Industry News: ATF’s 2005 Operations Reviewed
By Robert M. Hausman

A review of the activities of the industry’s regulator, the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) is provided in the agency’s recently released 2005 annual report.

During fiscal year (FY) 2005, ATF processed 10,758 permanent and 6,464 temporary applications for the importation of firearms, ammunition, and implements of war.

During FY 2005, ATF industry operations investigators conducted 11,011 firearms compliance and application inspections. ATF conducted 3,083 inspections employing a streamlined inspection program designed to identify and examine FFLs that pose the most significant threat of being used by traffickers, as well as those FFLs that are “in violation of the law and responsible for the criminal diversion of firearms,” ATF says.

These inspections resulted in 1,110 law enforcement referrals; 493 prohibited sales violations (including sales to underage persons or prohibited categories of persons); 3,601 NICS violations; 1,663 unreported multiple sales violations; and 11,086 inventory discrepancies. Inspections resulted in over 700 firearms licensees having violations meriting serious administrative action. Referrals were also made to ATF law enforcement for criminal investigation.

ATF says its inspection efforts are resulting in FFLs coming into compliance with the law. Once ATF conducts a warning conference with a licensee relating to violations of the law or regulations, ATF performs a recall inspection the following year to ensure that the licensee is complying with federal laws and specific record keeping regulations.

In FY 2005, ATF conducted 558 recall inspections. A comparison of the previous inspection results with the recall inspection results showed a 90% reduction in inventory discrepancies, an 86% decrease in prohibited sales, and a 77% reduction in other types of violations.

During ATF’s firearms inspections, the Bureau found that 2,990 of the 3,083 federal firearms licensees had 12,274 missing or stolen firearms.

During FY 2005, ATF conducted over 260,000 firearms trace requests. Firearms tracing is the systematic tracking of the movement of a firearm recovered by law enforcement personnel from its first sale by the manufacturer or importer through the distribution chain to the first retail purchaser.

NFA Data

ATF processes all applications to manufacture, transfer and register NFA firearms. The registration information is captured in the National Firearms Registration and Transfer Record.

As of November 30, 2005, there were 1,762,948 firearms registered with the NFA branch. From January 1, 2005, through November 30, 2005, the branch processed 150,913 applications to make, register, or transfer NFA arms.

On the criminal side of its operations, ATF referred 3,253 defendants for prosecutions in firearms trafficking investigations, a 10% increase over FY 2004. There were 1,448 convictions of firearms traffickers in ATF cases in 2005, an increase of 14% over the previous fiscal year. ATF’s efforts resulted in the initiation of 28,526 total firearms investigations and 8,353 defendants were convicted for firearms-related offenses in FY 2005.

Forty-nine percent of the defendants convicted in 2005 were prohibited persons in possession of firearms. ATF had a 170% increase in the number of defendants referred for prosecution as prohibited persons from FY 2000 to FY 2005. Four percent of the firearms defendants convicted in 2005 were armed career criminals. Over the same 5 years, ATF also saw a 209% increase in the number of defendants referred for prosecution under 18 U.S.C. Section 924(e), the armed career criminal statute, which mandates a minimum mandatory 15-year sentence.

Meanwhile, reported firearm violent crime has decreased during the years 2000 through 2004. In 2000, there were 533,470 reported incidents, in 2001 524,030, in 2002 364,090, in 2003 366,840 and in 2004 280,890.

Homicides with firearms saw an increase during the years 2000 through 2003, before declining in 2004. In 2000, there were 8,661 homicides with firearms, in 2001 8,890, in 2002 9,528, in 2003 9,659, and in 2004 9,326.

ATF has also referred an increasing amount of previously convicted felons found in possession of firearms and armed career criminals for prosecution. In 2000, ATF referred 3,474 such persons for prosecution and 2,212 defendants were convicted. In 2001, 4,383 were referred for prosecution and 2,846 were convicted. In 2002, 5,456 were referred and 3,248 were convicted. In 2003, 8,034 were referred and 3,346 were convicted. In 2004, there were 8,944 referrals and 3,827 convictions. In 2005, there were 9,388 referrals and 4,076 convictions. Note: convictions may occur in a different year than referral.

In the year 2000, 252 referrals for prosecution were made of armed career criminals and 144 were convicted. In 2001, there were 321 referrals and 197 convictions. In 2002, there were 426 referrals and 255 convictions. In 2003, there were 638 referrals and 263 convictions. In 2004, there were 630 referrals and 276 convictions. In 2005, there were 779 referrals and 309 convictions. Over the past year, an average of ten defendants per field agent were referred for prosecution.

ATF Funding

For FY 2005, the U.S. Congress appropriated $882.5 million for ATF’s operations and an additional $53.5 million was made available from other sources. ATF incurred obligations of $923.9 million during the fiscal year.

The vast majority of ATF’s funds in FY 2005 were used for firearms enforcement; $591 million, representing 64% of its budget. Explosive enforcement consumed $119 million or 13% of the total. Firearms industry operations comprised 9% or $81 million of the funds. Arson work cost $64 million or 7% of the budget. Explosive industry operations ate up $48 million or 5% of the total and alcohol and tobacco absorbed $21 million or 2%.

As of Sept. 30, 2005, ATF had 4,921 employees. Of these, 2,441 are special agents who carry out investigative and law enforcement functions. Another 771 are industry operations investigators. The remaining 1,709 are administrative, professional and technical employees.

New ATF E-Mail Service for FFL Holders

ATF is offering Federal Firearms Licensees a new option to receive ATF information, such as open letters and notices by e-mail. This service will not replace traditional ATF postal mailings. Those licensees interested should e-mail their request to: FFLnewsletter@atf.gov. Include your name, business name, FFL number, and e-mail address. Only the licensee or a responsible person can request and receive information using the new e-mail service.

Proposed Bills Would Reform ATF

In the aftermath of the recent congressional hearings on ATF gun show practices in the Richmond, Virginia area, legislation has been proposed to change ATF procedures.

H. R. 5005, the “Firearms Corrections and Improvements Act,” by Rep. Lamar Smith (R-TX) would (among other changes):
  • Permanently ban taxes or “user fees” on background checks by the federal instant check system - fees that Congress has prohibited in appropriations amendments every year since 1998.
  • Permanently ban electronic registries of dealers’ records - a threat to gun owners’ privacy that Congress has also banned through appropriations riders for a decade.
  • Limit disclosure of firearms trace records - which Congress has already limited through a series of appropriations riders over the past few years, out of concern for gun owners’ privacy and the confidentiality of law enforcement records.
  • Eliminate a provision of federal law that requires juveniles to have written permission to use a handgun for purposes such as competitive shooting or safety training - even when the parent or guardian is present.
  • Allow possession and transfer of machine guns by firearm and ammunition manufacturers for use in research and development (for instance, to ensure that ammunition works reliably), and by federal contractors who provide national security services.
Another bill, H.R. 5092, totally revises the system of penalties for licensed dealers, manufacturers and importers of firearms. Under today’s system, ATF can only give an FFL holder a warning, or totally revoke the license. This bill would allow fines or license suspensions for less serious violations, while allowing license revocation for the kind of serious violations that would block an investigation or put guns in the hands of criminals. Among H.R. 5092’s other provisions, the bill:
  • Allows penalties for intentional violations of the law, but not for simple paperwork mistakes. Congress thought it had fixed this problem when it passed the Firearms Owners’ Protection Act of 1986, but the government has argued in court that the 1986 changes were “without practical significance.”
  • Provides a fair process for imposing penalties, by allowing FFLs to appeal ATF penalties to a neutral administrative law judge. (Currently FFLs appeal ATF decisions to another employee of ATF itself.)
  • Requires a Department of Justice review of ATF gun show enforcement operations.
  • Requires ATF to establish clear investigative guidelines.
  • Focuses ATF’s efforts on violations of firearms, explosives, arson, alcohol and tobacco laws, rather than on broader gang, drug or terrorism investigations.
Slaying Prompts Calls for Controls in Switzerland

The recent murder of one of Switzerland’s most famous skiers has prompted the Swiss government to exercise great caution in the granting of permits to export small arms, a source within the country indicates.

Corinne Rey-Bellet was shot by her husband Gerold Stadler; just days after the couple had agreed to separate. Stadler also shot and killed Rey-Bellet’s brother Alain, and seriously wounded her mother, before finally killing himself. Stadler shot his famous wife with his Swiss Army officer’s pistol.

U.S. Bill Would Provide Machine Gun Amnesty

The “Veterans` Heritage Firearms Act of 2005,” (H.R. 2088) introduced by U.S. Rep. Jim Gibbons (R-Nev.), would provide a 90-day amnesty period during which veterans and their families could register NFA firearms acquired overseas between June 26, 1934 and Oct. 31, 1968, without fear of prosecution.

The proposed legislation would not apply to destructive devices. Congress granted a limited amnesty in 1968, but many veterans did not receive notice in time to participate.

H.R. 2088 states that “in the absence of clear and convincing evidence to the contrary the Attorney General shall accept as true and accurate any affidavit, document, or other evidence submitted by an individual to establish that such firearm meets the requirements.”

This allows for the fact that veterans may have acquired war trophy firearms lawfully under military regulations, but without receiving official paperwork. Some veterans may also have lost such paperwork over the years.

Under the bill, the Attorney General would create and distribute clear printed notices providing information regarding the amnesty period and the requirements for registering a firearm.

Recognizing that veterans‘ trophies represent an important part of the nation’s history, H.R. 2088 would require the Attorney General to transfer each firearm that has been forfeited to the United States to the first qualified museum that submits a suitable request.

The Attorney General would be prohibited from destroying any forfeited firearm until the end of the 5-year period and the public would have to be informed of forfeitures.

Lastly, H.R. 2088 would amend federal law relating to machine guns, allowing their “transfer to or by, or possession by, a museum which is open to the public and incorporated as a not-for-profit corporation under applicable State law.” Current law only allows transfer of machineguns to government museums.

Excise Tax Gain Indicates Production Increase

Federal excise tax collections on firearms and ammunition rose 2.6% percent in calendar year 2005, signaling a slight increase in production by manufacturers.

Firearm and ammunition manufacturers paid $224.3 million in excise taxes last year, an increase from the $218.6 million paid in 2004, according to figures released by the U.S. Treasury Department.

Last year’s excise tax totals point to an estimated $2.1 billion in sales for manufacturers, up from about $2 billion in 2004, according to the National Shooting Sports Foundation.

Total excise tax collections for the calendar year of 2005 were: long guns - $105.6 million (rising 1.8% from $103.8 million in 2004); ammunition - $71.3 million (moving up 3.5% from $68.9 million in 2004); and handguns, $47.3 million (up 3% from $45.9 million in 2004).

Business Process Automation Offered to Industry

Most businesses in the sporting goods industry operate on disparate types of software which results in time consuming inefficiencies, says William Sucher, a consultant with Visualnet Media, Inc., a 5-year-old business process automation firm.

William Sucher, the son of Michael Sucher, a principal at the noted importer, Century International Arms, Inc., says he has witnessed first-hand all the frustrations sporting goods firms face in managing their inventory. Visualnet Media, he says, offers an end solution that will convert businesses to an entirely paperless, secure web-based environment. The method employs the use of technology that is commonly referred to as “free form software.” The technology can be used to manage shipments, handle inventory control or in real-time offerings to customers.

In use, with the click of a mouse, users can track what shipment an individual firearm came in on, how long that same firearm stayed in inventory and to determine which customer ultimately purchased that same firearm.

For further information, Sucher may be contacted by using his e-mail at: wsucher@visualnetmedia.com or by telephoning (425) 822-9181.

The author publishes two of the small arms industry’s most widely read trade newsletters. The International Firearms Trade covers the world firearms scene, and The New Firearms Business covers the domestic market. He also offers FFL-mailing lists to firms interested in direct marketing efforts to the industry. He may be reached at: FirearmsB@aol.com.

This article first appeared in Small Arms Review V9N12 (September 2006)
and was posted online on January 25, 2013


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