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NFATCA Report: Gun Trusts, Corporations, CLEO Signature... What Really Happened?
By John Brown

As you are undoubtedly aware, the White House has launched yet another assault on firearms owners in general; and now the NFA community in particular. Many are livid over the fact that it appears as though NFATCA caused or asked for the changes discussed in the Executive Action presented by Vice President Joe Biden in a draft Notice of Proposed Rule Making (NPRM). The NFATCA shares the anger and venom of the firearms community in response to these proposed actions and rule-making efforts. Be clear: We did not ask for what the White House is trying to deliver. Let's take a look at how we got to this point.

The NFATCA began in the Bush administration and enjoyed the benefit of working with an ATF that was willing to engage in constructive dialogue. We understand and appreciate that many of you believe that ATF, the NFA and the rest of firearms regulation should be abolished and that "negotiating with the enemy" is abhorrent and traitorous. Advocating for the repeal of the NFA is a noble goal, but not something that most of this community has shown a willingness to fund. The NFATCA adopted the approach that we would seek to work with ATF on goals that we could achieve and engage ATF as willing and productive partners. That cooperative environment actually worked for many years, until our current President was elected and subsequently re-elected. Our cooperative resources within ATF still existed, but they became increasingly reluctant to engage in productive activity with us. We had action items in play with an ATF that was becoming more and more distant.

The NFATCA began its efforts to eliminate the Chief Law Enforcement Officer (CLEO) signature requirement on several NFA forms almost nine years ago. In 2009, ATF was reluctant to engage in a dialogue to address this issue and others that were considered to be important to the NFA and firearms communities. Although we had previously engaged in a productive and collaborative work environment, ATF's hesitance forced us to retain counsel to file a formal petition to attempt to achieve meaningful discourse.

Once the petition was formally delivered, ATF began working with us on advancing the CLEO signature removal issue. We went through several rounds of clarification and patiently observed the effort moving back and forth between ATF and DOJ over a period of years. In early 2011, and again in 2012, ATF clearly demonstrated their intention to remove the CLEO signature requirement in RIN 1140-AA43, though they still had not consulted with us regarding the trust/corporate items. We awaited the formal rule-making process to begin. On August 28, 2013, the RIN was changed without notice. In addition, a lengthy draft of a proposed NPRM was released.

Our petition acknowledged the understanding that ATF was concerned about prohibited persons skirting background checks by utilizing trusts and corporate entities to purchase firearms. We had been warning people for years that ATF was going to shut down the “trust loophole” regarding unqualified people obtaining weapons, and that NFATCA was trying to mitigate the damage and get rid of the antiquated CLEO signature requirement as part of this negotiation. We sounded this clarion because ATF had clearly indicated that they wanted to discontinue it. NFATCA didn’t make this a problem or bring it to ATF’s attention; the people abusing the system did. ATF was already aware of it because they had such a massive increase in trust transfers, and they read the Internet boards, following the way people bragged about getting NFA weapons anonymously and advising each other how to do so. ATF is engaged with cases of prohibited persons who have acquired weapons through trusts and corporations without background checks. Some may point to the fact there have not been any violent crimes as a result of the loophole, but prohibited persons in possession of firearms is a crime in itself. ATF was in the untenable position of approving those transfers to prohibited persons. Something was absolutely going to change.

Class 3 dealers formed the method of using trusts back in 1993-1994, after consulting with lawyers and ATF counsel to circumvent local law enforcement who refused to sign off on purchases, in order to help the collectors in Dade County and Houston in particular. The dealers who engaged in discussions with ATF at the time made all of this possible, and for fifteen years this method worked very well. It was the Internet braggarts who created a problem for the general public, and now they’ve burned the bridge. Dealers’ sales are going to hurt due to the actions of a few individuals who have unlawfully cheated the system. Once again, the few abusers have caused a problem for all of us. The abusers of the trust situation set off ATF's radar. If there is anger that should be displayed, it should be towards the people who abused the system and brought all of this to the attention of ATF and the Executive Branch. Is it right that we have restrictions on our constitutionally guaranteed RTKBA? No. Is there some magic wand that gets rid of all firearms laws tomorrow morning? No. Is there a regulatory agency we have to deal with if we want to own NFA firearms, with a stack of rules and regulations? Yes.

While the NFATCA has acknowledged in our petition that there is concern regarding prohibited persons receiving firearms without background checks via trusts and corporations, the draft NPRM does not reflect any discussions or negotiations we have had with the Federal Government. We did not support nor advocate for the efforts of the Executive Branch that were recently published as the proposed NPRM. The proposed NPRM is being used as a political expedient to address areas of negligible concern. The Executive Branch proposals unduly burden the law-abiding public, will restrain lawful commerce and bury an already overwhelmed agency with an administrative infrastructure that will not serve the public safety interest.

The NFATCA supports the elimination of the CLEO signature requirement. The NFATCA is willing to engage with DOJ/ATF and the Executive Branch to investigate reasonable, effective and manageable approaches to preventing prohibited persons from acquiring firearms. We cannot and will not support the NPRM in its current form. Unfortunately, it does not appear as though ATF, the DOJ or this administration wishes to enter into a constructive dialogue. As a result, the NFATCA will adopt a much more aggressive stance.

We are currently soliciting resources to mount an offensive on multiple fronts:
  • A legal review and dissection of the draft NPRM
  • Soliciting information regarding the costs of such an effort that would prohibit that level of spending
  • A legal counter-offensive to the draft NPRM via petition or other suitable means
  • Solicitation of Congressional inquiry
  • Creation of a massive grassroots effort to combat the NPRM, should it actually be published in the Federal Register

Many of the existing and proposed gun laws are already unconstitutional in our eyes. However, they are the law of the land right now, and we have to fight them. We have to fight hard to win, and we’re not better off if we simply sit back and complain and impotently shake our fists in the air because we feel we are holy and right. We are better off engaging with the regulatory agency through whatever effective means can be mounted and try to pre-empt the negative application of regulations, while working towards turning the tide that is against us on the larger scale. We don’t have many public friends in Congress. There is some support behind the scenes, but no one who’ll currently vote to rescind 922(o) or repeal the NFA. As for the courts, Heller should have been 9-0 in our favor but it was 5-4 as a win, and two of the five said, “Wait, this doesn’t have anything to do with machine guns, does it?” There’s no guarantee that the U.S. Supreme Court will rule in favor of constitutionality, so the current field of battle in which we can compete is regulatory.

If you look at the record, you’ll see that we’ve accomplished a lot. For two years running, we had gained traction and had the CLEO signature almost gone. ATF started the action on the trusts in 2008 or 2009; we found out and engaged them on it. Because it took so long, the White House finally became aware of it and is now using it as yet another public gun control initiative that Obama and Biden think they can just mandate. Remember, it’s not done yet. It has to go through Office of Information and Regulatory Affairs (OIRA) review, which could be completed by November. Then, it must withstand mandatory public comment after it is published in the Federal Register, if it is actually published. If we muster a lot of rational comment on why this is harmful and getting rid of CLEO is good, and we use some strong allies in the background, we have a chance to turn that around - perhaps enough to get rid of CLEO along the way. Now it is time to do something. We’d get farther faster if we had stronger support in the community to fight these issues. We’ve been asking for help on this, for the public to join the NFATCA and become active. We didn't receive much help, yet managed to persevere and keep fighting. I would suggest that you not just hand this administration a win by allowing them to continue to keep us divided. We will not sit on our hands. We will not sit back and let the White House win without a fight. That being said, the choices are obvious: You can sit back and criticize, or you can join in the fight. Today we are mustering support from sister organizations that believe in the cause and want to help. As many of you have heard me say over and over again, united we stand, divided we fall. Come stand with the NFATCA and write to your elected representatives and your state delegates. Join the crowd of people, like the NFATCA, that absolutely will not stand for this administration’s efforts.


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