[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES (BATFE): REFORMING 
                 LICENSING AND ENFORCEMENT AUTHORITIES

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON CRIME, TERRORISM,
                         AND HOMELAND SECURITY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 28, 2006

                               __________

                           Serial No. 109-114

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov


                                 ______

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                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California        ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah                   MAXINE WATERS, California
SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
RIC KELLER, Florida                  ADAM B. SCHIFF, California
DARRELL ISSA, California             LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona                  CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana                  DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

             Philip G. Kiko, General Counsel-Chief of Staff
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

        Subcommittee on Crime, Terrorism, and Homeland Security

                 HOWARD COBLE, North Carolina, Chairman

DANIEL E. LUNGREN, California        ROBERT C. SCOTT, Virginia
MARK GREEN, Wisconsin                SHEILA JACKSON LEE, Texas
TOM FEENEY, Florida                  MAXINE WATERS, California
STEVE CHABOT, Ohio                   MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida                  WILLIAM D. DELAHUNT, Massachusetts
JEFF FLAKE, Arizona                  ANTHONY D. WEINER, New York
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
LOUIE GOHMERT, Texas

                     Michael Volkov, Chief Counsel

                          David Brink, Counsel

                        Caroline Lynch, Counsel

                 Jason Cervenak, Full Committee Counsel

                     Bobby Vassar, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             MARCH 28, 2006

                           OPENING STATEMENT

                                                                   Page
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Chairman, Subcommittee on Crime, 
  Terrorism, and Homeland Security...............................     1
The Honorable Robert C. Scott, a Representative in Congress from 
  the State of Virginia, and Ranking Member, Subcommittee on 
  Crime, Terrorism, and Homeland Security........................     2

                               WITNESSES

Ms. Audrey Stucko, Deputy Assistant Director, Enforcement 
  Programs and Services, Bureau of Alcohol, Tobacco, Firearms, 
  and Explosives (BATFE)
  Oral Testimony.................................................     4
  Prepared Statement.............................................     7
Mr. Richard E. Gardiner, Attorney at Law, Fairfax, Virginia
  Oral Testimony.................................................    15
  Prepared Statement.............................................    17
Lt. Michael James Lara, Tucson Police Department, Tucson, Arizona
  Oral Testimony.................................................    20
  Prepared Statement.............................................    22
Ms. M. Kristen Rand, Legislative Director, Violence Policy Center
  Oral Testimony.................................................    30
  Prepared Statement.............................................    31

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable Robert C. Scott, a 
  Representative in Congress from the State of Virginia, and 
  Ranking Member, Subcommittee on Crime, Terrorism, and Homeland 
  Security.......................................................    53
Prepared Statement of Bruce R. Barany, Co-Owner, The General 
  Store, Spokane, Washington.....................................    54
Prepared Statement of James. M. Faircloth, Owner, Jim's Pawn 
  Shop, Inc., Fayetteville, North Carolina.......................    58
Prepared Statement of Stanton Myerson, Owner, Lou's of Upper 
  Darby, Inc., Upper Darby, Pennsylvania.........................    61


BUREAU OF ALCOHOL, TOBACCO, FIREARMS, AND EXPLOSIVES (BATFE): REFORMING 
                 LICENSING AND ENFORCEMENT AUTHORITIES

                              ----------                              


                        TUESDAY, MARCH 28, 2006

                  House of Representatives,
                  Subcommittee on Crime, Terrorism,
                              and Homeland Security
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:04 p.m., in 
Room 2141, Rayburn House Office Building, the Honorable Howard 
Coble (Chairman of the Subcommittee) presiding.
    Mr. Coble. Good afternoon, ladies and gentlemen. We are 
scheduled to have four witnesses on this panel and I see two 
have been seated--and a third--and a fourth. Very well.
    Today, ladies and gentlemen, the Subcommittee on Crime, 
Terrorism, and Homeland Security will receive testimony from 
two panels of witnesses. The first panel has been called to 
assist the Subcommittee's oversight on the civil and criminal 
enforcement efforts of the Bureau of Alcohol, Tobacco, 
Firearms, and Explosives, popularly known as ATF. Specifically, 
this panel will review ATF enforcement authorities and the 
possibility of civil penalties for minor violations; ATF 
administrative process and procedures for licensing of Federal 
firearm licensees, FFLs, to ensure that licensees are provided 
adequate and expeditious due process; and ATF allocation of 
enforcement resources.
    This review will help Members of this Subcommittee to 
determine if legislation is in fact needed to assist the ATF in 
accomplishing its mission and to ensure adequate and timely due 
process for FFLs. The ATF must be able to regulate FFLs in a 
fair and expeditious manner. Unfortunately, the ATF authorities 
limit potential penalties to only revocation or no penalty at 
all, which leaves little or no middle ground for fair 
resolution.
    This could also drain the ATF's limited enforcement 
resources, which may be better utilized by focusing on FFLs 
posing the greatest threat of harm to the public. ATF should 
not waste valuable resources worrying about ministerial errors 
committed by licensees; rather, they should focus, it seems to 
me, on those licensees who willfully violate the laws and 
regulations and pose a threat of significant harm.
    Similarly, when it comes to criminal prosecutions of 
individuals, ATF and the Department of Justice should focus on 
those truly bad actors. Prosecutions that are aimed at only 
padding case statistics--and I am not suggesting that that is 
done. But if it is done, it not only wastes Government 
resources, but could tarnish law-abiding citizens' reputation 
as well and cause individuals severe financial distress.
    We look forward to our witnesses' testimony today and hope 
that it can shed some light on how Congress can do its part to 
ensure, one, that individual civil liberties are respected, and 
two, that the ATF has effective tools at its disposal to 
fulfill its mission of investigating violations of our Nation's 
gun laws.
    I am pleased to welcome our panelists and I am now equally 
pleased to recognize the distinguished gentleman from Virginia, 
the Ranking Member, Mr. Bobby Scott.
    Mr. Scott. Thank you, Mr. Chairman. I am pleased to join 
you in convening this hearing on ATF licensing enforcement 
authority. We have held two previous hearings on ATF gun law 
enforcement activities; this hearing focuses primarily on ATF 
gun licensing, issuing, and regulations, procedures, and 
practices.
    I believe there are several areas in the current licensing 
regulations that we can all agree need some change. Adding fine 
and suspension authority to the current revocation-only 
authority for licensing violations is one such area that I 
think there will be general agreement.
    I believe that in according due process, the appearance of 
impartiality is an important component. While there is nothing 
to establish that ATF-appointed employees cannot serve as fair 
and impartial hearing officers, I believe that the appearance 
of impartiality is served by having those officers from a 
different agency or appointed source.
    I am open to the suggestion that ATF could benefit from a 
study of its operations and resource allocations and from 
general operational guidelines relative to enforcement 
activities, as with other agencies under the Department of 
Justice.
    Whatever we may do legislatively, Mr. Chairman, I believe 
that our goal should be to improve the operational 
effectiveness as well as the fairness of the ATF's gun law 
enforcement and licensing responsibilities. That Agency has an 
important function and responsibility with respect to the 
enforcement of our Federal gun laws, and while we all want to 
ensure that these functions and responsibilities are applied in 
a manner that promotes and supports the respective citizens 
they affect, we don't want to do it at the expense of diligent 
and effective law enforcement.
    So, Mr. Chairman, I know our staffs are working on 
legislation that will reform some of ATF's current enforcement 
procedures and options. It is my hope that we will come up with 
legislation that reflects improvements on what we can agree on 
a bipartisan basis and also those that both gun control as well 
as gun rights advocates can support.
    I look forward to the testimony by witnesses relative to 
these issues and look forward to working with you toward the 
end of bipartisan, generally supported improvements on ATF gun 
enforcement operations.
    Thank you, Mr. Chairman.
    Chairman Coble. I thank the gentleman from Virginia.
    Let me at this time recognize our witnesses. We have four 
distinguished witnesses with us today. Our first witness is 
Audrey Stucko, Deputy Assistant Director for Enforcement 
Programs and Services at the Bureau of Alcohol, Tobacco, and 
Firearms. Ms. Stucko began her career with ATF in 1977, working 
in a variety of positions in New York City, Philadelphia, 
Baltimore, and Washington, D.C. Prior to her current position, 
she worked as Chief of the Firearms and Explosives Services 
Division and as the Chief of Staff for the Enforcement Programs 
and Services Directorate.
    Our second witness is Mr. Richard Gardiner, attorney at law 
in Fairfax, Virginia. Mr. Gardiner is a sole practitioner with 
emphasis on criminal defense in Federal and State courts. He 
has briefed and argued criminal and civil appeals before 
multiple circuits of the United States courts of appeals and 
the United States Supreme Court. Mr. Gardiner has also 
previously testified before the Congress and the Virginia 
General Assembly. He earned his bachelor's degree from Union 
College and was awarded his J.D. degree from George Mason 
University--as an aside, Mr. Gardiner, an institution unknown 
to virtually no American today.
    Our third witness is Lieutenant Michael Lara, Commander at 
the Tucson Police Department. Lieutenant Lara started his law 
enforcement career in 1977 as a State-certified police officer 
in Crown Point, Indiana, and moved up the ranks to become a 
detective and ultimately a supervisor. He previously taught 
criminal justice classes at the Pima Community College. 
Lieutenant Lara received a bachelor's degree from Indiana 
University, a master's degree from Norther Arizona University, 
and is a graduate of the FBI National Academy in Quantico, 
Virginia.
    Our final witness today is Kristen Rand, Legislative 
Director for the Violence Policy Center. In this capacity, Ms. 
Rand is responsible for the VPC's policymaker education efforts 
and directs the organization's research on Federal firearms 
policy. Previously she worked as counsel to the Washington 
office of Consumer's Union. Ms. Rand is the author of numerous 
studies on gun policy, including Gun Shows in America. She 
earned her undergraduate degree from the University of Southern 
California and her J.D. was awarded to her from the George 
Washington University.
    Good to have you all with us. It is our custom to swear in 
all witnesses, so if you all would please stand and raise your 
right hands.
    [Witnesses sworn.]
    Chairman Coble. Let the record show that each of the 
witnesses answered in the affirmative. You may be seated.
    Good to have you all with us. Now, as we have previously 
advised you, we are not completely inflexible but we do operate 
under the 5-minute rule. So if you all could confine your 
statements on or about 5 minutes, we--Mr. Scott and I do not 
become violent, but if you go too far astray, I may tap the 
gavel. Your warning sign will be when the amber light appears 
on the panel before you. That is your indicator that you have a 
minute remaining.
    Ms. Stucko, why don't you start us off.

    TESTIMONY OF AUDREY STUCKO, DEPUTY ASSISTANT DIRECTOR, 
ENFORCEMENT PROGRAMS AND SERVICES, BUREAU OF ALCOHOL, TOBACCO, 
                FIREARMS, AND EXPLOSIVES (BATFE)

    Ms. Stucko. Good afternoon, Chairman Coble, Congressman 
Scott, and Members of the Subcommittee. Thank you for the 
opportunity to appear before you to discuss the significant 
contributions of the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives relating to our administration of the licensing 
provisions of the Gun Control Act of 1968.
    I appreciate this opportunity to outline for the 
Subcommittee ATF's regulation of Federal firearms licensees, 
which I will refer to as FFLs. I will begin with the 
application and license issuance process and then address 
voluntary FFL compliance, which is ATF's primary goal.
    All applicants for a license submit an application to ATF's 
licensing center in Atlanta. The applicant and any corporate 
officers, directors, or managers are subject to National 
Instant Check System background checks, and assuming none are 
felons or otherwise fall within a category of prohibited 
persons, the application is then sent to the ATF field division 
where the applicant is located.
    At that point, an Industry Operations Investigator, an IOI, 
conducts an interview to verify the identity of the applicant, 
verify that the applicant has a permanent location that will be 
available to ATF's statutorily authorized inspections, and to 
review with the application the laws and regulations governing 
the operation of the applicant's firearms business. This 
process benefits applicants by providing them with information 
to assist them in operating their business in compliance with 
the law.
    Once the field is satisfied that the applicant meets all 
the statutory criteria for licensing, the licensing center is 
then directed to issue the license. ATF attempts to complete 
the license process within 60 days, but the time period can be 
extended when complications arise in connection with criminal 
background checks or necessary zoning variances.
    ATF continues to educate licensees concerning their 
obligations under the law through the issuance of open letters 
that are mailed to FFLs and posted on the ATF Web site, through 
quarterly FFL newsletters and by attending industry conferences 
and trade shows to answer questions from licensees. We also 
provide FFLs with our Federal Firearms Regulations Reference 
Guide, which includes the laws, regulations, and other 
information about conducting a firearms business under Federal 
law.
    With certain exceptions, the Gun Control Act limits ATF to 
one annual compliance inspection of an FFL's firearms records 
and inventory each year. There are currently over 105,000 
Federal firearms licensees, and ATF conducts approximately 
4,000 inspections of firearms licensees each year. The purpose 
of the inspection program is to determine whether an FFL is 
complying with the law and regulations, and if not, to obtain 
voluntary compliance. Voluntary compliance is encouraged by 
educating FFLs about the requirements of the law and 
regulations and by issuing Notices of Violation that outline 
the specific violations of the law and regulations that were 
discovered during the inspection. IOIs go over the violations 
outlined in the notice that the FFLs to make sure they 
understand how their business operations fell short and how to 
avoid violations in the future.
    In the event the violations are willful, the licensee may 
receive a warning letter from the field division or may be 
asked to attend a warning conference to discuss the violation 
and how it may be avoided in the future. If the violations are 
willful and it is determined that voluntary compliance is 
unlikely or that continued operation of the FFL poses a threat 
to public safety, the field division may recommend that the 
license be revoked.
    Under the Gun Control Act, license revocation may be 
undertaken for any willful violation of the law or regulations. 
The term ``willful'' is not defined in the law, but Federal 
courts have consistently defined it to mean that the FFL knew 
of the legal requirements at issue and disregarded or was 
plainly indifferent to these requirements. This interpretation 
of willfulness is consistent with that applied in 
administrative proceedings held by a number of other Federal 
agencies.
    ATF has issued guidance to all field divisions outlining 
the types of violations that are suitable for warning letters, 
warning conferences, and revocation of licenses. The guidelines 
were issued to ensure consistency in administering the statute 
throughout the United States.
    A review of Agency data indicates that ATF typically 
revokes fewer than 100 licenses per year on the basis of 
willful violations of the law and regulations. This represents 
2.5 percent of all licensees inspected annually and about .1 
percent of the total FFL population. In the vast majority of 
these revocations, ATF has already provided the licensee with 
an opportunity to comply and previously issued Reports of 
Violation or warning letters or held warning conferences. 
Moreover, in almost all cases, the Federal district courts have 
upheld the Government's actions. For example, in the past 5 
years, 33 of 36 Federal district courts reviewing ATF's license 
denial or revocation decisions have upheld those 
determinations. Further, only one of the three adverse 
decisions has resulted in an award of fees and costs against 
the Government.
    Again, our goals are voluntary compliance and educating 
FFLs about their obligations under the law and encouraging 
business practices that bring about this result. ATF typically 
resorts to license revocation only when it is clear that 
voluntary compliance is unlikely and that continued operation 
of the firearms business is not in the public's interest.
    Currently, license revocation hearings are held before ATF 
hearing officers and the proceedings are informal, where the 
rules of evidence and other judicial rules do not strictly 
apply. Because the hearings are informal, FFLs often choose to 
represent themselves. After the hearing, the Director of 
Industry Operations, who oversees a Division's regulatory 
operations, issues a final decision. During the administrative 
proceedings, the FFL may continue to operate the firearms 
business. Thereafter, the FFL can proceed to Federal district 
court for review of the revocation or denial decision.
    Because a firearms license revocation is subject to trial 
de novo, a legal term which means the court can allow new 
testimony and evidence that was not considered at the 
administrative hearing, ATF revocation proceedings do not meet 
the formal adjudication requirements of the Administrative 
Procedures Act. This makes the proceedings more amenable to 
unrepresented FFLs who have chosen to proceed without counsel. 
ATF hearing officers are trained to accommodate the 
unrepresented licensees.
    We hope this information will assist the Committee in its 
oversight efforts, and I look forward to answering any 
questions that the Subcommittee may have.
    [The prepared statement of Ms. Stucko follows:]

                  Prepared Statement of Audrey Stucko




    Mr. Coble. Thank you, Ms. Stucko.
    Mr. Gardiner.

   TESTIMONY OF RICHARD GARDINER, ATTORNEY AT LAW, FAIRFAX, 
                            VIRGINIA

    Mr. Gardiner. Thank you, Mr. Chairman.
    Mr. Chairman and Members of the Committee, thank you for 
the opportunity to testify today on the need to reform the laws 
under which the ATF operates. There are four major problems 
with the current process for civil enforcement against Federal 
licensees which I would like to address.
    The first, and most critical, is the fact, as Ms. Stucko 
mentioned, that there is no legal--there is no definition in 
the statute of the term ``willful.'' And as I will explain 
later, the interpretation that the Government pushes for in 
these cases is quite contrary to what Congress had in mind, if 
one reviews the legislative history of the Firearms Owners 
Protection Act of 1986.
    Second, the ATF tends to focus, or has a significant focus 
on trivial, immaterial violations which are unrelated to public 
safety, and they impose unreasonable standards of perfection 
which are simply not humanly achievable.
    And lastly, the hearing process that Ms. Stucko mentioned 
is heavily stacked against the licensee and makes those 
proceedings essentially sham proceedings, which make them 
essentially worthless.
    As I mentioned, first of all, ATF treats virtually all 
errors in dealers' records, no matter how few or how minor, as 
willful violations if the dealer--if they can show the dealer 
had been warned prior to what the law requires. Now, of course, 
all dealers know what the law is, so that is not very difficult 
to demonstrate.
    Let me give you a couple of examples. One is in a number of 
cases that I have been involved in, the purchaser of the 
firearm put on the form where he had to answer Yes or No, he 
put a Y or an N. ATF used that as a basis for revoking the 
person's license. Now, that wasn't the sole reason, but it 
was--it is in a number of occasions a basis for revoking the 
license, because the customer put down Y or N and not the word 
Yes or No.
    Another example is that ATF, the form requires that in 
addition to the city and State and Zip Code of the person's 
place of residence that he also put the county of residence. 
ATF has revoked licenses or sought revocation of licenses on 
many instances based on the failure of the licensee to put down 
the county, even though the residence address was crystal clear 
from the city, State, and Zip Code which was put down.
    As I mentioned, this is clearly not what Congress had in 
mind when it enacted the ``willful'' standard in 1986. As the 
Senate Judiciary Committee report stated, the purpose of adding 
``willfully'' to the license revocation procedure is--and I 
quote--``to ensure that licenses are not revoked for 
inadvertent errors or technical mistakes.'' But that is 
precisely what ATF is doing. It argues that that standard 
should not apply. And unfortunately, as Ms. Stucko indicated, a 
number of courts have agreed with ATF that inadvertent errors 
and technical mistakes are a basis for revocation and has 
upheld revocations for exactly that reason.
    In one case, in fact, ATF actually argued to the judge that 
Congress's addition of the word ``willfully'' to the statute 
was--and again I quote--``without practical significance.'' And 
because several courts have agreed with ATF's interpretation, 
that definition of ``willful'' is the one that ATF has 
continued to apply.
    Congress should make clear that ``willful'' means that the 
licensee had an intent to violate the law and did so with that 
intent.
    Second of all, ATF revokes licenses for violations which 
could not possibly create any danger to public safety. For 
example, in one case in Illinois which was just ruled on by the 
Seventh Circuit, the individual had not listed on the Form 4473 
the type of ID presented. But in each instance the customer's 
driver's license number, the State firearms identification card 
number, or both, were recorded on another document which was 
attached to the Form 4473. Yes, the information should have 
been transposed over to the Form 4473, but there was nothing 
there that would have prevented an effective background check, 
nor would it have prevented in any way the tracing of firearms.
    The last point I would make is with regard to the license 
revocation process which Ms. Stucko mentioned. It is a license 
process that is stacked against the licensee. In 1986, after 
passage of the Firearms Owners Protection Act, ATF actually 
repealed the regulation which required hearings to be held by 
an administrative law judge, and since then, hearings are held 
by an ATF employee with no legal training, usually an 
investigator from another field division or even retired ATF 
employees. It would be an understatement to say that these 
hearing officers are deferential to the Agency. They are the 
Agency.
    I would give one example that I think really summarizes 
that. At one of the hearings that I participated in, I had made 
a motion to dismiss the proceeding on some procedural grounds. 
The hearing officer turned to the attorney representing ATF in 
this hearing and asked, What should I do? The ATF counsel 
instructed him to deny the motion, and that is what the hearing 
officer did.
    This creates the--along the lines of Representative Scott's 
comments--at least the impression that these hearings are not 
being conducted in a fair and neutral manner. We would urge--I 
would urge that Congress reimpose by statute the requirement 
that administrative law judges conduct these hearings so that 
the licensees--so that there is not only the actuality of 
fairness, but the impression of fairness.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Gardiner follows:]

               Prepared Statement of Richard E. Gardiner



    Mr. Coble. Thank you, Mr. Gardiner.
    Lieutenant Lara.
    Mr. Lara. Thank you, Chairman Coble, Representative Scott.
    Mr. Coble. Excuse me just a moment. We have been joined by 
the distinguished gentleman from Florida, Mr. Feeney. And I 
thought I saw the Ranking Member for the Full Committee here, 
Mr. Conyers, from Michigan. Perhaps he will return.
    Lieutenant, proceed.

  TESTIMONY OF MICHAEL JAMES LARA, TUCSON POLICE DEPARTMENT, 
                        TUCSON, ARIZONA

    Mr. Lara. Thank you, Chairman Coble, Representative Scott, 
and Members of the Subcommittee for allowing me to tell you my 
story. I am Michael Lara from Tucson, Arizona. Currently I am a 
lieutenant on the Tucson Police Department and have been a law 
enforcement officer for 28 years.
    In 2003, I had prospects of growth and promotion. At that 
point, I was a patrol commander, when my life was altered after 
ATF charged me with making a false statement on a firearms 
purchase form. In 2002, I had purchased a handgun and then gave 
it to a friend. My friend was a law-abiding citizen and had 
been authorized by the Arizona State Police to carry a 
concealed weapon.
    On the firearms purchase form, it asked whether or not I 
was the actual buyer of the firearm. After reading the 
definition of what an actual buyer was, I answered yes on the 
form. At one point, ATF had cause to review the purchase of the 
firearm. The firearm had not been used in any criminal 
situation, and yet my department conducted an internal 
investigation and later found me innocent of any wrongdoings.
    During this internal investigation, I gave one statement, 
the focus of which was not the purchase form that I had filled 
out. After the internal investigation, I was left on 
administrative leave while ATF continued their investigation, 
which took 7 months. Three months later, ATF indicted me, 
claiming that I had not purchased a firearm as a gift, but that 
I had actually bought it for my friend using her money. This 
type of purchase is often referred to as a straw purchase, and 
the law prohibits a straw purchase to prevent prohibited 
possessors from obtaining guns.
    After charges were filed, I was fired from the Tucson 
Police Department. Three weeks later, I had a hearing in a U.S. 
district court, at which point I was physically arrested and 
subjected to prisoner processing before being released on my 
own recognizance. Three months after my arrest, my case went to 
trial. At the end of the trial, the jury deliberated less than 
1 hour before finding me innocent of the charges.
    Two more months went by before I was reinstated on my job, 
but on the first day back to work I was given a 40-hour 
suspension without pay for criminal activity because I had been 
indicted.
    Throughout this ordeal, I held the belief that once ATF 
does a proper investigation, the case would go away. This did 
not happen. ATF based their case on the only statement taken 
from me by Internal Affairs. ATF failed to interview any of the 
witnesses to the firearm purchase and transfer.
    This was a life-altering event, and it was absolutely 
devastating. I am the father of four sons and have sole custody 
of them. So at the time of the prosecution, it had an immediate 
and direct impact on them as well. It is not hard to imagine 
how tough it was for them to face their friends and teachers, 
especially when the newspapers kept running headlines about a 
cop gone bad.
    Financially, I lost over $216,000 in savings and earnings. 
I had to refinance my home to help pay the bills and the 
attorney fees. The prosecution also had a direct impact on my 
retirement. I endured two great fears throughout this entire 
process. Number one, if I were found guilty, I would lose 
custody of my sons. Number two, the prospect of prison life is 
not a good one for an ex-officer.
    And finally, my professional career is shot. It has now 
been 3 years after the event and I am still a patrol 
lieutenant. It was made clear to me that when I returned to 
work, I would never see any advancement.
    It just makes no sense to me why ATF would try to prosecute 
someone who had dedicated themselves to serving our community 
and who clearly did nothing wrong. It was obvious that there 
was no intent of wrongdoing. And even if their perception of 
the facts were accurate, at best I would have been guilty of 
filling out an ambiguous form incorrectly.
    This prosecution should not have occurred, and it 
certainly, as I said, was life-altering.
    I would like to thank the Chair. Thank you.
    [The prepared statement of Mr. Lara follows:]

                Prepared Statement of Michael James Lara




    Mr. Coble. I thank you, Lieutenant, for being with us.
    Ms. Rand.

 TESTIMONY OF M. KRISTEN RAND, LEGISLATIVE DIRECTOR, VIOLENCE 
                         POLICY CENTER

    Ms. Rand. Thank you, Mr. Chairman, Members of the 
Subcommittee.
    I think I would just like to provide a little context here 
in that the Violence Policy Center has done a lot of research 
looking at gun dealer licensing over the decades. In 1992 we 
released a study showing that there were more gun dealers in 
America than gas stations. There were 245,000 Type I FFL 
dealers, meaning the basic license to deal in firearms; there 
were 210,000 gas stations in America at that time.
    And not surprisingly, with so many gun dealers out there, 
they were a primary source for illegally trafficked weapons. 
They were a primary source for straw purchases. They were 
virtually unmanageable by ATF. There were simply too many 
dealers, far too few agents, far too few inspections. And we 
documented this situation in many research studies and worked 
with the Clinton administration to impose new administrative 
rules and to pass new regulations. The regulations at the time 
were so lax that two dogs were licensed as gun dealers by ATF 
in 1990. That was a really bad situation.
    We have come a long way since then, through the tougher 
enforcement of existing law, higher license fees, better 
background checks. The universe of gun dealers, Type I dealers 
in America today, is around 55,000--far more manageable for 
ATF. And we think that is going in the right direction.
    We would also add that, with respect to administrative 
procedures, it is really important to understand that the 
administrative process for persons who are in a revocation 
proceeding with ATF, it really is skewed toward the defendant 
in that they have the right to a de novo review, meaning a 
court can look at new evidence. That is not required under the 
Administrative Procedures Act. We certainly want to see that 
there is at least an appearance--that the hearing officer is 
objective. That is important. But the current process does meet 
the Administrative Procedures Act, and we would want to have 
this issue studied very carefully before making changes in that 
regard.
    I think the most important thing is we have to remember 
what it was like when we had more gun dealers than gas 
stations. I know it was extremely frustrating for law 
enforcement, extremely frustrating for ATF and other 
enforcement agencies, and we don't want to take steps 
backwards.
    So that I think some of the things that have been discussed 
here, the Violence Policy Center would certainly support: civil 
penalties, as long as they are meaningful, so that they are not 
just a slap on the wrist and that they are carefully gauged to 
be adequate for the violation; suspension authority for ATF, we 
have long supported that. I think that is a great idea, that 
revocation certainly shouldn't be the only option for the 
Agency. But again, the Agency really doesn't revoke that many 
licenses. They never have.
    So we think we just need to be very careful here, but I 
think, from the discussion today, there certainly are measures 
that we can all agree on to improve the process. But I would 
caution that we shouldn't legislate based on anecdote. Mr. 
Lara's situation sounds extremely unpleasant, but we just 
should be careful not to just legislate based on one anecdote 
and go back to the days when America had more gun dealers than 
gas stations.
    Thank you.
    [The prepared statement of Ms. Rand follows:]

                 Prepared Statement of M. Kristen Rand

    Good afternoon Mr. Chairman, I am Kristen Rand, legislative 
director for the Violence Policy Center (VPC). The Violence Policy 
Center is a non-profit think tank that works to reduce firearm-related 
death and injury through research, policy development, and advocacy. 
The VPC is pleased to have the opportunity to address issues related to 
Federal Firearms License holders (FFLs).
    In 1992, the Violence Policy Center released a landmark study of 
federally licensed firearms dealers. More Gun Dealers than Gas Stations 
detailed the ease with which a Federal Firearms License could be 
obtained at the time. The basic three-year gun dealer's license could 
be had for $30.00 and completion of a simple form. Applicants were 
barely scrutinized by the Bureau of Alcohol, Tobacco, Firearms and 
Explosives (ATF). The result was more than 245,000 Type I gun dealers 
in America--far more than the 210,000 gas stations then operating in 
the United States. The system for issuing licenses was so lax that in 
1990 ATF approved applications for two dogs, the Washington Post 
revealed.
    But the sheer volume of licensees was only the tip of the iceberg. 
Unlike ordinary citizens, licensees are: able to buy and sell firearms 
in interstate commerce and receive firearms via common carrier; able to 
purchase firearms from wholesalers at discount and in unlimited 
quantities; and, are exempt from waiting periods, background checks, 
licensing, or registration requirements. In our 1992 study, the VPC 
documented how FFLs were abusing these privileges to funnel large 
numbers of guns into the illegal market. One of the most egregious 
abuses was a Virginia dealer who was supplying guns to criminals in the 
District of Columbia:

        Donald Percival was an FFL who owned two pawn shops in 
        Virginia: Ted's Coin, Guns, Pawnbrokers, and Ted's Coins, Guns, 
        and Machineguns. In 1988 ATF became aware that Percival and his 
        employees were selling firearms such as MAC-11 assault pistols, 
        9mm pistols, and inexpensive small-caliber handguns to underage 
        DC residents, including drug dealers. Percival warned buyers 
        that he was required to notify ATF of multiple purchases, 
        something one drug dealer described as ``information he needed 
        in his business.'' The drug dealer said Percival had stated 
        that all he required was a Virginia driver's license or someone 
        with a Virginia driver's license to act as the straw man and 
        ``you can come down and get a gun.'' When a Ted's salesman was 
        asked how to get rid of the serial number on a gun, he replied, 
        ``You have to pour acid over the serial number to get it off.'' 
        Percival also sold numerous guns in straw purchase sales to 
        undercover ATF agents. In 1989, Percival was convicted by a 
        jury of conspiracy and related felony federal firearms 
        violations.

    At the time, ATF identified straw purchasing \1\ as the preferred 
method by which weapons were obtained by criminals in the District of 
Columbia.
---------------------------------------------------------------------------
    \1\ A straw purchase is a transaction in which persons who can 
legally purchase guns acquire them for persons prohibited from gun 
possession by reason of a felony conviction or other disqualifier.
---------------------------------------------------------------------------
    This is just one of the myriad examples of dealers abusing the 
privileges of the license. One infamous example was David Taylor, a 
Bronx, New York, man who was ultimately indicted by authorities in 1987 
in a plot to resell in New York City at least 1,000 handguns he ordered 
using his FFL and had shipped to his apartment via UPS. The Bronx 
District Attorney called the case ``the most incredible violation of 
this city's gun laws that I or anyone else has ever heard of.'' 
Moreover, because there was no requirement at that time that FFLs 
comply with state and local licensing laws, Taylor was able to 
circumvent New York's tough gun laws, prompting the Bronx D.A. to label 
the federal law ``disgraceful.''
    The Clinton Administration reacted to this ``disgraceful'' 
situation by taking a number of steps to crack down on license abuse. 
They began aggressively enforcing the statutory requirement that 
dealers be ``engaged in the business'' of selling firearms.\2\ Although 
federal law had long contained the requirement that dealers meet a 
certain level of business activity in order to be eligible for a 
license, this provision had never been enforced. In addition, the 
thoroughness of the background check was improved with a new 
requirement that applicants submit fingerprints and photographs, and 
more applicants were inspected. These administrative changes were 
augmented by new statutory requirements in 1994, including an increase 
in the fee for a three-year license from $30.00 to $200.00. Applicants 
were also required for the first time to certify that their business 
was not prohibited by state or local law and that the business would 
comply with all relevant state and local laws within 30 days of license 
approval.
---------------------------------------------------------------------------
    \2\ See 18 U.S.C. Sec. 921 (a)(21) and Sec. 923 ((d)(1)(E).
---------------------------------------------------------------------------
    In addition to these positive changes at the federal level, many 
localities--including Detroit and New York--began enforcing zoning and 
other local ordinances prohibiting dealers from operating from 
residential premises.
    The result of these policy changes has been a gradual, yet drastic, 
reduction in the number of licensees. The Violence Policy Center 
recently released a study with the most recent numbers. Today there are 
54,902 Type I FFLs. Only five states--Alaska, Idaho, Montana, Oregon, 
and Wyoming--still have more gun dealers than gas stations (a copy of 
the study, An Analysis of the Decline in Gun Dealers: 1994 to 2005, 
http://www.vpc.org/studies/dealers.pdf, has been submitted for 
inclusion in the record).
    The Government Accountability Office (GOA) analyzed the reasons for 
the decline and found that the policy changes made during the 1990s 
resulted in fewer applications being submitted and fewer renewals of 
existing licenses. The GAO also found that the number of licenses that 
were abandoned or withdrawn far exceeded the number of licenses denied 
or revoked.\3\ In fact, ATF very seldom revokes a license. The VPC's 
1992 study documented 15 years of license revocations, from 1975 
through 1990. In 1990, nine licenses were revoked. In 1975, ATF revoked 
seven licenses. The high during the 15-year period was during the 
Reagan Administration in 1986 when a total of 27 licenses were revoked. 
The low revocation numbers continue today. In 2002, ATF revoked 30 
licenses and the number of revocations increased to 54 in 2003.
---------------------------------------------------------------------------
    \3\ GAO Report, Federal Firearms Licensees: Various Factors Have 
Contributed to the Decline in the Number of Dealers, (March 1996).
---------------------------------------------------------------------------
    The low revocation numbers may be partially the result of a process 
that provides every advantage to the licensee. Typically, after ATF 
finds violations, the dealer is warned and provided with the 
opportunity to remedy any violations long before revocation proceedings 
are initiated. Moreover, revocation is the agency's only option to 
punish recalcitrant dealers. The agency has no general authority to 
suspend a license or to assess civil penalties.
    In addition, licensees are afforded generous appeal rights. 
Licensees have a statutory right to a hearing and may even request that 
a license revocation be stayed during the hearing process. Although 
some licensees have complained that the hearing officer is an ATF 
employee, this is entirely consistent with the Administrative Procedure 
Act (APA),\4\ the federal statute governing administrative 
adjudications.
---------------------------------------------------------------------------
    \4\ 5 U.S.C. Sec. 556 (b) provides that the agency, one or more 
members of the body which comprises the agency, or one or more 
administrative law judges shall preside at the taking of evidence.
---------------------------------------------------------------------------
    A licensee who does not prevail at the agency hearing has the right 
to appeal the revocation decision to a United States district court and 
is entitled to de novo review of his claim.\5\ The de novo standard of 
review was added to the judicial review provision in 1986 by the 
National Rifle Association-backed Firearms Owners' Protection Act 
(FOPA), legislation designed primarily to loosen restrictions on 
federal firearms licensees. The FOPA also added language that entitles 
a licensee to submit evidence in court that was not considered at the 
agency level hearing.
---------------------------------------------------------------------------
    \5\ De novo review ensures that the claim will be considered anew, 
the same as if it had not been heard before and as if no decision 
previously had been rendered. Ness v. Commissioner, 954 F.2d 1495, 1497 
(9th Cir. 1992). Such review is 'independent.' Premier v. Fuentes, 880 
F.2d 1096, 1102 (9th Cir. 1989).
---------------------------------------------------------------------------
    Another FOPA addition provides a huge advantage to a licensee who 
is the subject of criminal charges where the proceedings are terminated 
or the defendant is acquitted. This provision prohibits the Attorney 
General from revoking a license based ``in whole or in part on the 
facts which form the basis of such criminal charges.'' \6\ The Reagan 
Department of the Treasury opposed this change to the statute pointing 
out, ``Because the burden of proof on the Government is less stringent 
in civil actions, a civil license denial or revocation proceeding 
should not depend on the outcome of the criminal case. No 
constitutional rights are violated by the civil proceeding when the 
applicant or licensee was previously acquitted of criminal charges.'' 
\7\
---------------------------------------------------------------------------
    \6\ 18 U.S.C. Sec. 923(f)(4).
    \7\ 132 Cong. Rec. H507 (1986) (statement of Rep. Hughes).
---------------------------------------------------------------------------
    There are several benefits to the significant decline in the number 
of FFLs. A smaller universe of dealers makes it easier for ATF to focus 
its inspections. ATF has also noted that fewer dealers makes it easier 
to complete firearm trace requests since it reduces the number of 
dealers who cannot be located because they have changed residences.
    The decline in the number of licensed gun dealers coincided with a 
very significant drop in overall gun death in America. Gun-related 
deaths peaked in 1993 at 39,595. In 2003, the latest year for which 
complete figures are available, there were 30,136 gun-related deaths.
    But the fact that FFLs are difficult to revoke and licensees' 
rights are so well protected may help explain why straw purchases 
continue to contribute significantly to illegal gun trafficking, 
despite the decline in the number of licensed dealers. In its June 2000 
report detailing 1,530 criminal gun trafficking investigations, ATF 
identified straw purchasing as ``the most common channel in trafficking 
investigations''--with straw purchasing involved in almost half of all 
trafficking investigations. The report also found that because licensed 
dealers have access to large numbers of firearms, corrupt FFLs diverted 
the highest volume of guns into the illegal market. Moreover, where 
FFLs cooperated with straw purchasers and straw-purchasing rings, the 
average number of firearms trafficked per investigation was 114.8 
compared to 32.8 in cases where there was no FFL involvement.
    Recent straw purchasing prosecutions include the following:

          In 2006, seven people were indicted in Philadelphia 
        for using straw purchases to obtain guns, including an AK-47 
        assault rifle, they used in robberies at banks and fast-food 
        restaurants and to shoot at a police officer.\8\
---------------------------------------------------------------------------
    \8\ Vernon Clark, ``Seven charged in gun-buying, robbery spree: 
Weapons obtained illegally through `straw buyers,' were used to rob 
banks, local and U.S. officials said,'' The Philadelphia Inquirer, 
February 9, 2006, p. B03.

          In 2005, two FFLs in Fairmont, West Virginia, were 
        indicted for facilitating straw purchases at two pawn shops.\9\
---------------------------------------------------------------------------
    \9\ Associated Press, ``Five charged in illegal gun sales,'' March 
2, 2005, State and Regional.

          In 2004, two FFLs in Manassas, Virginia, were 
        arrested for facilitating straw purchases of various types of 
        guns over a two-year period. One of the dealers was recorded 
        telling an informant that he knew that what he was doing was 
        wrong.\10\
---------------------------------------------------------------------------
    \10\ Josh White and Jerry Markon, ``2 Manassas Gun Dealers Charged; 
Weapons Sold to Felons and for Use in Crimes, ATF Says,'' Washington 
Post, March 18, 2004, Prince William Extra, T02.

          In 2004, a woman pleaded guilty to purchasing two 
        semiautomatic handguns--one of which was used in the slaying of 
        a three-year-old child--for felons from Don's Guns in 
        Indianapolis. The woman was arrested as part of a federal gun 
        trafficking investigation that involved the straw purchase of 
        at least 28 guns from Don's Guns.\11\
---------------------------------------------------------------------------
    \11\ Fred Kelly, ``Woman admits buying 2 pistols on behalf of 
felons,'' The Indianapolis Star, March 11, 2004, p. 3B.

          In 2003, the owner of a Pennsylvania gun shop and his 
        father were sentenced to prison terms for supplying guns to a 
        straw purchaser.\12\
---------------------------------------------------------------------------
    \12\ Associated Press, ``News in brief from western Pennsylvania,'' 
March 22, 2003, State and Regional.

    The steep decline in licensed gun dealers in America is one of the 
unsung victories in the effort to prevent firearm-related violence and 
protect public safety. The gun lobby is desperate to reverse this 
decline. They have, in fact, succeeded in inserting a provision in 
ATF's annual spending bills for fiscal years 2005 and 2006 that 
prohibits ATF from refusing to grant or renew a dealer's license for 
``lack of business activity.'' In order to continue in the right 
direction, ATF needs more resources to monitor dealers' operations and 
identify the ``bad apple'' dealers whose licenses should be revoked. 
The agency needs more flexibility to punish corrupt dealers, such as 
the authority to suspend licenses and assess civil penalties.
    Let's not go back to the days when America had more gun dealers 
than gas stations.

                               ATTACHMENT




    Mr. Coble. Thank you, Ms. Rand.
    Now, we impose the 5-minute rule upon ourselves as well, so 
if you all could tersely respond to our questions, we would 
appreciate that.
    Ms. Stucko, would the creation of civil penalties, 
including the suspension of an FFL license--is that a concept 
that ATF would support?
    Ms. Stucko. I think we would need time to analyze any 
specific situation, but we would certainly be open to 
considering and working with the Committee on any 
possibilities.
    Mr. Coble. Ms. Rand, your organization--strike that.
    Does your organization support the idea of establishing a 
graduated civil penalties structure for FFLs that violate the 
law?
    Ms. Rand. Yes, we would support meaningful civil penalties, 
and also urge that the issue of indexing them for inflation be 
looked at as well, so that once they are on the books for 10 or 
20 years, that they are still relevant. That would be another 
issue we would recommend that you look at.
    Mr. Coble. Would that include the implementation of the 
option to suspend an FFL license?
    Ms. Rand. Yes. We are very supportive of the idea of 
suspension authority.
    Mr. Coble. Lieutenant Lara, I empathize with you. That was 
a very compelling testimony that you gave. And just as an 
aside, I note that you were acquitted after a 3-day trial. How 
long was the jury out?
    Mr. Lara. The jury was out less than 1 hour.
    Mr. Coble. I would have thought that would--less than 1 
hour?
    Mr. Lara. Less than 1 hour.
    Mr. Coble. Were you interviewed, lieutenant, by any 
representative representing ATF or the Department of Justice 
prior to your having been charged?
    Mr. Lara. No, I wasn't.
    Mr. Coble. Mr. Gardiner, you touched on this. Well, strike 
that. Let me go back to Ms. Rand a minute.
    Ms. Rand, does your organization support a complete ban on 
civilian sale of firearms in the United States?
    Ms. Rand. No, Mr. Chairman. We support a ban on sales of 
handguns, assault weapons, .50 caliber sniper rifles. But we do 
not support a ban on sporting rifles and shotguns.
    Mr. Coble. Mr. Gardiner, you touched on this, but I am 
going to give you a chance to extend in a little more detail 
regarding the different interpretations of the term ``willful'' 
in criminal and civil cases. Elaborate a little on that, if you 
will.
    Mr. Gardiner. Yes, in 1986, Congress put the word 
``willful'' into both the license revocation provision and the 
criminal provisions in 924. Since then, the U.S. Supreme Court 
has interpreted the word ``willfully'' in the criminal 
provision that Congress enacted and said, in a case called 
United States v. Bryan, and said that ``willful'' means that 
the person had to act knowing that he was acting unlawfully and 
acting with a bad purpose. That is classic criminal intent.
    In the civil context, interpreting the same word, the same 
word ``willfully'' that Congress put into the same act at the 
same time, the ATF has taken the position that that word does 
not mean what it means in the criminal context, despite the 
fact that it is the same word, but that it means that if a 
dealer was aware what his legal obligations were and he commits 
that violation, even if he only does it on a very, very few 
occasions, that that is a willful violation.
    The example I would give is this case that was decided by 
the Seventh Circuit. There were 880 forms involved. There were 
12 forms which had one or two errors on them--and 880 forms 
would be 34,320 blocks of information of which 19 had errors. 
And the errors were, for example, that the driver's license 
number was not transposed from another document. That is a 
99.96 percent perfect completion record, yet ATF took the 
position that because the dealer was aware, based on the fact 
that he had completed 99.96 percent of the forms accurately, 
that he committed a willful violation with regard to the other 
.04 percent, because he knew what his legal obligations were.
    Essentially, what the ATF position is, that human beings 
can make no mistakes. And indeed, in the oral argument in that 
case, one of the judges asked the U.S. Attorney what the ATF's 
position was, and he said ``zero tolerance.''
    Mr. Coble. Thank you, Mr. Gardiner.
    Ms. Rand, you indicated that fewer dealers is a move in the 
right direction. I realize hypothetical questions are sometimes 
difficult to answer, but let me throw one at you. How many gun 
dealers do you think there should be? Or do you have an idea 
for that?
    Ms. Rand. Well, the problem primarily is with dealers who 
aren't operating under storefront businesses. Historically the 
real problem has been so-called kitchen table dealers, who get 
the licenses and operate out of their homes or offices, and 
that they tend not to, you know, really engage in the business 
of selling firearms. So our position has been if you clean out 
all these so-called kitchen table dealers and limit the 
licenses to stocking dealers, that would probably--I mean, I 
don't actually know how many that would be, but I think it is 
estimated that about 40 percent now are still kitchen table 
dealers.
    Mr. Coble. Now, let me beat that red light before Mr. Scott 
comes after me.
    Mr. Gardiner, you heard the lieutenant's testimony. Does 
that portray cases in which you have been involved?
    Mr. Gardiner. Yes.
    Mr. Coble. That severe?
    Mr. Gardiner. That severe. I have had similar cases. I had 
one case in West Virginia where there were 206 counts. The 
gentleman was acquitted of 201 of them.
    Mr. Coble. Thank you, sir.
    The gentleman from Virginia.
    Mr. Scott. Thank you.
    Mr. Gardiner, following up----
    Mr. Coble. Mr. Scott, if you would, we have been joined by 
the distinguished gentleman from New York, Mr. Weiner. Good to 
have you with us.
    Mr. Scott.
    Mr. Scott. Thank you.
    Mr. Gardiner, let me follow up on that. What was the 
sanction imposed in that case? Is that a revocation case?
    Mr. Gardiner. Which, the one in the Seventh Circuit are you 
talking about?
    Mr. Scott. Well, either the 201 out of 206, or the didn't 
transpose the----
    Mr. Gardiner. The 201 out of 206 was a criminal 
prosecution, and the other one----
    Mr. Scott. What sanction was imposed?
    Mr. Gardiner. Well, he was convicted. I mean, he was 
acquitted of 201 counts, so no sanction, and the sanction that 
was imposed for the remaining five counts, which are pending 
under appeal, was a 24-month jail sentence. And on the other 
one, the sanction was revocation because, as has been pointed 
out by several witnesses, the only sanction that ATF has 
available by statute is revocation.
    Mr. Scott. So you would agree that fines and possible 
suspension, kind of intermediate sanctions, would be a good 
idea?
    Mr. Gardiner. Yes.
    Mr. Scott. You are a lawyer. Do you represent generally the 
gun dealers as clients?
    Mr. Gardiner. I have represented gun dealers. I have also 
represented individuals who are not gun dealers, although I 
didn't represent Mr. Lara, but cases similar to his.
    Mr. Scott. On the term ``willful,'' could you give some 
other examples of how that new interpretation gets us in 
trouble?
    Mr. Gardiner. Well, what it means is that any dealer who 
ATF has told in one of these warning conferences that he has 
mistakes on his 4473 Forms or his acquisition disposition log, 
if he makes those mistakes again, even if he does it in .04 
percent of the time, in ATF's view that is a willful violation. 
They give no room for human error.
    Mr. Scott. And then you are looking at revocation or 
nothing, or a criminal offense?
    Mr. Gardiner. Correct.
    Mr. Scott. Now, in reference to the hearing officer, 
presently how do they pick the hearing officer?
    Mr. Gardiner. The hearing officer is selected--there is a 
person called a Director of Industry Operations, and I don't 
know exactly where he is in the hierarchy, but he is a field 
person, and he selects the hearing officer. And the person he 
selects is usually someone from outside the region, so he 
doesn't--but he is an ATF inspector. He is brought in from 
outside the region, so I guess he doesn't know, theoretically 
doesn't know any of the players.
    Mr. Scott. And if we change that to the normal 
administrative process act, who would be the hearing officer?
    Mr. Gardiner. It could be--I believe that the statute 
should require that it be an administrative law judge. Under 
the current Administrative Procedures Act, agency employees can 
conduct certain types of hearings. I think in a situation like 
this, it would be much wiser for Congress to just simply 
require by statute that it be an administrative law judge. 
Because we do have legal issues here which are of significance, 
and you need someone who has legal training to be able to 
interpret them and be able to interpret and apply, at least to 
the degree they apply, the rules of evidence.
    Mr. Scott. Okay. Ms. Stucko, you indicated that you won 33 
out of 36 cases in court.
    Ms. Stucko. That is correct.
    Mr. Scott. And those are on revocations?
    Ms. Stucko. Those are on revocations, correct.
    Mr. Scott. Now, how many people did--I assume everybody you 
revoked didn't go to court?
    Ms. Stucko. No, those are the cases that did go to court.
    Mr. Scott. Do you know how many you revoked altogether?
    Ms. Stucko. Approximately 100 each year. And that is about 
one-tenth of 1 percent of the total population of FFLs.
    Mr. Scott. Okay. And 100 a year, and over what time was the 
33 out of 36?
    Ms. Stucko. That was over a 5-year period.
    Mr. Scott. So out of 500, you lost 3 cases.
    Do you support the intermediate sanctions, the fines and 
suspensions, as opposed to revocation or nothing?
    Ms. Stucko. We are open to taking a look at intermediary 
measures.
    Mr. Scott. Mrs. Rand, how would we establish a standard 
that would reduce the number of licensees? If someone is well 
qualified and wants to be a licensee, what should be the 
process?
    Ms. Rand. Well, I mean, there are many jurisdictions, and I 
think the District of Columbia is one that has a process in 
place in its interaction between ATF and local law enforcement. 
If you apply for a dealer's license in the District, you get a 
visit from an ATF inspector and from--and you have to notify 
the local law enforcement and you have to meet all zoning 
requirements, you have to be in compliance with all business 
license laws, et cetera, et cetera. And the combination of 
those two things have worked in D.C. and other jurisdictions--
--
    Mr. Scott. So you would limit the license to someone who 
was actually in the business, not just trading frequently?
    Ms. Rand. Correct. We would limit it to preferably people 
who are running stocking gun stores.
    Mr. Scott. Mr. Gardiner, do you have a problem with that as 
a limitation on licensees?
    Mr. Gardiner. That is already the law. As Ms. Rand pointed 
out, that changed during the Clinton administration in 1994 to 
require the compliance with zoning laws. And that is what I 
think has led to the significant decline in the number of 
dealers, from about 250,000 to about 55,000.
    So, no, I don't have a problem with it because it is 
already the law.
    Mr. Scott. Okay. Thank you.
    Mr. Coble. The distinguished gentleman from Florida, Mr. 
Feeney.
    Mr. Feeney. Thank you, Mr. Chairman.
    You know, Ms. Rand, you have already acknowledged that with 
the exception of some sporting rifles, your organization would 
be in favor of pretty much an outright ban on sales of handguns 
and assault weapons and a variety of other weapons. It seems to 
me that the--you said it three or four times, and of course we 
have your written testimony which is in more detail and has 
some facts, but it seems to me that your major premise is how 
horrible the notion is that there are more gun dealers than gas 
stations in the United States as of 1992.
    It occurs to me that when we won the Revolutionary War and 
World War I and probably World War II we had more gun dealers 
in the United States than we did gas stations. And somehow we 
wobbled along as a Nation and protected some of our liberties.
    I think it is somewhat of a nonsequitur to say that because 
you have more gun dealers than gas stations, that somehow you 
have a society on the brink of collapse. And yet you repeated 
that several times in your 5-minute testimony.
    Ms. Rand. Well, actually, I mean, we did a new research 
study looking at the decline in dealers in the States that 
still do have more gun dealers than gas stations, one of which 
is Alaska, which has three times more gun dealers than gas 
stations, and in fact regularly ranks at the top of the list of 
States with the highest overall firearm-related gun death 
rates. So----
    Mr. Feeney. How many gun dealers are there in Washington, 
D.C. that are licensed?
    Ms. Rand. I don't--I would guess probably 11 or 12. I guess 
that would be----
    Mr. Feeney. How many, given the population?
    Ms. Rand. But see, the problem in D.C. is that the guns 
used in homicides here invariably come from out-of-State. 
Ninety-seven percent of the guns causing harm in the District--
--
    Mr. Feeney. Well, with all due respect----
    Ms. Rand.--come from outside of the District----
    Mr. Feeney. One of the rational arguments here is that to 
the extent that you license more people that are dealing in 
guns--because not everybody who is dealing in guns, as you just 
pointed out, is licensed--so to the extent that you have a 
higher percentage of the people that are dealing licensed, it 
gives the ATF the ability to regulate everybody that is 
transferring weapons.
    Ms. Stucko, you just responded to my colleague that you 
didn't necessarily have a problem with looking at some 
intermediary effort to enforce licensed gun dealers so that we 
are not focusing on the minor paperwork problems, but rather 
getting after people that are willfully or deliberately or in a 
gross negligent way not complying with the intent and the 
meaning of the law. Would you support a look at a graduated set 
of penalties so that we don't throw everybody who has made one 
or two paperwork errors out of 205 things that they are charged 
with, don't throw everybody in the same bus with a dealer that 
literally is going out of his or her way to violate the law and 
transfer weapons?
    Ms. Stucko. I think we are definitely open to looking at a 
graduated tier.
    I would like to clarify that willfulness doesn't 
necessarily result in a revocation. Willfulness just 
establishes that a violation has taken place. And while some 
violations may be defined by others as being minor, I mean they 
are violations, but what we do is we take in--we take the 
overall picture. We look at the FFL as a whole. And depending 
on what the circumstances are would warrant whether or not 
revocation is needed.
    Mr. Feeney. Well, we have at least one prosecutor who is on 
record telling a Federal judge that ``no errors'' are 
permissible. I wondered what would happen if we would hold FEMA 
or, say, the National Immigration Service to the standard that 
no errors are impermissible. It seems to me a pretty high 
standard. You may not do that on every basis, but----
    Ms. Rand, you indicated that the appellate process is, I 
think you put it, quite liberal for ATF licensees that are 
charged with some of these minor offenses. Actually, you put it 
``generous appeals rights.'' But in fact, the testimony of Mr. 
Gardiner is that the appeals process goes to the prosecutor. It 
is basically the ATF's agent that you get to appeal to. Do I 
understand--how do you reconcile your testimony with his--I 
have to go to the prosecutor?
    Ms. Rand. You start at ATF, where there is a fact-finding 
hearing. And then if you lose at that stage, you have the right 
to appeal to the district court and present your case there. 
And----
    Mr. Feeney. Mr. Gardiner, do they have to take that appeal 
to the district court level?
    Mr. Gardiner. After the so-called administrative hearing, 
then you have a right to go into court. That is correct.
    Mr. Feeney. What is your problem with the appellate process 
as a matter of due process and fairness?
    Mr. Gardiner. Well, the problem with the appellate process 
as it now exists is that this administrative hearing, where 
presumably most of these cases should end, is a sham proceeding 
because you have this ATF employee, an investigator from just 
outside the region, who is conducting the hearing. And what I 
didn't get to mention earlier but I will mention now is that 
when he then goes back to review his decision, he consults the 
very counsel at ATF and the director of industry operations who 
made the decision in the first place. So it really is not a 
hearing process as is commonly understood administratively.
    And the problem with the judicial review, though it is 
certainly a good thing, is that most of the judges take the 
position, based on ATF's argument, that they are simply looking 
at what the hearing officer did. So you don't really now have 
any meaningful review.
    Mr. Feeney. Well, Mr. Chairman, if there is no objection, I 
want to get to this. Because Ms. Rand makes a point that you 
are entitled to a de novo hearing, you say that it is quite 
deferential. Are you saying that the practice is different than 
the de jure procedure?
    Mr. Gardiner. That is what I am saying, is that--that is 
exactly what I am saying, that ATF has taken the position that 
the de novo review is limited to a de novo review of the 
administrative process; that is, the judge can look at the 
administrative process himself but he doesn't do anything 
beyond that. And that is the problem, is that then you depend 
on having a fair administrative process, but you don't have a 
fair administrative process, so the de novo judicial review 
essentially becomes meaningless.
    Mr. Coble. I thank the gentleman.
    I commend the Members of the Subcommittee and the witnesses 
for staying pretty well within the time frame. You all have 
contributed very significantly, I believe. And I thank you for 
your testimony. The Subcommittee very much appreciates the 
contribution.
    In order to ensure a full record and adequate consideration 
of this important issue, the record will be left open for 
additional submissions for 7 days. Also, any written questions 
a Member wants to submit should be submitted within the same 7-
day period.
    This concludes the oversight hearing on the Bureau of 
Alcohol, Tobacco, Firearms, and Explosives: Reforming Licensing 
and Enforcement Authorities.
    We will now proceed with the legislative hearing on H.R. 
5005, the ``Firearms Corrections and Improvement Act.''
    We stand adjourned as far as the first panel is concerned.
    [Whereupon, at 2:53 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

 Prepared Statement of the Honorable Robert C. Scott, a Representative 
      in Congress from the State of Virginia, and Ranking Member, 
        Subcommittee on Crime, Terrorism, and Homeland Security

    Thank you, Mr. Chairman. I am Pleased to join in convening this 
hearing on ATF licensing and enforcement authorities. We have held two 
previous hearings on ATF gun law enforcement activities. This hearing 
focuses primarily on ATF gun licensing issuance and regulations 
procedures and practices.
    I believe there are several areas under current licensing 
regulations that we can all agree warrant some change. Adding fine and 
suspension authority to the current revocation only authority for 
licensing violations is one such area of general agreement. I believe 
that in according due process, the appearance of impartiality is an 
important component. While there is nothing to establish that ATF 
appointed employees cannot serve as fair and impartial hearing 
officials, I believe that the appearance of impartiality is served by 
having those officers from a agency and appointment source. And I am 
open to the suggestion that the ATF could benefit from a study of its 
operations and resource allocations and from general operational 
guidelines relative its enforcement activities, as with other agencies 
under the department of Justice.
    Whatever we may do legislatively, Mr. Chairman, I believe that our 
goal should be to improve the operational effectiveness as well as the 
fairness of the ATF's gun law enforcement and licensing 
responsibilities. The ATF has an important function and responsibility 
with respect to the enforcement of our federal gun laws. While we want 
to ensure that these functions and responsibilities are applied in 
manner that promotes the support and respect of the citizens they 
affect, we don't want to do so at the expense of diligent and effective 
enforcement.
    Mr. Chairman I know that our staff's are working on legislation 
that will reform some of the ATF's current enforcement procedures and 
options. It is my hope that the legislation will reflect improvements 
that we can agree with on a bi-partisan basis, and that gun control, as 
well gun rights, advocates can support. I look forward to the testimony 
of our witnesses relative to these issues, and I look forward to 
working with you towards the ends of bi-partisan, generally supported 
improvements in ATF gun enforcement operations. Thank you.

                               __________

  Prepared Statement of Bruce R. Barany, Co-Owner, The General Store, 
                          Spokane, Washington



                               __________

  Prepared Statement of James. M. Faircloth, Owner, Jim's Pawn Shop, 
                   Inc., Fayetteville, North Carolina



                               __________

  Prepared Statement of Stanton Myerson, Owner, Lou's of Upper Darby, 
                    Inc., Upper Darby, Pennsylvania



                                 
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