Short title

This Act may be cited as the

Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE) Modernization and Reform Act of 2006

Graduated penalties for civil violations by Federal firearms licensees

(a)

In general

Section 923 of title 18, United States Code, is amended by striking subsections (e) and (f) and inserting the following:

(e)(1)(A)If the Attorney General determines that a licensee under this section has willfully violated any provision of this chapter or any regulation prescribed under this chapter, the Attorney General may— (i)if the violation is of a minor nature— (I)impose on the licensee a civil money penalty of not more than $1,000 for each such violation, except that the total amount of penalties imposed on a licensee under this subclause for violations arising from a single inspection or examination shall not exceed $5,000; or (II)suspend the license for not more than 30 days, and specify the circumstances under which the suspension is to be terminated, if, in the period for which the license is in effect, there have been at least 2 prior occasions on which the licensee has been determined to have violated this chapter; or (ii)if the violation is of a serious nature— (I)impose on the licensee a civil money penalty of not more than $2,500 for each such violation, except that the total amount of penalties imposed on a licensee under this subclause for a violations arising from a single inspection or examination shall not exceed $15,000; (II)suspend the license for not more than 90 days, and specify the circumstances under which the suspension is to be terminated; (III)revoke the license; or (IV)take the actions described in subclauses (I) and (II), or subclauses (I) and (III). (B)(i)(I)In determining the amount of a civil money penalty to impose under subparagraph (A) on a licensee, the nature and severity of the violation involved, the size of the firearms business operated by the licensee, and the prior record of the licensee shall be considered. (II)On request of the licensee, the Attorney General may consider the ability of the licensee to pay a civil money penalty, and may allow the licensee to submit documents and information to establish the ability of the licensee to pay. The Attorney General shall not make part of any public record any document or information so submitted, and shall return to the licensee any such document or information. (III)The total amount of penalties imposed on a licensee under subparagraph (A) with respect to violations of a minor nature and of a serious nature arising from a single inspection or examination shall not exceed $15,000. (ii)For purposes of subparagraph (A), violation of a provision of this chapter with respect to 2 or more firearms during a single transaction shall be considered a single violation of the provision. (iii)The Attorney General may defer, or suspend, in whole or in part, the imposition of a civil money penalty on a licensee whose license is suspended under this paragraph. (C)For purposes of subparagraph (A): (i)A violation of this chapter shall be considered to be of a serious nature if the violation— (I)results in or could have resulted in the transfer of a firearm or ammunition to a person prohibited from possessing or receiving the firearm or ammunition under this chapter or under State or local law; (II)obstructs or could have obstructed a bona fide criminal investigation or prosecution, or an inspection or examination under this chapter; or (III)prevents or could have prevented a licensee from complying with subsection (a)(7), (a)(8), (b)(1), (b)(3), (b)(4), (j), (k), (o), or (p) of section 922, subsection (g)(7) of this section, or subsection (b) or (h) of section 924. (ii)A violation of this chapter shall be considered to be of a minor nature if the violation is not of a serious nature. (D)The Attorney General may not commence an enforcement action under subparagraph (A) with respect to a violation, after the 5-year period that begins with— (i)the date the violation occurred; or (ii)if the licensee intentionally obstructed discovery of the violation, the date the violation is discovered. (2)(A)Not less than 30 days before the effective date of any penalty imposed on a licensee by reason of a determination made under paragraph (1), the Attorney General shall send the licensee a written notice— (i)of the determination, and the grounds on which the determination was made; (ii)of the nature of the penalty; and (iii)that the licensee may, within 30 days after receipt of the notice, request a hearing to review the determination. (B)A hearing to review a determination made under paragraph (1) with respect to a licensee shall not be held unless the licensee requests such a hearing within 30 days after receiving the notice of the determination sent pursuant to subparagraph (A). (C)On timely receipt from the licensee of a request for such a review, the Attorney General shall stay the imposition under paragraph (1) of any penalty involved, pending resolution of the review, unless, in the case of a suspension or revocation of a licensee, the Attorney General establishes, at a hearing before an administrative law judge, by clear and convincing evidence, that the continued operation by the licensee of the business poses an immediate and grave threat to public safety. (3)(A)Within 90 days after timely receipt from a licensee of a request to review a determination made under paragraph (1) (or at such later time as is agreed to by the Attorney General and the licensee), an administrative law judge shall hold a hearing, at a location convenient to the licensee, to review the determination. (B)Not less than 30 days before the hearing, the Attorney General shall deliver to the licensee— (i)a document identifying each person whom the Attorney General intends to call as a witness during the hearing; (ii)a copy of each document which will be introduced as evidence at the hearing; and (iii)copies of all documents on which the determination is based. (C)Within 90 days after the hearing, the administrative law judge shall issue a written decision setting forth findings of fact and conclusions of law, and a decision as to whether to affirm, modify, or reverse the determination. (D)On request of the licensee, the Attorney General shall stay the effective date of any penalty, suspension, or revocation until there has been a final, nonreviewable judgment with respect to the determination involved, unless, in the case of a suspension or revocation of a licensee, the Attorney General establishes, at a hearing before an administrative law judge, by clear and convincing evidence, that the continued operation by the licensee of the business poses an immediate and grave threat to public safety. (E)The action of an administrative law judge under this subsection shall be considered final agency action for all purposes, and may be reviewed only as provided in subsection (f). (4)This subsection shall not be interpreted to affect the authority of the Attorney General under section 922(t)(5). (f)(1)Within 60 days after a party receives a notice issued under subsection (d)(3) of a decision to deny a license, or a notice issued under subsection (e)(3)(C) of a determination to impose a civil money penalty or to suspend or revoke a license, the party may file a petition with the United States district court for the district in which the party resides or has a principal place of business for a de novo review of the decision or determination. (2)In a proceeding conducted under this paragraph, the court shall, on application of a party, consider any evidence submitted by the parties to the proceeding whether or not the evidence was considered at the hearing held under subsection (d)(3) or (e)(3). (3)If the court decides that the decision or determination was not authorized, the court shall order the Attorney General to take such action as may be necessary to comply with the judgment of the court. (4)If criminal proceedings are instituted against a licensee alleging any violation of this chapter or of a regulation prescribed under this chapter, and the licensee is acquitted of the charges, or the proceedings are terminated, other than upon motion of the Government before trial on the charges, the Attorney General shall be absolutely barred from denying a license under this chapter, suspending or revoking a license granted under this chapter, or imposing a civil money penalty under subsection (e), if the action would be based in whole or in part on the facts which form the basis of the criminal charges. (5)The Attorney General may not institute a proceeding to suspend or revoke a license granted under this chapter, or to impose a civil money penalty under subsection (e), more than 1 year after the filing of the indictment or information.

(b)

Conforming amendment to procedure applicable to denial of application for license

Section 923(d) of such title is amended by adding at the end the following:

(3)If the Attorney General denies an application for a license, an administrative law judge of the Department of Justice shall, on request by the aggrieved party, promptly hold a hearing to review the denial, at a location convenient to the aggrieved party. If, after the hearing, the administrative law judge decides not to reverse the denial, the administrative law judge shall give notice of the final denial decision to the aggrieved party.

Consideration of Federal firearms license applications

(a)

In general

Section 923(d) of title 18, United States Code, as amended by section 2(b) of this Act, is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4) and inserting after paragraph (1) the following:

(2)The Attorney General shall make a preliminary determination as to whether to approve or deny an application submitted under subsection (a) or (b). If the preliminary determination is to deny the application, the Attorney General shall notify the applicant in writing of the preliminary determination and the reasons for the preliminary determination, and shall afford the applicant an opportunity to supplement the application with additional information and to request a hearing on the application. If the applicant, in a timely manner, requests such a hearing, the Attorney General shall hold the hearing at a location convenient to the applicant, and shall notify the applicant in writing of the time and place of the hearing.

(b)

Conforming amendment

Section 923(f) of such title, as amended by section 2(a) of this Act, is amended by striking (d)(3) each place it appears and inserting (d)(4).

Definition of willfully

Section 923(e) of title 18, United States Code, as amended by section 2(a) of this Act, is amended by adding at the end the following:

(5)For purposes of this subsection, the term willfully means, with respect to conduct of a person, that the person knew of a legal duty, and engaged in the conduct knowingly and in intentional disregard of the duty.

Establishment of formal inspection, examination, and investigative guidelines

The Attorney General shall establish guidelines for how the Bureau of Alcohol, Tobacco, Firearms, and Explosives is to conduct inspections, examinations, or investigations of possible violations of chapters 40 and 44 of title 18, United States Code.

Review by the Inspector General of the Department of Justice of the gun show enforcement program; report

(a)

Review

The Inspector General of the Department of Justice shall conduct a review of the operations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, for the purpose of assessing the manner in which the Bureau conducts the gun show enforcement program and blanket residency checks of prospective and actual firearms purchasers. (b)

Report

Not later than 1 year after the date of the enactment of this Act, the Inspector General of the Department of Justice shall submit to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate a written report that contains the findings of the review required by subsection (a), and includes such recommendations as may be appropriate.

Limitations on use of firearms purchaser information

Section 923(g)(1)(D) of title 18, United States Code, is amended in the last sentence by inserting , except that information identifying a person who has purchased or received firearms or ammunition and who is not prohibited from doing so may not be so made available or so provided unless the agency involved has certified that the agency will not disclose the information to any entity other than a court, federal, State or local law enforcement agency, or prosecutor before the period.

Liquidation of inventory in Federal firearms license expiration, surrender, or revocation cases

Section 923 of title 18, United States Code, is amended by adding at the end the following:

(m)(1)Except as provided in paragraph (2), a person whose license issued under this chapter is expired, surrendered, or revoked shall be afforded 60 days from the effective date of the expiration, surrender, or revocation to liquidate the firearms inventory of the person, which time may be extended upon a showing of reasonable cause. During such 60-day period (including any extension of the period), the license involved shall continue to be considered valid. (2)Paragraph (1) shall not apply with respect to a person if a United States District Court for the judicial district in which the person resides or in which the principal place of business of the person subject to the license is located finds, by clear and convincing evidence, that the continued operation by the person of the business poses an immediate and grave threat to public safety.

Opportunity to cure violations after acquisition of firearms business

Section 923 of title 18, United States Code, is further amended by adding at the end the following:

(n)If the Attorney General is made aware that a business licensed under this chapter has transferred to a surviving spouse or child of the licensee, to an executor, administrator, or other legal representative of a deceased licensee; or to a receiver or trustee in bankruptcy, or an assignee for benefit of creditors, and, before the transfer, or on the first inspection or examination by the Attorney General of the records of the licensee after the transfer, the licensee is found to be operating the business in violation of this chapter, the Attorney General— (1)shall notify the transferee of the violation by the transferor; and (2)shall not presume that the transferee is committing the violation.

10.

Standards for criminal violations of recordkeeping requirements

Section 922(m) of title 18, United States Code, is amended— (1)by striking any false entry and inserting a materially false entry; (2)by striking appropriate entry and inserting a materially significant entry; and (3)by striking properly maintain and inserting retain custody of.

11.

Authority to collect information on explosives stored under State law; regulations governing storage of explosives made applicable to storage of explosives by agencies operating under State law

(a)

Authority to collect information on explosives stored under State law

(1)

In general

Section 846 of title 18, United States Code, is amended by adding at the end the following:

(c)Each agency operating under the law of any State or political subdivision thereof that stores or keeps explosive materials shall submit to the Attorney General, at such time as the Attorney General shall prescribe in regulations, a written report that specifies each location at which the agency stores or keeps explosive materials that have been shipped or transported in interstate or foreign commerce, and the types and amounts of such explosive materials that are stored or kept at the location.

(2)

Regulations

Within 6 months after the date of the enactment of this section, the Attorney General shall prescribe the regulations referred to in section 846(c) of title 18, United States Code. (b)

Regulations governing storage of explosives made applicable to storage of explosives by agencies operating under State law

Subpart K of part 555 of subchapter C of chapter II of title 27, Code of Federal Regulations, shall apply with respect to the storage by agencies operating under the law of any State or political subdivision thereof of explosive materials that have been shipped or transported in interstate or foreign commerce.

12.

Effective date

This Act and the amendments made by this Act shall take effect at the end of the 180-day period that begins with the date of the enactment of this Act.