Rules of Practice in Explosives License and Permit Proceedings (2007R-5P); Revisions Reflecting Changes Consistent With the Homeland Security Act of 2002, 64740-64754 [2019-24570]

Download as PDF 64740 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility to minimize burden. This rule makes only a procedural change to allow flexibility to manage and oversee the Job Corps procurement process in a manner that the Department determines appropriate. Therefore, this rule is not expected to have any regulatory impacts. Regulatory Flexibility Act/Small Business Regulatory Enforcement Fairness Act The Regulatory Flexibility Act (RFA), at 5 U.S.C. 603(a), requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis, which describes the impact of the final rule on small entities. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the final rule is not expected to have a significant economic impact on a substantial number of small entities. This final rule does not affect small entities as defined in the RFA. Therefore, the Department certifies that the final rule will not have a significant economic impacts on a substantial number of small entities. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the Department consider the impact of paperwork and other information collection burdens imposed on the public. The Department has determined that this rule does not alter any information collection burdens. Executive Order 13132 (Federalism) Section 6 of E.O. 13132 requires Federal agencies to consult with State entities when a regulation or policy may have a substantial direct effect on the States, the relationship between the National Government and the States, or the distribution of power and responsibilities among the various levels of government, within the meaning of the E.O. Section 3(b) of the E.O. further provides that Federal agencies must implement regulations that have a substantial direct effect only if statutory authority permits the regulation and it is of national significance. This final rule does not have a substantial direct effect on the States, the relationship between the National Government and the States, or the distribution of power and responsibilities among the various VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 levels of government, within the meaning of the E.O. This final rule merely makes a procedural change for internal Departmental operations and management for Job Corps procurement. Unfunded Mandates Reform Act of 1995 This regulatory action has been reviewed in accordance with the Unfunded Mandates Reform Act of 1995 (the Reform Act). Under the Reform Act, a Federal agency must determine whether a regulation proposes a Federal mandate that would result in the increased expenditures by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any single year. This final rule merely makes an administrative change regarding the Departmental entity authorized for Job Corps procurement responsibilities. Therefore, the relevant requirements the Reform Act do not apply. Executive Order 13175 (Indian Tribal Governments) The Department has reviewed the final rule under the terms of E.O. 13175 and DOL’s Tribal Consultation Policy, and have concluded that the changes to regulatory text which are the focus of the final rule would not have tribal implications, as these changes do not have substantial direct effects on one or more Indian tribes, the relationship between the Federal Government and Indian tribes, nor the distribution of power and responsibilities between the Federal Government and Indian tribes. Therefore, no consultations with tribal governments, officials, or other tribal institutions were necessary. List of Subjects in 20 CFR Part 686 Employment, Grant programs—labor, Job Corps. For the reasons stated in the preamble, the Department amends 20 CFR part 686 as follows: PART 686—THE JOBS CORPS UNDER TITLE I OF THE WORKFORCE INNOVATION AND OPPORTUNITY ACT 1. The authority citation for part 686 continues to read as follows: ■ Authority: Secs. 142, 144, 146, 147, 159, 189, 503, Pub. L. 113–128, 128 Stat. 1425 (Jul. 22, 2014). 2. Amend § 686.310 by revising paragraph (a) to read as follows: ■ § 686.310 How are entities selected to receive funding to operate centers? (a) The Secretary selects eligible entities to operate contract centers on a Frm 00038 Fmt 4700 Sfmt 4700 § 686.340 How are entities selected to receive funding to provide outreach and admission, career transition and other operations support services? (a) The Secretary selects eligible entities to provide outreach and admission, career transition, and operational services on a competitive basis in accordance with applicable statutes and regulations. In selecting an entity, the Secretary issues requests for proposals (RFP) for operational support services according to the Federal Acquisition Regulation (48 CFR chapter 1) and Department of Labor Acquisition Regulation (48 CFR chapter 29). The Secretary develops RFPs for operational support services in consultation with the Governor, the center workforce council (if established), and the Local WDB for the workforce development area in which the center is located. * * * * * John Pallasch, Assistant Secretary for Employment and Training, Labor. [FR Doc. 2019–25441 Filed 11–22–19; 8:45 am] BILLING CODE 4510–FT–P Amended Regulatory Text PO 00000 competitive basis in accordance with applicable statutes and regulations. In selecting an entity, the Secretary issues requests for proposals (RFPs) for the operation of all contract centers according to the Federal Acquisition Regulation (48 CFR chapter 1) and Department of Labor Acquisition Regulation (48 CFR chapter 29). The Secretary develops RFPs for center operators in consultation with the Governor, the center workforce council (if established), and the Local WDB for the workforce development area in which the center is located. * * * * * ■ 3. Amend § 686.340 by revising paragraph (a) to read as follows: DEPARTMENT OF JUSTICE Bureau of Alcohol, Tobacco, Firearms, and Explosives 27 CFR Parts 478, 555, and 771 [Docket No. ATF 33F; AG Order No. 4577– 2019] RIN 1140–AA40 Rules of Practice in Explosives License and Permit Proceedings (2007R–5P); Revisions Reflecting Changes Consistent With the Homeland Security Act of 2002 Bureau of Alcohol, Tobacco, Firearms, and Explosives, Department of Justice. AGENCY: E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations ACTION: Final rule. The Department of Justice is amending the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) concerning procedures and practices in connection with denials of initial applications, denials of renewals, and revocations of explosives licenses or permits. These regulations are being codified in a new part entitled, ‘‘Rules and Practice in License and Permit Proceedings.’’ These regulations are based upon the regulations that ATF relied upon prior to its transfer from the Department of the Treasury to the Department of Justice. This final rule makes minor revisions to regulations governing administrative proceedings related to the denial, suspension, or revocation of a license, and the imposition of a civil fine under Federal firearms law to reference regulations under ATF authority. These revisions remove all references to statutes, regulations, positions, and other terms that are applicable only to the Department of the Treasury. These revisions reflect ATF’s position as a regulatory and enforcement agency under the Department of Justice and are consistent with the regulations governing administrative hearing processes for explosives licenses and permits. DATES: This rule is effective December 26, 2019. FOR FURTHER INFORMATION CONTACT: Denise Brown, Enforcement Programs and Services, Office of Regulatory Affairs, 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: SUMMARY: I. Background The Attorney General has delegated to the Director of ATF responsibility for administering and enforcing title I of the Gun Control Act of 1968 (GCA), Public Law 90–618, as amended, 18 U.S.C. chapter 44, relating to commerce in firearms and ammunition; and title XI, Regulation of Explosives, of the Organized Crime Control Act of 1970 (OCCA), Public Law 91–452, as amended, 18 U.S.C. chapter 40. See 18 U.S.C. 926(a); 18 U.S.C. 843; 28 CFR 0.130. Under the GCA, ATF has the authority to license applicants, renew licenses, and revoke Federal firearms licenses. 18 U.S.C. 923. The OCCA, as amended by the Safe Explosives Act, title XI, subtitle C of Public Law 107– 296, the Homeland Security Act of 2002 (enacted November 25, 2002), VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 authorizes ATF to provide licenses and permits to qualified applicants for the acquisition, distribution, storage, or use of explosive materials and to renew or revoke such licenses and permits. 18 U.S.C. 843. A. Rules of Practice in Permit Proceedings (27 CFR Part 71) On November 25, 2002, President George W. Bush signed the Homeland Security Act of 2002, Public Law 107– 296 (the Act), which divided the regulatory functions of the Bureau of Alcohol, Tobacco, and Firearms into two separate agencies. The Act renamed the Bureau of Alcohol, Tobacco, and Firearms as the Bureau of Alcohol, Tobacco, Firearms, and Explosives and transferred law enforcement and certain regulatory functions to the Department of Justice. The Act also retained in the Department of the Treasury (Treasury) certain functions of the former Bureau of Alcohol, Tobacco, and Firearms. The functions retained by Treasury became the responsibility of a new Alcohol and Tobacco Tax and Trade Bureau (TTB). As a result of the Act, TTB has all regulatory authority under 27 CFR part 71 and ATF therefore cannot promulgate new regulations under that part, although ATF has continued to follow the procedures set forth in part 71 to administer hearings related to the application and revocation of Federal explosives licenses and permits. See 28 CFR 0.133(a)(2). B. License Proceedings (27 CFR Part 478) Regulations that implement the provisions of the GCA are set forth in 27 CFR part 478. Subpart E of part 478 relates to proceedings involving Federal firearms licensees, including the denial, suspension, or revocation of licenses and the imposition of civil fines. Specifically, 27 CFR 478.76 provides that, at a hearing for the disapproval of applications for firearms licenses, for the denial, suspension, or revocation of a firearms license, or for imposition of a civil fine under Federal firearms law, an applicant or licensee may be represented by an attorney, a certified public accountant, or any other person recognized to practice before ATF as provided in 31 CFR part 8, if the representative complies with the applicable practice requirements of 26 CFR 601.521 through 601.527. C. License and Permit Proceedings (27 CFR Part 555) The regulations that implement OCCA procedural and substantive requirements are found in 27 CFR part 555. Subpart E of part 555 relates to PO 00000 Frm 00039 Fmt 4700 Sfmt 4700 64741 proceedings involving Federal explosives licensees and permittees, including the denial of an initial application, denial of a renewal, and revocation of a license or permit. Specifically, 27 CFR 555.78 provides that, at a hearing for the disapproval of applications for explosives licenses, and for the denial of renewal or revocation of such licenses or permits under Federal explosives law, an applicant, licensee, or permittee may be represented by an attorney, a certified public accountant, or any other person recognized to practice before ATF as provided in 31 CFR part 8, if the representative complies with the applicable practice requirements of 26 CFR 601.521 through 601.527. II. Notice of Proposed Rulemaking On October 7, 2014, the Department of Justice published a notice of proposed rulemaking with a request for comments entitled, ‘‘Rules of Practice in Explosives License and Permit Proceedings (2007R–5P); Revisions Reflecting Changes Consistent with the Homeland Security Act of 2002.’’ 79 FR 60391–60405. The proposed rule sought to revise ATF regulations to add a new part that implements 18 U.S.C. 843 and 847 relating to the procedures and practice for the denials of initial applications, denials of renewal, and revocations of explosives licenses or permits by ATF under Federal explosives law. Additionally, the proposed rule sought to make minor revisions to regulations governing administrative proceedings related to the denial, suspension, or revocation of a license, and the imposition of a civil fine under Federal firearms law to reference regulations under ATF authority. These changes clarify ATF’s role in explosives license proceedings and remove references to any regulations outside the scope of ATF’s authority. Comments on the notice of proposed rulemaking were to be submitted to ATF on or before January 5, 2015. III. Comment Analysis and Department Response Comments Received In response to the notice of proposed rulemaking, ATF received two comments. One commenter is an explosive and fertilizer trade association; and the other is a university student. Both commenters support ATF’s proposal to transfer and consolidate regulations governing explosives license applications and renewals or revocation of licenses and E:\FR\FM\25NOR1.SGM 25NOR1 64742 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations permits, improving the enforcement of ATF’s regulations. One of the commenters, the Institute of Makers of Explosives (IME), notes that the creation of a new part 771 addresses jurisdictional and authority issues within ATF. IME agrees that ATF should maintain jurisdiction for all explosives programs and since the regulatory authority over part 71 resides with another agency, ATF should promulgate new regulations affecting the procedures for hearings that it is responsible for conducting. IME further states: ‘‘If promulgated, the new Part will bring all administrative and enforcement responsibilities connected with the explosives licensing and permitting program under the jurisdiction of ATF and will allow the Bureau, itself, to affect any necessary changes to the procedural rules governing its due process proceedings.’’ Further, IME agrees with ATF’s clarification of 27 CFR 555.78 that will allow for self-representation in licensing and permit hearings conducted by ATF. The second commenter, a student, generally supports the rule because the proscribed regulation changes will not hurt the economy but rather ‘‘help[s] the economy, productivity, competition, jobs, the environment, public health or safety, State, local, or tribal government and communities.’’ The same commenter further notes that the rule gives every person the right to due process if their application has been denied for a firearm. Department Response The Department agrees that by promulgating regulations in a new part, 27 CFR part 771, ATF will be able to better govern and administer explosives license and permit proceedings that come under its jurisdiction. IV. Final Rule This final rule implements the amendments to the regulations in 27 CFR 478.76, 555.73, 555.75, 555.78, 555.79, 555.82, and adds new part 771, as specified in the notice of proposed rulemaking published on October 7, 2014 (79 FR 60391–60405). Additionally, this final rule includes some minor technical amendments. First, in 27 CFR 771.5, the definition of ‘‘Application’’ is amended to include renewal applications and the definition of ‘‘Person’’ is amended to include ‘‘company.’’ Second, § 771.59, which governs an initial application for a license or permit, is amended to eliminate the statement that a request for hearing should include a statement of the reasons for a hearing; this change makes this provision consistent with the VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 requirements for an existing Federal explosive licensee requesting a hearing in § 771.60. Third, §§ 771.59 and 771.60 are amended to add that the licensee or permittee will receive notice of the assignment of an administrative law judge (ALJ) by the Director of Industry Operations (DIO), if the ALJ has not already provided such notice; this clarifies that the ALJ will often provide this notification but the DIO must provide this notice if not already provided by the ALJ. Fourth, a reference to § 771.59 is added in § 771.64, which concerns part of the process following a request for a hearing, to reflect the fact that requests for a hearing can be made as a result of denial of an initial application in addition to the revocation or denial of a renewal application. Fifth, § 771.82 is amended to include a statement that the Federal Rules of Evidence are not binding on these proceedings, and to include a reference to expert testimony and the relevant Federal Rule of Evidence in § 771.82(a). These changes are necessary to clarify what is admissible in a hearing and to clarify that both opinion and expert testimony shall be admitted in a hearing when the ALJ is satisfied that the witness is properly qualified pursuant to Federal Rules of Evidence 701 or 702. Sixth, § 771.95, which governs the responsibilities of an ALJ, is amended to eliminate the sentence that ALJs shall be under the administrative control of the Director. This sentence addresses the responsibilities of the Director and not the responsibilities of the ALJs. Therefore, the sentence is unnecessary as to the responsibilities of the ALJ and confusing as to application. Seventh, § 771.97(k), which authorizes the ALJ to take any action authorized by an ATF rule and consistent with the Administrative Procedure Act, is amended to add a cross-reference to ATF’s authority concerning licenses and permits, 18 U.S.C. 843, and the provision of the Administrative Procedure Act setting out authority for individuals presiding over agency hearings, 5 U.S.C. 556(c). Eighth, the final rule amends 27 CFR 771.99 to state that disorderly or contemptuous language or conduct by an attorney (either for a licensee or permittee or for the Government), may be reported to the Department of Justice, Office of Professional Responsibility, consistent with 28 CFR 0.39a(a)(9). Finally, other changes eliminate superfluous language or correct stylistic errors. PO 00000 Frm 00040 Fmt 4700 Sfmt 4700 V. Statutory and Executive Order Review A. Executive Order 12866, 13563, and 13771 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; Executive Order 13563, ‘‘Improving Regulation and Regulatory Review,’’ section 1(b), General Principles of Regulation, and section 6, Retrospective Analyses of Existing Rules; and Executive Order 13771, ‘‘Reducing Regulation and Controlling Regulatory Costs.’’ 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. This rule consolidates and clarifies regulations governing explosives license application renewal or revocation of licenses and permits. This rule would not add any costs to industry because this rule puts into regulation current industry and agency practices; therefore, the explosives industry would not need to incur any hourly or capital burdens in order to comply with this final rule. The Department has assessed the costs and benefits of this regulation and believes that the regulatory approach selected imposes no new regulatory costs and maximizes net benefits. 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 government 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. The Department has determined that this final rule is not a ‘‘significant regulatory action’’ as defined in Executive Order 12866, section 3(f). Accordingly, this E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations final rule has not been reviewed by the Office of Management and Budget (OMB). Because this rule is not significant under Executive Order 12866, this action is not subject to Executive Order 13771, ‘‘Reducing Regulations and Controlling Regulatory Costs.’’ 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 rule merely transfers and consolidates regulations governing explosives license application renewal or revocation of licenses and permits, improving the enforcement of ATF regulations. 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 (5 U.S.C. 605(b)) exempts an agency from the requirement to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements if 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-forprofit enterprises, and small governmental jurisdictions. The Attorney General has reviewed this final rule and, by approving it, certifies that it will not have a significant economic impact on a substantial number of small entities. This final rule codifies the ATF regulations governing the procedure and practice for denying applications, denying renewals, and revoking VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 explosives licenses or permits under Federal explosives law in a new part 771 under ATF’s regulatory authority. Additionally, this final rule updates the regulations governing the denial, suspension, or revocation of a firearms license, and imposition of a civil fine under Federal firearms law to only reference regulations under ATF authority. This rule also amends the regulations to require an applicant or licensee in a proceeding concerning the denial, suspension, or revocation of a firearms license, or the imposition of a civil fine under Federal firearms law, to file a duly executed power of attorney designating his representative, and waivers, if applicable, under the Privacy Act of 1974. See 5 U.S.C. 552(a), and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns and return information). This is required in the current regulations by reference to 31 CFR part 8 and 26 CFR 601.521 through 601.527. The changes in this final rule are purely administrative and do not add any new requirements that would have any impact on the economy. 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. See 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 foreignbased 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. G. Paperwork Reduction Act This final rule does not impose any new reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995. Drafting Information The author of this document is Denise Brown; Enforcement Programs and Services; Office of Regulatory Affairs, PO 00000 Frm 00041 Fmt 4700 Sfmt 4700 64743 Bureau of Alcohol, Tobacco, Firearms, and Explosives. List of Subjects 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. 27 CFR Part 555 Administrative practice and procedure, Customs duties and inspection, Explosives, Hazardous substances, Imports, Penalties, Reporting and recordkeeping requirements, Safety, Security measures, Seizures and forfeitures, Transportation, Warehouses. 27 CFR Part 771 Administrative practice and procedure, Explosives. Authority and Issuance Accordingly, for reasons discussed in the preamble, 27 CFR chapter II is amended as follows: PART 478—COMMERCE IN FIREARMS AND AMMUNITION 1. The authority citation for 27 part 478 continues to read as follows: ■ Authority: 5 U.S.C. 552(a); 18 U.S.C. 921– 931; 44 U.S.C. 3504(h). ■ 2. Revise § 478.76 to read as follows: § 478.76 Representation at a hearing. Applicants or licensees may represent themselves or be represented by an attorney, a certified public accountant, or any other person, specifically designated in a duly executed power of attorney that shall be filed in the proceeding by the applicant or licensee. The applicant or licensee shall file waivers, if applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns and return information). The Director of Industry Operations may be represented in proceedings under §§ 478.72 and 478.74 by an attorney in the Office of Chief Counsel who is authorized to execute and file motions, briefs, and other papers in the proceeding, on behalf of the Director of Industry Operations, in the attorney’s own name as ‘‘Attorney for the Government.’’ E:\FR\FM\25NOR1.SGM 25NOR1 64744 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations 771.2 771.3 PART 555—COMMERCE IN EXPLOSIVES Subpart B—Definitions 771.5 Meaning of terms. 3. The authority citation for 27 CFR part 555 continues to read as follows: ■ Authority: 18 U.S.C. 847. § 555.73 [Amended] 4. Amend § 555.73 by removing ‘‘part 71’’ and adding in its place ‘‘part 771’’. ■ § 555.75 [Amended] 5. Amend § 555.75 by removing ‘‘part 71’’ and adding in its place ‘‘part 771’’. ■ 6. Revise § 555.78 to read as follows: ■ § 555.78 Representation at a hearing. An applicant, licensee, or permittee may represent himself, or be represented by an attorney, a certified public accountant, or any other person, specifically designated in a duly executed power of attorney that shall be filed in the proceeding by the applicant, licensee, or permittee. The applicant, licensee, or permittee shall file waivers, if applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns and return information). The Director of Industry Operations may be represented in proceedings under §§ 555.73 and 555.75 by an attorney in the Office of Chief Counsel who is authorized to execute and file motions, briefs and other papers in the proceeding, on behalf of the Director of Industry Operations, in the attorney’s own name as ‘‘Attorney for the Government.’’ § 555.79 [Amended] 7. Amend § 555.79 by removing ‘‘(a)’’, ‘‘(b)’’, and ‘‘(c)’’ and removing ‘‘part 71’’ and adding in its place ‘‘part 771’’. ■ 8. Revise § 555.82 to read as follows: ■ § 555.82 Rules of practice in license and permit proceedings. Regulations governing the procedure and practice for disapproval of applications for explosives licenses and permits and for the denial of renewal or revocation of such licenses and permits under the Act are contained in part 771 of this chapter. ■ 9. Add subchapter E, consisting of part 771, to read as follows: SUBCHAPTER E—EXPLOSIVE LICENSE AND PERMIT PROCEEDINGS PART 771—RULES OF PRACTICE IN EXPLOSIVE LICENSE AND PERMIT PROCEEDINGS Subpart A—Scope and Construction of Regulations Sec. 771.1 Scope of part. VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 771.74 771.75 Liberal construction. Forms prescribed. Subpart C—General 771.25 Communications and pleadings. 771.26 Service on applicant, licensee, or permittee. 771.27 Service on the Director of Industry Operations or Director. Time 771.28 771.29 Computation. Continuances and extensions. Representation at Hearings 771.30 Personal representation. 771.31 Attorneys and other representatives. Subpart D—Compliance and Settlement 771.35 Opportunity for compliance. 771.36 Settlement. 771.37 Notice of contemplated action. 771.38 Licensee’s or permittee’s failure to meet requirements within reasonable time. 771.39 Authority of Director of Industry Operations to proceed with revocation or denial action. Subpart E—Revocation or Denial 771.40 Denial of initial application. 771.41 Denial of renewal application or revocation of license or permit. 771.42 Grounds for revocation of licenses or permits. 771.43 Grounds for denial of applications for licenses or permits. Subpart F—Hearing Procedure Notices 771.55 771.56 771.57 771.58 Content. Forms. Execution and disposition. Designated place of hearing. Request for Hearing 771.59 Initial application proceedings. 771.60 Revocation or denial of renewal proceedings. 771.61 Notice of hearing. Non-Request for Hearing 771.62 Initial application. 771.63 Revocation or denial of renewal. Responses to Notices 771.64 Answers. 771.65 Responses admitting facts. 771.66 Initial conferences. Failure to Appear 771.67 Initial applications. 771.68 Revocation or denial of renewal. Waiver of Hearing 771.69 Withdrawal of request for hearing. 771.70 Adjudication based upon written submissions. Surrender of License or Permit 771.71 Before citation. 771.72 After citation. Motions 771.73 General. PO 00000 Frm 00042 Fmt 4700 Sfmt 4700 Prior to hearing. At hearing. Hearing 771.76 General. 771.77 Initial applications. 771.78 Revocation or denial of renewal. Burden of Proof 771.79 Initial applications. 771.80 Revocation or denial of renewal. General 771.81 Stipulations at hearing. 771.82 Evidence. 771.83 Closing of hearings; arguments, briefs, and proposed findings. 771.84 Reopening of the hearing. Record of Testimony 771.85 Stenographic record. 771.86 Oath of reporter. Subpart G—Administrative Law Judges 771.95 Responsibilities of administrative law judges. 771.96 Disqualification. 771.97 Powers. 771.98 Separation of functions. 771.99 Conduct of hearing. 771.100 Unavailability of administrative law judge. Subpart H—Decisions 771.105 Administrative law judge’s findings and recommended decision. 771.106 Certification and transmittal of record and decision. Action by Director of Industry Operations 771.107 Initial application proceedings. 771.108 Director of Industry Operations’ decision. 771.109 Revocation or denial of renewal proceedings. 771.110 Revocation or denial of renewal. 771.111 Proceedings involving violations not within the division of issuance of license or permit. Subpart I—Review 771.120 Appeal on petition to the Director. 771.121 Review by Director. 771.122 Denial of renewal or revocation. 771.123 Court review. Subpart J—Miscellaneous 771.124 Depositions. 771.125 Witnesses and fees. 771.126 Discovery. 771.127 Privileges. Record 771.135 771.136 What constitutes record. Availability. Authority: 18 U.S.C. 843, 847. Subpart A—Scope and Construction of Regulations § 771.1 Scope of part. Regulations in this part govern procedures and practices for disapproving applications for licenses and permits and denying renewal of or revocation of such licenses or permits under 18 U.S.C. chapter 40. E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations § 771.2 Liberal construction. Director of Industry Operations. The principal ATF official in a Field Operations division responsible for administering regulations in this part. Ex parte communication. An oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given, but not including requests for status reports. Initial decision. The decision of the Director of Industry Operations in a proceeding concerning the revocation § 771.3 Forms prescribed. of, denial of renewal of, or denial of application for a license or permit. This (a) The Director is authorized to prescribe all forms required by this part. decision becomes the agency’s final All of the information called for in each decision in the absence of an appeal. Final decision. The definitive form shall be furnished as indicated by decision of ATF, e.g., the agency’s the headings on the form and the decision in the absence of an appeal or instructions on or pertaining to the form. In addition, information called for the Director’s decision following an appeal to the Director. in each form shall be furnished as License. Subject to applicable law, required by this part. (b) Requests for forms should be made entitles the licensee to transport, ship, and receive explosive materials in to the ATF Distribution Center or interstate or foreign commerce, and to through the ATF website at http:// engage in the business specified by the www.atf.gov. license, at the location described on the Subpart B—Definitions license. Licensee. Any importer, § 771.5 Meaning of terms. manufacturer, or dealer licensed under When used in this part and in forms the provisions of 18 U.S.C. chapter 40 prescribed under this part, where not and 27 CFR part 555. otherwise distinctly expressed or Limited permit. A permit issued to a manifestly incompatible with the intent person authorizing him to receive for thereof, terms shall have the meaning his use explosive materials from a provided in this subpart. Words in the licensee or permittee in his State of plural form shall include the singular, residence on no more than six occasions and vice versa, and words importing the during the 12-month period in which masculine gender shall include the the permit is valid. A limited permit feminine. does not authorize the receipt or Administrative law judge. The person transportation of explosive materials in appointed pursuant to 5 U.S.C. 3105, interstate or foreign commerce. designated to preside over any Other term. Any other term defined in administrative proceedings under this the Federal explosives laws (18 U.S.C. part. chapter 40), the regulations promulgated Applicant. Any person who has filed thereunder (27 CFR part 555), or the an application for a license or permit Administrative Procedure Act (5 U.S.C. under 18 U.S.C. chapter 40. 551 et seq.), where used in this part, Application. Any application for a shall have the meaning assigned to it license or permit, including renewal therein. applications, under 18 U.S.C. chapter Permittee. Any user of explosives for 40. a lawful purpose who has obtained ATF. The Bureau of Alcohol, Tobacco, either a user permit or a limited permit Firearms, and Explosives, Department of under 18 U.S.C. chapter 40 and 27 CFR Justice. part 555. Attorney for the Government. An Person. Any individual, corporation, attorney in the ATF Office of Chief company, association, firm, partnership, Counsel authorized to represent the society, or joint stock company. Director of Industry Operations in the Recommended decision. The advisory proceeding. decision of the administrative law judge CFR. The Code of Federal in any proceeding regarding the Regulations. revocation of, denial of renewal of, or Contemplated notice. Includes any denial of application for a license or notice contemplating the revocation or permit. ATF must act on a denial of renewal of a license or permit. recommended decision with its own Director. The Director, Bureau of initial or final decision. User-limited permit. A user permit Alcohol, Tobacco, Firearms, and valid only for a single purchase Explosives, Department of Justice. Regulations in this part shall be liberally construed to secure just, expeditious, and efficient determination of the issues presented. The Rules of Civil Procedure for the U.S. District Courts (28 U.S.C. appendix) are not controlling, but may act as a guide in any situation not provided for or controlled by this part and shall be liberally construed or relaxed when necessary. VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 PO 00000 Frm 00043 Fmt 4700 Sfmt 4700 64745 transaction. Recipients of a user-limited permit must obtain a new permit for any subsequent purchase transaction. User permit. A permit issued to a person authorizing him to— (1) Acquire for his own use explosive materials from a licensee in a State other than the State in which he resides or from a foreign country; and (2) Transport explosive materials in interstate or foreign commerce. Willfulness. The plain indifference to, or purposeful disregard of, a known legal duty. Willfulness may be demonstrated by, but does not require, repeat violations involving a known legal duty. Subpart C—General § 771.25 Communications and pleadings. (a) All communications to the Government regarding the procedures set forth in this part and all pleadings, such as answers, motions, requests, or other papers or documents required or permitted to be filed under this part, relating to a proceeding pending before an administrative law judge, shall be addressed to the administrative law judge at his post of duty and the Attorney for the Government. Communications concerning proceedings not pending before an administrative law judge should be addressed to the Director of Industry Operations or Director, as the case may be. (b) Except to the extent required for the disposition of ex parte matters as authorized by law, no ex parte communications shall be made to or from the administrative law judge concerning the merits of the adjudication. If the administrative law judge receives or makes an ex parte communication not authorized by law, the administrative law judge shall place on the record of the proceeding: (1) All such written communications; (2) Memoranda stating the substance of all such oral communications; and (3) All written responses and memoranda stating the substance of all oral responses to paragraphs (b)(1) and (2) of this section. § 771.26 Service on applicant, licensee, or permittee. All orders, notices, motions, and other formal documents required to be served under the regulations in this part may be served by mailing a signed, original copy thereof to the designated representative of the applicant, licensee, or permittee by certified mail, with request for return receipt card, at the representative’s business address, by personal service, or as otherwise agreed E:\FR\FM\25NOR1.SGM 25NOR1 64746 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations to by the parties. If the applicant, licensee, or permittee has not yet designated a representative, all orders, notices, motions, and other formal documents required to be served under the regulations in this part may be served by mailing a signed, original copy thereof to the applicant, licensee, or permittee at the address stated on his application, license, or permit, or at his last known address, or by delivery of such original copy to the applicant, licensee, or permittee personally, or in the case of a corporation, partnership, or other unincorporated association, by delivering the same to an officer, or manager, or general agent thereof, or to its attorney of record. Such personal service may be made by any employee of the Department of Justice designated by the Attorney General or by any employee of ATF. A certificate of mailing and the return receipt card, or certificate of service signed by the person making such service, shall be filed as a part of the record. § 771.27 Service on the Director of Industry Operations or Director. Pleadings, motions, notices, and other formal documents may be served by certified mail, by personal service, or as otherwise agreed to by the parties, on the Director of Industry Operations (or upon the Attorney for the Government on behalf of the Director of Industry Operations), or on the Director, if the proceeding is before him for review on appeal. Representation at Hearings § 771.30 Personal representation. Any individual or member of a partnership may appear for himself, or for such partnership, and a corporation or association may be represented by a bona fide officer of such corporation or association, upon showing of adequate authorization. § 771.31 Attorneys and other representatives. An applicant, licensee, or permittee may represent himself, or be represented by an attorney, a certified public accountant, or any other person, specifically designated in a duly executed power of attorney that shall be filed in the proceeding by the applicant, licensee, or permittee. The applicant, licensee, or permittee shall file waivers, if applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns and return information). The Director of Industry Operations may be represented in proceedings by an attorney in the Office of Chief Counsel who is authorized to execute and file motions, briefs, and other papers in the proceeding on behalf of the Director of Industry Operations, in the attorney’s own name as ‘‘Attorney for the Government.’’ Subpart D—Compliance and Settlement § 771.35 Opportunity for compliance. In computing any period of time prescribed or allowed by this part, the day of the act, event, or default after which the designated period of time is to run is not to be included. The last day of the period to be computed is to be included, unless it is a Saturday, Sunday, or Federal holiday, in which event the period runs until the next day that is not a Saturday, Sunday, or Federal holiday. Pleadings, requests, or other papers or documents required or permitted to be filed under this part must be received for filing at the appropriate office within the time limits, if any, for such filing. No license or permit shall be revoked or denied renewal unless, prior to the institution of proceedings, facts or conduct warranting such action shall have been called to the attention of the licensee or permittee by the Director of Industry Operations in writing in a contemplated notice, and the licensee or permittee shall have been accorded an opportunity to demonstrate or achieve compliance with all lawful requirements as set forth in section 9(b) of the Administrative Procedure Act. In cases in which the Director of Industry Operations alleges in his contemplated notice, with supporting reasons, willful violations or that the public interest requires otherwise, this section does not apply and the issuance of a contemplated notice is unnecessary. § 771.29 § 771.36 Time § 771.28 Computation. Continuances and extensions. For good cause shown, the administrative law judge, Director, or Director of Industry Operations, as the case may be, may grant continuances and, as to all matters pending before him, extend any time limit prescribed by the regulations in this part (except where the time limit is statutory). VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 Settlement. Any proposals of settlement should be made to the Director of Industry Operations, but may be made through the Attorney for the Government. Where necessary, the date of the hearing may be postponed pending consideration of such proposals when they are made in good faith and not for the purpose of PO 00000 Frm 00044 Fmt 4700 Sfmt 4700 delay. If proposals of settlement are submitted, and they are considered unsatisfactory, the Director of Industry Operations may reject the proposals and may, either directly or through the Attorney for the Government, inform the licensee or permittee of any conditions on which the alleged violations may be settled. If the proposals of settlement are considered satisfactory to the Director of Industry Operations, the licensee or permittee shall be notified thereof and the proceeding shall be dismissed. § 771.37 Notice of contemplated action. Where the Director of Industry Operations has not ascertained whether the licensee or permittee has willfully violated the Federal explosives laws and where he believes the matter has the potential to be settled informally, i.e., without formal administrative proceedings, he shall, in accordance with section 5(b) of the Administrative Procedure Act, prior to the issuance of a notice of revocation or denial of renewal, give the licensee or permittee a contemplated notice of such action and an opportunity to show why the license or permit should not be revoked or denied renewal. The notice should inform the licensee or permittee of the charges on which the notice would be based, if issued, and afford him a period of 15 days from the date of the notice, or such longer period as the Director of Industry Operations deems necessary, in which to submit proposals of settlement to the Director of Industry Operations. Where informal settlement is not reached promptly because of inaction by the applicant, licensee, or permittee or proposals are made for the purpose of delay, a notice shall be issued in accordance with § 771.42 or § 771.43, as appropriate. The issuance of a notice of contemplated action does not entitle the recipient to a hearing before an administrative law judge. § 771.38 Licensee’s or permittee’s failure to meet requirements within reasonable time. If the licensee or permittee fails to meet the requirements of applicable laws and regulations in this part within such reasonable time as may be specified by the Director of Industry Operations, proceedings for revocation or denial of renewal of the license or permit shall be initiated. § 771.39 Authority of Director of Industry Operations to proceed with revocation or denial action. Where the evidence is conclusive and the nature of the violation is such as to preclude any settlement, the violation is of a continuing character that necessitates immediate action to protect E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations the public interest, or the Director of Industry Operations believes that any informal settlement of the alleged violation will not ensure future compliance with applicable laws and regulations in this part, or in any similar case where the circumstances are such as to clearly preclude informal settlement, and the Director of Industry Operations so finds and states the reasons therefor in the notice, the Director of Industry Operations may proceed with the revocation or denial of renewal. Subpart E—Revocation or Denial § 771.40 Denial of initial application. Whenever the Director of Industry Operations has reason to believe that an applicant for an original license or permit is not eligible to receive a license or permit under the provisions of § 555.49 of this chapter, the Director of Industry Operations shall issue a notice of denial on ATF Form 5400.11 (Notice of Denial of Application for License or Permit) (F 5400.11). The notice will set forth the matters of fact and law relied upon in determining that the application should be denied and will afford the applicant 15 days from the date of receipt of the notice in which to request a hearing to review the denial. If no request for a hearing is filed within that time, a copy of the application, marked ‘‘Disapproved,’’ will be returned to the applicant. § 771.41 Denial of renewal application or revocation of license or permit. If, following the opportunity for compliance under § 555.71 of this chapter, or without opportunity for compliance under § 555.71 of this chapter as circumstances warrant, the Director of Industry Operations finds that the licensee or permittee is not likely to comply with applicable laws or regulations in this part or is otherwise not eligible to continue operations authorized under his license or permit, the Director of Industry Operations shall issue a notice of denial of the renewal application or revocation of the license or permit, ATF F 5400.11 (Notice of Denial of Application for License or Permit) or ATF Form 5400.10 (Notice of Revocation of License or Permit) (F 5400.10), as appropriate. The notice will set forth the matters of fact constituting the violations specified, dates, places, and the sections of law and regulations violated. In the case of the revocation of a license or permit, the notice will specify the date on which the action is effective, which date will be on or after the date the notice is served on the licensee or permittee. The notice will VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 also advise the licensee or permittee that he may, within 15 days after receipt of the notice, request a hearing and, if applicable, a stay of the effective date of the revocation of his license or permit. § 771.42 Grounds for revocation of licenses or permits. Whenever the Director of Industry Operations has reason to believe that any holder of a license or permit has willfully violated any provision of 18 U.S.C. chapter 40 or 27 CFR part 555 or has become ineligible to continue operations authorized under the license or permit, the Director of Industry Operations shall issue a notice for the revocation of such license or permit, as the case may be. § 771.43 Grounds for denial of applications for licenses or permits. If, upon examination of any application (including a renewal application) for a license or permit, the Director of Industry Operations has reason to believe that the applicant is not entitled to such license or permit, the Director of Industry Operations shall issue a denial of the application. An applicant is not eligible for a license or permit if he fails to meet the requirements of 18 U.S.C. 843(b) and § 555.49 of this chapter. Subpart F—Hearing Procedure Notices § 771.55 PO 00000 requested within 15 days from receipt of the notice. § 771.56 Content. Frm 00045 Fmt 4700 Sfmt 4700 Forms. Notices shall be issued on the following forms: (a) ATF Form 5400.9, ‘‘Order After Denial or Revocation Hearing,’’ for all revocations or denials of renewal of licenses or permits pursuant to 18 U.S.C. chapter 40 after a hearing has been held and a Recommended Decision has been issued by the administrative law judge; (b) Form 5400.10, ‘‘Notice of Revocation for License or Permit,’’ for all revocations of licenses or permits pursuant to 18 U.S.C. chapter 40, except as provided for in paragraph (a) of this section; (c) Form 5400.11, ‘‘Notice of Denial of Application for License or Permit,’’ for the denial of renewal or original applications for licenses or permits pursuant to 18 U.S.C. chapter 40, except as provided for in paragraph (a) of this section; (d) Form 5400.12, ‘‘Notice of Contemplated Denial or Revocation of License or Permit,’’ for the contemplated revocation or denial of renewal application of licenses or permits pursuant to 18 U.S.C. chapter 40; or (e) Such other forms as the Director may prescribe. § 771.57 (a) Notices for the revocation or denial of renewal of a license or permit shall be promptly issued by the Director of Industry Operations and shall set forth: (1) The sections of law and regulations relied upon for authority and jurisdiction; (2) The specific grounds upon which the revocation or denial is based, i.e., the matters of fact constituting the violations specified, dates, places, and sections of law and regulations violated; (3) In the case of a revocation, the date on which the action is effective; and (4) That the licensee or permittee has 15 days from receipt of the notice within which to request a hearing before an administrative law judge. (b) Notices for the denial of an initial application for a license or permit shall set forth: (1) The sections of law and regulations relied upon for authority and jurisdiction; (2) The specific grounds upon which the denial is based, i.e., the matters of fact and law relied upon for the disapproval of the application; and (3) That the application will be disapproved unless a hearing is 64747 Execution and disposition. A signed original of the applicable form shall be served on the licensee or permittee. If a hearing is requested, a copy shall be sent to the administrative law judge designated to conduct the hearing. Any remaining copies shall be retained for the office of the Director of Industry Operations. § 771.58 Designated place of hearing. The designated place of hearing shall be determined by the administrative law judge, taking into consideration the convenience and necessity of the parties and their representatives. Request for Hearing § 771.59 Initial application proceedings. (a) If the applicant for an initial license or permit desires a hearing, he shall file a request in writing with the Director of Industry Operations within 15 days after receipt of notice of the disapproval, in whole or in part, of the application. (b) On receipt of the request, the Director of Industry Operations shall forward a copy of the request, together with a copy of the notice, to the Office of Chief Counsel for the assignment of an administrative law judge. E:\FR\FM\25NOR1.SGM 25NOR1 64748 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations (c) After the Office of Chief Counsel notifies the Director of Industry Operations or the Attorney for the Government of the assignment of an administrative law judge, the Director of Industry Operations shall notify the licensee or permittee of the assignment, if the administrative law judge has not already done so. § 771.60 Revocation or denial of renewal proceedings. (a) If the licensee or permittee desires a hearing, he shall file a request, in writing, with the Director of Industry Operations within 15 days after receipt of the notice or within such time as the Director of Industry Operations may allow. (b) Where a licensee or permittee requests a hearing, the Director of Industry Operations shall forward a copy of the request, together with a copy of the notice, to the Office of Chief Counsel for the assignment of an administrative law judge. (c) After the Office of Chief Counsel notifies the Director of Industry Operations or the Attorney for the Government of the assignment of an administrative law judge, the Director of Industry Operations shall notify the licensee or permittee of the assignment, if the administrative law judge has not already done so. (d) In the case of a revocation, a licensee or permittee may include a request for a stay of the effective date of revocation with the request for a hearing. (e) On receipt of a request for a stay of the effective date of a revocation, the Director of Industry Operations shall timely advise the licensee or permittee whether the stay is granted. (1) If the stay is granted, the matter shall be referred to an administrative law judge pursuant to paragraph (b) of this section. (2) If the stay is denied, the licensee or permittee may request an immediate hearing. In this event, the Director of Industry Operations shall immediately refer the matter to the Office of Chief Counsel for the assignment of an administrative law judge, who shall set a date and place for hearing, which date shall be no later than 10 days from the date the licensee or permittee requested the immediate hearing. § 771.61 Notice of hearing. Once a request for a hearing has been referred to the administrative law judge, the administrative law judge shall set a time and place for a hearing and shall serve notice thereof upon the parties at least 10 days in advance of the hearing date. VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 Non-Request for Hearing § 771.62 Initial application. In the case of an initial application, if the applicant does not request a hearing within 15 days, or within such additional time as the Director of Industry Operations may in his discretion allow, the Director of Industry Operations will return a copy of the application, marked ‘‘Disapproved,’’ to the applicant, accompanied by a brief statement including the findings upon which the denial is based. § 771.63 Revocation or denial of renewal. In the case of a revocation or denial of renewal of an application, if the licensee or permittee does not request a hearing within 15 days, or within such additional time as the Director of Industry Operations may in his discretion allow, the Director of Industry Operations shall make the initial decision in the case pursuant to § 771.78(b). Responses to Notices § 771.64 Answers. (a) Where the licensee or permittee requests a hearing in accordance with §§ 771.59 and 771.60, a written response to the relevant notice may be filed with the administrative law judge and served on the Director of Industry Operations within 15 days after the licensee or permittee receives service of the designation of the administrative law judge. (b) Where no hearing is requested, the licensee or permittee may file a written answer to the relevant notice with the Director of Industry Operations within 15 days after service of the notice. (c) An answer shall contain a concise statement of the facts that constitute the grounds for defense. A hearing, if requested, may be limited to the issues contained in the notice and the answer. The administrative law judge or Director of Industry Operations, as the case may be, may, as a matter of discretion, waive any requirement of this section. (d) Answers need not be filed in initial application proceedings. § 771.65 Responses admitting facts. If the licensee or permittee desires to waive the hearing on the allegations of fact set forth in the notice and does not contest the facts, the answer may consist of a statement that the licensee or permittee admits all material allegations of fact charged in the notice to be true. The Director of Industry Operations shall base the decision on the notice and such answer, although such an answer shall not affect the licensee’s or PO 00000 Frm 00046 Fmt 4700 Sfmt 4700 permittee’s right to submit proposed findings of fact and conclusions of law or right to appeal. § 771.66 Initial conferences. (a) In any proceeding, the administrative law judge, upon his own motion or upon the motion of one of the parties or their qualified representatives, may in the administrative law judge’s discretion direct the parties or their qualified representatives to appear at a specified time and place for a conference to consider: (1) Simplification of the issues; (2) The necessity of amendments to the pleadings; (3) The possibility of obtaining stipulations, admissions of facts, and documents; (4) The possibility of both parties exchanging information or scheduling discovery; (5) A date on which both parties will simultaneously submit lists of proposed hearing exhibits; (6) Limiting the number of expert witnesses; (7) Identifying and, if practicable, scheduling all witnesses to be called; however, there is no requirement in these proceedings for the parties to submit pre-hearing statements or statements of proposed testimony by witnesses; and (8) Such other matters as may aid in the disposition of the proceeding. (b) As soon as practicable after such conference, the administrative law judge shall issue an order that recites the action taken, the amendments allowed to the pleadings, and the agreements made by the parties or their qualified representatives as to any of the matters considered. The order shall also limit the issues for hearing to those not disposed of by admission or agreement. Such order shall control the subsequent course of the proceedings, unless modified for good cause by a subsequent order. After discovery is complete, the order may be amended or supplemented if necessary. Failure To Appear § 771.67 Initial applications. Where the applicant on an initial application for a license or permit has requested a hearing and does not appear at the appointed time and place, evidence has not been offered to refute or explain the grounds upon which disapproval of the application is contemplated, and no good cause has been shown for the failure to appear, the applicant shall be considered to have waived the hearing. When such waiver occurs, a default judgment against the applicant will be entered and the E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations administrative law judge shall recommend disapproval of said application. § 771.68 Revocation or denial of renewal. If, on the date set for a hearing concerning the revocation or denial of renewal of a license or permit, the licensee or permittee does not appear, no evidence has been offered, and no good cause has been shown for the failure to appear, the Attorney for the Government will proceed ex parte and offer for the record sufficient evidence to make a prima facie case. At such hearing, documents, statements, and affidavits may be submitted in lieu of testimony of witnesses. Appeals for the circuit in which the licensee or permittee resides or has his principle place of business pursuant to § 555.80 of this chapter. Surrender of License or Permit § 771.71 Before citation. Waiver of Hearing If a licensee or permittee surrenders the license or permit before the notice of revocation or denial of renewal, the Director of Industry Operations may accept the surrender. But if the evidence, in the opinion of the Director of Industry Operations, warrants issuance of a notice for revocation or denial of renewal, the surrender shall be refused and the Director of Industry Operations shall issue the notice. § 771.69 § 771.72 Withdrawal of request for hearing. At any time prior to the assignment of an administrative law judge, the licensee or permittee may, by filing written notice with the Director of Industry Operations, withdraw his request for a hearing. If such a notice is filed after assignment to the administrative law judge and prior to issuance of his recommended decision the Director of Industry Operations shall move the administrative law judge to dismiss the proceedings as moot. If such a notice is filed either after issuance of a notice of denial or notice of revocation and before assignment of the administrative law judge, or after issuance by the administrative law judge of his recommended decision and prior to the Director of Industry Operations’ order disapproving the application or denying the renewal of or revoking the license or permit, the Director of Industry Operations shall, by order, dismiss the proceeding. § 771.70 Adjudication based upon written submissions. The licensee or permittee may waive the hearing before the administrative law judge and stipulate that the matter will be adjudicated by the Director of Industry Operations based upon written submissions. Written submissions may include stipulations of law or facts, proposed findings of fact and conclusions of law, briefs, or any other documentary material. The pleadings, together with the written submissions of both the licensee or permittee and the attorney for the Government, shall constitute the record on which the initial decision shall be based. The election to contest the denial or revocation without a hearing under this section does not affect the licensee’s or permittee’s right to appeal to the Director pursuant to § 555.79 of this chapter or to the United States Court of VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 After citation. If a licensee or permittee surrenders the license or permit after notice, but prior to the referral to an administrative law judge and prior to an initial decision, the Director of Industry Operations may accept the surrender of the license or permit and dismiss the proceeding as moot. If a licensee or permittee surrenders the license or permit after notice and after the referral to the administrative law judge, but prior to the issuance of a recommended decision, the Director of Industry Operations may accept the surrender of the license or permit and shall move the administrative law judge to dismiss the proceedings as moot. In either case, if, in the opinion of the Director of Industry Operations, the evidence is such as to warrant revocation or denial of renewal, as the case may be, the surrender of the license or permit shall be refused, and the proceeding shall continue. Motions § 771.73 General. All motions shall be made and addressed to the administrative law judge before whom the proceeding is pending, and copies of all motion papers shall be served upon the other party or parties. The administrative law judge may dispose of any motion without oral argument, but he may, if he so desires, set it down for hearing and request argument. The administrative law judge may dispose of such motion prior to the hearing on the merits or he may postpone the disposition until the hearing on the merits. No appeal may be taken from any ruling on a motion until the whole record is certified for review. Examples of typical motions may be found in the Rules of Civil Procedure referred to in § 771.2. PO 00000 Frm 00047 Fmt 4700 Sfmt 4700 § 771.74 64749 Prior to hearing. All motions that should be made prior to the hearing, such as a motion directed to the sufficiency of the pleadings or of preliminary orders, shall be filed in writing with the Director of Industry Operations or the administrative law judge if the matter has been referred to him, and shall briefly state the order or relief applied for and the grounds for such motion. § 771.75 At hearing. Motions at the hearing may be made in writing to the administrative law judge or stated orally on the record. Hearing § 771.76 General. If a hearing is requested, it shall be held at the time and place stated in the notice of hearing unless otherwise ordered by the administrative law judge. § 771.77 Initial applications. (a) The administrative law judge who presides at the hearing on initial applications shall recommend a decision to the Director of Industry Operations. The administrative law judge shall certify the complete record of the proceedings before him and shall immediately forward the complete certified record to the Director of Industry Operations. The administrative law judge shall also send one copy of his recommended decision to the applicant or the applicant’s representative, one copy to the Attorney for the Government, and one copy to the Director of Industry Operations, who shall make the initial decision as provided in § 771.107. The applicant may be directed by the Director of Industry Operations to produce such records as may be deemed necessary for examination. All hearings on applications shall be open to the public subject to such restrictions and limitations as may be consistent with orderly procedure. (b) If no hearing is requested, the return of the application marked ‘‘Disapproved’’ is the Director of Industry Operations’ initial decision. § 771.78 Revocation or denial of renewal. (a) The administrative law judge who presides at the hearing in proceedings for the revocation or denial of renewal of licenses or permits shall make a recommended decision to the Director of Industry Operations. The administrative law judge shall certify the complete record of the proceedings before him and shall immediately forward the complete certified record to the Director of Industry Operations. The administrative law judge shall also send E:\FR\FM\25NOR1.SGM 25NOR1 64750 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations one copy of his recommended decision to the licensee or permittee or the licensee’s or permittee’s representative, one copy to the Attorney for the Government, and one copy to the Director of Industry Operations, who shall make the initial decision as provided in § 771.109. (b) If no hearing is requested, the Director of Industry Operations shall make the initial decision. Burden of Proof § 771.79 Initial applications. In hearings on the initial denial of applications, the burden of proof is on the Government to show by a preponderance of the evidence that the Director of Industry Operations had reason to believe that the applicant is not entitled to a permit or license. § 771.80 Revocation or denial of renewal. In hearings on the revocation or denial of renewal of a license or permit, the burden of proof is on the Government to show that the Director of Industry Operations had reason to believe that the licensee or permittee is not entitled to a permit or license, as may be the case. The Government must meet this proof by a preponderance of the evidence. General § 771.81 Stipulations at hearing. If there has been no initial conference under § 771.66, the administrative law judge may at the beginning of the hearing require that the parties attempt to arrive at such stipulations as will eliminate the necessity of taking evidence with respect to allegations of fact about which there is no substantial dispute. The administrative law judge should take similar action, where appropriate, throughout the hearing and should call and conduct any conferences that he deems advisable with a view to the simplification, clarification, and disposition of any of the issues involved in the hearing. § 771.82 Evidence. The Federal Rules of Evidence are not binding on these proceedings. However, any relevant evidence that would be admissible under the rules of evidence governing civil proceedings in matters not involving trial by jury in the Courts of the United States shall be admissible. The administrative law judge may relax such rules in any hearing when in his judgment such relaxation would not impair the rights of either party and would more speedily conclude the hearing or would better serve the ends of justice. However, the administrative VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 law judge shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence. Every party shall have the right to present his case or defense by oral or documentary evidence, depositions, or duly authenticated copies of records and documents; to submit rebuttal evidence; and to conduct such reasonable crossexamination as may be required for a full and true disclosure of the facts. (a) Witnesses. The administrative law judge shall have the right in his discretion to limit the number of witnesses whose testimony may be merely cumulative and shall, as a matter of policy, not only exclude irrelevant, immaterial, or unduly repetitious evidence but shall also limit the crossexamination of witnesses to that required for a full and true disclosure of the facts so as not to unnecessarily prolong the hearing and unduly burden the record. Opinion or expert testimony shall be admitted when the administrative law judge is satisfied that the witness is properly qualified as defined by Federal Rules of Evidence 701 or 702. (b) Documentary evidence. Material and relevant evidence shall not be excluded because it is not the best evidence unless its authenticity is challenged, in which case reasonable time shall be given to establish its authenticity. When only portions of a document are to be relied upon, the offering party shall prepare the pertinent excerpts, adequately identified, and shall supply copies of such excerpts, together with a statement indicating the purpose for which such materials will be offered, to the administrative law judge and to the other parties. Only the excerpts, so prepared and submitted, shall be received in the record. However, the whole of the original document should be made available for examination and for use by opposing counsel for purposes of cross-examination. Compilations, charts, summaries of data, and photocopies of documents may be admitted in evidence if the proceedings will thereby be expedited, and if the material upon which they are based is available for examination by the parties. Objections to the evidence shall be in short form, stating the grounds relied upon. The transcript shall not include argument or debate on objections, except as ordered by the administrative law judge, but shall include the rulings thereon. Where official notice is taken of a material fact not appearing in the evidence in the record, any party shall, on timely request, be afforded an opportunity to controvert such fact. PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 (c) Hearsay. Probative, material, and reliable hearsay evidence is admissible in proceedings under this subpart. § 771.83 Closing of hearings; arguments, briefs, and proposed findings. Before closing a hearing, the administrative law judge shall inquire of each party whether the party has any further evidence to offer, which inquiry and the response thereto shall be shown in the record. The administrative law judge may hear arguments of counsel and the administrative law judge may limit the time of such arguments at his discretion. The administrative law judge may, in his discretion, allow briefs to be filed on behalf of either party but shall closely limit the time within which the briefs for both parties shall be filed, so as to avoid unreasonable delay. The administrative law judge shall also ascertain whether the parties desire to submit proposed findings and conclusions, together with supporting reasons, and, if so, a period of not more than 15 days (unless extended by the administrative law judge)—after the close of the hearing or receipt of a copy of the record, if one is requested—will be allowed for such purpose. § 771.84 Reopening of the hearing. The Director, the Director of Industry Operations, or the administrative law judge, as the case may be, may, as to all matters pending before him, in his discretion reopen a hearing— (a) In case of default under § 771.67 or § 771.68 where the applicant, licensee, or permittee failed to request a hearing or to appear after one was set, upon petition setting forth reasonable grounds for such failure; and (b) Where any party desires leave to adduce additional evidence upon petition summarizing such evidence, establishing its materiality, and stating reasonable grounds why such party with due diligence was unable to produce such evidence at the hearing. Record of Testimony § 771.85 Stenographic record. A stenographic record shall be made of the testimony and proceedings, including stipulations, admissions of fact, and arguments of counsel in all proceedings. A transcript of the evidence and proceedings at the hearing shall be made in all cases. § 771.86 Oath of reporter. The reporter making the stenographic record shall subscribe an oath before the administrative law judge, to be filed in the record of the case, that he will truly and correctly report the oral testimony and proceedings at such hearing and E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations accurately transcribe the same to the best of his ability. Subpart G—Administrative Law Judges § 771.95 Responsibilities of administrative law judges. In hearings under this subpart, administrative law judges must apply all governing agency rulings and governing agency precedent. They shall be responsible for the conduct of hearings and shall render their decisions as soon as is reasonably possible after the hearing is closed. Administrative law judges shall also be responsible for the preparation, certification, and forwarding of the complete record of proceedings and the administrative work relating thereto and, by arrangement with Directors of Industry Operations and representatives of the Office of Chief Counsel shall have access to facilities and temporary use of personnel at such times and places as are needed in the prompt dispatch of official business. § 771.96 Disqualification. An administrative law judge shall, at any time, withdraw from any proceeding if he deems himself disqualified. Upon the filing in good faith by the applicant, licensee, permittee, or Attorney for the Government of a timely and sufficient affidavit of facts showing personal bias or otherwise warranting the disqualification of any administrative law judge, if the administrative law judge fails to disqualify himself, the Director shall upon appeal, as provided in § 771.120, determine the matter as a part of the record and decision in the proceeding. If the Director decides the administrative law judge should have deemed himself disqualified, the Director will remand the record for hearing de novo before another administrative law judge. If the Director should decide against the disqualification of the administrative law judge, the proceeding will be reviewed on its merits by the original administrative law judge. The burden is upon the party seeking disqualification to set forth evidence sufficient to overcome the presumption of the administrative law judge’s honesty and integrity. § 771.97 Powers. Administrative law judges shall have authority to: (a) Administer oaths and affirmations; (b) Issue subpoenas as authorized by law; (c) Rule upon offers of proof and receive relevant evidence; VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 (d) Take or cause depositions to be taken whenever the ends of justice would be served thereby; (e) Regulate the course of the hearing; (f) Hold conferences for the settlement or simplification of the issues by consent of the parties; (g) Require the attendance at such conferences of at least one representative of each party who has the authority to negotiate concerning resolution of issues in controversy; (h) Dispose of procedural requests or similar matters; (i) Render recommended decisions in proceedings on applications for licenses and permits and on revocation or denial of renewal of licenses or permits; (j) Call, examine, and cross-examine witnesses, including hostile or adverse witnesses, when the administrative law judge deems such action to be necessary to a just disposition of the case, and introduce into the record documentary or other evidence; and (k) Take any other action authorized by rule of the Bureau of Alcohol, Tobacco, Firearms, and Explosives consistent with the Administrative Procedure Act. See 5 U.S.C. 556(c) and 18 U.S.C. 843. § 771.98 Separation of functions. Administrative law judges shall perform no functions inconsistent with their duties and responsibilities. The Director may assign administrative law judges duties not inconsistent with the performance of their functions as administrative law judges. Except to the extent required for the disposition of ex parte matters as required by law, no administrative law judge shall consult any person or party as to any fact in issue unless there has been notice and opportunity for all parties to participate. The functions of the administrative law judge shall be entirely separated from the general investigative functions of the agency. No officer, employee, or agent engaged in the performance of investigative or prosecuting functions in any proceeding shall, in that proceeding or a factually related proceeding, participate or advise in the administrative law judge’s or Director’s decision, or in the agency review on appeal, except as a witness or counsel in the proceedings. The administrative law judge may not informally obtain advice or opinions from the parties or their counsel, or from any officer or employee of the ATF, as to the facts or the weight or interpretation to be given to the evidence. The administrative law judge may, however, informally obtain advice on matters of law or procedure in a proceeding from officers or employees who were not engaged in the PO 00000 Frm 00049 Fmt 4700 Sfmt 4700 64751 performance of investigative or prosecuting functions in that proceeding or a factually related proceeding. The administrative law judge may, at any time, consult with and obtain instructions from the Director on questions of law and policy. Furthermore, it is not a violation of the separation of functions for the administrative law judge to participate in the questioning of witnesses, where the questioning is for clarification or to move the proceedings along, and where the questioning is not so extensive as to place the administrative law judge in the position of a prosecuting officer. § 771.99 Conduct of hearing. The administrative law judge is charged with the duty of conducting a fair and impartial hearing and of maintaining order in form and manner consistent with the dignity of a court proceeding. In the event that counsel or any person or witness in any proceeding shall refuse to obey the orders of the administrative law judge, or be guilty of disorderly or contemptuous language or conduct in connection with any hearing, the administrative law judge may, for good cause stated in the record, suspend the hearing, and, in the case of disorderly or contemptuous language or conduct by an attorney, report the matter to the Department of Justice, Office of Professional Responsibility. See 28 CFR 0.39a(a)(9). The refusal of a witness to answer any question that has been ruled to be proper shall be considered by the administrative law judge in determining the weight to be given all the testimony of that witness. § 771.100 Unavailability of administrative law judge. In the event that the administrative law judge designated to conduct a hearing becomes unavailable before the filing of his findings and recommended decision, the Director may assign the case to another administrative law judge for the continuance of the proceeding, in accordance with the regulations in this part in the same manner as if he had been designated administrative law judge at the commencement of the proceeding. Subpart H—Decisions § 771.105 Administrative law judge’s findings and recommended decision. Within a reasonable time after the conclusion of the hearing, and as expeditiously as possible, the administrative law judge shall render his recommended decision. All decisions shall become a part of the record and, if proposed findings and conclusions have been filed, shall show E:\FR\FM\25NOR1.SGM 25NOR1 64752 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations the administrative law judge’s ruling upon each of such proposed findings and conclusions. Decisions shall consist of: (a) A brief statement of the issues of fact involved in the proceeding; (b) The administrative law judge’s findings and conclusions, as well as the reasons or basis therefor with record references, upon all the material issues of fact, law, or discretion presented on the record (including, when appropriate, comment as to the credibility and demeanor of the witnesses); and (c) The administrative law judge’s recommended determination as to the revocation or denial at issue. § 771.106 Certification and transmittal of record and decision. After reaching his decision, the administrative law judge shall certify the complete record of the proceeding before him and shall immediately forward the complete certified record together with one copy of the administrative law judge’s recommended decision to the Director of Industry Operations for initial decision, one copy of the recommended decision to the applicant or the applicant’s representative, and one copy of the recommended decision to the Attorney for the Government. Action by Director of Industry Operations § 771.107 Initial application proceedings. (a) Accepting the recommended decision. If the Director of Industry Operations, after consideration of the record of the hearing and of any proposed findings, conclusions, or exceptions filed with him by the applicant, accepts the recommended decision of the administrative law judge, the Director of Industry Operations shall by order approve or disapprove of the application in accordance with the recommended decision. If the Director of Industry Operations approves the application, he shall briefly state for the record his reasons therefor. However, if the Director of Industry Operations disapproves of the applications, he shall serve a copy of the administrative law judge’s recommended decision on the applicant, informing the applicant of the Director of Industry Operations’ contemplated action and affording the applicant not more than 10 days in which to submit proposed findings and conclusions or exceptions to the recommended decision with reasons in support thereof. (b) Rejecting the recommended decision. If, after such consideration VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 referenced in paragraph (a) of this section, the Director of Industry Operations rejects the recommended decision of the administrative law judge, in whole or in part, the Director of Industry Operations shall by order make such findings and conclusions as in his opinion are warranted by the law and facts in the record. Any decision of the Director of Industry Operations ordering the disapproval of an application for a permit shall state the findings and conclusions upon which it is based, including his ruling upon each proposed finding, conclusion, and exception to the administrative law judge’s recommended decision, together with a statement of the administrative law judge’s findings, conclusions, and reasons or basis therefor, upon all material issues of fact, law, or discretion presented on the record. A signed original of the decision of the Director of Industry Operations shall be served upon the applicant and the original copy containing a certificate of service shall be placed in the official record of the proceeding. such a petition, he shall withhold issuance of the order pending the decision of the Director, upon receipt of which he shall issue the order in accordance with the Director’s decision. A signed original of the order of the Director of Industry Operations shall be served upon the licensee or permittee or his representative and the original copy containing a certificate of service shall be placed in the official record of the proceeding. (c) Decisions pursuant to § 771.78(b). In a case where the initial decision is made by the Director of Industry Operations in accordance with § 771.78(b), the Director of Industry Operations shall also issue an order revoking or denying the renewal of the license or permit, or dismissing the proceedings in accordance with his initial decision. A signed original of the decision and order of the Director of Industry Operations shall be served upon the licensee or permittee or his representative and the original copy placed in the official record of the proceeding. § 771.108 decision. § 771.110 Director of Industry Operations’ When the Director of Industry Operations issues an initial decision in accordance with § 771.77 or § 771.107 the decision shall become a part of the record. The decision shall consist of: (a) A brief statement of the issues involved in the proceedings; (b) The Director of Industry Operations’ findings and conclusions, as well as the reasons therefor; and (c) The Director of Industry Operations’ determination on the record. § 771.109 Revocation or denial of renewal proceedings. (a) Accepting the recommended decision. After consideration of the complete certified record of the hearing, if the Director of Industry Operations agrees with the recommended decision of the administrative law judge, the Director of Industry Operations shall enter an order revoking or denying the renewal of the license or permit or dismissing the proceedings in accordance with the administrative law judge’s recommended decision. (b) Rejecting the recommended decision. After consideration of the complete certified record of the hearing, if the Director of Industry Operations disagrees with the recommended decision of the administrative law judge, he may file a petition with the Director for review of the recommended decision, as provided in § 771.120. If the Director of Industry Operations files PO 00000 Frm 00050 Fmt 4700 Sfmt 4700 Revocation or denial of renewal. Pursuant to § 771.109(a), when the Director of Industry Operations issues an order revoking or denying the renewal of a license or permit, he shall furnish a copy of the order and of the recommended decision on which it is based to the Director. Should such order be subsequently set aside on review by the courts, the Director of Industry Operations will so advise the Director. § 771.111 Proceedings involving violations not within the division of issuance of license or permit. In the event violations occurred at a place not within the field division where the licensee or permittee is located, the Director of Industry Operations of the field division where the licensee or permittee is located will take jurisdiction over any proceeding and will take appropriate action in accordance with this subpart, including issuing the relevant notice. Subpart I—Review § 771.120 Director. Appeal on petition to the (a) An appeal to the Director may be made by the applicant, licensee, or permittee, or by the Director of Industry Operations (DIO). For the applicant, licensee, or permittee, such appeal shall be made by filing a petition for review on appeal with the Director within 15 days of the service of the adverse initial decision by the Director of Industry Operations. For the Director of Industry Operations, such appeal shall be taken E:\FR\FM\25NOR1.SGM 25NOR1 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations by filing a petition for review on appeal with the Director within 15 days of the issuance of the administrative law judge’s decision recommending against revocation or denial of renewal. The petitioning applicant, licensee, or permittee must submit arguments showing that the Director of Industry Operations’ initial decision, and if applicable the underlying administrative law judge’s recommended decision, was without reasonable warrant in fact or contrary to law and regulations. The petitioning DIO must submit arguments showing the administrative law judge’s recommended decision was without reasonable warrant in fact or contrary to law and regulations. Nothing in this part shall limit the authority of the Director to review the administrative law judge’s decision exercising all the powers that he would have in making the recommended decision. (b) A copy of the petition shall be filed with the Director of Industry Operations or served on the applicant, licensee, or permittee, as the case may be. In the event of an appeal, the Director of Industry Operations shall immediately certify and forward the complete original record, by certified mail, to the Director, for his consideration and review. § 771.121 Review by Director. (a) Modification or reversal. On appeal, the Director shall afford a reasonable opportunity for the submission of proposed findings, conclusions, or exceptions with reasons in support thereof and an opportunity for oral argument. The Director may alter or modify any finding of the administrative law judge (or of the Director of Industry Operations as the case may be) and may affirm, reverse, or modify the recommended decision of the administrative law judge, or the initial decision of the Director of Industry Operations, or may remand the case for further hearing, but shall not consider evidence that is not a part of the record. (b) Affirmance. Except in the case of a remand, when, on appeal, the Director affirms the initial decision of the Director of Industry Operations or the recommended decision of the administrative law judge, as the case may be, such decision shall be the agency’s final decision. (c) Recusal. Appeals and petitions for review shall not be decided by the Director in any proceeding in which the Director has engaged in an investigation or prosecution and in such event the Director shall so state his disqualification in writing and refer the VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 record to the Deputy Director for appropriate action. The Deputy Director may designate an Assistant Director or one of the Deputy Director’s principal aides to consider any proceeding instead of the Director. The original copy of the decision on review shall be placed in the official record of the proceeding, a signed duplicate original shall be served upon the applicant, licensee, or permittee, and a copy shall be transmitted to the Director of Industry Operations. § 771.122 Denial of renewal or revocation. If the Director orders the denial of an application, a copy of the application marked ‘‘Disapproved’’ will be returned to the applicant by the Director of Industry Operations. If the Director orders a revocation of a license of permit, any stay of revocation will be withdrawn and the revocation will become effective upon the order of the Director of Industry Operations. After the issuance of a denial of a renewal application or a revocation, and pending the final determination of a timely appeal, the licensee or permittee may continue operations, if at all, pursuant to § 555.83 of this chapter. § 771.123 Court review. (a) If an applicant, licensee, or permittee files an appeal in the United States Court of Appeals for the circuit in which he resides or has his principle place of business, within 60 days after the receipt of the Director’s decision, the Director, upon notification that an appeal has been taken, shall prepare the record for submission to the court in accordance with applicable court rules. (b) If an applicant, licensee, or permittee does not seek review with the Director, but instead seeks review within 60 days after the receipt of the initial decision of the Director of Industry Operations pursuant to § 771.109, the Director of Industry Operations, upon notification that an appeal has been taken, shall prepare the record for submission to the court in accordance with applicable court rules. The Director of Industry Operations shall notify the Director if such an appeal is taken. (c) The Director, or the Director of Industry Operations, as the case may be, shall certify the correctness of the transcript of the record, forward one copy to the attorney for the Government in the review of the case, and file the original record of the proceedings with the original certificate in the appropriate United States Court of Appeals. PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 64753 Subpart J—Miscellaneous § 771.124 Depositions. The administrative law judge may take or order the taking of depositions by either party to the proceeding at such time and place as the administrative law judge may designate before a person having the power to administer oaths, upon application therefor and notice to the parties to the action. The testimony shall be reduced to writing by the person taking the deposition, or a person under his direction, and the deposition shall be subscribed by the deponent unless subscribing thereof is waived in writing by the parties. § 771.125 Witnesses and fees. Witnesses summoned before the administrative law judge may be paid the same fees and mileage that are paid witnesses in the courts of the United States, and witnesses whose depositions are taken and the persons taking the same shall severally be entitled to the same fees as are paid for like services in the courts of the United States. Witness fees and mileage shall be paid by the party at whose instance the witnesses appear and the person taking the deposition shall be paid by the party at whose instance the deposition is taken. § 771.126 Discovery. The discovery provisions of the Federal Rules of Civil Procedure and the Federal Rules of Criminal Procedure are not controlling with respect to agency proceedings under this part. However, fundamental fairness requires a party be given the opportunity to know what evidence is offered and a chance to rebut such evidence. Either party may petition the administrative law judge for non-burdensome discovery if the party can demonstrate that the interests of justice require disclosure of these materials. § 771.127 Privileges. The Administrative Procedure Act, 5 U.S.C. 559, provides that, except as otherwise required by law, privileges relating to procedure or evidence apply equally to agencies and persons. Therefore, an agency may rely on judicially-approved privileges to resist production of its files where appropriate. Record § 771.135 What constitutes record. The transcript of testimony, pleadings, exhibits, all papers and requests filed in the proceeding, and all findings, decisions, and orders, shall constitute the exclusive record. Where the decision rests on official notice of E:\FR\FM\25NOR1.SGM 25NOR1 64754 Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Rules and Regulations material fact not appearing in the record, the administrative law judge shall so state in his findings and any party shall, on timely request, be afforded an opportunity to show facts to the contrary. § 771.136 Availability. A copy of the record shall be available for inspection or copying by the parties to the proceedings during business hours at the office of the administrative law judge or the Director of Industry Operations or, pending administrative review, at the Office of the Director. Dated: November 5, 2019. William P. Barr, Attorney General. [FR Doc. 2019–24570 Filed 11–22–19; 8:45 am] BILLING CODE 4410–FY–P FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 29 CFR Part 2700 Simplified Proceedings Federal Mine Safety and Health Review Commission. ACTION: Direct final rule; confirmation of effective date. AGENCY: The Federal Mine Safety and Health Review Commission (the ‘‘Commission’’) is an independent adjudicatory agency that provides hearings and appellate review of cases arising under the Federal Mine Safety and Health Act of 1977. On October 11, 2019, the Commission published in the Federal Register a direct final rule which would withdraw the Commission’s procedures for simplified proceedings. The Commission received one comment on the rule and is confirming the withdrawal of its simplified proceeding rules. DATES: The effective date of November 25, 2019, for the direct final rule published October 11, 2019 (84 FR 54782), is confirmed. FOR FURTHER INFORMATION CONTACT: Sarah Stewart, Deputy General Counsel, Office of the General Counsel, Federal Mine Safety and Health Review Commission, at (202) 434–9935. SUPPLEMENTARY INFORMATION: SUMMARY: A. Background In 2010, the Commission published in the Federal Register a final rule to simplify the procedures for handling certain civil penalty proceedings. The Commission evaluated the procedures in a pilot program extending almost nine years. VerDate Sep<11>2014 15:57 Nov 22, 2019 Jkt 250001 Based upon its evaluation of the simplified proceedings pilot program, the Commission determined that a special set of procedures for its simplest cases is not necessary at the present time. The Commission’s overall caseload has decreased since the simplified proceedings rule was promulgated. Moreover, parties may request on a case-by-case basis that the Commission adapt the Commission’s conventional procedures as necessary to expedite or simplify the processing of a case. On October 11, 2019 (84 FR 54782), the Commission published a direct final rule withdrawing the simplified proceedings rule and permitting comment. The Commission received one comment from the Solicitor of Labor, on behalf of the U.S. Department of Labor. The Solicitor made no specific comments on the procedural rules themselves. Rather, the Solicitor suggested that the Commission should solicit more comments and data on the manner to improve the proceedings, including considering in part the simplified proceeding rules of the Occupational Safety and Health Review Commission (‘‘OSHRC’’). The Commission already considered OSHRC’s simplified proceeding rules in its determination that the Commission’s simplified rules should be withdrawn. Having considered the comments received, the Commission has determined that subpart J should be withdrawn at the present time. If practice proves the necessity for different rules applicable to the Commission’s simplest cases, the Commission will publish a proposal of such rules at that time. B. Notice and Public Procedure 1. Executive Orders The Commission is an independent regulatory agency under section 3(b) of Executive Order (‘‘E.O.’’) 12866 (Sept. 30, 1993), 58 FR 51735 (Oct. 4, 1993); E.O. 13563 (Jan. 18, 2011), 76 FR 3821 (Jan. 21, 2011); E.O. 13771 (Jan. 30, 2017), 82 FR 9339 (Feb. 3, 2017); E.O. 13777 (Feb. 24, 2017), 82 FR 12285 (Mar. 1, 2017); and E.O. 13132 (Aug. 4, 1999), 64 FR 43255 (Aug. 10, 1999). The Commission has determined that this rulemaking does not have ‘‘takings implications’’ under E.O. 12630 (Mar. 15, 1988), 53 FR 8859 (Mar. 18, 1988). The Commission has determined that these regulations meet all applicable standards set forth in E.O. 12988 (Feb. 5, 1996), 61 FR 4729 (Feb. 7, 1996). 2. Statutory Requirements The Commission has determined that this rulemaking is exempt from the PO 00000 Frm 00052 Fmt 4700 Sfmt 4700 requirements of the Regulatory Flexibility Act (‘‘RFA’’) (5 U.S.C. 601 et seq.), because the rule would not have a significant economic impact on a substantial number of small entities. The Commission has determined that this rule is not a ‘‘major rule’’ under the Small Business Regulatory Enforcement Fairness Act (‘‘SBREFA’’) (5 U.S.C. 804(2)). The Commission has determined that the Paperwork Reduction Act (‘‘PRA’’) (44 U.S.C. 3501 et seq.) does not apply because these rules do not contain any information collection requirements that require the approval of the OMB. The Commission has determined that the Congressional Review Act (‘‘CRA’’) (5 U.S.C. 801 et seq.) does not apply because, pursuant to 5 U.S.C. 804(3)(C), these rules are rules of agency procedure or practice that do not substantially affect the rights or obligations of non-agency parties. The Commission has determined that this rulemaking is not a major Federal action significantly affecting the quality of the human environment requiring an environmental assessment under the National Environmental Policy Act (‘‘NEPA’’) (42 U.S.C. 4321 et seq.). The Commission is an independent regulatory agency, and as such, is not subject to the requirements of the Unfunded Mandates Reform Act (‘‘UMRA’’) (2 U.S.C. 1532 et seq.). Dated: November 20, 2019. Marco M. Rajkovich, Jr., Chairman, Federal Mine Safety and Health Review Commission. [FR Doc. 2019–25503 Filed 11–22–19; 8:45 am] BILLING CODE 6735–01–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 9 and 721 [EPA–HQ–OPPT–2018–0627; FRL–10001– 30] RIN 2070–AB27 Significant New Use Rules on Certain Chemical Substances (18–1) Environmental Protection Agency (EPA). ACTION: Final rule. AGENCY: EPA is issuing significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 22 chemical substances which are the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA under TSCA. This action requires persons who intend to manufacture (defined by SUMMARY: E:\FR\FM\25NOR1.SGM 25NOR1

Agencies

[Federal Register Volume 84, Number 227 (Monday, November 25, 2019)]
[Rules and Regulations]
[Pages 64740-64754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24570]


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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Parts 478, 555, and 771

[Docket No. ATF 33F; AG Order No. 4577-2019]
RIN 1140-AA40


Rules of Practice in Explosives License and Permit Proceedings 
(2007R-5P); Revisions Reflecting Changes Consistent With the Homeland 
Security Act of 2002

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
Department of Justice.

[[Page 64741]]


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 
procedures and practices in connection with denials of initial 
applications, denials of renewals, and revocations of explosives 
licenses or permits. These regulations are being codified in a new part 
entitled, ``Rules and Practice in License and Permit Proceedings.'' 
These regulations are based upon the regulations that ATF relied upon 
prior to its transfer from the Department of the Treasury to the 
Department of Justice. This final rule makes minor revisions to 
regulations governing administrative proceedings related to the denial, 
suspension, or revocation of a license, and the imposition of a civil 
fine under Federal firearms law to reference regulations under ATF 
authority. These revisions remove all references to statutes, 
regulations, positions, and other terms that are applicable only to the 
Department of the Treasury. These revisions reflect ATF's position as a 
regulatory and enforcement agency under the Department of Justice and 
are consistent with the regulations governing administrative hearing 
processes for explosives licenses and permits.

DATES: This rule is effective December 26, 2019.

FOR FURTHER INFORMATION CONTACT: Denise Brown, Enforcement Programs and 
Services, Office of Regulatory Affairs, 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: 

I. Background

    The Attorney General has delegated to the Director of ATF 
responsibility for administering and enforcing title I of the Gun 
Control Act of 1968 (GCA), Public Law 90-618, as amended, 18 U.S.C. 
chapter 44, relating to commerce in firearms and ammunition; and title 
XI, Regulation of Explosives, of the Organized Crime Control Act of 
1970 (OCCA), Public Law 91-452, as amended, 18 U.S.C. chapter 40. See 
18 U.S.C. 926(a); 18 U.S.C. 843; 28 CFR 0.130. Under the GCA, ATF has 
the authority to license applicants, renew licenses, and revoke Federal 
firearms licenses. 18 U.S.C. 923. The OCCA, as amended by the Safe 
Explosives Act, title XI, subtitle C of Public Law 107-296, the 
Homeland Security Act of 2002 (enacted November 25, 2002), authorizes 
ATF to provide licenses and permits to qualified applicants for the 
acquisition, distribution, storage, or use of explosive materials and 
to renew or revoke such licenses and permits. 18 U.S.C. 843.

A. Rules of Practice in Permit Proceedings (27 CFR Part 71)

    On November 25, 2002, President George W. Bush signed the Homeland 
Security Act of 2002, Public Law 107-296 (the Act), which divided the 
regulatory functions of the Bureau of Alcohol, Tobacco, and Firearms 
into two separate agencies. The Act renamed the Bureau of Alcohol, 
Tobacco, and Firearms as the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives and transferred law enforcement and certain regulatory 
functions to the Department of Justice. The Act also retained in the 
Department of the Treasury (Treasury) certain functions of the former 
Bureau of Alcohol, Tobacco, and Firearms. The functions retained by 
Treasury became the responsibility of a new Alcohol and Tobacco Tax and 
Trade Bureau (TTB). As a result of the Act, TTB has all regulatory 
authority under 27 CFR part 71 and ATF therefore cannot promulgate new 
regulations under that part, although ATF has continued to follow the 
procedures set forth in part 71 to administer hearings related to the 
application and revocation of Federal explosives licenses and permits. 
See 28 CFR 0.133(a)(2).

B. License Proceedings (27 CFR Part 478)

    Regulations that implement the provisions of the GCA are set forth 
in 27 CFR part 478. Subpart E of part 478 relates to proceedings 
involving Federal firearms licensees, including the denial, suspension, 
or revocation of licenses and the imposition of civil fines. 
Specifically, 27 CFR 478.76 provides that, at a hearing for the 
disapproval of applications for firearms licenses, for the denial, 
suspension, or revocation of a firearms license, or for imposition of a 
civil fine under Federal firearms law, an applicant or licensee may be 
represented by an attorney, a certified public accountant, or any other 
person recognized to practice before ATF as provided in 31 CFR part 8, 
if the representative complies with the applicable practice 
requirements of 26 CFR 601.521 through 601.527.

C. License and Permit Proceedings (27 CFR Part 555)

    The regulations that implement OCCA procedural and substantive 
requirements are found in 27 CFR part 555. Subpart E of part 555 
relates to proceedings involving Federal explosives licensees and 
permittees, including the denial of an initial application, denial of a 
renewal, and revocation of a license or permit. Specifically, 27 CFR 
555.78 provides that, at a hearing for the disapproval of applications 
for explosives licenses, and for the denial of renewal or revocation of 
such licenses or permits under Federal explosives law, an applicant, 
licensee, or permittee may be represented by an attorney, a certified 
public accountant, or any other person recognized to practice before 
ATF as provided in 31 CFR part 8, if the representative complies with 
the applicable practice requirements of 26 CFR 601.521 through 601.527.

II. Notice of Proposed Rulemaking

    On October 7, 2014, the Department of Justice published a notice of 
proposed rulemaking with a request for comments entitled, ``Rules of 
Practice in Explosives License and Permit Proceedings (2007R-5P); 
Revisions Reflecting Changes Consistent with the Homeland Security Act 
of 2002.'' 79 FR 60391-60405. The proposed rule sought to revise ATF 
regulations to add a new part that implements 18 U.S.C. 843 and 847 
relating to the procedures and practice for the denials of initial 
applications, denials of renewal, and revocations of explosives 
licenses or permits by ATF under Federal explosives law. Additionally, 
the proposed rule sought to make minor revisions to regulations 
governing administrative proceedings related to the denial, suspension, 
or revocation of a license, and the imposition of a civil fine under 
Federal firearms law to reference regulations under ATF authority. 
These changes clarify ATF's role in explosives license proceedings and 
remove references to any regulations outside the scope of ATF's 
authority.
    Comments on the notice of proposed rulemaking were to be submitted 
to ATF on or before January 5, 2015.

III. Comment Analysis and Department Response

Comments Received

    In response to the notice of proposed rulemaking, ATF received two 
comments. One commenter is an explosive and fertilizer trade 
association; and the other is a university student. Both commenters 
support ATF's proposal to transfer and consolidate regulations 
governing explosives license applications and renewals or revocation of 
licenses and

[[Page 64742]]

permits, improving the enforcement of ATF's regulations.
    One of the commenters, the Institute of Makers of Explosives (IME), 
notes that the creation of a new part 771 addresses jurisdictional and 
authority issues within ATF. IME agrees that ATF should maintain 
jurisdiction for all explosives programs and since the regulatory 
authority over part 71 resides with another agency, ATF should 
promulgate new regulations affecting the procedures for hearings that 
it is responsible for conducting. IME further states: ``If promulgated, 
the new Part will bring all administrative and enforcement 
responsibilities connected with the explosives licensing and permitting 
program under the jurisdiction of ATF and will allow the Bureau, 
itself, to affect any necessary changes to the procedural rules 
governing its due process proceedings.'' Further, IME agrees with ATF's 
clarification of 27 CFR 555.78 that will allow for self-representation 
in licensing and permit hearings conducted by ATF.
    The second commenter, a student, generally supports the rule 
because the proscribed regulation changes will not hurt the economy but 
rather ``help[s] the economy, productivity, competition, jobs, the 
environment, public health or safety, State, local, or tribal 
government and communities.'' The same commenter further notes that the 
rule gives every person the right to due process if their application 
has been denied for a firearm.

Department Response

    The Department agrees that by promulgating regulations in a new 
part, 27 CFR part 771, ATF will be able to better govern and administer 
explosives license and permit proceedings that come under its 
jurisdiction.

IV. Final Rule

    This final rule implements the amendments to the regulations in 27 
CFR 478.76, 555.73, 555.75, 555.78, 555.79, 555.82, and adds new part 
771, as specified in the notice of proposed rulemaking published on 
October 7, 2014 (79 FR 60391-60405). Additionally, this final rule 
includes some minor technical amendments. First, in 27 CFR 771.5, the 
definition of ``Application'' is amended to include renewal 
applications and the definition of ``Person'' is amended to include 
``company.'' Second, Sec.  771.59, which governs an initial application 
for a license or permit, is amended to eliminate the statement that a 
request for hearing should include a statement of the reasons for a 
hearing; this change makes this provision consistent with the 
requirements for an existing Federal explosive licensee requesting a 
hearing in Sec.  771.60. Third, Sec. Sec.  771.59 and 771.60 are 
amended to add that the licensee or permittee will receive notice of 
the assignment of an administrative law judge (ALJ) by the Director of 
Industry Operations (DIO), if the ALJ has not already provided such 
notice; this clarifies that the ALJ will often provide this 
notification but the DIO must provide this notice if not already 
provided by the ALJ. Fourth, a reference to Sec.  771.59 is added in 
Sec.  771.64, which concerns part of the process following a request 
for a hearing, to reflect the fact that requests for a hearing can be 
made as a result of denial of an initial application in addition to the 
revocation or denial of a renewal application. Fifth, Sec.  771.82 is 
amended to include a statement that the Federal Rules of Evidence are 
not binding on these proceedings, and to include a reference to expert 
testimony and the relevant Federal Rule of Evidence in Sec.  771.82(a). 
These changes are necessary to clarify what is admissible in a hearing 
and to clarify that both opinion and expert testimony shall be admitted 
in a hearing when the ALJ is satisfied that the witness is properly 
qualified pursuant to Federal Rules of Evidence 701 or 702. Sixth, 
Sec.  771.95, which governs the responsibilities of an ALJ, is amended 
to eliminate the sentence that ALJs shall be under the administrative 
control of the Director. This sentence addresses the responsibilities 
of the Director and not the responsibilities of the ALJs. Therefore, 
the sentence is unnecessary as to the responsibilities of the ALJ and 
confusing as to application. Seventh, Sec.  771.97(k), which authorizes 
the ALJ to take any action authorized by an ATF rule and consistent 
with the Administrative Procedure Act, is amended to add a cross-
reference to ATF's authority concerning licenses and permits, 18 U.S.C. 
843, and the provision of the Administrative Procedure Act setting out 
authority for individuals presiding over agency hearings, 5 U.S.C. 
556(c). Eighth, the final rule amends 27 CFR 771.99 to state that 
disorderly or contemptuous language or conduct by an attorney (either 
for a licensee or permittee or for the Government), may be reported to 
the Department of Justice, Office of Professional Responsibility, 
consistent with 28 CFR 0.39a(a)(9). Finally, other changes eliminate 
superfluous language or correct stylistic errors.

V. Statutory and Executive Order Review

A. Executive Order 12866, 13563, and 13771

    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; Executive Order 13563, ``Improving 
Regulation and Regulatory Review,'' section 1(b), General Principles of 
Regulation, and section 6, Retrospective Analyses of Existing Rules; 
and Executive Order 13771, ``Reducing Regulation and Controlling 
Regulatory Costs.''
    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. This rule consolidates and clarifies regulations governing 
explosives license application renewal or revocation of licenses and 
permits. This rule would not add any costs to industry because this 
rule puts into regulation current industry and agency practices; 
therefore, the explosives industry would not need to incur any hourly 
or capital burdens in order to comply with this final rule. The 
Department has assessed the costs and benefits of this regulation and 
believes that the regulatory approach selected imposes no new 
regulatory costs and maximizes net benefits.
    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 
government 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. The Department has determined that this 
final rule is not a ``significant regulatory action'' as defined in 
Executive Order 12866, section 3(f). Accordingly, this

[[Page 64743]]

final rule has not been reviewed by the Office of Management and Budget 
(OMB).
    Because this rule is not significant under Executive Order 12866, 
this action is not subject to Executive Order 13771, ``Reducing 
Regulations and Controlling Regulatory Costs.''
    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 rule 
merely transfers and consolidates regulations governing explosives 
license application renewal or revocation of licenses and permits, 
improving the enforcement of ATF regulations.

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 (5 U.S.C. 605(b)) exempts an agency 
from the requirement to conduct a regulatory flexibility analysis of 
any rule subject to notice and comment rulemaking requirements if 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 
final rule and, by approving it, certifies that it will not have a 
significant economic impact on a substantial number of small entities.
    This final rule codifies the ATF regulations governing the 
procedure and practice for denying applications, denying renewals, and 
revoking explosives licenses or permits under Federal explosives law in 
a new part 771 under ATF's regulatory authority. Additionally, this 
final rule updates the regulations governing the denial, suspension, or 
revocation of a firearms license, and imposition of a civil fine under 
Federal firearms law to only reference regulations under ATF authority. 
This rule also amends the regulations to require an applicant or 
licensee in a proceeding concerning the denial, suspension, or 
revocation of a firearms license, or the imposition of a civil fine 
under Federal firearms law, to file a duly executed power of attorney 
designating his representative, and waivers, if applicable, under the 
Privacy Act of 1974. See 5 U.S.C. 552(a), and 26 U.S.C. 6103(c) 
(confidentiality and disclosure of returns and return information). 
This is required in the current regulations by reference to 31 CFR part 
8 and 26 CFR 601.521 through 601.527. The changes in this final rule 
are purely administrative and do not add any new requirements that 
would have any impact on the economy.

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. See 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.

G. Paperwork Reduction Act

    This final rule does not impose any new reporting or recordkeeping 
requirements under the Paperwork Reduction Act of 1995.

Drafting Information

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

List of Subjects

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.

27 CFR Part 555

    Administrative practice and procedure, Customs duties and 
inspection, Explosives, Hazardous substances, Imports, Penalties, 
Reporting and recordkeeping requirements, Safety, Security measures, 
Seizures and forfeitures, Transportation, Warehouses.

27 CFR Part 771

    Administrative practice and procedure, Explosives.

Authority and Issuance

    Accordingly, for reasons discussed in the preamble, 27 CFR chapter 
II is amended as follows:

PART 478--COMMERCE IN FIREARMS AND AMMUNITION

0
1. The authority citation for 27 part 478 continues 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.  478.76 to read as follows:


Sec.  478.76  Representation at a hearing.

    Applicants or licensees may represent themselves or be represented 
by an attorney, a certified public accountant, or any other person, 
specifically designated in a duly executed power of attorney that shall 
be filed in the proceeding by the applicant or licensee. The applicant 
or licensee shall file waivers, if applicable, under the Privacy Act of 
1974 and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns 
and return information). The Director of Industry Operations may be 
represented in proceedings under Sec. Sec.  478.72 and 478.74 by an 
attorney in the Office of Chief Counsel who is authorized to execute 
and file motions, briefs, and other papers in the proceeding, on behalf 
of the Director of Industry Operations, in the attorney's own name as 
``Attorney for the Government.''

[[Page 64744]]

PART 555--COMMERCE IN EXPLOSIVES

0
 3. The authority citation for 27 CFR part 555 continues to read as 
follows:

    Authority: 18 U.S.C. 847.


Sec.  555.73  [Amended]

0
 4. Amend Sec.  555.73 by removing ``part 71'' and adding in its place 
``part 771''.


Sec.  555.75  [Amended]

0
 5. Amend Sec.  555.75 by removing ``part 71'' and adding in its place 
``part 771''.

0
 6. Revise Sec.  555.78 to read as follows:


Sec.  555.78  Representation at a hearing.

    An applicant, licensee, or permittee may represent himself, or be 
represented by an attorney, a certified public accountant, or any other 
person, specifically designated in a duly executed power of attorney 
that shall be filed in the proceeding by the applicant, licensee, or 
permittee. The applicant, licensee, or permittee shall file waivers, if 
applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) 
(confidentiality and disclosure of returns and return information). The 
Director of Industry Operations may be represented in proceedings under 
Sec. Sec.  555.73 and 555.75 by an attorney in the Office of Chief 
Counsel who is authorized to execute and file motions, briefs and other 
papers in the proceeding, on behalf of the Director of Industry 
Operations, in the attorney's own name as ``Attorney for the 
Government.''


Sec.  555.79  [Amended]

0
 7. Amend Sec.  555.79 by removing ``(a)'', ``(b)'', and ``(c)'' and 
removing ``part 71'' and adding in its place ``part 771''.

0
8. Revise Sec.  555.82 to read as follows:


Sec.  555.82  Rules of practice in license and permit proceedings.

    Regulations governing the procedure and practice for disapproval of 
applications for explosives licenses and permits and for the denial of 
renewal or revocation of such licenses and permits under the Act are 
contained in part 771 of this chapter.

0
 9. Add subchapter E, consisting of part 771, to read as follows:

SUBCHAPTER E--EXPLOSIVE LICENSE AND PERMIT PROCEEDINGS

PART 771--RULES OF PRACTICE IN EXPLOSIVE LICENSE AND PERMIT 
PROCEEDINGS

Subpart A--Scope and Construction of Regulations
Sec.
771.1 Scope of part.
771.2 Liberal construction.
771.3 Forms prescribed.
Subpart B--Definitions
771.5 Meaning of terms.
Subpart C--General
771.25 Communications and pleadings.
771.26 Service on applicant, licensee, or permittee.
771.27 Service on the Director of Industry Operations or Director.

Time

771.28 Computation.
771.29 Continuances and extensions.

Representation at Hearings

771.30 Personal representation.
771.31 Attorneys and other representatives.
Subpart D--Compliance and Settlement
771.35 Opportunity for compliance.
771.36 Settlement.
771.37 Notice of contemplated action.
771.38 Licensee's or permittee's failure to meet requirements within 
reasonable time.
771.39 Authority of Director of Industry Operations to proceed with 
revocation or denial action.
Subpart E--Revocation or Denial
771.40 Denial of initial application.
771.41 Denial of renewal application or revocation of license or 
permit.
771.42 Grounds for revocation of licenses or permits.
771.43 Grounds for denial of applications for licenses or permits.
Subpart F--Hearing Procedure

Notices

771.55 Content.
771.56 Forms.
771.57 Execution and disposition.
771.58 Designated place of hearing.

Request for Hearing

771.59 Initial application proceedings.
771.60 Revocation or denial of renewal proceedings.
771.61 Notice of hearing.

Non-Request for Hearing

771.62 Initial application.
771.63 Revocation or denial of renewal.

Responses to Notices

771.64 Answers.
771.65 Responses admitting facts.
771.66 Initial conferences.

Failure to Appear

771.67 Initial applications.
771.68 Revocation or denial of renewal.

Waiver of Hearing

771.69 Withdrawal of request for hearing.
771.70 Adjudication based upon written submissions.

Surrender of License or Permit

771.71 Before citation.
771.72 After citation.

Motions

771.73 General.
771.74 Prior to hearing.
771.75 At hearing.

Hearing

771.76 General.
771.77 Initial applications.
771.78 Revocation or denial of renewal.

Burden of Proof

771.79 Initial applications.
771.80 Revocation or denial of renewal.

General

771.81 Stipulations at hearing.
771.82 Evidence.
771.83 Closing of hearings; arguments, briefs, and proposed 
findings.
771.84 Reopening of the hearing.

Record of Testimony

771.85 Stenographic record.
771.86 Oath of reporter.
Subpart G--Administrative Law Judges
771.95 Responsibilities of administrative law judges.
771.96 Disqualification.
771.97 Powers.
771.98 Separation of functions.
771.99 Conduct of hearing.
771.100 Unavailability of administrative law judge.
Subpart H--Decisions
771.105 Administrative law judge's findings and recommended 
decision.
771.106 Certification and transmittal of record and decision.

Action by Director of Industry Operations

771.107 Initial application proceedings.
771.108 Director of Industry Operations' decision.
771.109 Revocation or denial of renewal proceedings.
771.110 Revocation or denial of renewal.
771.111 Proceedings involving violations not within the division of 
issuance of license or permit.
Subpart I--Review
771.120 Appeal on petition to the Director.
771.121 Review by Director.
771.122 Denial of renewal or revocation.
771.123 Court review.
Subpart J--Miscellaneous
771.124 Depositions.
771.125 Witnesses and fees.
771.126 Discovery.
771.127 Privileges.

Record

771.135 What constitutes record.
771.136 Availability.

    Authority: 18 U.S.C. 843, 847.

Subpart A--Scope and Construction of Regulations


Sec.  771.1  Scope of part.

    Regulations in this part govern procedures and practices for 
disapproving applications for licenses and permits and denying renewal 
of or revocation of such licenses or permits under 18 U.S.C. chapter 
40.

[[Page 64745]]

Sec.  771.2  Liberal construction.

    Regulations in this part shall be liberally construed to secure 
just, expeditious, and efficient determination of the issues presented. 
The Rules of Civil Procedure for the U.S. District Courts (28 U.S.C. 
appendix) are not controlling, but may act as a guide in any situation 
not provided for or controlled by this part and shall be liberally 
construed or relaxed when necessary.


Sec.  771.3  Forms prescribed.

    (a) The Director is authorized to prescribe all forms required by 
this part. All of the information called for in each form shall be 
furnished as indicated by the headings on the form and the instructions 
on or pertaining to the form. In addition, information called for in 
each form shall be furnished as required by this part.
    (b) Requests for forms should be made to the ATF Distribution 
Center or through the ATF website at http://www.atf.gov.

Subpart B--Definitions


Sec.  771.5  Meaning of terms.

    When used in this part and in forms prescribed under this part, 
where not otherwise distinctly expressed or manifestly incompatible 
with the intent thereof, terms shall have the meaning provided in this 
subpart. Words in the plural form shall include the singular, and vice 
versa, and words importing the masculine gender shall include the 
feminine.
    Administrative law judge. The person appointed pursuant to 5 U.S.C. 
3105, designated to preside over any administrative proceedings under 
this part.
    Applicant. Any person who has filed an application for a license or 
permit under 18 U.S.C. chapter 40.
    Application. Any application for a license or permit, including 
renewal applications, under 18 U.S.C. chapter 40.
    ATF. The Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
Department of Justice.
    Attorney for the Government. An attorney in the ATF Office of Chief 
Counsel authorized to represent the Director of Industry Operations in 
the proceeding.
    CFR. The Code of Federal Regulations.
    Contemplated notice. Includes any notice contemplating the 
revocation or denial of renewal of a license or permit.
    Director. The Director, Bureau of Alcohol, Tobacco, Firearms, and 
Explosives, Department of Justice.
    Director of Industry Operations. The principal ATF official in a 
Field Operations division responsible for administering regulations in 
this part.
    Ex parte communication. An oral or written communication not on the 
public record with respect to which reasonable prior notice to all 
parties is not given, but not including requests for status reports.
    Initial decision. The decision of the Director of Industry 
Operations in a proceeding concerning the revocation of, denial of 
renewal of, or denial of application for a license or permit. This 
decision becomes the agency's final decision in the absence of an 
appeal.
    Final decision. The definitive decision of ATF, e.g., the agency's 
decision in the absence of an appeal or the Director's decision 
following an appeal to the Director.
    License. Subject to applicable law, entitles the licensee to 
transport, ship, and receive explosive materials in interstate or 
foreign commerce, and to engage in the business specified by the 
license, at the location described on the license.
    Licensee. Any importer, manufacturer, or dealer licensed under the 
provisions of 18 U.S.C. chapter 40 and 27 CFR part 555.
    Limited permit. A permit issued to a person authorizing him to 
receive for his use explosive materials from a licensee or permittee in 
his State of residence on no more than six occasions during the 12-
month period in which the permit is valid. A limited permit does not 
authorize the receipt or transportation of explosive materials in 
interstate or foreign commerce.
    Other term. Any other term defined in the Federal explosives laws 
(18 U.S.C. chapter 40), the regulations promulgated thereunder (27 CFR 
part 555), or the Administrative Procedure Act (5 U.S.C. 551 et seq.), 
where used in this part, shall have the meaning assigned to it therein.
    Permittee. Any user of explosives for a lawful purpose who has 
obtained either a user permit or a limited permit under 18 U.S.C. 
chapter 40 and 27 CFR part 555.
    Person. Any individual, corporation, company, association, firm, 
partnership, society, or joint stock company.
    Recommended decision. The advisory decision of the administrative 
law judge in any proceeding regarding the revocation of, denial of 
renewal of, or denial of application for a license or permit. ATF must 
act on a recommended decision with its own initial or final decision.
    User-limited permit. A user permit valid only for a single purchase 
transaction. Recipients of a user-limited permit must obtain a new 
permit for any subsequent purchase transaction.
    User permit. A permit issued to a person authorizing him to--
    (1) Acquire for his own use explosive materials from a licensee in 
a State other than the State in which he resides or from a foreign 
country; and
    (2) Transport explosive materials in interstate or foreign 
commerce.
    Willfulness. The plain indifference to, or purposeful disregard of, 
a known legal duty. Willfulness may be demonstrated by, but does not 
require, repeat violations involving a known legal duty.

Subpart C--General


Sec.  771.25  Communications and pleadings.

    (a) All communications to the Government regarding the procedures 
set forth in this part and all pleadings, such as answers, motions, 
requests, or other papers or documents required or permitted to be 
filed under this part, relating to a proceeding pending before an 
administrative law judge, shall be addressed to the administrative law 
judge at his post of duty and the Attorney for the Government. 
Communications concerning proceedings not pending before an 
administrative law judge should be addressed to the Director of 
Industry Operations or Director, as the case may be.
    (b) Except to the extent required for the disposition of ex parte 
matters as authorized by law, no ex parte communications shall be made 
to or from the administrative law judge concerning the merits of the 
adjudication. If the administrative law judge receives or makes an ex 
parte communication not authorized by law, the administrative law judge 
shall place on the record of the proceeding:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral 
communications; and
    (3) All written responses and memoranda stating the substance of 
all oral responses to paragraphs (b)(1) and (2) of this section.


Sec.  771.26  Service on applicant, licensee, or permittee.

    All orders, notices, motions, and other formal documents required 
to be served under the regulations in this part may be served by 
mailing a signed, original copy thereof to the designated 
representative of the applicant, licensee, or permittee by certified 
mail, with request for return receipt card, at the representative's 
business address, by personal service, or as otherwise agreed

[[Page 64746]]

to by the parties. If the applicant, licensee, or permittee has not yet 
designated a representative, all orders, notices, motions, and other 
formal documents required to be served under the regulations in this 
part may be served by mailing a signed, original copy thereof to the 
applicant, licensee, or permittee at the address stated on his 
application, license, or permit, or at his last known address, or by 
delivery of such original copy to the applicant, licensee, or permittee 
personally, or in the case of a corporation, partnership, or other 
unincorporated association, by delivering the same to an officer, or 
manager, or general agent thereof, or to its attorney of record. Such 
personal service may be made by any employee of the Department of 
Justice designated by the Attorney General or by any employee of ATF. A 
certificate of mailing and the return receipt card, or certificate of 
service signed by the person making such service, shall be filed as a 
part of the record.


Sec.  771.27  Service on the Director of Industry Operations or 
Director.

    Pleadings, motions, notices, and other formal documents may be 
served by certified mail, by personal service, or as otherwise agreed 
to by the parties, on the Director of Industry Operations (or upon the 
Attorney for the Government on behalf of the Director of Industry 
Operations), or on the Director, if the proceeding is before him for 
review on appeal.

Time


Sec.  771.28  Computation.

    In computing any period of time prescribed or allowed by this part, 
the day of the act, event, or default after which the designated period 
of time is to run is not to be included. The last day of the period to 
be computed is to be included, unless it is a Saturday, Sunday, or 
Federal holiday, in which event the period runs until the next day that 
is not a Saturday, Sunday, or Federal holiday. Pleadings, requests, or 
other papers or documents required or permitted to be filed under this 
part must be received for filing at the appropriate office within the 
time limits, if any, for such filing.


Sec.  771.29  Continuances and extensions.

    For good cause shown, the administrative law judge, Director, or 
Director of Industry Operations, as the case may be, may grant 
continuances and, as to all matters pending before him, extend any time 
limit prescribed by the regulations in this part (except where the time 
limit is statutory).

Representation at Hearings


Sec.  771.30  Personal representation.

    Any individual or member of a partnership may appear for himself, 
or for such partnership, and a corporation or association may be 
represented by a bona fide officer of such corporation or association, 
upon showing of adequate authorization.


Sec.  771.31  Attorneys and other representatives.

    An applicant, licensee, or permittee may represent himself, or be 
represented by an attorney, a certified public accountant, or any other 
person, specifically designated in a duly executed power of attorney 
that shall be filed in the proceeding by the applicant, licensee, or 
permittee. The applicant, licensee, or permittee shall file waivers, if 
applicable, under the Privacy Act of 1974 and 26 U.S.C. 6103(c) 
(confidentiality and disclosure of returns and return information). The 
Director of Industry Operations may be represented in proceedings by an 
attorney in the Office of Chief Counsel who is authorized to execute 
and file motions, briefs, and other papers in the proceeding on behalf 
of the Director of Industry Operations, in the attorney's own name as 
``Attorney for the Government.''

Subpart D--Compliance and Settlement


Sec.  771.35  Opportunity for compliance.

    No license or permit shall be revoked or denied renewal unless, 
prior to the institution of proceedings, facts or conduct warranting 
such action shall have been called to the attention of the licensee or 
permittee by the Director of Industry Operations in writing in a 
contemplated notice, and the licensee or permittee shall have been 
accorded an opportunity to demonstrate or achieve compliance with all 
lawful requirements as set forth in section 9(b) of the Administrative 
Procedure Act. In cases in which the Director of Industry Operations 
alleges in his contemplated notice, with supporting reasons, willful 
violations or that the public interest requires otherwise, this section 
does not apply and the issuance of a contemplated notice is 
unnecessary.


Sec.  771.36  Settlement.

    Any proposals of settlement should be made to the Director of 
Industry Operations, but may be made through the Attorney for the 
Government. Where necessary, the date of the hearing may be postponed 
pending consideration of such proposals when they are made in good 
faith and not for the purpose of delay. If proposals of settlement are 
submitted, and they are considered unsatisfactory, the Director of 
Industry Operations may reject the proposals and may, either directly 
or through the Attorney for the Government, inform the licensee or 
permittee of any conditions on which the alleged violations may be 
settled. If the proposals of settlement are considered satisfactory to 
the Director of Industry Operations, the licensee or permittee shall be 
notified thereof and the proceeding shall be dismissed.


Sec.  771.37   Notice of contemplated action.

    Where the Director of Industry Operations has not ascertained 
whether the licensee or permittee has willfully violated the Federal 
explosives laws and where he believes the matter has the potential to 
be settled informally, i.e., without formal administrative proceedings, 
he shall, in accordance with section 5(b) of the Administrative 
Procedure Act, prior to the issuance of a notice of revocation or 
denial of renewal, give the licensee or permittee a contemplated notice 
of such action and an opportunity to show why the license or permit 
should not be revoked or denied renewal. The notice should inform the 
licensee or permittee of the charges on which the notice would be 
based, if issued, and afford him a period of 15 days from the date of 
the notice, or such longer period as the Director of Industry 
Operations deems necessary, in which to submit proposals of settlement 
to the Director of Industry Operations. Where informal settlement is 
not reached promptly because of inaction by the applicant, licensee, or 
permittee or proposals are made for the purpose of delay, a notice 
shall be issued in accordance with Sec.  771.42 or Sec.  771.43, as 
appropriate. The issuance of a notice of contemplated action does not 
entitle the recipient to a hearing before an administrative law judge.


Sec.  771.38   Licensee's or permittee's failure to meet requirements 
within reasonable time.

    If the licensee or permittee fails to meet the requirements of 
applicable laws and regulations in this part within such reasonable 
time as may be specified by the Director of Industry Operations, 
proceedings for revocation or denial of renewal of the license or 
permit shall be initiated.


Sec.  771.39  Authority of Director of Industry Operations to proceed 
with revocation or denial action.

    Where the evidence is conclusive and the nature of the violation is 
such as to preclude any settlement, the violation is of a continuing 
character that necessitates immediate action to protect

[[Page 64747]]

the public interest, or the Director of Industry Operations believes 
that any informal settlement of the alleged violation will not ensure 
future compliance with applicable laws and regulations in this part, or 
in any similar case where the circumstances are such as to clearly 
preclude informal settlement, and the Director of Industry Operations 
so finds and states the reasons therefor in the notice, the Director of 
Industry Operations may proceed with the revocation or denial of 
renewal.

Subpart E--Revocation or Denial


Sec.  771.40  Denial of initial application.

    Whenever the Director of Industry Operations has reason to believe 
that an applicant for an original license or permit is not eligible to 
receive a license or permit under the provisions of Sec.  555.49 of 
this chapter, the Director of Industry Operations shall issue a notice 
of denial on ATF Form 5400.11 (Notice of Denial of Application for 
License or Permit) (F 5400.11). The notice will set forth the matters 
of fact and law relied upon in determining that the application should 
be denied and will afford the applicant 15 days from the date of 
receipt of the notice in which to request a hearing to review the 
denial. If no request for a hearing is filed within that time, a copy 
of the application, marked ``Disapproved,'' will be returned to the 
applicant.


Sec.  771.41   Denial of renewal application or revocation of license 
or permit.

    If, following the opportunity for compliance under Sec.  555.71 of 
this chapter, or without opportunity for compliance under Sec.  555.71 
of this chapter as circumstances warrant, the Director of Industry 
Operations finds that the licensee or permittee is not likely to comply 
with applicable laws or regulations in this part or is otherwise not 
eligible to continue operations authorized under his license or permit, 
the Director of Industry Operations shall issue a notice of denial of 
the renewal application or revocation of the license or permit, ATF F 
5400.11 (Notice of Denial of Application for License or Permit) or ATF 
Form 5400.10 (Notice of Revocation of License or Permit) (F 5400.10), 
as appropriate. The notice will set forth the matters of fact 
constituting the violations specified, dates, places, and the sections 
of law and regulations violated. In the case of the revocation of a 
license or permit, the notice will specify the date on which the action 
is effective, which date will be on or after the date the notice is 
served on the licensee or permittee. The notice will also advise the 
licensee or permittee that he may, within 15 days after receipt of the 
notice, request a hearing and, if applicable, a stay of the effective 
date of the revocation of his license or permit.


Sec.  771.42   Grounds for revocation of licenses or permits.

    Whenever the Director of Industry Operations has reason to believe 
that any holder of a license or permit has willfully violated any 
provision of 18 U.S.C. chapter 40 or 27 CFR part 555 or has become 
ineligible to continue operations authorized under the license or 
permit, the Director of Industry Operations shall issue a notice for 
the revocation of such license or permit, as the case may be.


Sec.  771.43  Grounds for denial of applications for licenses or 
permits.

    If, upon examination of any application (including a renewal 
application) for a license or permit, the Director of Industry 
Operations has reason to believe that the applicant is not entitled to 
such license or permit, the Director of Industry Operations shall issue 
a denial of the application. An applicant is not eligible for a license 
or permit if he fails to meet the requirements of 18 U.S.C. 843(b) and 
Sec.  555.49 of this chapter.

Subpart F--Hearing Procedure

Notices


Sec.  771.55  Content.

    (a) Notices for the revocation or denial of renewal of a license or 
permit shall be promptly issued by the Director of Industry Operations 
and shall set forth:
    (1) The sections of law and regulations relied upon for authority 
and jurisdiction;
    (2) The specific grounds upon which the revocation or denial is 
based, i.e., the matters of fact constituting the violations specified, 
dates, places, and sections of law and regulations violated;
    (3) In the case of a revocation, the date on which the action is 
effective; and
    (4) That the licensee or permittee has 15 days from receipt of the 
notice within which to request a hearing before an administrative law 
judge.
    (b) Notices for the denial of an initial application for a license 
or permit shall set forth:
    (1) The sections of law and regulations relied upon for authority 
and jurisdiction;
    (2) The specific grounds upon which the denial is based, i.e., the 
matters of fact and law relied upon for the disapproval of the 
application; and
    (3) That the application will be disapproved unless a hearing is 
requested within 15 days from receipt of the notice.


Sec.  771.56  Forms.

    Notices shall be issued on the following forms:
    (a) ATF Form 5400.9, ``Order After Denial or Revocation Hearing,'' 
for all revocations or denials of renewal of licenses or permits 
pursuant to 18 U.S.C. chapter 40 after a hearing has been held and a 
Recommended Decision has been issued by the administrative law judge;
    (b) Form 5400.10, ``Notice of Revocation for License or Permit,'' 
for all revocations of licenses or permits pursuant to 18 U.S.C. 
chapter 40, except as provided for in paragraph (a) of this section;
    (c) Form 5400.11, ``Notice of Denial of Application for License or 
Permit,'' for the denial of renewal or original applications for 
licenses or permits pursuant to 18 U.S.C. chapter 40, except as 
provided for in paragraph (a) of this section;
    (d) Form 5400.12, ``Notice of Contemplated Denial or Revocation of 
License or Permit,'' for the contemplated revocation or denial of 
renewal application of licenses or permits pursuant to 18 U.S.C. 
chapter 40; or
    (e) Such other forms as the Director may prescribe.


Sec.  771.57  Execution and disposition.

    A signed original of the applicable form shall be served on the 
licensee or permittee. If a hearing is requested, a copy shall be sent 
to the administrative law judge designated to conduct the hearing. Any 
remaining copies shall be retained for the office of the Director of 
Industry Operations.


Sec.  771.58   Designated place of hearing.

    The designated place of hearing shall be determined by the 
administrative law judge, taking into consideration the convenience and 
necessity of the parties and their representatives.

Request for Hearing


Sec.  771.59  Initial application proceedings.

    (a) If the applicant for an initial license or permit desires a 
hearing, he shall file a request in writing with the Director of 
Industry Operations within 15 days after receipt of notice of the 
disapproval, in whole or in part, of the application.
    (b) On receipt of the request, the Director of Industry Operations 
shall forward a copy of the request, together with a copy of the 
notice, to the Office of Chief Counsel for the assignment of an 
administrative law judge.

[[Page 64748]]

    (c) After the Office of Chief Counsel notifies the Director of 
Industry Operations or the Attorney for the Government of the 
assignment of an administrative law judge, the Director of Industry 
Operations shall notify the licensee or permittee of the assignment, if 
the administrative law judge has not already done so.


Sec.  771.60  Revocation or denial of renewal proceedings.

    (a) If the licensee or permittee desires a hearing, he shall file a 
request, in writing, with the Director of Industry Operations within 15 
days after receipt of the notice or within such time as the Director of 
Industry Operations may allow.
    (b) Where a licensee or permittee requests a hearing, the Director 
of Industry Operations shall forward a copy of the request, together 
with a copy of the notice, to the Office of Chief Counsel for the 
assignment of an administrative law judge.
    (c) After the Office of Chief Counsel notifies the Director of 
Industry Operations or the Attorney for the Government of the 
assignment of an administrative law judge, the Director of Industry 
Operations shall notify the licensee or permittee of the assignment, if 
the administrative law judge has not already done so.
    (d) In the case of a revocation, a licensee or permittee may 
include a request for a stay of the effective date of revocation with 
the request for a hearing.
    (e) On receipt of a request for a stay of the effective date of a 
revocation, the Director of Industry Operations shall timely advise the 
licensee or permittee whether the stay is granted.
    (1) If the stay is granted, the matter shall be referred to an 
administrative law judge pursuant to paragraph (b) of this section.
    (2) If the stay is denied, the licensee or permittee may request an 
immediate hearing. In this event, the Director of Industry Operations 
shall immediately refer the matter to the Office of Chief Counsel for 
the assignment of an administrative law judge, who shall set a date and 
place for hearing, which date shall be no later than 10 days from the 
date the licensee or permittee requested the immediate hearing.


Sec.  771.61  Notice of hearing.

    Once a request for a hearing has been referred to the 
administrative law judge, the administrative law judge shall set a time 
and place for a hearing and shall serve notice thereof upon the parties 
at least 10 days in advance of the hearing date.

Non-Request for Hearing


Sec.  771.62  Initial application.

    In the case of an initial application, if the applicant does not 
request a hearing within 15 days, or within such additional time as the 
Director of Industry Operations may in his discretion allow, the 
Director of Industry Operations will return a copy of the application, 
marked ``Disapproved,'' to the applicant, accompanied by a brief 
statement including the findings upon which the denial is based.


Sec.  771.63  Revocation or denial of renewal.

    In the case of a revocation or denial of renewal of an application, 
if the licensee or permittee does not request a hearing within 15 days, 
or within such additional time as the Director of Industry Operations 
may in his discretion allow, the Director of Industry Operations shall 
make the initial decision in the case pursuant to Sec.  771.78(b).

Responses to Notices


Sec.  771.64  Answers.

    (a) Where the licensee or permittee requests a hearing in 
accordance with Sec. Sec.  771.59 and 771.60, a written response to the 
relevant notice may be filed with the administrative law judge and 
served on the Director of Industry Operations within 15 days after the 
licensee or permittee receives service of the designation of the 
administrative law judge.
    (b) Where no hearing is requested, the licensee or permittee may 
file a written answer to the relevant notice with the Director of 
Industry Operations within 15 days after service of the notice.
    (c) An answer shall contain a concise statement of the facts that 
constitute the grounds for defense. A hearing, if requested, may be 
limited to the issues contained in the notice and the answer. The 
administrative law judge or Director of Industry Operations, as the 
case may be, may, as a matter of discretion, waive any requirement of 
this section.
    (d) Answers need not be filed in initial application proceedings.


Sec.  771.65  Responses admitting facts.

    If the licensee or permittee desires to waive the hearing on the 
allegations of fact set forth in the notice and does not contest the 
facts, the answer may consist of a statement that the licensee or 
permittee admits all material allegations of fact charged in the notice 
to be true. The Director of Industry Operations shall base the decision 
on the notice and such answer, although such an answer shall not affect 
the licensee's or permittee's right to submit proposed findings of fact 
and conclusions of law or right to appeal.


Sec.  771.66  Initial conferences.

    (a) In any proceeding, the administrative law judge, upon his own 
motion or upon the motion of one of the parties or their qualified 
representatives, may in the administrative law judge's discretion 
direct the parties or their qualified representatives to appear at a 
specified time and place for a conference to consider:
    (1) Simplification of the issues;
    (2) The necessity of amendments to the pleadings;
    (3) The possibility of obtaining stipulations, admissions of facts, 
and documents;
    (4) The possibility of both parties exchanging information or 
scheduling discovery;
    (5) A date on which both parties will simultaneously submit lists 
of proposed hearing exhibits;
    (6) Limiting the number of expert witnesses;
    (7) Identifying and, if practicable, scheduling all witnesses to be 
called; however, there is no requirement in these proceedings for the 
parties to submit pre-hearing statements or statements of proposed 
testimony by witnesses; and
    (8) Such other matters as may aid in the disposition of the 
proceeding.
    (b) As soon as practicable after such conference, the 
administrative law judge shall issue an order that recites the action 
taken, the amendments allowed to the pleadings, and the agreements made 
by the parties or their qualified representatives as to any of the 
matters considered. The order shall also limit the issues for hearing 
to those not disposed of by admission or agreement. Such order shall 
control the subsequent course of the proceedings, unless modified for 
good cause by a subsequent order. After discovery is complete, the 
order may be amended or supplemented if necessary.

Failure To Appear


Sec.  771.67  Initial applications.

    Where the applicant on an initial application for a license or 
permit has requested a hearing and does not appear at the appointed 
time and place, evidence has not been offered to refute or explain the 
grounds upon which disapproval of the application is contemplated, and 
no good cause has been shown for the failure to appear, the applicant 
shall be considered to have waived the hearing. When such waiver 
occurs, a default judgment against the applicant will be entered and 
the

[[Page 64749]]

administrative law judge shall recommend disapproval of said 
application.


Sec.  771.68  Revocation or denial of renewal.

    If, on the date set for a hearing concerning the revocation or 
denial of renewal of a license or permit, the licensee or permittee 
does not appear, no evidence has been offered, and no good cause has 
been shown for the failure to appear, the Attorney for the Government 
will proceed ex parte and offer for the record sufficient evidence to 
make a prima facie case. At such hearing, documents, statements, and 
affidavits may be submitted in lieu of testimony of witnesses.

Waiver of Hearing


Sec.  771.69  Withdrawal of request for hearing.

    At any time prior to the assignment of an administrative law judge, 
the licensee or permittee may, by filing written notice with the 
Director of Industry Operations, withdraw his request for a hearing. If 
such a notice is filed after assignment to the administrative law judge 
and prior to issuance of his recommended decision the Director of 
Industry Operations shall move the administrative law judge to dismiss 
the proceedings as moot. If such a notice is filed either after 
issuance of a notice of denial or notice of revocation and before 
assignment of the administrative law judge, or after issuance by the 
administrative law judge of his recommended decision and prior to the 
Director of Industry Operations' order disapproving the application or 
denying the renewal of or revoking the license or permit, the Director 
of Industry Operations shall, by order, dismiss the proceeding.


Sec.  771.70  Adjudication based upon written submissions.

    The licensee or permittee may waive the hearing before the 
administrative law judge and stipulate that the matter will be 
adjudicated by the Director of Industry Operations based upon written 
submissions. Written submissions may include stipulations of law or 
facts, proposed findings of fact and conclusions of law, briefs, or any 
other documentary material. The pleadings, together with the written 
submissions of both the licensee or permittee and the attorney for the 
Government, shall constitute the record on which the initial decision 
shall be based. The election to contest the denial or revocation 
without a hearing under this section does not affect the licensee's or 
permittee's right to appeal to the Director pursuant to Sec.  555.79 of 
this chapter or to the United States Court of Appeals for the circuit 
in which the licensee or permittee resides or has his principle place 
of business pursuant to Sec.  555.80 of this chapter.

Surrender of License or Permit


Sec.  771.71   Before citation.

    If a licensee or permittee surrenders the license or permit before 
the notice of revocation or denial of renewal, the Director of Industry 
Operations may accept the surrender. But if the evidence, in the 
opinion of the Director of Industry Operations, warrants issuance of a 
notice for revocation or denial of renewal, the surrender shall be 
refused and the Director of Industry Operations shall issue the notice.


Sec.  771.72  After citation.

    If a licensee or permittee surrenders the license or permit after 
notice, but prior to the referral to an administrative law judge and 
prior to an initial decision, the Director of Industry Operations may 
accept the surrender of the license or permit and dismiss the 
proceeding as moot. If a licensee or permittee surrenders the license 
or permit after notice and after the referral to the administrative law 
judge, but prior to the issuance of a recommended decision, the 
Director of Industry Operations may accept the surrender of the license 
or permit and shall move the administrative law judge to dismiss the 
proceedings as moot. In either case, if, in the opinion of the Director 
of Industry Operations, the evidence is such as to warrant revocation 
or denial of renewal, as the case may be, the surrender of the license 
or permit shall be refused, and the proceeding shall continue.

Motions


Sec.  771.73   General.

    All motions shall be made and addressed to the administrative law 
judge before whom the proceeding is pending, and copies of all motion 
papers shall be served upon the other party or parties. The 
administrative law judge may dispose of any motion without oral 
argument, but he may, if he so desires, set it down for hearing and 
request argument. The administrative law judge may dispose of such 
motion prior to the hearing on the merits or he may postpone the 
disposition until the hearing on the merits. No appeal may be taken 
from any ruling on a motion until the whole record is certified for 
review. Examples of typical motions may be found in the Rules of Civil 
Procedure referred to in Sec.  771.2.


Sec.  771.74  Prior to hearing.

    All motions that should be made prior to the hearing, such as a 
motion directed to the sufficiency of the pleadings or of preliminary 
orders, shall be filed in writing with the Director of Industry 
Operations or the administrative law judge if the matter has been 
referred to him, and shall briefly state the order or relief applied 
for and the grounds for such motion.


Sec.  771.75  At hearing.

    Motions at the hearing may be made in writing to the administrative 
law judge or stated orally on the record.

Hearing


Sec.  771.76   General.

    If a hearing is requested, it shall be held at the time and place 
stated in the notice of hearing unless otherwise ordered by the 
administrative law judge.


Sec.  771.77   Initial applications.

    (a) The administrative law judge who presides at the hearing on 
initial applications shall recommend a decision to the Director of 
Industry Operations. The administrative law judge shall certify the 
complete record of the proceedings before him and shall immediately 
forward the complete certified record to the Director of Industry 
Operations. The administrative law judge shall also send one copy of 
his recommended decision to the applicant or the applicant's 
representative, one copy to the Attorney for the Government, and one 
copy to the Director of Industry Operations, who shall make the initial 
decision as provided in Sec.  771.107. The applicant may be directed by 
the Director of Industry Operations to produce such records as may be 
deemed necessary for examination. All hearings on applications shall be 
open to the public subject to such restrictions and limitations as may 
be consistent with orderly procedure.
    (b) If no hearing is requested, the return of the application 
marked ``Disapproved'' is the Director of Industry Operations' initial 
decision.


Sec.  771.78  Revocation or denial of renewal.

    (a) The administrative law judge who presides at the hearing in 
proceedings for the revocation or denial of renewal of licenses or 
permits shall make a recommended decision to the Director of Industry 
Operations. The administrative law judge shall certify the complete 
record of the proceedings before him and shall immediately forward the 
complete certified record to the Director of Industry Operations. The 
administrative law judge shall also send

[[Page 64750]]

one copy of his recommended decision to the licensee or permittee or 
the licensee's or permittee's representative, one copy to the Attorney 
for the Government, and one copy to the Director of Industry 
Operations, who shall make the initial decision as provided in Sec.  
771.109.
    (b) If no hearing is requested, the Director of Industry Operations 
shall make the initial decision.

Burden of Proof


Sec.  771.79   Initial applications.

    In hearings on the initial denial of applications, the burden of 
proof is on the Government to show by a preponderance of the evidence 
that the Director of Industry Operations had reason to believe that the 
applicant is not entitled to a permit or license.


Sec.  771.80  Revocation or denial of renewal.

    In hearings on the revocation or denial of renewal of a license or 
permit, the burden of proof is on the Government to show that the 
Director of Industry Operations had reason to believe that the licensee 
or permittee is not entitled to a permit or license, as may be the 
case. The Government must meet this proof by a preponderance of the 
evidence.

General


Sec.  771.81   Stipulations at hearing.

    If there has been no initial conference under