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]

Agencies

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

[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 https://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