478.39a(a)(2) is amended to read 
as: ``common or contract carrier (which for purposes of this paragraph 
includes the U.S. Postal Service).''
    Upon the effective date of this final rule, transferor/sender 
licensees will be required to use Form 3310.11 to notify ATF of 
firearms stolen or lost in transit. For stolen or lost NFA firearms, 
submitting Form 3310.11 will satisfy the requirements of 27 CFR 478.39 
and 479.141. In addition, transferor/sender FFLs must reflect the theft 
or loss of a firearm in transit as a disposition entry in their 
required records not later than 7 days following discovery of the theft 
or loss. The rule also specifies that FFLs that report theft or loss of 
a firearm and later discover its whereabouts must advise ATF that the 
firearm has been located, and must re-enter the firearm into their 
required records as an acquisition or disposition entry as appropriate. 
These recordkeeping requirements apply whether the firearm is stolen or 
lost in transit between FFLs or between a licensee and a nonlicensee.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866 and Executive Order 13563--Regulatory Review

    This final rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), The Principles of Regulation, and in accordance with Executive 
Order 13563, ``Improving Regulation and Regulatory Review,'' section 
1(b).
    The Department of Justice has determined that this final rule is a 
``significant regulatory action'' under Executive Order 12866, section 
(f), and accordingly this final rule has been reviewed by the Office of 
Management and Budget. However, this final rule will not have an annual 
effect on the economy of $100 million or more; nor will it adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities. 
Accordingly, this final rule is not an ``economically significant'' 
rulemaking under Executive Order 12866.
    Executive Orders 12866 and 13563 both direct agencies to assess 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. The Department has assessed the costs and benefits of this 
final regulation and believes that the regulatory approach selected 
maximizes net benefits.
    Under 18 U.S.C. 923(g)(6) and its current implementing regulation, 
27 CFR 478.39a, each FFL must report the theft or loss of a firearm 
from the licensee's inventory or collection within 48 hours after the 
theft or loss is discovered. The licensee must report the theft or loss 
of a firearm to ATF and to the appropriate local authorities. Current 
regulations do not specify reporting and recordkeeping requirements for 
firearms lost or stolen while in transit. This final rule specifies 
that when a firearm is stolen or lost in transit, for reporting 
purposes it is considered stolen or lost from the transferor's/sender's 
inventory.
    The GCA and the current implementing regulations have long required 
that a licensee must report the theft or loss of a firearm. This final 
rule specifies that a transferor/sender licensee is required to submit 
the required report if a firearm is lost or stolen in transit on a 
common or contract carrier from that licensee to another person. This 
final rule retains most of the existing requirements under 27 CFR part 
478, subpart H, and the instructions for Form 3310.11 with respect to 
how FFLs are to record the theft or loss of firearms from their 
inventories in their A&D Records.
    The final rule will reduce the current reporting burden on 
licensees when the theft or loss involves a registered NFA firearm. 
Currently, as discussed in section I, a licensee must submit Form 
3310.11 to NTC to comply with 27 CFR 478.39a and, if the licensee is 
the person who lost the firearm, provide additional notification to the 
NFA Branch to comply with 27 CFR 479.141. Under this final rule, to 
meet the 27 CFR 478.39a requirements, a licensee must complete and 
submit Form 3310.11 to NTC. If the theft or loss involves a registered 
NFA firearm, NTC will notify the NFA Branch. This will satisfy the 27 
CFR 479.141 notification requirements; licensees will no longer have to 
submit additional notification about NFA firearms to ATF.
    Although there is no definite count of the total number of firearms 
that were lost or stolen in transit, ATF can provide an estimate based 
on tracing data. From FY 2010 through FY 2014, there was an average of 
1,333 crime gun traces per year where the firearm was traced back to an 
FFL that claimed it never received the firearm allegedly shipped to it, 
but no theft or loss was reported to ATF.\15\ ATF recognizes that this 
figure may include some firearms lost or stolen at licensed premises 
while not in transit (i.e., prior to or after shipment). However, 
because there are numerous firearms lost or stolen that have not been 
traced, the full count of firearms lost or stolen in transit that would 
be reported under this rule may be significantly higher. Although the 
number of unreported thefts or losses of firearms may be substantially 
greater than this estimate, any additional burden to report them should 
be minimal. At this time, the 1,333 figure reflects the best data 
available.
---------------------------------------------------------------------------

    \15\ In the 2014 NPRM, the Department relied on the crime gun 
trace average for FY 2008 through FY 2012. In this final rule, the 
Department has used the more recent average from FY 2010 through FY 
2014 because it believes that the updated figure more accurately 
reflects the actual benefits and costs of the final rule. The 
updated figure does not meaningfully change the Department's 
estimates of the rule's costs and benefits.
---------------------------------------------------------------------------

    Pursuant to the instructions on Form 3310.11, a separate form is 
required for each theft or loss. ATF estimates that it takes an FFL 24 
minutes to complete Form 3310.11; the postage cost to mail the form to 
NTC is 49 cents. If FFLs complete a separate Form 3310.11 for each of 
the average of 1,333 firearms that tracing data indicates are lost or 
stolen each year but are not currently being reported, ATF estimates 
the total burden hours to be 533 (1,333 x 24/60), and the current 
estimated cost to be $18,350. (Cost of completing the form = 24 minutes 
at $33.19 per hour x 1,333 = $17,697; Cost of mailing the form =

[[Page 1317]]

$.49 x 1,333 = $653.) ATF estimated the cost of the time to complete 
these tasks using employee compensation data for June 2015 as 
determined by the Bureau of Labor Statistics (BLS), U.S. Department of 
Labor. See News Release, U.S. Dep't of Labor, Bureau of Labor 
Statistics, Employer Costs for Employer Compensation (Sept. 9, 2015), 
https://www.bls.gov/news.release/archives/ecec_09092015.pdf.\16\ The BLS 
determined the hourly compensation (which includes wages, salaries, and 
benefits) for civilian workers to be $33.19.
---------------------------------------------------------------------------

    \16\ In the 2014 NPRM, the Department relied on BLS employee 
compensation data from December 2013. In this final rule, the 
Department has used the more recent BLS data from June 2015 because 
it believes that the more recent data more accurately reflects the 
actual benefits and costs of the final rule. The more recent BLS 
data does not meaningfully change the Department's estimates of the 
rule's costs and benefits.
---------------------------------------------------------------------------

    The instructions on Form 3310.11 also provide that FFLs must report 
firearms thefts or losses by telephone to ATF. ATF estimates that it 
takes an FFL 24 minutes to call and provide the requisite information 
to ATF. If an FFL called ATF for each of the average of 1,333 firearms 
that tracing data indicates are lost or stolen each year but are not 
currently being reported, ATF estimates the total burden hours to be 
533 (1,333 x 24/60), and the current estimated cost is $17,697 (24 
minutes at $33.19 per hour x 1,333).
    Therefore, the combined total estimated burden hours for submitting 
Form 3310.11 and calling ATF are 1,066 (533 + 533). The combined total 
estimated cost of fulfilling those same two requirements is $36,047 
($18,350 + $17,697).
    Alternatives, such as the UCC variable approach discussed in 
section III of the SUPPLEMENTARY INFORMATION in the 2014 NPRM, are more 
burdensome for FFLs than the approach taken in this final rule. This is 
because, under the UCC variable approach, FFLs would need to examine 
the terms of the individual contracts to determine how the contract 
allocates the risk of loss as between the two parties. In contrast, the 
final rule provides a simple, consistent rule so that there is no basis 
for uncertainty or need for additional review: the final rule assigns 
the theft or loss reporting requirement to the transferor/sender FFL.
    In addition, this final rule will alleviate reporting burdens on 
licensees in that licensees will need only report the theft or loss of 
a registered NFA firearm once to ATF instead of reporting the incident 
separately to NTC and the NFA Branch. As the licensee is providing much 
of the same information under both reporting requirements, ATF 
estimates that it takes the same amount of time and cost for postage, 
and ATF uses the same hourly compensation as listed above (i.e., 24 
minutes for time, 49 cents for postage, and $33.19 for hourly 
compensation). Currently, the NFA Branch receives notification of the 
theft or loss of a registered NFA firearm from approximately 60 
licensees annually. ATF estimates the total burden hours to be 24 (60 x 
24/60) and the total cost to be $826. (Cost of submitting the 
notification = 24 minutes at $33.19 per hour x 60 = $797; cost of 
mailing the notification = $.49 x 60 = $29.) Therefore, ATF estimates 
the savings to be these amounts.

B. Executive Order 13132

    This final rule will not have substantial direct effects on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, ``Federalism,'' the Attorney General has 
determined that this final rule does not have sufficient federalism 
implications to warrant the preparation of a federalism summary impact 
statement.

C. Executive Order 12988

    This final rule meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice 
Reform.''

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires an agency to conduct a 
regulatory flexibility analysis of any rule subject to notice and 
comment rulemaking requirements unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. See 5 U.S.C. 605(b). Small entities include 
small businesses, small not-for-profit enterprises, and small 
governmental jurisdictions. The Attorney General has reviewed this 
final rule and, by approving it, certifies that this final rule will 
not have a significant economic impact on a substantial number of small 
entities.
    Under section 18 U.S.C. 923(g)(6) and its implementing regulation, 
27 CFR 478.39a, each FFL must report the theft or loss of a firearm 
from the licensee's inventory or collection within 48 hours after the 
theft or loss is discovered. The licensee must report the theft or loss 
of a firearm to ATF and to the appropriate local authorities. This 
final rule clarifies that when a firearm is stolen or lost in transit, 
for reporting purposes, it is considered stolen or lost from the 
transferor/sender FFL's inventory.
    As discussed in section I of this preamble, the current regulation 
requires that an FFL report thefts or losses telephonically to ATF and 
complete and submit to NTC a separate Form 3310.11 for each theft or 
loss. ATF estimates the time to complete the form as 24 minutes, the 
time for the telephone call as 24 minutes, and the postage cost as 49 
cents. If an FFL called ATF to report the theft or loss and completed a 
separate Form 3310.11 for each of the average of 1,333 firearms that 
tracing data indicates are lost or stolen each year but are not 
currently being reported, ATF estimates the total cost of completing 
and mailing the form and calling ATF to be $36,047. See section VI.A. 
for a full discussion of these costs. Therefore, this final rule will 
not impose a significant impact on a substantial number of small 
entities.

E. Small Business Regulatory Enforcement Fairness Act of 1996

    This final rule is not a major rule as defined by section 251 of 
the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 804. This final rule will not result in an annual effect on the 
economy of $100 million or more; a major increase in costs or prices; 
or significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign based enterprises in domestic and 
export markets.

F. Unfunded Mandates Reform Act of 1995

    This final rule will not result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector of 
$100 million or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995. See 2 U.S.C. 1532(a), 1533(a).

G. Paperwork Reduction Act

    This final rule revises an existing reporting and recordkeeping 
requirement under the Paperwork Reduction Act. It also eliminates an 
existing reporting requirement. The current regulation at 27 CFR 
478.39a provides that each FFL must report the theft or loss of a 
firearm from the licensee's inventory or collection within 48 hours 
after the theft or loss is discovered. Licensees must report such

[[Page 1318]]

thefts and losses to ATF both telephonically and by submitting Form 
3310.11. Licensees must also report the theft or loss to the 
appropriate local authorities.
    Pursuant to 27 CFR 479.141 and according to the instructions on 
Form 3310.11, licensees reporting the theft or loss of registered NFA 
firearms must provide additional notification to ATF. As discussed in 
section I, no form exists for this purpose, and the person reporting 
typically submits a letter with the required information to the NFA 
Branch. As part of this rulemaking, Form 3310.11, approved under OMB 
control number 1140-0039, will capture the information required by 27 
CFR 479.141. Therefore, under this final rule, a licensee will satisfy 
its obligation to provide the required notification to the NFA Branch 
by submitting Form 3310.11 to NTC, and NTC will notify the NFA Branch. 
Submitting Form 3310.11 will satisfy the requirements of both 27 CFR 
478.39a and 27 CFR 479.141 with one notification.
    In addition, the instructions on Form 3310.11 state that a licensee 
must reflect the theft or loss of a firearm as a disposition entry in 
the A&D Record required by subpart H of part 478 (formerly 178). These 
instructions further state that the disposition entry should indicate 
whether the incident is a theft or loss and include the ATF-Issued 
Incident Number and the Incident Number provided by the local law 
enforcement agency. Finally, the instructions state that if the 
firearms are located, they should be re-entered in the A&D Record as 
acquisition entries. The final rule adds both sets of these 
instructions to the regulatory text in 27 CFR 478.39a with 
modifications. See section V for full discussion of these revisions.
    The information collection required by 27 CFR 478.39a--i.e., the 
submission of Form 3310.11--has been approved by the Office of 
Management and Budget under control number 1140-0039. This final rule 
specifies that when a firearm is stolen or lost in transit, for 
reporting purposes, it is considered stolen or lost from the 
transferor's/sender's inventory.

Drafting Information

    The author of this document is Denise Brown, Office of Regulatory 
Affairs, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, 
Firearms, and Explosives.

List of Subjects in 27 CFR Part 478

    Administrative practice and procedure, Arms and munitions, Customs 
duties and inspection, Exports, Imports, Intergovernmental relations, 
Law enforcement officers, Military personnel, Penalties, Reporting and 
recordkeeping requirements, Research, Seizures and forfeitures, 
Transportation.

Authority and Issuance

    Accordingly, for the reasons discussed in the preamble, 27 CFR part 
478 is amended as follows:

PART 478--COMMERCE IN FIREARMS AND AMMUNITION

0
1. The authority citation for 27 CFR part 478 is revised to read as 
follows:

    Authority:  5 U.S.C. 552(a); 18 U.S.C. 921-931; 44 U.S.C. 
3504(h).


0
2. Revise Sec.  478.39a to read as follows:


Sec.  478.39a  Reporting theft or loss of firearms.

    (a)(1) Each licensee shall report the theft or loss of a firearm 
from the licensee's inventory (including any firearm which has been 
transferred from the licensee's inventory to a personal collection and 
held as a personal firearm for at least 1 year), or from the collection 
of a licensed collector, within 48 hours after the theft or loss is 
discovered.
    (2) When a firearm is stolen or lost in transit on a common or 
contract carrier (which for purposes of this paragraph includes the 
U.S. Postal Service), it is considered stolen or lost from the 
transferor/sender licensee's inventory for reporting purposes. 
Therefore, the transferor/sender of the stolen or lost firearm shall 
report the theft or loss of the firearm within 48 hours after the 
transferor/sender discovers the theft or loss.
    (b) Each licensee shall report the theft or loss by telephoning ATF 
at 1-888-930-9275 (nationwide toll-free number), and by preparing and 
submitting to ATF a Federal Firearms Licensee Theft/Loss Report, ATF 
Form 3310.11, in accordance with the instructions on the form. The 
original of the report shall be retained by the licensee as part of the 
licensee's required records.
    (c) When a licensee submits to ATF a Federal Firearms Licensee 
Theft/Loss Report, ATF Form 3310.11, for the theft or loss of a firearm 
registered under the National Firearms Act, this report also satisfies 
the notification requirement under Sec.  479.141 of this chapter.
    (d) Theft or loss of any firearm shall also be reported to the 
appropriate local authorities. If the location of the theft or loss is 
known, the local law enforcement agency at that location would be the 
appropriate local authority. Otherwise, the report should be made to 
the local law enforcement authorities at the licensee's location or 
business premises.
    (e) Licensees shall reflect the theft or loss of a firearm as a 
disposition entry in the Record of Acquisition and Disposition required 
by subpart H of this part not later than 7 days following discovery of 
the theft or loss. The disposition entry shall record whether the 
incident is a theft or loss, the ATF-Issued Incident Number, and the 
Incident Number provided by the local law enforcement agency.
    (f) Licensees who report the theft or loss of a firearm and later 
discover its whereabouts shall advise ATF at 1-888-930-9275 (nationwide 
toll-free number) that the firearm has been located, and shall re-enter 
the firearm in the Record of Acquisition and Disposition as an 
acquisition or disposition entry as appropriate.

    Dated: January 4, 2016.
Loretta E. Lynch,
Attorney General.
[FR Doc. 2016-00112 Filed 1-11-16; 8:45 am]
BILLING CODE 4410-FY-P