[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Rules and Regulations]
[Pages 58272-58281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28986]



[[Page 58271]]

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Part III





Department of the Treasury





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Bureau of Alcohol, Tobacco and Firearms



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27 CFR Parts 178 and 179



Implementation of Public Law 103-159, Relating to the Permanent 
Provisions of the Brady Handgun Violence Prevention Act; Final Rule

  Federal Register / Vol. 63, No. 209 / Thursday, October 29, 1998 / 
Rules and Regulations  

[[Page 58272]]



DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Parts 178 and 179

[T.D. ATF-415; Ref: Notice No. 857; 93F-057P]
RIN 1512-AB67


Implementation of Public Law 103-159, Relating to the Permanent 
Provisions of the Brady Handgun Violence Prevention Act

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of 
the Treasury.

ACTION: Final rule, Treasury decision.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Alcohol, Tobacco and Firearms (ATF) is amending 
the regulations to implement the provisions of Public Law 103-159, 
relating to the permanent provisions of the Brady Handgun Violence 
Prevention Act. These regulations implement the law by requiring, with 
some exceptions, a licensed firearms importer, manufacturer, or dealer 
to contact the national instant criminal background check system (NICS) 
before transferring any firearm to an unlicensed individual. NICS will 
advise the licensee whether the system contains any information that 
the prospective purchaser is prohibited by law from possessing or 
receiving a firearm.

DATES: This rule is effective November 30, 1998.

FOR FURTHER INFORMATION CONTACT: James P. Ficaretta, Regulations 
Division, Bureau of Alcohol, Tobacco and Firearms, 650 Massachusetts 
Avenue, NW., Washington, DC 20226 (202-927-8230).

SUPPLEMENTARY INFORMATION:

Background

    On November 30, 1993, Public Law 103-159 (107 Stat. 1536) was 
enacted, amending the Gun Control Act of 1968 (GCA), as amended (18 
U.S.C. Chapter 44). Title I of Public Law 103-159, the Brady Handgun 
Violence Prevention Act (the ``Brady law'' or ``Brady''), imposed as an 
interim measure a waiting period of 5 days before a licensed importer, 
manufacturer, or dealer may sell, deliver, or transfer a handgun to an 
unlicensed individual. The waiting period applies only in States 
without an acceptable alternate system of conducting background checks 
on handgun purchasers. The interim provisions of the Brady law, 18 
U.S.C. 922(s), became effective on February 28, 1994, and cease to 
apply on November 30, 1998.

Permanent Provisions of the Brady Law

    The permanent provisions of the Brady law provide for the 
establishment of a national instant criminal background check system 
(``NICS'') that a firearms licensee must contact before transferring 
any firearm to an unlicensed individual. The law requires that the 
permanent system be established not later than November 30, 1998. While 
the interim provisions apply only to handguns, the permanent provisions 
of the Brady law apply to all firearms. Furthermore, the law provides 
that the system may take up to three business days to notify the 
licensee whether receipt of a firearm by the prospective purchaser 
would be in violation of law.

National Instant Criminal Background Check System

    The Brady law requires that the Attorney General establish a 
permanent national instant criminal background check system that any 
licensee may contact, by telephone or by other electronic means in 
addition to the telephone, for information on whether receipt of a 
firearm by a prospective transferee would violate Federal or State law. 
The law requires that the permanent system be established not later 
than November 30, 1998. It is expected that the NICS will be 
established by October 31, 1998, although licensees will not be 
required to contact NICS until November 30, 1998.
    Upon establishment of the system, the Attorney General is required 
to notify each firearms licensee and the chief law enforcement officer 
of each State of the existence and purpose of NICS and the means to be 
used to contact NICS. Beginning on the date that is 30 days after the 
Attorney General notifies firearms licensees that NICS is established, 
the permanent provisions of Brady, 18 U.S.C. 922(t), become effective.

Statutory Requirements

    Section 922(t) generally makes it unlawful for any licensed 
firearms importer, manufacturer, or dealer to sell, deliver, or 
transfer a firearm to an unlicensed individual (transferee), unless--
    1. Before the completion of the transfer, the licensee contacts the 
national instant background check system;
    2. The system provides the licensee with a unique identification 
number signifying that transfer of the firearm would not be in 
violation of law OR 3 business days (meaning a day on which State 
offices are open) have elapsed from the date the licensee contacted the 
system and the system has not notified the licensee that receipt of the 
firearm by the transferee would be in violation of law; and
    3. The licensee verifies the identity of the transferee by 
examining a valid identification document containing a photograph of 
the transferee.

Exceptions to NICS

    The statute provides the following exceptions to the national 
instant background check system:
    1. The transferee presents to the licensee a permit which was 
issued not more than 5 years earlier by the State in which the transfer 
is to take place and which allows the transferee to possess or acquire 
a firearm, and the law of the State provides that such a permit is to 
be issued only after an authorized government official has verified 
that available information does not indicate that possession of a 
firearm by the transferee would be in violation of the law;
    2. Purchases of firearms which are subject to the National Firearms 
Act and which have been approved for transfer under 27 CFR Part 179 
(Machine Guns, Destructive Devices, and Certain Other Firearms); or
    3. Purchases of firearms for which the Secretary has certified that 
compliance with NICS is impracticable because the ratio of the number 
of law enforcement officers of the State in which the transfer is to 
occur to the number of square miles of land area of the State does not 
exceed 0.0025 (i.e., 25 officers per 10,000 square miles), the premises 
of the licensee are remote in relation to the chief law enforcement 
officer of the area, and there is an absence of telecommunications 
facilities in the geographical area in which the business premises are 
located.

Penalties for Noncompliance

    Section 922(t) provides that a firearms licensee who transfers a 
firearm and knowingly fails to comply with the requirements of the law, 
in a case where compliance would have revealed that the transfer was 
unlawful, is subject to license suspension or revocation and a civil 
fine of not more than $5,000.

Notice of Proposed Rulemaking

    On February 19, 1998, ATF published in the Federal Register a 
notice proposing regulations to implement the requirements placed on 
Federal firearms licensees by section 922(t) (Notice No. 857; 63 FR 
8379). The comment period for Notice No. 857 closed on May 20, 1998.

[[Page 58273]]

    On June 4, 1998, pursuant to section 103(h) of the Brady law, the 
Department of Justice issued proposed regulations establishing the 
methods of operation for NICS, including policies and procedures for 
ensuring the privacy and security of the system and appeal procedures 
for individuals who are determined by NICS to be ineligible to purchase 
a firearm (63 FR 30429, 30430, and 30514). Accordingly, these issues 
were not addressed in ATF's proposed regulations.
    Prior to the close of the comment period, two commenters requested 
that public hearings be held on the proposed regulations and one 
commenter requested that the comment period be extended. ATF believes 
that it is necessary to advise Federal firearms licensees of their 
responsibilities under the permanent provisions of the Brady law as 
much in advance of the November 30, 1998, effective date as possible. 
An extension of the comment period and the holding of public hearings 
would delay the issuance of final regulations. Furthermore, ATF 
believes that 90 days is a sufficient amount of time for all interested 
parties to respond to the issues raised in the notice. Finally, ATF 
believes that any information received during an extension of the 
comment period or presented in oral testimony at a public hearing would 
be similar to that received during the 90-day comment period. 
Accordingly, ATF is not extending the comment period or holding public 
hearings on the proposed regulations.

Analysis of Comments

    In response to Notice No. 857, ATF received 8,492 comments, 
representing 8,779 signatures. Comments were submitted by Federal 
firearms licensees, licensed firearms collectors, nonlicensed 
individuals, industry trade groups, and other organizations (e.g., 
National Association of Arms Shows, Inc., National Pawnbrokers 
Association, Violence Policy Center, Gun Owners of America, and the 
National Rifle Association of America), members of Congress, State 
representatives, and law enforcement officials.
    Approximately 125 commenters addressed issues which were outside 
the scope of the notice. These include user fees for NICS checks, hours 
of operation that NICS will be available for background checks, how 
firearms licensees will receive final notification from NICS in the 
event a background check is delayed, provisions for a toll-free appeal 
hotline that firearms purchasers can contact in the event of a wrongful 
denial of a purchase, and ATF's assurance that in most cases a NICS 
check will be instantaneous. These issues are being addressed in the 
Department of Justice's rulemaking proceeding.
    Twenty-three commenters expressed opposition to the Brady law and 
urged its repeal. One hundred sixty-six commenters requested other 
changes that would also require legislative action. These include 
eliminating the provision of the law which authorizes NICS to take up 
to three business days to respond to a request for a background check, 
restricting the Department of Justice's role in implementing any 
provisions of the Brady law, exempting State ``instant check'' and 
``point of sale check'' systems from a NICS check, and prohibiting NICS 
from containing information on certain categories of persons prohibited 
from receiving or possessing firearms (such as renunciates and persons 
discharged from the military under dishonorable conditions). ATF is not 
adopting any of these comments because they are inconsistent with the 
language of the statute.

Long Guns, Antique Firearms, and Licensed Collectors of Curios or 
Relics

    Forty-seven commenters contend that the permanent provisions of the 
Brady law either do not apply or should not apply to transfers of long 
guns. Some commenters point out that the title of the statute, the 
``Brady Handgun Violence Prevention Act,'' clearly shows that Congress 
intended the law, both the temporary and permanent provisions, to apply 
only to handguns. Other commenters argue that since the interim 
provisions of the Brady law apply only to handguns, it is apparent that 
the permanent provisions should apply only to handguns as well. These 
commenters maintain that ATF has exceeded its authority under the Brady 
law by proposing to require NICS checks for all firearms, including 
rifles and shotguns.
    While the title of the statute is the ``Brady Handgun Violence 
Prevention Act,'' the plain language of the law clearly states that the 
permanent provisions apply to all firearms, including rifles and 
shotguns. In that regard, section 922(t)(1) provides that a Federal 
firearms licensee ``shall not transfer a firearm'' to an unlicensed 
individual unless before the completion of the transfer, the licensee 
contacts NICS. Section 103(j)(2) of the Brady law provides that the 
term ``firearm'' has the meaning prescribed in Sec. 921(a) of the GCA. 
This section defines ``firearm,'' in part, as ``any weapon (including a 
starter gun) which will or is designed to or may readily be converted 
to expel a projectile by the action of an explosive; . . .'' Thus, the 
term ``firearm'' clearly includes rifles and shotguns.
    Two commenters inquired whether antique firearms are subject to the 
permanent provisions of the Brady law. Pursuant to section 921(a)(3), 
the term ``firearm'' does not include an antique firearm (as defined in 
section 921(a)(16)). Accordingly, the transfer of an antique firearm is 
not subject to the Brady law.
    Several commenters requested clarification whether the permanent 
provisions of the Brady law apply to licensed collectors of curios or 
relics. The transfer of a firearm by a licensed collector is not 
subject to section 922(t), since the law by its terms applies only to 
the transfer of a firearm by a licensed importer, manufacturer, or 
dealer to an unlicensed person. Furthermore, since the permanent 
provisions of Brady do not apply to transfers among licensees, the 
transfer of a curio or relic firearm to a licensed collector is not 
subject to permanent Brady. However, in transactions involving firearms 
not classified as curios or relics, the licensed collector has the same 
status as a nonlicensee. Thus, a licensed collector's acquisition of a 
firearm that is not a curio or relic from an importer, manufacturer, or 
dealer is subject to the requirements of permanent Brady.

Pawn Transactions

    In Notice No. 857, ATF advised that the proposed regulations would 
apply the permanent provisions of the Brady law to the redemption of a 
pawned firearm. As ATF noted, the Violent Crime Control and Law 
Enforcement Act of 1994, Public Law 103-322, amended Sec. 922(s) of the 
GCA to specifically exempt transactions involving the return of a 
handgun to the person from whom it was received. However, no such 
exemption appears in Sec. 922(t).
    Three hundred thirty-eight commenters disagreed with ATF's 
interpretation that the permanent provisions of the Brady law apply to 
the redemption of a pawned firearm. Many of the commenters argue that 
the law was intended to apply only to the sale of a firearm and not to 
pawn transactions involving the redemption of a firearm. A national 
trade association representing 3,600 pawnbrokers suggested that 
Congress did not intend to cover the redemption of a pawned firearm, 
and that the term ``transfer'' in the Brady law referred to a transfer 
of title. The commenter further contends that the amendment of 
Sec. 922(s) of the GCA by the Violent Crime Control and

[[Page 58274]]

Law Enforcement Act of 1994 ``indicates their [Congress'] intent to not 
apply Brady to pawn loans.'' Several commenters suggested that because 
pawn loan customers would not have the disposable income to pay for a 
NICS check, they would instead sell their firearms on the street 
through unregulated sources.
    After carefully considering the arguments raised by the commenters, 
ATF has concluded that the permanent provisions of the Brady law apply 
to the redemption of a pawned firearm. Unlike Sec. 922(s) of the GCA, 
there is no provision in Sec. 922(t) which exempts transactions 
involving the return of a firearm to the person from whom it was 
received.
    Furthermore, ATF does not agree with the commenters who suggested 
that the return of a redeemed firearm is not a ``transfer'' within the 
meaning of the permanent provisions of the Brady law. The redemption of 
a pawned firearm has always been treated as a disposition under the 
GCA, and a Form 4473 has always been required for such redemptions. 
Furthermore, in Huddleston v. United States, 415 U.S. 814 (1974), the 
Supreme Court held that the redemption of a pawned firearm was an 
acquisition within the meaning of the GCA. Thus, there is no basis for 
exempting the redemption of a pawned firearm from the permanent 
provisions of Brady.

Consignments

    ATF has received inquiries regarding the return by a licensee of a 
consigned firearm to an unlicensed individual. In these cases, the 
unlicensed individual has delivered a firearm to the licensee for sale. 
Sales of the firearm are handled in the same manner as other firearm 
sales. However, if the licensee does not sell the firearm, it may be 
returned to the unlicensed individual.
    ATF has always treated the return of consigned firearms as a 
transfer or disposition within the meaning of the GCA. The individual 
to whom the consigned firearms are returned must complete a Form 4473 
in the same manner as any unlicensed individual who is acquiring a 
firearm from a licensee. Accordingly, the final regulations do not 
provide any exemption for the return of a consigned firearm.

Repaired and Replacement Firearms

    While this issue was not specifically addressed in the proposed 
rule, approximately 55 comments dealt with the application of permanent 
Brady to repaired and replacement firearms. Most of those commenters 
argued that the return of a repaired firearm to the person from whom it 
was received should not be considered a ``transfer'' for purposes of 
the Brady law.
    The notice of proposed rulemaking did not propose that such 
transactions should be subject to permanent Brady. After carefully 
considering the comments on this issue, ATF agrees that the return of a 
repaired or replacement firearm by a licensee is not a ``transfer'' 
within the meaning of the Brady law.
    Historically, the return of a repaired or replacement firearm by a 
licensee has been treated in a different fashion from other 
dispositions under the GCA. Since the enactment of the GCA in 1968, the 
regulations have provided that a Form 4473 ``shall not be required to 
record the disposition made of a firearm delivered to a licensee for 
the sole purpose of repair or customizing when such firearm or a 
replacement firearm is returned to the person from whom received.'' See 
27 CFR 178.124(a).
    The final rule does not require NICS checks in any situation in 
which the transferee is not required to complete a Form 4473. 
Accordingly, transactions falling within the exemption found in section 
178.124(a) are not subject to the requirement for an NICS check.

Time of NICS Check

    As proposed in Notice No. 857, Sec. 178.102(c) provided that a NICS 
check may be relied upon by the licensee only for use in a single 
transaction and for a period not to exceed 30 days. If the transaction 
is not completed within the 30-day period, the licensee must initiate a 
new NICS check prior to completion of the transfer.
    ATF received approximately 40 comments on this proposal. Many 
commenters objected to the proposal that a separate NICS check must be 
conducted for each separate transaction. They contend that this 
requirement is unnecessary and places a burden on both NICS and the 
licensee. Two commenters stated as follows:

    The purpose of the check is to ensure the individual who wishes 
to purchase a firearm is not a prohibited possessor under the law. 
In this instance, there is no reason to require a separate NICS 
check if an individual purchases more than one firearm within a 30 
day calendar period.

Many other commenters were concerned about the validity of a NICS check 
with respect to the return or exchange of a newly purchased firearm.
    The Brady law provides that a licensee may not transfer a firearm 
to an unlicensed individual unless, before the completion of the 
transfer, the licensee contacts NICS. It is clear that the law 
contemplates that once the transfer is completed, any additional 
transfer of a firearm to the same individual would be a separate 
transfer that would require a separate NICS check. With respect to the 
return or exchange of a newly purchased firearm, replacement firearms 
are not subject to a NICS check. However, if the firearm is being 
returned and exchanged for a different firearm, this constitutes a 
separate transaction and another NICS check would be required.
    Several commenters objected to ATF's proposal that a NICS check 
should only be valid for 30 calendar days. Three commenters argued that 
the Brady law does not specify or impose any time limit on the validity 
of a NICS check. Three other commenters suggested that a NICS check 
should be acceptable for multiple purchases for 5 years, the same 
period of time for which a permit is valid.
    Another commenter, a trade organization representing approximately 
300 firearms dealers, asserted that the proposed 30-day limitation is 
unreasonable and unnecessary. This commenter states that customers 
often order firearms and then later return to the licensee's premises 
to effect the transfer. Based on the experience of its membership, this 
commenter believed that many transfers do not take place within 30 
days, due to the customer's own business commitments or the customer's 
personal circumstances. Accordingly, this commenter proposed that the 
NICS check should be valid for a period of 60 days. Another commenter 
expressed similar concerns, and recommended that the check should be 
valid for 45 days ``to allow normal transactions to occur, given delays 
and distances normally encountered in firearms sales situations.''
    As ATF stated in Notice No. 857, it is clear that the Brady law 
contemplates that the licensee should contact NICS immediately prior to 
the transfer of a firearm. However, ATF recognized that many States 
have waiting periods which mandate a delay of up to 10 days before the 
firearm may be transferred. Thus, the proposed rule provided that a 
NICS check would be valid in a single transaction for a period of up to 
30 days. This would allow the purchaser a reasonable period of time to 
come back for the firearm in States with lengthy waiting periods.
    After carefully considering the comments, ATF has decided not to 
extend the period in which a NICS check retains its validity. ATF 
believes that the 30-day period is reasonable in that it allows 
sufficient time for a purchaser to return to take possession of a 
firearm. In situations where a

[[Page 58275]]

purchaser has ordered a custom-made firearm and a longer delay is 
required, the licensee may choose to conduct the NICS check after the 
firearm comes in, rather than at the time that the order is placed. In 
any event, licensees should try to avoid lengthy delays between the 
time the NICS check is conducted and the time the firearm is 
transferred. The 30-day limit provides a concrete limit beyond which 
the firearm may not be transferred pursuant to a ``stale'' NICS check.

Permits

    The Brady law provides that a licensee is not required to initiate 
a NICS check where the purchaser presents a permit that allows the 
purchaser to ``possess or acquire a firearm.'' The final rule clarifies 
that the permit must be valid under State law. Section 178.102(d)(1)(i) 
of the proposed regulations clarified that this exception includes 
permits to carry concealed weapons as well as permits specifically 
authorizing the purchase of a firearm.
    Five commenters expressed opposition to ATF's proposal that a 
permit to carry concealed weapons was included within the permit 
exemption provided by permanent Brady. Four of the commenters contend 
that the proposed regulation expands the scope of the exemption and 
that the clear language of the Brady law limits the exemption to a 
permit to ``possess or acquire'' a firearm. Two commenters maintain 
that this provision of the law applies only to permits specifically 
authorizing the purchase of a firearm.
    Some commenters assert that excepting concealed weapons permit 
holders from a NICS check would significantly increase the number of 
exempt firearms transactions. For example, one commenter noted that 
``[t]his expansion will dramatically increase the possibility of 
unlawful firearms purchase[s] in part because the varying state systems 
for revocation of the permits frequently involve considerable delay.''
    Notwithstanding these comments, it is ATF's conclusion from the 
plain language of the Brady law that a permit to ``possess'' a firearm 
includes a permit to carry concealed weapons. Furthermore, ATF's 
position in this matter is consistent with that taken with respect to 
the permit alternative under the interim provisions of the Brady law. 
Accordingly, Sec. 178.102(d)(1)(i) is being adopted in the final 
regulations as proposed.

NICS Checks in Conjunction With the Issuance of Permits

    The law provides that for a permit to qualify as an alternative to 
the NICS check at the time of transfer, it must have been issued not 
more than 5 years earlier by the State in which the transfer is to take 
place. Furthermore, the permit is a valid alternative under permanent 
Brady only if the law of the State provides that such a permit is to be 
issued only after an authorized government official has verified that 
the information available to such official does not indicate that 
possession of a firearm by such other person would be in violation of 
law.
    In construing the language of the statute, the proposed regulations 
provided that as of November 30, 1998, ``the information available to'' 
State officials who issue permits will include a NICS check. The 
proposed regulations also clarified that if a State did not disqualify 
all individuals prohibited under Federal law, the permits issued by 
that State would not be accepted as alternatives under the permanent 
provisions of the Brady law.
    Approximately 3,700 commenters objected to ATF's proposal that the 
acceptance of permits as alternatives was conditioned upon the State 
running a NICS check prior to issuing the permit. Most of the 
commenters contend that the statute does not mandate that State 
officials conduct a NICS check on all permit applicants. Two commenters 
argued that ``[t]his portion of the proposed regulation violates Prinz 
[sic] v. United States. Here the United States Supreme Court held that 
``The Federal Government may not compel the States to enact or 
administer a federal regulatory program.' ''
    The issuance of regulations setting standards for permits that meet 
the criteria of the statute in no way implicates Tenth Amendment or 
Federalism concerns. Neither the Brady law nor the regulations require 
States to establish or administer permit systems at all. However, the 
law does set forth certain standards that State permits must meet in 
order to be recognized as valid Brady alternatives.
    As of November 30, 1998, ``the information available to'' State 
officials will include NICS. As indicated in Notice No. 857, a NICS 
check will provide a more extensive background check of the purchaser 
than other record systems containing only criminal records. NICS will 
include records from the Department of Defense concerning dishonorable 
discharges, records from the Department of State regarding individuals 
who have renounced United States citizenship, and other information not 
available in criminal records.
    Accordingly, Sec. 178.102(d)(1)(iii) is adopted as proposed.
    One commenter noted that Notice No. 857 was silent with respect to 
State permits issued prior to the effective date of the permanent 
provisions of the Brady law. Prior to November 30, 1998, the 
information ``available to'' State permit officials did not include 
NICS. Permits issued prior to that date that were recognized by ATF as 
valid alternatives under interim Brady will continue to be recognized 
as valid alternatives after November 30, 1998, notwithstanding the fact 
that no NICS check was conducted prior to the issuance of the permits. 
These permits will be ``grandfathered'' for a period not to exceed 5 
years or the duration of the permit, whichever is shorter.

Firearms Transaction Record (Form 4473)

    In general, the regulations provide that prior to the transfer of a 
firearm to a prospective purchaser, the buyer must complete, sign, and 
date a firearms transaction record, Form 4473. The form requests 
certain information, including the transferee's name, sex, height, 
weight, race, residence address, date of birth, and place of birth. In 
Notice No. 857, ATF proposed amending the regulations to solicit 
additional optional information about the purchaser, including the 
transferee's social security number, to facilitate the transfer of a 
firearm (Sec. 178.124(c)(2)). ATF noted in Notice No. 857 that ATF Form 
5300.35, Statement of Intent to Obtain a Handgun (Brady form), 
currently requests the purchaser's social security number as optional 
information.
    Approximately 8,000 commenters addressed this proposal. Twenty-five 
commenters misunderstood the proposal and were under the impression the 
proposed regulation was requiring purchasers to provide their social 
security number on Form 4473. The remaining commenters expressed other 
concerns and urged ATF to withdraw the proposed regulation. Many 
commenters contend that requesting the purchaser's social security 
number violates the individual's right to privacy. The commenters are 
also concerned about the possible misuse of the information, including 
the establishment of a national registry of firearms owners. Other 
commenters are concerned that the request for a purchaser's social 
security number as additional optional information may eventually 
become a requirement. These commenters also believe that a firearm

[[Page 58276]]

transfer may be unnecessarily delayed or the purchaser subjected to 
additional scrutiny if the social security number is not provided.
    The final regulations will include the purchaser's social security 
number on Form 4473 as optional information. The social security number 
is a unique identifier. ATF believes that providing this information on 
Form 4473 will facilitate the transfer of a firearm. As discussed in 
Notice No. 857, ATF believes this additional information will help 
minimize the misidentification of firearms purchasers as felons or 
other prohibited persons whose receipt and possession would violate the 
law. For example, by providing this information the transferee might 
avoid confusion with a prohibited buyer who has the same name and date 
of birth as the transferee. Nevertheless, providing the social security 
number on Form 4473 is optional under the proposed regulation and the 
purchaser is not required to provide such information.
    With respect to the commenters' concern regarding the establishment 
of a national registry of firearms owners, ATF would note that the 
registration of firearms, firearms owners, or firearms transactions or 
dispositions is specifically prohibited by 18 U.S.C. 926(a) and section 
103(i) of the Brady law. ATF would further note that Forms 4473 are 
maintained by dealers, not the Federal Government.
    In Notice No. 857, ATF proposed that in any transaction for which a 
licensee receives a unique identification number from NICS, such number 
will be recorded on Form 4473 and retained in the records of the 
licensee, regardless of whether the transaction is approved or denied 
by NICS, and regardless of whether the firearm is actually transferred 
(27 CFR 178.102(b)). Several commenters objected to the proposed 
requirement that licensees retain copies of Form 4473 for denied NICS 
checks or where there is no transfer of a firearm. The commenters argue 
that this requirement is unnecessary and only serves to increase the 
paperwork burden on licensees. ATF disagrees with the commenters and 
finds the requirement to be both necessary and warranted. As explained 
in the notice, requiring licensees to retain Form 4473 in all cases 
will enable ATF to determine compliance with the law by licensees and 
purchasers. Accordingly, the regulation is being adopted as proposed. 
The final rule clarifies that the transaction number provided by NICS 
shall include either a NICS transaction number or, in States where the 
State is recognized as a point of contact for NICS checks, a State 
transaction number.
    Seven commenters contend that the Brady law requires Form 4473 to 
be destroyed after each firearm transaction. Specifically, 
Sec. 922(t)(2)(C) provides that if a NICS check indicates receipt of a 
firearm by a prospective purchaser would not violate Federal or State 
law,

    [T]he system shall . . . destroy all records of the system with 
respect to the call (other than the identifying number and the date 
the number was assigned) and all records of the system relating to 
the person or the transfer.

The Brady law does not require the Form 4473 to be destroyed after each 
firearm transaction. The ``system'' mentioned in the law refers to the 
national instant background check system (NICS) established by the 
Attorney General. In addition, the Department of Justice has issued 
proposed regulations with respect to the destruction of records in the 
NICS (AG Order No. 2158-98; June 4, 1998, 63 FR 30430).
    Several commenters misinterpreted Sec. 178.124(c)(3) as proposed by 
ATF. It is their understanding that the regulation requires licensees 
to provide NICS with information regarding the firearm being 
transferred (e.g., type, model, caliber or gauge, etc.). The commenters 
are opposed to NICS collecting and maintaining such information. The 
proposed regulation was not intended to require licensees to provide 
NICS with specific information about an individual's firearms purchase. 
For clarification purposes, ATF is amending Sec. 178.124(c) and 
revising Form 4473 to specify that information about the firearm being 
transferred (e.g., the name of the manufacturer, the type, model, 
caliber, etc.) will be recorded on the Form 4473 by the licensee after 
the completion of the NICS check.

Civil Penalties

    As explained in the notice of proposed rulemaking, section 
922(t)(5) of the GCA provides that a licensee who knowingly transfers a 
firearm and knowingly fails to comply with the provisions of section 
922(t)(1) with respect to the transfer may be subject to revocation or 
suspension of the license for up to 6 months and a civil fine of not 
more than $5,000. This provision applies only where at the time that 
the transferee most recently proposed the transfer, the national 
instant criminal background check system was operating and information 
was available to the system demonstrating that the transferee's receipt 
of a firearm would violate section 922(g) or (n) of the GCA, or State 
law.
    The GCA, 18 U.S.C. 923(e), already provides ATF with authority to 
revoke a firearms license, after notice and opportunity for hearing, 
where the licensee has willfully violated any of the provisions of the 
GCA or the regulations issued thereunder. Furthermore, section 923(f) 
provides that revocation actions are subject to de novo judicial review 
by the district court in which the licensee resides or has his 
principal place of business.
    ATF is amending Subpart E of Part 178 to provide that the existing 
procedures for revocation of licenses will also apply to the suspension 
and revocation of licenses under section 922(t)(5), as well as the 
imposition of a civil fine under this provision. The final rule also 
clarifies that such actions are subject to de novo judicial review by 
the district court.

Miscellaneous

    Approximately 3,700 commenters expressed opposition to proposed 
Sec. 178.97(b). This section requires a NICS check where a club or 
similar organization temporarily furnishes firearms to participants in 
a trap or similar shooting activity for use off the premises. The 
commenters contend that this requirement ``is neither required by, nor 
is consistent with, the statute.'' ATF views the activity mentioned 
above in the same manner as the loan or rental of a firearm to a 
nonlicensee for temporary use off the licensed premises for lawful 
sporting purposes. In that regard, Sec. 178.97(a) requires the licensee 
to record the transaction in his permanent records of acquisition and 
disposition and on Form 4473. It is ATF's position that such a transfer 
is subject to the requirements of the Brady law. Accordingly, 
Sec. 178.97(b) is adopted in the final regulations as proposed.
    ATF is amending Sec. 178.102(c) by revising Example 2 at the end of 
the section to clarify that a firearms transaction is completed when 
the licensee executes the Form 4473 and the firearm is transferred to 
the purchaser. Some commenters believe the wording of the proposed 
regulation is confusing and implies that a firearms transaction is 
completed when the licensee executes the Form 4473, regardless of when 
the actual transfer of the firearm takes place.
    The proposed regulation in Sec. 178.125(e) would have required 
dealers to record in their records of disposition the identification 
number provided by NICS. ATF has determined that requirement is 
unnecessary since the final regulations require licensees to record the 
unique identification number provided by NICS on Form 4473 and to 
retain each Form 4473 for a period of

[[Page 58277]]

not less than 20 years after the date of sale or disposition. 
Accordingly, ATF is not amending the regulation.
    Finally, section 178.125a(a) is being amended to provide that 
licensees are not required to comply with the provisions of 
Sec. 178.102 when selling firearms from the licensee's personal 
collection, provided that the licensee has maintained the firearm as 
part of his or her personal collection for at least one year.

Executive Order 12866

    It has been determined that this final rule is not a significant 
regulatory action as defined in Executive Order 12866. Therefore, a 
Regulatory Assessment is not required.

Regulatory Flexibility Act

    It is hereby certified that this final rule will not have a 
significant economic impact on a substantial number of small entities. 
The revenue effects of this rulemaking on small businesses flow 
directly from the underlying statute. Likewise, any secondary or 
incidental effects, and any reporting, recordkeeping, or other 
compliance burdens flow directly from the statute. Accordingly, a 
regulatory flexibility analysis is not required.

Paperwork Reduction Act

    The collections of information contained in this final regulation 
have been reviewed and approved by the Office of Management and Budget 
in accordance with the requirements of the Paperwork Reduction Act (44 
U.S.C. 3507(d)) under control number 1512-0544. Other collections of 
information contained in this final rule have been approved under 
control numbers: 1512-0520, 1512-0006, and 1512-0524 (Sec. 178.129(c)) 
and 1512-0129 and 1512-0526 (Sec. 178.129(d), (e), and (f)). An agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless it displays a valid control number 
assigned by the Office of Management and Budget.
    The collections of information in this final rule are in 27 CFR 
178.102, 178.124(c), 178.129(b), 178.131, and 178.150. This information 
is required to implement the provisions of Public Law 103-159, relating 
to the permanent provisions of the Brady Handgun Violence Prevention 
Act. The collections of information are required to ensure compliance 
with the law. The likely respondents and/or recordkeepers are 
individuals and businesses.
    Estimated number of respondents: 106,000.
    Estimated burden hours: 1 hour.
    However, the above mentioned regulations which implement the Brady 
law require amendments to ATF Form 4473. In order to prevent a 
duplication of burden hours, the burden hours that are associated with 
the collections of information in these regulations (1,136,266 hours) 
will be reported under OMB control number 1512-0129, the Supporting 
Statement for ATF Form 4473, Firearms Transaction Record, Part I. The 
following paragraphs explain the additional burden hours.
    Section 178.102 requires, with some exceptions, licensees to 
contact NICS before transferring any firearm to an unlicensed 
individual. The estimated total annual reporting and/or recordkeeping 
burden associated with this requirement is 824,000 hours. Section 
178.124(c) requires licensees to record on Form 4473 the date the 
licensee contacts NICS and any identification number provided by NICS. 
The licensee must also verify the identity of the person acquiring the 
firearm by examining an identification document presented by the 
transferee. Form 4473 will include certain optional information about 
the purchaser, such as the person's social security number and alien 
registration number. Section 178.131 requires licensees to maintain 
certain records for firearms transactions not subject to a NICS check. 
The estimated total annual reporting and/or recordkeeping burden 
associated with Secs. 178.124(c) and 178.131 is 308,266 hours. Section 
178.129(b) requires licensees to retain a completed Form 4473 for a 
period of not less than 5 years where the transfer of a firearm is not 
made. The estimated total annual recordkeeping burden associated with 
this requirement is 4,000 hours. Section 178.150 provides for an 
alternative to NICS in certain geographical locations. Licensees must 
submit a written application to the Director containing certain 
information. The same requirement currently applies to the waiting 
period provision of the Brady law for transfers of handguns. Since this 
requirement was established in 1994, no licensee has qualified for an 
exception from the provisions of Brady based on geographical location. 
As such, ATF does not believe that there is any reporting and/or 
recordkeeping burden associated with the requirements of Sec. 178.150 
with regard to NICS.
    Certain collections of information contained in Sec. 178.129(b), 
previously approved under control numbers 1512-0520, 1512-0006, and 
1512-0524, are merely being redesignated as Sec. 178.129(c) in this 
final rule. Similarly, the collections of information in 
Sec. 178.129(c), (d), and (e), previously approved under control 
numbers 1512-0129 and 1512-0526, are being redesignated as 
Sec. 178.129(d), (e), and (f) in the final regulation.
    Comments concerning the accuracy of these burden estimates and 
suggestions for reducing the burden should be directed to the Chief, 
Document Services Branch, Room 3110, Bureau of Alcohol, Tobacco and 
Firearms, 650 Massachusetts Avenue, NW, Washington, DC 20226, and to 
the Office of Management and Budget, Attention: Desk Officer for the 
Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms, 
Office of Information and Regulatory Affairs, Washington, DC 20503.

Disclosure

    Copies of the notice of proposed rulemaking, all written comments, 
and this final rule will be available for public inspection during 
normal business hours at: ATF Public Reading Room, Room 6480, 650 
Massachusetts Avenue, NW., Washington, DC.
    Drafting Information. The author of this document is James P. 
Ficaretta, Regulations Division, Bureau of Alcohol, Tobacco and 
Firearms.

List of Subjects

Part 178

    Administrative practice and procedure, Arms and ammunition, 
Authority delegations, Customs duties and inspection, Exports, Imports, 
Military personnel, Penalties, Reporting requirements, Research, 
Seizures and forfeitures, and Transportation.

Part 179

    Administrative practice and procedure, Arms and munitions, 
Authority delegations, Customs duties and inspection, Exports, Imports, 
Military personnel, Penalties, Reporting requirements, Research, 
Seizures and forfeitures, and Transportation.

Authority and Issuance

    For the reasons discussed in the preamble, ATF amends 27 CFR Parts 
178 and 179 as follows:

PART 178--COMMERCE IN FIREARMS AND AMMUNITION

    Paragraph 1. The authority citation for 27 CFR Part 178 continues 
to read as follows:
    Authority: 5 U.S.C. 552(a); 18 U.S.C. 847, 921-930; 44 U.S.C. 
3504(h).

    Par. 2. Section 178.11 is amended by adding a definition for 
``NICS'' to read as follows:

[[Page 58278]]

Sec. 178.11  Meaning of terms.

* * * * *
    NICS. The National Instant Criminal Background Check System 
established by the Attorney General pursuant to 18 U.S.C. 922(t).
* * * * *
    Par. 3. Section 178.73 is revised to read as follows:


Sec. 178.73  Notice of revocation, suspension, or imposition of civil 
fine.

    (a) Basis for action. Whenever the regional director (compliance) 
has reason to believe that a licensee has willfully violated any 
provision of the Act or this part, a notice of revocation of the 
license, ATF Form 4500, may be issued. In addition, a notice of 
revocation, suspension, or imposition of a civil fine may be issued on 
ATF Form 4500 whenever the regional director (compliance) has reason to 
believe that a licensee has knowingly transferred a firearm to an 
unlicensed person and knowingly failed to comply with the requirements 
of 18 U.S.C. 922(t)(1) with respect to the transfer and, at the time 
that the transferee most recently proposed the transfer, the national 
instant criminal background check system was operating and information 
was available to the system demonstrating that the transferee's receipt 
of a firearm would violate 18 U.S.C. 922(g) or 922(n) or State law.
    (b) Issuance of notice. The notice shall set forth the matters of 
fact constituting the violations specified, dates, places, and the 
sections of law and regulations violated. The regional director 
(compliance) shall afford the licensee 15 days from the date of receipt 
of the notice in which to request a hearing prior to suspension or 
revocation of the license, or imposition of a civil fine. If the 
licensee does not file a timely request for a hearing, the regional 
director (compliance) shall issue a final notice of suspension or 
revocation and/or imposition of a civil fine on ATF Form 4501, as 
provided in Sec. 178.74.
    Par. 4. Section 178.74 is revised to read as follows:


Sec. 178.74  Request for hearing after notice of suspension, 
revocation, or imposition of civil fine.

    If a licensee desires a hearing after receipt of a notice of 
suspension or revocation of a license, or imposition of a civil fine, 
the licensee shall file a request, in duplicate, with the regional 
director (compliance) within 15 days after receipt of the notice of 
suspension or revocation of a license, or imposition of a civil fine. 
On receipt of such request, the regional director (compliance) shall, 
as expeditiously as possible, make necessary arrangements for the 
hearing and advise the licensee of the date, time, location and the 
name of the officer before whom the hearing will be held. Such 
notification shall be made no less than 10 days in advance of the date 
set for the hearing. On conclusion of the hearing and consideration of 
all the relevant presentations made by the licensee or the licensee's 
representative, the regional director (compliance) shall render a 
decision and shall prepare a brief summary of the findings and 
conclusions on which the decision is based. If the decision is that the 
license should be revoked, or, in actions under 18 U.S.C. 922(t)(5), 
that the license should be revoked or suspended, and/or that a civil 
fine should be imposed, a certified copy of the summary shall be 
furnished to the licensee with the final notice of revocation, 
suspension, or imposition of a civil fine on ATF Form 4501. If the 
decision is that the license should not be revoked, or in actions under 
18 U.S.C. 922(t)(5), that the license should not be revoked or 
suspended, and a civil fine should not be imposed, the licensee shall 
be notified in writing.
    Par. 5. Section 178.78 is revised to read as follows:


Sec. 178.78  Operations by licensee after notice.

    In any case where denial, suspension, or revocation proceedings are 
pending before the Bureau of Alcohol, Tobacco and Firearms, or notice 
of denial, suspension, or revocation has been served on the licensee 
and he has filed timely request for a hearing, the license in the 
possession of the licensee shall remain in effect even though such 
license has expired, or the suspension or revocation date specified in 
the notice of revocation on Form 4500 served on the licensee has 
passed: Provided, That with respect to a license that has expired, the 
licensee has timely filed an application for the renewal of his 
license. If a licensee is dissatisfied with a posthearing decision 
revoking or suspending the license or denying the application or 
imposing a civil fine, as the case may be, he may, pursuant to 18 
U.S.C. 923(f)(3), within 60 days after receipt of the final notice 
denying the application or revoking or suspending the license or 
imposing a civil fine, file a petition for judicial review of such 
action. Such petition should be filed with the U.S. district court for 
the district in which the applicant or licensee resides or has his 
principal place of business. In such case, when the regional director 
(compliance) finds that justice so requires, he may postpone the 
effective date of suspension or revocation of a license or authorize 
continued operations under the expired license, as applicable, pending 
judicial review.
    Par. 6. Section 178.96 is amended by revising the first sentence in 
paragraph (b), and by revising paragraph (c) to read as follows:


Sec. 178.96  Out-of-State and mail order sales.

* * * * *
    (b) A licensed importer, licensed manufacturer, or licensed dealer 
may sell a firearm that is not subject to the provisions of 
Sec. 178.102(a) to a nonlicensee who does not appear in person at the 
licensee's business premises if the nonlicensee is a resident of the 
same State in which the licensee's business premises are located, and 
the nonlicensee furnishes to the licensee the firearms transaction 
record, Form 4473, required by Sec. 178.124. * * *
    (c)(1) A licensed importer, licensed manufacturer, or licensed 
dealer may sell or deliver a rifle or shotgun, and a licensed collector 
may sell or deliver a rifle or shotgun that is a curio or relic to a 
nonlicensed resident of a State other than the State in which the 
licensee's place of business is located if--
    (i) The purchaser meets with the licensee in person at the 
licensee's premises to accomplish the transfer, sale, and delivery of 
the rifle or shotgun;
    (ii) The licensed importer, licensed manufacturer, or licensed 
dealer complies with the provisions of Sec. 178.102;
    (iii) The purchaser furnishes to the licensed importer, licensed 
manufacturer, or licensed dealer the firearms transaction record, Form 
4473, required by Sec. 178.124; and
    (iv) The sale, delivery, and receipt of the rifle or shotgun fully 
comply with the legal conditions of sale in both such States.
    (2) For purposes of paragraph (c) of this section, any licensed 
manufacturer, licensed importer, or licensed dealer is presumed, in the 
absence of evidence to the contrary, to have had actual knowledge of 
the State laws and published ordinances of both such States.
    Par. 7. Section 178.97 is revised to read as follows:


Sec. 178.97  Loan or rental of firearms.

    (a) A licensee may lend or rent a firearm to any person for 
temporary use off the premises of the licensee for lawful sporting 
purposes: Provided, That the delivery of the firearm to such person is 
not prohibited by Sec. 178.99(b) or Sec. 178.99(c), the licensee 
complies

[[Page 58279]]

with the requirements of Sec. 178.102, and the licensee records such 
loan or rental in the records required to be kept by him under Subpart 
H of this part.
    (b) A club, association, or similar organization temporarily 
furnishing firearms (whether by loan, rental, or otherwise) to 
participants in a skeet, trap, target, or similar shooting activity for 
use at the time and place such activity is held does not, unattended by 
other circumstances, cause such club, association, or similar 
organization to be engaged in the business of a dealer in firearms or 
as engaging in firearms transactions. Therefore, licensing and 
recordkeeping requirements contained in this part pertaining to 
firearms transactions would not apply to this temporary furnishing of 
firearms for use on premises on which such an activity is conducted.
    Par. 8. Section 178.102 is revised to read as follows:


Sec. 178.102  Sales or deliveries of firearms on and after November 30, 
1998.

    (a) Background check. Except as provided in paragraph (d) of this 
section, a licensed importer, licensed manufacturer, or licensed dealer 
(the licensee) shall not sell, deliver, or transfer a firearm to any 
other person who is not licensed under this part unless the licensee 
meets the following requirements:
    (1) Before the completion of the transfer, the licensee has 
contacted NICS;
    (2)(i) NICS informs the licensee that it has no information that 
receipt of the firearm by the transferee would be in violation of 
Federal or State law and provides the licensee with a unique 
identification number; or
    (ii) Three business days (meaning days on which State offices are 
open) have elapsed from the date the licensee contacted NICS and NICS 
has not notified the licensee that receipt of the firearm by the 
transferee would be in violation of law; and
    (3) The licensee verifies the identity of the transferee by 
examining the identification document presented in accordance with the 
provisions of Sec. 178.124(c).

    Example for paragraph (a). A licensee contacts NICS on Thursday, 
and gets a ``delayed'' response. The licensee does not get a further 
response from NICS. If State offices are not open on Saturday and 
Sunday, 3 business days would have elapsed on the following Tuesday. 
The licensee may transfer the firearm on the next day, Wednesday.

    (b) Transaction number. In any transaction for which a licensee 
receives a transaction number from NICS (which shall include either a 
NICS transaction number or, in States where the State is recognized as 
a point of contact for NICS checks, a State transaction number), such 
number shall be recorded on a firearms transaction record, Form 4473, 
which shall be retained in the records of the licensee in accordance 
with the provisions of Sec. 178.129. This applies regardless of whether 
the transaction is approved or denied by NICS, and regardless of 
whether the firearm is actually transferred.
    (c) Time limitation on NICS checks. A NICS check conducted in 
accordance with paragraph (a) of this section may be relied upon by the 
licensee only for use in a single transaction, and for a period not to 
exceed 30 calendar days from the date that NICS was initially 
contacted. If the transaction is not completed within the 30-day 
period, the licensee shall initiate a new NICS check prior to 
completion of the transfer.

    Example 1 for paragraph (c). A purchaser completes the Form 4473 
on December 15, 1998, and a NICS check is initiated by the licensee 
on that date. The licensee is informed by NICS that the information 
available to the system does not indicate that receipt of the 
firearm by the transferee would be in violation of law, and a unique 
identification number is provided. However, the State imposes a 7-
day waiting period on all firearms transactions, and the purchaser 
does not return to pick up the firearm until January 22, 1999. The 
licensee must conduct another NICS check before transferring the 
firearm to the purchaser.
    Example 2 for paragraph (c). A purchaser completes the Form 4473 
on January 25, 1999, and arranges for the purchase of a single 
firearm. A NICS check is initiated by the licensee on that date. The 
licensee is informed by NICS that the information available to the 
system does not indicate that receipt of the firearm by the 
transferee would be in violation of law, and a unique identification 
number is provided. The State imposes a 7-day waiting period on all 
firearms transactions, and the purchaser returns to pick up the 
firearm on February 15, 1999. Before the licensee executes the Form 
4473, and the firearm is transferred, the purchaser decides to 
purchase an additional firearm. The transfer of these two firearms 
is considered a single transaction; accordingly, the licensee may 
add the second firearm to the Form 4473, and transfer that firearm 
without conducting another NICS check.
    Example 3 for paragraph (c). A purchaser completes a Form 4473 
on February 15, 1999. The licensee receives a unique identification 
number from NICS on that date, the Form 4473 is executed by the 
licensee, and the firearm is transferred. On February 20, 1999, the 
purchaser returns to the licensee's premises and wishes to purchase 
a second firearm. The purchase of the second firearm is a separate 
transaction; thus, a new NICS check must be initiated by the 
licensee.

    (d) Exceptions to NICS check. The provisions of paragraph (a) of 
this section shall not apply if--
    (1) The transferee has presented to the licensee a valid permit or 
license that--
    (i) Allows the transferee to possess, acquire, or carry a firearm;
    (ii) Was issued not more than 5 years earlier by the State in which 
the transfer is to take place; and
    (iii) The law of the State provides that such a permit or license 
is to be issued only after an authorized government official has 
verified that the information available to such official does not 
indicate that possession of a firearm by the transferee would be in 
violation of Federal, State, or local law: Provided, That on and after 
November 30, 1998, the information available to such official includes 
the NICS;
    (2) The firearm is subject to the provisions of the National 
Firearms Act and has been approved for transfer under 27 CFR Part 179; 
or
    (3) On application of the licensee, in accordance with the 
provisions of Sec. 178.150, the Director has certified that compliance 
with paragraph (a)(1) of this section is impracticable.
    (e) The document referred to in paragraph (d)(1) of this section 
(or a copy thereof) shall be retained or the required information from 
the document shall be recorded on the firearms transaction record in 
accordance with the provisions of Sec. 178.131.

(Approved by the Office of Management and Budget under control 
number 1512-0544)

    Par. 9. Section 178.124 is amended by revising paragraph (c), by 
removing ``paragraph (c)(1)(ii)'' in paragraphs (d) and (e) and adding 
in its place ``paragraph (c)(3)(ii)'', by revising the first sentence 
in paragraph (f), and by revising the parenthetical text at the end of 
the section to read as follows:


Sec. 178.124  Firearms transaction record.

* * * * *
    (c)(1) Prior to making an over-the-counter transfer of a firearm to 
a nonlicensee who is a resident of the State in which the licensee's 
business premises is located, the licensed importer, licensed 
manufacturer, or licensed dealer so transferring the firearm shall 
obtain a Form 4473 from the transferee showing the transferee's name, 
sex, residence address (including county or similar political 
subdivision), date and place of birth; height, weight and race of the 
transferee; whether the transferee is a citizen of the United States; 
the transferee's State of residence; and certification by the 
transferee that the transferee is not prohibited by the Act from 
transporting or shipping a firearm in interstate or foreign commerce or 
receiving a firearm which has been shipped or transported

[[Page 58280]]

in interstate or foreign commerce or possessing a firearm in or 
affecting commerce.
    (2) In order to facilitate the transfer of a firearm and enable 
NICS to verify the identity of the person acquiring the firearm, ATF 
Form 4473 also requests certain optional information. This information 
includes the transferee's social security number and alien registration 
number (if applicable). Such information may help avoid the possibility 
of the transferee being misidentified as a felon or other prohibited 
person.
    (3) After the transferee has executed the Form 4473, the licensee:
    (i) Shall verify the identity of the transferee by examining the 
identification document (as defined in Sec. 178.11) presented, and 
shall note on the Form 4473 the type of identification used;
    (ii) Shall, in the case of a transferee who is an alien legally in 
the United States, cause the transferee to present documentation 
establishing that the transferee is a resident of the State (as defined 
in Sec. 178.11) in which the licensee's business premises is located, 
and shall note on the form the documentation used. Examples of 
acceptable documentation include utility bills or a lease agreement 
which show that the transferee has resided in the State continuously 
for at least 90 days prior to the transfer of the firearm; and
    (iii) Shall comply with the requirements of Sec. 178.102 and record 
on the form the date on which the licensee contacted the NICS, as well 
as any response provided by the system, including any identification 
number provided by the system.
    (4) The licensee shall identify the firearm to be transferred by 
listing on the Form 4473 the name of the manufacturer, the name of the 
importer (if any), the type, model, caliber or gauge, and the serial 
number of the firearm.
    (5) The licensee shall sign and date the form if the licensee does 
not know or have reasonable cause to believe that the transferee is 
disqualified by law from receiving the firearm and transfer the firearm 
described on the Form 4473.
* * * * *
    (f) Form 4473 shall be submitted, in duplicate, to a licensed 
importer, licensed manufacturer, or licensed dealer by a transferee who 
is purchasing or otherwise acquiring a firearm by other than an over-
the-counter transaction, who is not subject to the provisions of 
Sec. 178.102(a), and who is a resident of the State in which the 
licensee's business premises are located. * * *
* * * * *
(Paragraph (c) approved by the Office of Management and Budget under 
control number 1512-0544; paragraph (f) approved by the Office of 
Management and Budget under control number 1512-0130; all other 
recordkeeping approved by the Office of Management and Budget under 
control number 1512-0129)


Sec. 178.124a  [Amended]

    Par. 10. Section 178.124a is amended by removing the period at the 
end of the introductory text of paragraph (e) and adding in its place a 
colon.


Sec. 178.125a  [Amended]

    Par. 11. Section 178.125a is amended by adding ``comply with the 
provisions of Sec. 178.102 or'' after the phrase ``is not required to'' 
in the introductory text of paragraph (a).
    Par. 12. Section 178.129 is amended by revising paragraph (b), by 
redesignating paragraphs (c), (d), and (e) as paragraphs (d), (e), and 
(f), by adding new paragraph (c), and by revising the parenthetical 
text at the end of the section to read as follows:


Sec. 178.129  Record retention.

* * * * *
    (b) Firearms transaction record. Licensees shall retain each Form 
4473 and Form 4473(LV) for a period of not less than 20 years after the 
date of sale or disposition. Where a licensee has initiated a NICS 
check for a proposed firearms transaction, but the sale, delivery, or 
transfer of the firearm is not made, the licensee shall record any 
transaction number on the Form 4473, and retain the Form 4473 for a 
period of not less than 5 years after the date of the NICS inquiry. 
Forms 4473 shall be retained in the licensee's records as provided in 
Sec. 178.124(b): Provided, That Forms 4473 with respect to which a 
sale, delivery or transfer did not take place shall be separately 
retained in alphabetical (by name of transferee) or chronological (by 
date of transferee's certification) order.
    (c) Statement of intent to obtain a handgun, reports of multiple 
sales or other disposition of pistols and revolvers, and reports of 
theft or loss of firearms. Licensees shall retain each Form 5300.35 
(Statement of Intent to Obtain a Handgun(s)) for a period of not less 
than 5 years after notice of the intent to obtain the handgun was 
forwarded to the chief law enforcement officer, as defined in 
Sec. 178.150(c). Licensees shall retain each copy of Form 3310.4 
(Report of Multiple Sale or Other Disposition of Pistols and Revolvers) 
for a period of not less than 5 years after the date of sale or other 
disposition. Licensees shall retain each copy of Form 3310.11 (Federal 
Firearms Licensee Theft/Loss Report) for a period of not less than 5 
years after the date the theft or loss was reported to ATF.
* * * * *
(Paragraph (b) approved by the Office of Management and Budget under 
control number 1512-0544; Paragraph (c) approved by the Office of 
Management and Budget under control numbers 1512-0520, 1512-0006, 
and 1512-0524; Paragraph (f) approved by the Office of Management 
and Budget under control number 1512-0526; all other recordkeeping 
approved by the Office of Management and Budget under control number 
1512-0129)


Sec. 178.130  [Removed]

    Par. 13. Section 178.130 is removed.
    Par. 14. Section 178.131 is revised to read as follows:


Sec. 178.131  Firearms transactions not subject to a NICS check.

    (a)(1) A licensed importer, licensed manufacturer, or licensed 
dealer whose sale, delivery, or transfer of a firearm is made pursuant 
to the alternative provisions of Sec. 178.102(d) and is not subject to 
the NICS check prescribed by Sec. 178.102(a) shall maintain the records 
required by paragraph (a) of this section.
    (2) If the transfer is pursuant to a permit or license in 
accordance with Sec. 178.102(d)(1), the licensee shall either retain a 
copy of the purchaser's permit or license and attach it to the firearms 
transaction record, Form 4473, or record on the firearms transaction 
record, Form 4473, any identifying number, the date of issuance, and 
the expiration date (if provided) from the permit or license.
    (3) If the transfer is pursuant to a certification by ATF in 
accordance with Secs. 178.102(d)(3) and 178.150, the licensee shall 
maintain the certification as part of the records required to be kept 
under this subpart and for the period prescribed for the retention of 
Form 5300.35 in Sec. 178.129(c).
    (b) The requirements of this section shall be in addition to any 
other recordkeeping requirements contained in this part.
(Approved by the Office of Management and Budget under control 
number 1512-0544)

    Par. 15. Section 178.150 is revised to read as follows:


Sec. 178.150  Alternative to NICS in certain geographical locations.

    (a) The provisions of Sec. 178.102(d)(3) shall be applicable when 
the Director has certified that compliance with the provisions of 
Sec. 178.102(a)(1) is impracticable because:
    (1) The ratio of the number of law enforcement officers of the 
State in

[[Page 58281]]

which the transfer is to occur to the number of square miles of land 
area of the State does not exceed 0.0025;
    (2) The business premises of the licensee at which the transfer is 
to occur are extremely remote in relation to the chief law enforcement 
officer; and
    (3) There is an absence of telecommunications facilities in the 
geographical area in which the business premises are located.
    (b) A licensee who desires to obtain a certification under this 
section shall submit a written request to the Director. Each request 
shall be executed under the penalties of perjury and contain 
information sufficient for the Director to make such certification. 
Such information shall include statistical data, official reports, or 
other statements of government agencies pertaining to the ratio of law 
enforcement officers to the number of square miles of land area of a 
State and statements of government agencies and private utility 
companies regarding the absence of telecommunications facilities in the 
geographical area in which the licensee's business premises are 
located.
    (c) For purposes of this section and Sec. 178.129(c), the ``chief 
law enforcement officer'' means the chief of police, the sheriff, or an 
equivalent officer or the designee of any such individual.

(Approved by the Office of Management and Budget under control 
number 1512-0544)

PART 179--MACHINE GUNS, DESTRUCTIVE DEVICES, AND CERTAIN OTHER 
FIREARMS

    Par. 16. The authority citation for 27 CFR part 179 continues to 
read as follows:

    Authority: 26 U.S.C. 7805.

    Par. 17. Section 179.86 is amended by adding a sentence at the end 
of the section to read as follows:


Sec. 179.86  Action on application.

    * * * In addition to any other records checks that may be conducted 
to determine whether the transfer, receipt, or possession of a firearm 
would place the transferee in violation of law, the Director shall 
contact the National Instant Criminal Background Check System.

    Signed: October 1, 1998.
John W. Magaw,
Director.

    Approved: October 16, 1998.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 98-28986 Filed 10-28-98; 8:45 am]
BILLING CODE 4810-31-P