Federal Firearms License Proceedings-Hearings, 32230-32235 [2016-12100]

Agencies

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

[Federal Register Volume 81, Number 99 (Monday, May 23, 2016)]
[Rules and Regulations]
[Pages 32230-32235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12100]


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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 478

[Docket No. ATF 2008R-15P; AG Order No. 3670-2016]
RIN 1140-AA38


Federal Firearms License Proceedings--Hearings

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) regarding 
administrative hearings held as part of firearms license proceedings. 
This rule clarifies that persons requesting a hearing will be afforded 
the opportunity to submit facts and arguments for review and 
consideration during the hearing, and may make offers of settlement 
before or after the hearing. The regulations are intended to ensure 
that Federal firearms licensees and persons applying for a Federal 
firearms license are familiar with the hearing process relative to the 
denial, suspension, or revocation of a firearms license, or imposition 
of a civil fine.

DATES: This rule is effective July 22, 2016.

FOR FURTHER INFORMATION CONTACT: Shermaine Kenner, Office of Regulatory 
Affairs, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, 
Firearms, and Explosives, U.S. Department of Justice, 99 New York 
Avenue NE., Washington, DC 20226; telephone: (202) 648-7070.

SUPPLEMENTARY INFORMATION:

[[Page 32231]]

I. Background

    The Attorney General is responsible for enforcing the Gun Control 
Act of 1968 (the Act), 18 U.S.C. Chapter 44. She has delegated that 
responsibility to the Director of ATF (Director), subject to the 
direction of the Attorney General and the Deputy Attorney General. 28 
CFR 0.130(a). ATF has promulgated regulations that implement the Act in 
27 CFR part 478.
    The regulations in subpart E of part 478, Sec. Sec.  478.71-478.78, 
relate to proceedings involving Federal firearms licenses, including 
the denial, suspension, or revocation of a license, or the imposition 
of a civil fine. In particular, Sec.  478.71 provides that the Director 
may issue a notice of denial, ATF Form 4498, to an applicant for a 
license if he has reason to believe that the applicant is not 
qualified, under the provisions of Sec.  478.47, to receive a license. 
The notice sets forth the matters of fact and law relied upon in 
determining that the application should be denied, and affords the 
applicant 15 days from the date of receipt of the notice in which to 
request a hearing to review the denial. If a request for a hearing is 
not filed within such time, the application is disapproved and a copy, 
so marked, is returned to the applicant.
    Under Sec.  478.72, an applicant who has been denied an original or 
renewal license may file a request with the Director of Industry 
Operations for a hearing to review the denial of the application. On 
conclusion of the hearing and after consideration of all relevant facts 
and circumstances presented by the applicant or his representative, the 
Director renders a decision confirming or reversing the denial of the 
application. If the decision is that the denial should stand, a 
certified copy of the Director's findings and conclusions is furnished 
to the applicant with a final notice of denial, ATF Form 5300.13.\1\ In 
addition, a copy of the application, marked ``Disapproved,'' is 
returned to the applicant. If the decision is that the license applied 
for should be issued, the applicant is so notified, in writing, and the 
license is issued.
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    \1\ ATF Form 5300.13 was previously referred to as ATF Form 
4501.
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    Section 478.73 provides that whenever the Director has reason to 
believe that a firearms licensee has willfully violated any provision 
of the Act or part 478, a notice of revocation of the license, ATF Form 
4500, may be issued. In addition, a notice of revocation, suspension, 
or imposition of a civil fine may be issued on ATF Form 4500 whenever 
the Director has reason to believe that a licensee has knowingly 
transferred a firearm to an unlicensed person and knowingly failed to 
comply with the requirements of 18 U.S.C. 922(t)(1) (relating to a 
National Instant Criminal Background Check System (NICS) background 
check) with respect to the transfer and, at the time that the 
transferee most recently proposed the transfer, the NICS was operating 
and information was available to the system demonstrating that the 
transferee's receipt of a firearm would violate 18 U.S.C. 922(g) or 
922(n) or State law. Additionally a notice of suspension or revocation 
of a license, or the imposition of a civil penalty, may be issued 
whenever the Director has reason to believe that a licensee has 
violated Sec.  922(z)(1) by selling, delivering, or transferring any 
handgun to any person other than a licensee unless the transferee was 
provided with a secure gun storage or safety device for that handgun.
    As specified in 27 CFR 478.74, a licensee who has received a notice 
of license suspension or revocation of a license, or imposition of a 
civil fine, may, within 15 days of receipt, file a request for a 
hearing with the Director of Industry Operations. On conclusion of the 
hearing and after consideration of all the relevant presentations made 
at the hearing, the Director renders a decision and prepares a brief 
summary of the findings and conclusions on which the decision is based. 
If the decision is that the license should be revoked or, in actions 
under 18 U.S.C. 922(t)(5) or 924(p)(1), that the license should be 
revoked or suspended, or that a civil fine should be imposed, a 
certified copy of the summary is furnished to the licensee with the 
final notice of revocation, suspension, or imposition of a civil fine 
on ATF Form 5300.13. If the decision is that the license should not be 
revoked, or in actions under Sec. Sec.  922(t)(5) or 924(p)(1), that 
the license should not be revoked or suspended, and a civil fine should 
not be imposed, the licensee is notified in writing.
    Under 27 CFR 478.76, a firearms licensee or an applicant for a 
firearms license may be represented at a hearing by an attorney, 
certified public accountant, or other person recognized to practice 
before ATF, provided certain requirements are met. The Director may be 
represented in hearing proceedings by an authorized attorney in the 
Office of Chief Counsel. Pursuant to Sec.  478.77, hearings concerning 
license denials, suspensions, or revocations, or the imposition of a 
civil fine, must be held in a location convenient to the aggrieved 
party.
    In addition, ATF has published in the Federal Register its 
procedures regarding administrative hearings held as part of firearms 
license proceedings. See ATF 36N, 75 FR 48362, Aug. 10, 2010.

II. Proposed Rule--Clarification of Hearing Proceedings

    On February 3, 2012, ATF published in the Federal Register a notice 
of proposed rulemaking (NPRM) amending the regulations in subpart E of 
part 478, sections 478.71-478.78 (Notice No. 32P, 77 FR 5460). The 
proposed regulations were intended to ensure that Federal firearms 
licensees and applicants for a Federal firearms license are familiar 
with the hearing process relative to the denial, suspension, or 
revocation of a firearms license, or imposition of a civil fine.
    Specifically, the NPRM proposed to add language stating that a 
hearing would be informal and that a licensee or applicant would have 
the opportunity to submit facts, arguments, offers of settlement, or 
proposals of adjustment for review and consideration as part of the 
hearing process. While the opportunity for a licensee or applicant to 
submit additional material for review and consideration has always been 
afforded to such parties since the enactment of the Act, this 
clarification of the regulations was intended to ensure that all 
parties involved in firearms license administrative hearings are fully 
aware of these opportunities.
    The comment period for Notice No. 32P closed on May 3, 2012.

III. Summary of Comments

    All public comments were considered in preparing this final rule. 
In response to Notice No. 32P, ATF received ten comments. Five of the 
commenters agreed with the proposed rule. Commenters who agreed with 
the proposed rule primarily did so because they believed that 
implementation of the rule would clarify the opportunities available to 
an applicant or licensee requesting a hearing in response to a notice 
of the denial, revocation, or suspension of a firearms license, or 
imposition of a civil fine. Commenters who disagreed with the proposed 
rule did so for a variety of reasons, with the most common objection 
relating to the proposed addition of the term ``informal'' as applied 
to firearms license administrative hearings.

[[Page 32232]]

General Comments on the Proposed Rule

    One commenter stated that the proposed rule should better clarify 
what conduct can lead to a revocation, denial, or suspension of a 
Federal firearms license so that a person applying for a license can be 
on notice of the possibilities before taking the steps to get the 
license. Existing regulations in part 478, however, already specify 
which actions and violations by a licensee or applicant may lead to a 
license denial, revocation, or suspension, or imposition of a civil 
fine. Therefore, clarification of this matter is not needed.
    One commenter stated, ``[i]n order to ensure that Federal firearms 
licensees and applicants for a Federal firearms license are familiar 
with the hearing process relative to the denial, suspension, or 
revocation of a firearms license, or imposition of a civil fine, the 
information regarding the process and procedures for the denial hearing 
should be included in the Director of Industry Operation's report that 
is sent to the applicant or licensee.'' ATF already follows this 
practice: The notice of denial, revocation, suspension, or imposition 
of a civil fine includes information concerning specific procedures on 
how to request a hearing, a citation to the applicable regulations, and 
a pamphlet on the hearing process. In addition, information regarding 
the hearing process as well as what is required from an applicant or 
licensee can be found in Sec. Sec.  478.72 and 478.74, and the hearing 
procedures were published by ATF in the Federal Register on August 10, 
2010 (ATF 36N, 75 FR 48362). Accordingly, there is no need to change 
the language of this regulation to address the commenter's concern.
    One commenter argued that this proposed rule will likely cause 
crime to rise by making it more difficult for law-abiding citizens to 
have access to firearms. The same commenter stated that penalties for 
violations where the Director has reason to believe that a licensee has 
knowingly transferred a firearm to an unlicensed person and knowingly 
failed to comply with the requirements of 18 U.S.C. 922(t)(l) should be 
strengthened. Regarding the commenter's first assertion, this rule will 
not have any negative effect on the ability of law-abiding citizens to 
acquire firearms. If anything, this rule will benefit licensees or 
applicants requesting hearings by informing them of their option to 
submit material that may mitigate or reverse ATF's decision to revoke, 
suspend, or deny an application for a Federal firearms license. 
Concerning the commenter's second assertion, strengthening the 
penalties in Sec.  922(t)(5) for violations of Sec.  922(t)(1) is a 
matter for Congress, and cannot be addressed by ATF in this rulemaking. 
The Department notes that the amounts of civil fines and civil 
penalties as set forth in various Federal statutes are subject to being 
increased, by regulation, to account for inflation, pursuant to the 
Federal Civil Penalties Inflation Adjustment Act of 1990, codified as 
amended at 28 U.S.C. 2461 note. That is a matter to be addressed in a 
separate rulemaking.
    Two commenters expressed concern that the 15-day period in which to 
file the request for an administrative hearing under 27 CFR 478.72 to 
review the denial of a license, or under Sec.  478.74 to review the 
revocation or suspension of a license, or the imposition of a civil 
fine, is too short. One commenter suggested the response period should 
be extended to one month from the date the applicant or licensee 
receives a notice of the denial, revocation, or suspension of a Federal 
firearms license, or imposition of a civil fine. The second commenter 
suggested the response period should be extended to 45 days from 
receipt of such notice. Both commenters argued the additional time 
would provide licensees and applicants with a more reasonable amount of 
time to respond to the notice. ATF is unaware of any evidence 
demonstrating that the 15-day period, which has been in place for many 
years, is not ample time to request a hearing.\2\ Moreover, if 
sufficient good cause is shown, the Director of Industry Operations may 
extend the time limit in individual cases pursuant to 27 CFR 478.22(a). 
Furthermore, the NPRM did not propose to change the 15-day period and 
the Department does not believe a change in the time period is 
necessary. However, the issue of notice as it pertains to firearms 
license administrative hearings may be addressed in a separate 
rulemaking, if necessary.
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    \2\ The notice does not require that an applicant or licensee 
submit supporting facts, arguments, or evidence along with the 
request for a hearing within the 15-day period. Instead, the hearing 
notice merely requires a response from the applicant or licensee 
stating the request for an administrative hearing.
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    One commenter who supported the proposed rule suggested that ATF 
create a ``database that ensures those who get licenses also have a 
photo that attaches the license and the serial number of that firearm 
together.'' Although novel, this suggestion is not responsive to this 
rulemaking's request for comments regarding administrative hearings for 
Federal firearms licensees.
    One commenter provided four comments regarding the implementation 
of the proposed rule. First, the commenter argued that the current 
``informal'' hearing is only as informal as it suits ATF Counsel. 
Second, the commenter argued, ``ATF Executives previously attempted at 
least the appearance of fairness in its administrative licensing 
proceedings by promulgating and adopting guidelines--known as the 
Administrative Action Order (`AAO')--which required uniformity in the 
handling and outcomes of ATF administrative matters, yet the AAO is 
ignored by ATF Counsel.'' Third, the commenter argued, ``[t]he false 
confidence generated by a system that `stacks the deck' for one-sided 
adjudication in ATF's favor fosters unnecessary hostility with the 
industry, while obstructing bona fide ATF decision-makers from 
entertaining or implementing common sense solutions.'' Finally, the 
commenter argued, ``[n]on-communication among ATF personnel in key 
positions manifests itself in situations that compromise the entire 
bureau's integrity and reputation, not just the integrity and 
reputations of individual or isolated actors, and alienates the 
regulated environment.''
    The issues presented by the commenter, while substantive and 
related to the firearms license administrative hearings process, 
generally address a separate issue of how cases are adjudicated. First, 
as will be discussed further below, the Department has decided to 
remove the word ``informal'' from the regulatory text of the final 
rule. Second, ATF procedures are implemented to provide fairness and 
uniformity to all participants. Furthermore, as noted above, ATF 
provides a pamphlet on the hearing process with each notice, and has 
published a public notice of Hearing Procedures Relating to Federal 
Firearms Licensees, 75 FR 48362, to provide guidance on the process. 
Third, the regulations do not prevent common-sense solutions, but 
instead permit parties to make offers of settlement for review and 
consideration before or after the hearing. The final rule clarifies 
that offers of settlement will not be entertained at the hearing 
because the hearing is not a settlement conference but an opportunity 
to establish the factual record. Fourth, communication between ATF 
personnel is an integral part of this process, and ATF disagrees with 
the commenter's assertion that ATF personnel do not communicate with 
one another.

[[Page 32233]]

    One commenter suggested further amendments to the proposed rule by 
adding and emphasizing the word ``informal'' in additional sections not 
amended in the proposed rule, including the second sentence in 27 CFR 
478.71 and the section title of Sec.  478.72. As will be discussed 
further below, however, the Department has decided to remove the word 
``informal'' from the regulatory text of the final rule.

Comments on Specific Sections of the Proposed Rule

    Several comments sought additional clarification of or suggested 
substantive changes to the proposed rule. Four commenters expressed 
concern that the use of the term ``informal'' as applied to firearms 
administrative license proceedings required further clarification. 
Additionally, one commenter argued that the proposed rule would be 
contrary to the requirements of the Administrative Procedure Act (APA).
Informal Hearings
    As discussed in Section II of this preamble, the NPRM included 
language proposing to amend the regulations in subpart E of part 478 to 
clarify that firearms license administrative hearings are informal in 
nature and that adherence to civil court rules and procedures is 
consequently not required. See 77 FR at 5461. Some of the commenters 
expressed concern over the use of the term ``informal,'' arguing that 
it needed further clarification. Some of these commenters asked 
specifically what rules and procedures would be used in ``informal'' 
hearings, as well as whether and how ``informal'' proceedings would be 
recorded.
    One commenter expressed support for the rule, but expressed the 
following concerns about the clarity of the term ``informal'':

    This notice states that the hearings are to be informal in 
nature, however further clarification is needed here I believe. How 
informal exactly? Will there be a record of the proceedings in the 
event that the decision is appealed and how would that be handled? 
If adherence to civil court rules and procedure is not required, 
then what type of rules and procedure will be required and 
implemented? I think there needs to be a little more detailed 
description of what type of process the person who requests a 
hearing will go through when the person is submitting their facts 
and arguments.

Additionally, one commenter who opposed the rule argued, ``[t]o suggest 
that an ATF administrative hearing--as currently constituted--is 
`informal' in any way is an unfettered mischaracterization.''
    As the NPRM explained, the proposed rule would not change any of 
the procedures or rules that govern the administrative hearings 
provided for in Sec. Sec.  478.72 and 478.74, but would merely clarify 
for the benefit of the licensee or applicant the opportunities afforded 
to the individual requesting such a hearing. In addition, ATF's 
published explanation of its hearing procedures already states that 
``[h]earing procedures in firearms licensing matters are informal in 
nature.'' 75 FR at 48363. Nonetheless, it is clear from the response of 
commenters both supporting and opposing the rule that the proposal to 
characterize firearms administrative hearings as ``informal'' in this 
rule would not provide additional clarification to a licensee or 
applicant seeking such a hearing, as was the original intent of the 
proposed rule.
    As a result of these comments, and in light of the intent to 
clarify as expressed in the proposed rule, the Department is modifying 
the final rule so that it will no longer insert the phrase ``the 
hearing shall be informal'' into the regulatory text. So modified, the 
final rule will inform the licensee or applicant of the option to 
submit supporting material for consideration during a requested 
firearms license administrative hearing without stating or implying 
that the nature of those hearings will otherwise change.
The Administrative Procedure Act
    One commenter argued that the inclusion of the term ``informal'' in 
the proposed rule is directly contrary to what Congress intended for 
license hearings under 18 U.S.C. 923(f)(2), and that Congress intended 
all firearms license proceedings to be subject to the formal 
adjudication requirements of the APA. The commenter concluded, ``[t]he 
Administrative Procedure Act [under 5 U.S.C. 556(d)] requires that the 
hearings be formal proceedings where the agency has the burden of 
proof, where the evidence offered must be reliable, probative, and 
substantial, and where the applicant may present evidence and conduct 
cross-examination of the agency's witnesses.''
    Although the provisions of the APA generally apply to firearms 
license administrative hearings, ATF disagrees with the conclusion that 
the APA's formal adjudication provisions are applicable to firearms 
license administrative proceedings. Under 5 U.S.C. 554(a), the formal 
adjudication provisions of the APA (sections 554, 556, and 557) apply 
``in every case of an adjudication required by statute to be determined 
on the record after opportunity for an agency hearing.'' 5 U.S.C. 
554(a). In order to trigger this requirement, courts have held, a 
statute generally must state that an agency shall provide a ``hearing 
on the record,'' rather than just a ``hearing.'' R.R. Comm'n of Tex. v. 
United States, 765 F.2d 221, 227 (D.C. Cir. 1985). Moreover, the APA's 
formal adjudication provisions do not apply ``to the extent that there 
is involved . . . a matter subject to a subsequent trial of the law and 
the facts de novo in a court.'' 5 U.S.C. 554(a)(1).
    The Act does not trigger the formal adjudication provisions of the 
APA with respect to firearms hearings. The pertinent provisions of the 
Act require the Attorney General to hold ``a hearing,'' not a hearing 
``on the record,'' in connection with the denial, revocation, or 
suspension of a license, or imposition of a civil fine. See 18 U.S.C. 
922(t)(5), 923(f)(2), 924(p)(1). Moreover, 18 U.S.C. 923(f)(3) permits 
an aggrieved party to, at any time within sixty days after the date 
notice of a decision is given, ``file a petition with the United States 
district court for the district in which he resides or has his 
principal place of business for a de novo judicial review of [a 
license] denial or revocation.'' See also 27 CFR 478.78 (authorizing a 
dissatisfied applicant or licensee to ``file a petition for judicial 
review . . . with the U.S. district court for the district in which the 
applicant or licensee resides or has his principal place of 
business''). Accordingly, the APA's formal adjudication procedures do 
not apply to ATF hearings conducted pursuant to 27 CFR 478.72 and 
478.74. See Shaffer v. Holder, No. 1:09-0030, 2010 U.S. Dist. LEXIS 
31415, at *10, 2010 WL 1408829, at *14 (M.D. Tenn. Mar. 30, 2010).
    The commenter also cites APA procedural requirements contained in 5 
U.S.C. 556. However, section 556(a) provides as follows: ``This section 
applies, according to the provisions thereof, to hearings required by 
section 553 or 554 of this title to be conducted in accordance with 
this section.'' Sections 553 or 554 state that the procedural 
requirements of section 556 apply to rules and adjudications that are 
``required by statute to be made [or determined] on the record after 
opportunity for an agency hearing.'' As discussed above, the Act does 
not require firearms licensing hearings to be conducted ``on the 
record.''

IV. Final Rule

    For the reasons discussed above, this final rule has been revised 
from the proposed rule to omit any references that characterize 
hearings concerning the denial, suspension, or revocation of

[[Page 32234]]

a firearms license, or imposition of a civil fine, as ``informal.'' In 
addition, the Department is removing the term ``or proposals of 
adjustment'' in the final rule. The term ``proposals of adjustment'' is 
redundant when used with ``offers of settlement'' and is therefore 
unnecessary. The final rule will also clarify that during the hearing 
the applicant or licensee will have the opportunity to submit facts and 
arguments for review and consideration. Offers of settlement may be 
made before or after the hearing, but will not be entertained at the 
hearing, as the purpose of the hearing is to establish a factual 
record.
    The Department has also revised sections 478.73 and 478.74 to 
clarify that those sections apply to actions to revoke or suspend a 
license, or impose a civil fine, under 18 U.S.C. 924(p). This is a 
technical change that merely reiterates the requirements of the 
statute, see 18 U.S.C. 924(p)(1)(A) (stating that applicants are 
entitled to ``notice and opportunity for hearing'' in such actions), 
and codifies ATF's prior interpretation of sections 478.73 and 478.74, 
see 75 FR at 48362-63.

Statutory and Executive Order Reviews

A. Executive Order 12866 and 13563

    This rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), Principles of Regulation, and in accordance with Executive Order 
13563, ``Improving Regulation and Regulatory Review,'' section 1, 
General Principles of Regulation, and section 6, Retrospective Analyses 
of Existing Rules.
    Further, both Executive Orders 12866 and 13563 direct agencies to 
assess all 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 regulation and believes that the regulatory approach 
selected maximizes net benefits.
    This 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. Similarly, it does not create a serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency, materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof, or raise novel legal or policy issues arising out 
of legal mandates, the President's priorities, or the principles set 
forth in Executive Order 12866. Accordingly, this proposed rule is not 
a ``significant regulatory action'' as defined by Executive Order 
12866.
    Section 6 of Executive Order 13563 directs agencies to develop a 
plan to review existing significant rules that may be ``outmoded, 
ineffective, insufficient, or excessively burdensome,'' and to make 
appropriate changes where warranted. The Department selected and 
reviewed this rule under the criteria set forth in its Plan for 
Retrospective Analysis of Existing Rules, and determined that this 
final rule merely clarifies that an applicant or licensee requesting an 
administrative hearing as a result of the denial, suspension, or 
revocation of a firearms license, or the imposition of a civil fine, 
will have the opportunity for the submission and consideration of facts 
and arguments for review and consideration by the Director, and to make 
offers of settlement before or after a hearing.

B. Executive Order 13132

    This regulation 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 regulation does not have sufficient Federalism 
implications to warrant the preparation of a Federalism summary impact 
statement.

C. Executive Order 12988

    This regulation 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 (5 U.S.C. 605(b)) 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. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. The Attorney General has reviewed this rule and, by 
approving it, certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. The 
amendments merely clarify that an applicant or licensee requesting an 
administrative hearing as a result of the denial, suspension, or 
revocation of a firearms license, or the imposition of a civil fine, 
will have the opportunity for the submission and consideration of facts 
and arguments for review and consideration by the Director, and to make 
offers of settlement before or after a hearing.

E. Small Business Regulatory Enforcement Fairness Act of 1996

    This 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 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 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.

G. Paperwork Reduction Act

    This final rule does not impose any new reporting or recordkeeping 
requirements under the Paperwork Reduction Act.

Disclosure

    Copies of the NPRM, all comments received in response to the NPRM, 
and this final rule will be available for public inspection by 
appointment during normal business hours at: ATF Reading Room, Room 1E-
062, 99 New York Avenue NE., Washington, DC 20226; telephone: (202) 
648-8740.

Drafting Information

    The author of this document is Shermaine Kenner, Office of 
Regulatory

[[Page 32235]]

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, and 
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 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a); 18 U.S.C. 847, 921-930; 44 U.S.C. 
3504(h).


0
2. In Sec.  478.72, add a new fifth sentence to read as follows:


Sec.  478.72  Hearing after application denial.

    * * * During the hearing the applicant will have the opportunity to 
submit facts and arguments for review and consideration; offers of 
settlement will not be entertained at the hearing but may be made 
before or after the hearing. * * *

0
3. In Sec.  478.73, revise the last sentence of paragraph (a) to read 
as follows:


Sec.  478.73  Notice of revocation, suspension, or imposition of civil 
fine.

    (a) * * * In addition, pursuant to 18 U.S.C. 922(t)(5) and 18 
U.S.C. 924(p), a notice of revocation, suspension, or imposition of a 
civil fine may be issued on ATF Form 4500 whenever the Director has 
reason to believe that a licensee has knowingly transferred a firearm 
to an unlicensed person and knowingly failed to comply with the 
requirements of 18 U.S.C. 922(t)(1) with respect to the transfer and, 
at the time that the transferee most recently proposed the transfer, 
the national instant criminal background check system was operating and 
information was available to the system demonstrating that the 
transferee's receipt of a firearm would violate 18 U.S.C. 922(g) or 
922(n) or State law; or that a licensee has violated 18 U.S.C. 
922(z)(1) by selling, delivering, or transferring any handgun to any 
person other than a licensee, unless the transferee was provided with a 
secure gun storage or safety device for that handgun.
* * * * *

0
4. In Sec.  478.74, revise the fifth and sixth sentences and add a 
seventh sentence to read as follows:


Sec.  478.74  Request for hearing after notice of suspension, 
revocation, or imposition of civil fine.

    * * * If the decision is that the license should be revoked, or, in 
actions under 18 U.S.C. 922(t)(5) or 924(p), that the license should be 
revoked or suspended, or that a civil fine should be imposed, a 
certified copy of the summary shall be furnished to the licensee with 
the final notice of revocation, suspension, or imposition of a civil 
fine on ATF Form 5300.13. If the decision is that the license should 
not be revoked, or in actions under 18 U.S.C. 922(t)(5) or 924(p), that 
the license should not be revoked or suspended, and a civil fine should 
not be imposed, the licensee shall be notified in writing. During the 
hearing the licensee will have the opportunity to submit facts and 
arguments for review and consideration; offers of settlement will not 
be entertained at the hearing but may be made before or after the 
hearing.

    Dated: May 17, 2016.
Loretta E. Lynch,
Attorney General.
[FR Doc. 2016-12100 Filed 5-20-16; 8:45 am]
BILLING CODE 4410-FY-P