Industry News: V18N3

By Robert M. Hausman

NY Court Rules Against Producing Trace Data

Justice Frederick J. Marshall of the New York State Supreme Court, Erie County, has ruled that defendants in the Williams v. Beemiller, et al. case do not have to produce firearm trace data that plaintiffs sought as part of their “jurisdictional” discovery requests. The judge cited the Tiahrt Amendment in the Nov. 25 ruling.

Justice Marshall’s ruling helps close the door on private individuals seeking trace data directly from FFLs and the admissibility of such information in litigation. Though trace data does not constitute business records, the case serves as a warning to FFLs that their private business records are discoverable, according to NSSF.

Reid Says Gun Control Will Not Pass

U.S. Senate Majority Leader Harry Reid (D-Nev.) has said again that he does not have the votes to bring a gun control bill to the floor. “I would love to bring it back up, but I can’t do it until I have the votes, and at this stage I don’t have the votes,” Reid told reporters recently. (© FB/IFT)

Sturm, Ruger’s 2nd-Quarter Sales Up

Sturm, Ruger & Co. has reported that second-quarter sales were up 45% and earnings increased 64% compared to the same period a year ago. Said CEO Michael Fifer, “New product introductions were a significant component of our sales growth as new product sales represented $146.6 million, or 32%, of firearm sales in the first nine months of 2013.”

ATK’s 2nd- Quarter Sales up 48%

ATK has reported that second-quarter sales in its Sporting Group – which includes ammunition for law enforcement, military and sporting applications as well as optics, reloading gear and sport-shooting and tactical accessories – were up 48% to $421 million compared to $284 million in the same period last year.

The company said the increase in sales was driven by higher volume in ammunition, sales from Savage of $57 million and a previously announced ammunition price increase, partially offset by a decline in sales in tactical military accessories. ATK reported that its overall net income for the quarter was up 42%.

Interstate Handgun Sale Act Introduced

U.S. Rep. Steve Scalise (R-La.) has introduced the Firearms Interstate Commerce Reform Act (HR 3335) to allow for the out-of-state sale of handguns to law-abiding citizens. While current technology makes the ban on interstate sales of handguns an anachronism in modern times, it stands zero chance of passage in the Democrat controlled Senate.

Excise Tax Revenue Up to Record Levels

The latest Firearms and Ammunition Excise Tax Collection report released by the Department of the Treasury indicates that firearm and ammunition manufacturers reported tax liabilities of $224.3 million in the second calendar quarter of 2013, up 40.3% over the same time period reported in 2012.

This 2013 second-quarter total surpasses the previous highest quarter reported (1st quarter 2013) by 12.6%. The report, which covers April 1, 2013 through June 30, 2013, shows that $64.6 million was due in taxes for pistols and revolvers, $82.5 million for firearms (other)/long guns and $77.2 million for ammunition (shells and cartridges). Compared to the same time period in 2012, tax obligations were up 23% for pistols and revolvers, up 43.3% for firearms (other)/ long guns and up 55% for ammunition.

Canadians Need An I-94 Number to Buy Guns

Nonimmigrant aliens entering the United States are admitted under different classes/categories. Canadians are considered non-controlled aliens and commonly admitted under class/category V (Visitor for business or pleasure). Nonimmigrant aliens receiving an I-94 number are normally entered under categories E and K.

The issuance of an I-94 number is a manual process (may include a small fee) and not necessary for visitors of business or pleasure, including Canadians. For firearm sales, a nonimmigrant alien must possess an I-94 number. Therefore, for a Canadian to purchase a firearm in the United States through an FFL, they will need to obtain an I-94 number.

Responsible Persons on an FFL

Neither the Gun Control Act (GCA) nor its implementing regulations specifically define the term “responsible person.” ATF derives its interpretation of that term from 18 U.S.C. §923(d)(1)(B), to mean an individual who has the power to direct the management and policies of the business entity for which the federal firearms license is being applied. Reference the March 2006 FFL Newsletter:

An existing responsible person (RP) under the applicable federal firearms license must request the addition of the new RP in writing. Written correspondence can be addressed directly to the appropriate Federal Firearms Licensing Center (FFLC) examiner on letterhead or by email. The addition of a new RP does not have to be submitted on a Form 7.

Photographs and fingerprint cards (FPC) must be submitted in addition to all required personal information. If the RP being added to the license is currently an RP on an existing license, no new photographs, or FPCs need to be submitted, but a new background check must be completed before approval of the addition can occur. However, don’t expect ATF to notify you if the new RP is approved – it won’t. ATF will only notify you if the RP is disapproved. To find your FFLC examiner, visit www.atf.gov/files/contact/service-centers/fflc-distribution-map.pdf. Corporate account examiners and a staff directory can be found at: www.atf.gov/contact/service-centers/index.html.

To delete an existing RP under the applicable license, each licensee must also request this deletion in writing to the FFLC.

Transferring Firearms from FFL to Personal Collection

If your business is a sole proprietorship, no ATF Form 4473 or NICS check is required to transfer a firearm from your business inventory to your personal collection.

However, the acquisition and disposition (A&D) record must reflect the disposition of the firearm from business inventory to personal use, and the date of such transfer. Note that if you wish to dispose of the firearm prior to it being held as part of your personal collection for one year, you are required to re-enter the firearm into the A&D record, complete an ATF Form 4473, and conduct a background check on the transferee. However, if the firearm is maintained in your personal collection for one year or longer from the date the firearm was transferred from the business inventory, you are not required to comply with the provisions of §478.102 or 478.124. Reference 27 CFR 478.125a.

An ATF Form 4473 and NICS check is required when a corporation, LLC, or partnership holding a federal firearms license transfers a firearm to one of its officers (or partners in the case of a partnership) for his or her personal use. The disposition of this firearm must also be recorded in the A&D record.

Report Deaths of FFL Responsible Persons

The Federal Firearms Licensing Center reminds all licensees of the requirement to report deceased responsible persons (RP) to the FFLC within 30 days, so the RP can be deactivated in FFLC’s system.

The deactivation of a deceased RP may lead to the right of business succession. Certain persons other than the licensee may secure the right to continue business with the license at the same address on, and for the remainder of the term of, the current license. Upon expiration of the license, the successor would be required to apply for a new license if they wish to continue operating. (A successor cannot renew the existing license.) The guidance for Right of Succession (27 CFR 478.56) is also located on the face of the license. In the case of a Corporation, only a legal corporate entity may continue to be licensed.

If after the death of an individual the corporation is dissolved under state law, the entity no longer exists and may no longer be licensed. For further information or clarification on how the deactivation of a deceased RP may affect your license, please contact ATF Customer Service at (866) 662-2750.

New E-Check Claimed to be Improved

The FBI NICS E-Check has been upgraded and is now said to provide a much more user-friendly experience.

The biggest obstacle many FFLs identified with the old version of the E-Check was that it was difficult to set up on additional computers. Additionally, the old version of the E-Check was not compatible with many browsers.

The new E-Check 2.0 allows you to access the system from any computer or any browser. The FFL and/or manager receives administrative controls, which includes the ability to create and modify accounts. The E-Check 2.0 does not require a digital certificate to be downloaded to your computer. This makes it easier to use from any browser using a computer, laptop, tablet, smart phone, etc. You will log into FBI NICS E-Check using a user name and password similar to how you log in to most on-line accounts.

NFA Paperwork

ATF has become aware of fraudulent misuse of paperwork associated with National Firearms Act (NFA) firearms.

ATF strongly recommends that you never give anyone a copy of the applicable form that is to stay with your NFA firearm. In addition, please be aware that there are several areas to inspect if you are examining an NFA form for transfer. The ATF NFA Branch assigns a control number to every transfer, which is stamped on the applicable NFA form. Also, the serial number for the firearm is included in the tax stamp that is affixed to the applicable NFA form.

Should you suspect any misuse of NFA approved forms, please contact your local ATF office. A listing of the offices may be found at: www.atf.gov/content/contact-us/local-atf-offic.

Note on FFL Responsible Persons

The Federal Firearms Licensing Center reminds all licensees that an ATF Form 2.5330.20-Certification of Compliance with 18 U.S.C. 922(g)(5)(B) (COC) is currently required for each and every responsible person (RP) every three years, when submitting your renewal application (as indicated in Part C, question 6 on the ATF Form 8 Part II).

The Chief Law Enforcement Officer (CLEO) information is required on all renewals as well. The CLEO information should be entered in Part C, question 4 by the RP completing the renewal form. The CLEO should not complete any part of the application and should not sign the application. The RP completing the renewal should sign the renewal, thereby certifying that all of the information provided is true and correct to the best of his or her knowledge, and that a copy of the application has been provided to the CLEO, as required.

The failure to complete the COC and CLEO information on renewals generate the most returns from the FFLC, which ultimately delays the issuance of the renewed license.

Court Rules Sheriffs Cannot Participate In Suit

A lawsuit seeking to overturn two new Colorado gun-control laws remains alive despite a judge’s ruling that county sheriffs cannot participate. The lawsuit will move forward on behalf of other organizations that support gun rights, which had joined 55 of the state’s 64 sheriffs as plaintiffs.

Chief U.S. District Judge Marcia Krieger ruled that the sheriffs, in their official capacities, do not have standing to challenge the laws. They can join the suit as individuals, however.

The lawsuit seeks a decision from Krieger that the laws are unconstitutional. One of the laws bans magazines with capacities of more than 15 rounds. The other imposes fees and requires background checks for private transfers of firearms. The laws took effect July 1. (© FB/IFT)

Facing the Recall Music, CO Legislator Resigns

Sen. Evie Hudak (D-Westminster, Colo.) became the latest target of recall elections, resigning her seat in the Colorado Legislature just days before opponents were expected to turn in signatures to try to oust her from office.

She was targeted for her support of strict gun-control legislation, which did not sit well with much of her constituency. By resigning, Hudak ensured that Democrats would keep their narrow one-vote majority in the next legislative session, because a committee from the Democratic Party will appoint her replacement. If recalled, voters could have replaced her with a Republican.

November NICS Stats Down Over 14%

What will likely turn out to be an unprecedented gun sales slow-down continues with the November 2013 NSSF-adjusted National Instant Criminal Background Check System (NICS) figure of 1,308,100 is a decrease of 14.2% compared to the NSSF-adjusted NICS figure of 1,525,177 in November 2012.

For comparison, the unadjusted November 2013 NICS figure of 1,805,759 reflects a 9.6% decrease from the unadjusted NICS figure of 1,997,703 in November 2012. NSSF-adjusted NICS for November 2013 is the second highest on record — an 18.8% increase over November 2011.

Plastic Gun Ban Signed Without Schumer’s Trick

A 10-year renewal of the so-called “Undetectable Firearms Act” has been signed into law, without the polymer magazine ban trick Sen. Schumer (D-NY) attempted to insert into it.

Just before the Senate recessed in late November for two weeks, Sen. Schumer abruptly called for unanimous consent for a one-year extension to the Undetectable Firearms Act. Up to that point, all discussion in both the House and Senate were for five or 10 year periods.

His scam was to have the bill expire again during the Senate’s lame duck session in 2014. At that point, Schumer and his compadres on this effort (which included Patrick Leahy (D-VT) who, like Schumer, proclaims himself to be “pro-gun” to constituents) could tack on the gun-control expansions that their vulnerable Democrats in rural and western states would not support in an election year, The Washington Times reported.

Schumer and some Democrats on the Judiciary Committee, such as Leahy, had been trying recently to expand the scope of the so-called “plastic gun ban” ban to include millions of existing and non-threatening polymer magazines.

Sen. Jeff Sessions, the Alabama Republican who is on the Judiciary Committee, objected to Schumer’s request and asked the bill be done in regular order.

Schumer protested not moving immediately. He said on the floor that, “What makes us need to do this rather quickly is that a few months ago someone in Texas published on a website a way to make a plastic gun, buying a 3D printer for less than $1,000.” He’s referring to Cody Wilson who printed a plastic gun which he calls “The Liberator.”

The Times reported that current federal law states that a firearm has to have 3.7 oz. of steel in it — after removing the grips, stocks and magazine. With the invention of 3D printers, a few people have technically abided by the law by adding a non-functional steel clip to the firearm. Even though Wilson has a federal manufacturer’s license, which exempts him from the law, he added a piece of steel to his gun to make it compliant. The Democrats then attempted to create a non-existent political controversy for public relations purposes.

Connecticut Democratic Sen. Richard Blumenthal put out a press release Friday that falsely blamed Sen. Sessions for blocking the bill permanently. Mr. Blumenthal theatrically stated that, “Delaying these protections simply puts innocent American lives at risk.”

Sen. Chuck Grassley, the ranking Republican on the Judiciary Committee, was outraged by the games being played by Democrats. “Congressional Republicans support a lengthy extension of the ban on firearms that cannot be picked up by metal detectors,” the Iowa Republican said in a statement. “Rather than working with us, they sought to move their inadequate bill just before the Senate adjourned, intending to make Republicans object. Democrats have knowingly mischaracterized this debate.” The statute has actually been led by Republicans in the past. It was originally signed into law in 1988 by President Reagan. The GOP congress passed it with strong bipartisan support in 2003, and President George W. Bush signed it.

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 may be reached at: FirearmsB@aol.com.

This article first appeared in Small Arms Review V18N3 (June 2014)
and was posted online on March 21, 2014


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