[Federal Register Volume 69, Number 141 (Friday, July 23, 2004)]
[Rules and Regulations]
[Pages 43892-43901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16817]


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DEPARTMENT OF JUSTICE

Federal Bureau of Investigation

28 CFR Part 25

[FBI 108F; AG Order No. 2727-2004]
RIN 1110-AA07


National Instant Criminal Background Check System Regulation

AGENCY: Federal Bureau of Investigation, Department of Justice.

ACTION: Final rule.

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SUMMARY: The United States Department of Justice (``the Department'') 
is publishing a final rule amending the regulations implementing the 
National Instant Criminal Background Check System (``NICS'') pursuant 
to the Brady Handgun Violence Prevention Act (``Brady Act'').

EFFECTIVE DATES: The effective date for the final rule is July 20, 
2004.

FOR FURTHER INFORMATION CONTACT: Eugene Donaldson, Federal Bureau of 
Investigation, National Instant Criminal Background Check System (NICS) 
Section, Module A-3, 1000 Custer Hollow Road, Clarksburg, West Virginia 
26306-0147, (304) 625-3500.

SUPPLEMENTARY INFORMATION: This notice finalizes the rule proposed in 
the Federal Register on July 6, 2001 (66 FR 35567). The Federal Bureau 
of Investigation (``FBI'') accepted comments on the proposed rule from 
interested parties until October 22, 2001, and 1,164 comments were 
received. With the exception of certain changes explained below, the 
proposed rule is adopted as final.
    Significant Comments or Changes:
    The Department on July 6, 2001, published a notice of five 
proposals for changes in the regulations governing the NICS. The 
changes relate to the amount of time that the NICS retains information 
about approved firearm transfers in the system's chronological log of 
background check transactions (``Audit Log'') and the manner in which 
that information may be used to audit the use and performance of the 
NICS. The proposed changes sought to balance the Brady Act's mandate 
that the Department protect legitimate privacy interests of law-abiding 
firearm transferees and the Department's obligation to enforce the 
Brady Act and the rest of the Gun Control Act and prevent prohibited 
persons from receiving firearms.
    The comments about each of the five proposals are addressed below.

[[Page 43893]]

1. Proposal 1: Prompt Destruction of Records of Allowed 
Transactions (Sec.  25.9(b)(1), (2) and (3))

    The majority of the comments received addressed the proposal that 
would require information relating to allowed firearm transfers, other 
than the NICS Transaction Number (NTN) and the date the number was 
assigned, to be destroyed before the beginning of the next day of NICS 
operations. The NICS regulations currently require destruction of this 
information within 90 days of the system allowing a transaction. 28 CFR 
25.9(b)(1).
    Since the closing of the comment period, Congress passed, and the 
President signed into law, a requirement that addresses the time within 
which the NICS is required to destroy certain information in the 
records of allowed transactions. Section 617 of Pub. L. No. 108-199, 
the Consolidated Appropriations Act, 2004 (or ``Omnibus''), requires 
the NICS to destroy ``any identifying information submitted by or on 
behalf of any person who has been determined not to be prohibited from 
possessing or receiving a firearm no more than 24 hours after the 
system advises a Federal firearms licensee that possession or receipt 
of a firearm by the prospective transferee would not violate subsection 
(g) or (n) of section 922 of title 18, United States Code, or State 
law.'' Section 617 of the Omnibus bill becomes effective on July 21, 
2004, 180 days after January 23, 2004, the date the Omnibus bill was 
signed into law.
    For this reason, proposal 1 has been superseded by a 
legislative enactment setting a limit on how long the NICS may retain 
certain information on allowed transactions. The final rule has been 
revised to conform to the 24-hour record retention provision in the 
Omnibus bill. However, because many of the comments on proposal 
1 raised questions about the effect of the shortened retention 
period on the operation of the NICS, we discuss those comments below to 
explain how the NICS will operate under the Omnibus provision and 
continue to enforce relevant Federal laws effectively.
    Commenters questioned whether the FBI could audit system 
performance adequately when the retention period for most information 
relating to approved transfers is less than 24 hours. The FBI uses 
information currently retained in the Audit Log to ensure quality 
performance from the NICS employees and the operators at the contract 
Call Centers who take transferee information from Federal Firearms 
Licensees (``FFLs''). The FBI's procedure for these audits under the 
existing regulations is to review a sample of decisions (``proceed,'' 
``denied,'' and ``open'') made by NICS employees and of entries by Call 
Center operators of transferee information. If an erroneous decision to 
allow a firearm transfer is detected during the audit, the FBI seeks to 
rectify the mistake by referring the case to the Bureau of Alcohol, 
Tobacco, Firearms, and Explosives (``ATF'') for retrieval of the 
firearm. In addition, retraining may be given to the employees involved 
or all employees relating to the issues raised by the error to prevent 
similar mistakes.
    Under the Omnibus 24-hour destruction provision, this same auditing 
function will be performed soon after the transaction is processed by 
the NICS. This change, from the current review process (which in some 
instances may be performed as late as 75 days after an initial decision 
was made) to a process where reviews are performed within 24 hours 
after an FFL is advised of a ``proceed'' response (``real time'' 
audits), can be done without any change in the number of transactions 
audited and the level of confidence underlying the audits. The FBI has 
determined that, after the proposed change, it can audit the same 
percentage of employee ``proceed'' decisions and Call Center entries as 
it currently reviews. Furthermore, the FBI has determined that, under 
the new audit procedures, it can attain the same confidence level in 
the audit results that is achieved under the current post-decision 
review of proceed records retained for 90 calendar days. The FBI will 
perform these reviews to accommodate all hours and days of operation. 
These reviews will include audits of the procedures through which the 
NICS ensures that aliens who are illegally or unlawfully in the United 
States or who are non-immigrant aliens do not receive firearms as 
prohibited by the Gun Control Act. See 18 U.S.C. 922(g)(5). The 
Department is working toward providing the necessary staffing resources 
for these ``real time'' reviews and will coordinate with the FBI to 
ensure adequate resources for this function.
    The Department believes that these ``real time'' quality assurance 
audits, performed either before or within a few hours (less than 24 
hours, at the outermost) after eligibility decisions are communicated 
to the FFL, will ensure that the reliability and accuracy of the NICS 
is maintained. Contemporaneous reviews may prevent a firearm from being 
erroneously transferred to a prohibited individual. Reviews performed 
within 24 hours of advising an FFL of a proceed response will, in cases 
of erroneous proceed decisions discovered by the audit, permit 
immediate referral of any firearm retrievals to ATF. In addition, the 
institution of any corrective training promptly after the error will 
prevent the repetition of errors that might occur where reviews are 
conducted much later, as they are under the current 90-day retention 
policy.
    One comment observed that because the NICS has cases in which it 
cannot make a determination within three business days as to whether a 
potential transferee is disqualified, it cannot both make a 
determination and evaluate the accuracy of the determination within one 
business day. These cases, however, are not covered by the Omnibus 24-
hour destruction provision. The NICS cannot in some cases reach a final 
determination within three business days because relevant information 
is missing from the automated record system and must be obtained from 
other sources. As discussed below, the final rule defines these cases 
as ``open'' responses and allows the NICS to retain information about 
them until a ``proceed'' determination is reached or for not more than 
90 days, so that if records are returned to the NICS within that time 
showing that the transfer should have been denied, the case can be 
referred for a firearm retrieval. When there are no missing records, 
employees are able to make their determinations quite quickly, usually 
within a matter of minutes. Reviewing these determinations within 24 
hours after they are made is both feasible and preferable to the 
current system of review.
    The FBI also uses information on approved transactions to audit the 
data processing algorithm that matches system records to the transferee 
information submitted for the NICS check. These audits will be 
unaffected by the Omnibus provision because, in 2001, the FBI began 
performing the algorithm audits daily.
    Some commenters contended that the new proposed retention period is 
inconsistent with the Department's earlier comment that 90 days was 
``the shortest practicable period of time for retaining records of 
allowed transfers that would permit the performance of basic security 
audits of the NICS.'' 64 FR 10264. That statement, however, pertains to 
the process of post-decision reviews currently in effect and not the 
real-time auditing process that will be implemented under the Omnibus 
provision.
    The current NICS audit process, based on post-decision reviews, is 
similar to

[[Page 43894]]

the FBI's audit procedures for its National Crime Information Center 
(``NCIC''). In auditing the NCIC, the FBI reviews historical data 
periodically to ensure that law enforcement agencies are accessing the 
NCIC only for authorized purposes. NCIC users are typically subject to 
such audits once every three years. There is greater need to audit the 
NICS promptly, however, because NICS employees are constantly 
interpreting records, applying state and federal law, and deciding 
whether persons are eligible to possess or receive a firearm. Five 
years of operating the NICS have given the FBI sufficient experience in 
managing the system to implement the real-time quality reviews that 
will begin once the Omnibus 24-hour destruction requirement becomes 
effective.
    One comment suggested that the new retention period will hamper the 
ability of the NICS to develop and analyze statistical information 
about the system's use and performance. The FBI has determined that, 
although under the new period it may not have as much flexibility in 
doing so, it will be able to continue to develop needed statistical 
data about the system's performance under the new retention period by 
making statistical data runs on a daily basis (before the beginning of 
the next day of NICS operations) instead of doing so on a weekly or 
monthly basis.
    Another comment questioned the FBI's legal authority to retain more 
complex statistical data. The Department interprets the provision of 
the Brady Act requiring the destruction of ``all records of the system 
relating to the person or the transfer,'' 18 U.S.C. 922(t)(2)(C), as 
referring only to records that contain specific information about 
individual transfers. In addition, as discussed below, the Omnibus 
provision requires the destruction of ``any identifying information 
submitted by or on behalf of'' an approved purchaser. The Department 
believes, therefore, that the NICS may develop and retain information 
about the system's performance that does not contain such identifying 
information. Examples include but are not limited to the gross number 
of checks processed, the numbers of checks performed for handgun and 
long gun transfers, and the numbers for the different types of system 
responses given to FFLs (in the aggregate and by individual FFLs).
    The Department interprets section 617 of the Omnibus bill as being 
consistent with this reading of the Brady Act. Therefore, when the 
provision becomes effective, the FBI will continue to retain for not 
more than 90 days non-identifying data associated with transactions 
such as the FFL number, as well as the NTN and date (which are retained 
indefinitely), for all transactions in the NICS Audit Log. In addition, 
when asking an agency for information in connection with a NICS check, 
the NICS will provide the NTN, which the agency can reference in any 
response to the NICS. By retaining the FFL and NTN numbers for up to 90 
days, the FBI will be able to trace the transaction back to the FFL if 
prohibiting information is provided by an agency more than 24 hours 
after the NICS issued a Aproceed@ response. FFLs are required to record 
the NTN on the Firearms Transaction Record (ATF Form 4473) and must 
keep those forms for 20 years if the firearm is transferred. 27 CFR 
478.129(b). As a result, the FBI will retain the ability to refer the 
case to ATF for the retrieval of the erroneously transferred firearm 
and any other firearms illegally possessed by the prohibited person. 
This practice will ensure that firearm retrievals can continue under 
the language in the Omnibus bill.
    This continued retention of the FFL number is possible because the 
Department believes that the text of the Omnibus provision only 
requires the destruction within 24 hours of ``identifying information 
submitted by or on behalf of'' the approved purchaser. The statute is 
most naturally read to equate ``identifying information'' with 
information identifying the prospective transferee, rather than 
information that identifies anyone or anything. The FFL number does not 
identify the prospective transferee. Additionally, the phrase 
``identifying information submitted by or on behalf of'' a transferee 
is best read to encompass information in the NICS records provided by 
the transferee--either directly (``submitted by [the transferee]''), or 
indirectly through a surrogate, such as the FFL (``submitted on behalf 
of [the transferee]''). Even though an FFL must submit its FFL number 
to the NICS before any firearm transfer may be authorized, this number 
is most naturally characterized not to constitute information 
``submitted by or on behalf of'' a transferee because the transferee 
plays no role in providing it to the NICS.
    To be clear, the Omnibus provision's 24-hour record destruction 
requirement applies only to transactions in which the NICS has 
affirmatively determined that possession or receipt of a firearm by the 
purchaser would not violate 18 U.S.C. 922(g) or (n) or state law and 
has so ``advised'' the FFL, i.e. has provided the FFL with a 
``proceed'' response. Section 617 is not applicable to ``denied'' or 
``open'' transactions. In the case of denied transactions, records are 
retained indefinitely. Furthermore, as discussed below, the FBI will 
also continue to be able to retain for up to not more than 90 days (as 
it does under current law) information on ``open'' transactions--i.e., 
where the NICS has not yet provided a ``proceed'' or ``deny'' response 
because it has not received definitive information about the status of 
a prospective gun buyer's record (e.g., a missing arrest disposition). 
If prohibiting information is received within 90 days, continued 
retention of such records will allow the FBI to change an open 
transaction to a ``denied'' response and refer the case to ATF for a 
firearm retrieval if the firearm has been transferred by the FFL (as 
allowed under the Brady Act when the FFL has not received within three 
business days a response on whether the transfer is lawful).
    Some commenters were concerned that the proposed rule could 
interfere with the retention of information about proceed transactions 
by Point of Contact states (``POCs''). Under the existing NICS 
regulations, 28 CFR 25.9(d), POCs are required to destroy information 
about allowed transfers that are not part of ``a record system created 
and maintained pursuant to independent state law regarding firearm 
transactions.'' See also 63 FR 58311. The FBI has advised POCs that if 
they do not have such state authority they must observe the same 
retention period for allowed transfers as the FBI under Sec.  25.9(b). 
Thus, POCs that do not have the specified state authority will be 
required to reduce their retention period to conform to the new period 
that the FBI will observe, pursuant to the Omnibus provision, upon the 
effective date of this rule. However, POCs that have state authority to 
retain this information may continue to do so, and such authority is 
not affected by this regulatory change.
    Some commenters suggested that reducing the retention period to 
less than 24 hours will prevent the identification of unlawful firearm 
transactions involving straw purchases or the use of false 
identification. A ``straw purchase'' occurs when the actual purchaser 
of a firearm uses another person, the ``straw purchaser,'' to execute 
the paperwork necessary to purchase a firearm from an FFL. The straw 
purchaser violates the law by making a false statement with respect to 
information required to be kept in the FFL's records. Straw purchases 
are most often detected by the NICS when an FFL informs a NICS examiner 
that one person is buying a firearm for another

[[Page 43895]]

person, such as a friend or family member who recently has been denied. 
The transactions usually occur on the same operational day and 
frequently only minutes apart. Under the current regulation (Sec.  
25.9(b)(2)), when such transactions are identified, the proceed 
information is maintained by the NICS and referred to ATF for 
investigation where doing so is necessary to pursue an identified case 
of ``misuse of the system.''
    The requirement to destroy information about allowed transfers 
within 24 hours after the FFL has been notified of the approval will 
not interfere with these cases continuing to come to the attention of 
the NICS. To conform to the requirement of section 617 of the Omnibus, 
however, Sec.  25.9(b)(2) has been revised in the final rule to provide 
that information in the NICS Audit Log, including information not yet 
destroyed under the 24-hour destruction requirement, that indicates, 
either on its face or in conjunction with other information, a 
violation or potential violation of law or regulation may be shared by 
the FBI with appropriate authorities responsible for investigating, 
prosecuting, or enforcing such law or regulation. This change is 
consistent with Routine Use C in the NICS Privacy Act Notice, which 
provides that: If, during the course of any activity or operation of 
the system authorized by the regulations governing the system (28 CFR, 
part 25, subpart A), any record is found by the system which indicates, 
either on its face or in conjunction with other information, a 
violation or potential violation of law (whether criminal or civil) 
and/or regulation, the pertinent record may be disclosed to the 
appropriate agency/organization/task force (whether Federal, State, 
local, joint, or tribal) and/or to the appropriate foreign or 
international agency/organization charged with the responsibility of 
investigating, prosecuting, and/or enforcing such law or regulation * * 
*
63 FR 65226-27 (Nov. 25, 1998). This provision in the final rule will 
continue to allow the FBI and ATF to pursue cases of suspected straw 
purchases, as well as other potential violations of law or regulation, 
that come to the FBI's attention while operating the system. Where a 
potential straw purchase comes to the attention of the FBI while 
processing a NICS check within 24 hours after a dealer is advised of a 
proceed determination, this provision in the regulation will authorize 
the FBI to provide records of the approved transfer to ATF before the 
identifying information in records in the NICS Audit Log must be 
destroyed as required by the Omnibus provision.
    In addition, the NICS does not destroy records of denials. A NICS 
employee verifies the potential straw purchase case by referring back 
to an earlier ``denied'' response, not an earlier ``proceed'' response. 
For that reason, information about allowed transfers in the Audit Log 
is not used to track lawful transferees to see whether they might be 
engaged in a straw purchase. Straw purchases by persons with last names 
different from the ones of persons that later receive the firearm would 
not be detectable by a review of the Audit Log, regardless of whether 
the information contained therein is kept for one day or 90 days.
    The change required by the Omnibus provision does not affect the 
ability of law enforcement to detect or prosecute the use of false 
identification by prospective firearm purchasers. The NICS runs the 
name and identifying information that the FFL sends to the system based 
on the identification documents presented by the buyer. The FFL is 
responsible for examining the identification documents, and the NICS 
has no means by which it can validate the identification presented. 
Thus, the change in the retention period of information about allowed 
transfers has no relevance to the system's ability (or inability) to 
validate a buyer's identification. One comment suggested that a 
purchaser using a false identity could be detected by reviewing the 
Audit Log for a pattern of purchases that could trigger an 
investigation to uncover possible gun trafficking. The Department's 
position since the NICS began operating is that such use of the Audit 
Log is not authorized by the Brady Act and the NICS regulations, both 
of which prohibit the use of the NICS to establish a system of firearm 
registration relating to lawful gun purchases; the Audit Log, 
therefore, is not used to track purchases by lawful gun buyers, even 
though doing so could potentially identify purchase patterns suggesting 
possible cases of gun trafficking.
    One comment observed that the proposed change would prevent the 
NICS from referring a ``proceed'' transaction for a firearm retrieval 
when a disqualifying record is subsequently entered into the system. 
The comment indicated that this would allow a prohibited buyer to 
``beat the clock'' and buy a firearm after he or she becomes 
disqualified but before his or her disqualifying record is entered into 
the system. The NICS, however, does not currently have a process for 
automatically comparing new criminal history or other disqualifying 
information received by the FBI against proceed transactions in the 
Audit Log. As noted above, under the final rule the system will list as 
``open'' the cases in which the system has hit on a potentially 
disqualifying record but has not obtained definitive information on 
whether the person is disqualified. Examples of such cases include 
transactions where a record is found of an arrest for a disqualifying 
offense without information about the final disposition or where a 
record is found of a conviction of a violent misdemeanor without 
information on whether there is a domestic relationship that would make 
the offense a disqualifying misdemeanor crime of domestic violence. 
Records on these open transactions will be kept for not more than 90 
days to allow for referral of the case for firearm retrieval in the 
event disqualifying information is received within that time.
    Many commenters argued that the Brady Act and the Firearms Owners' 
Protection Act require immediate destruction of NICS records upon 
communicating the proceed decision to the FFL, and that any retention 
of information on approved transfers violates the provisions of federal 
law prohibiting the establishment of a federal firearms registry. The 
United States Court of Appeals for the District of Columbia Circuit 
rejected this argument in National Rifle Ass'n of America, Inc. v. 
Reno, 216 F.3d 122 (D.C. Cir. 2000), cert. denied sub nom. National 
Rifle Ass'n of America, Inc. v. Ashcroft, 533 U.S. 928 (2001). That 
decision affirmed the Attorney General's discretion to allow the NICS 
to keep information about allowed firearm transfers for a limited 
period of time for the limited purpose of conducting audits of the use 
and performance of the system. See National Rifle Ass'n of America, 
Inc. v. Reno, 216 F.3d at 137-38, quoting 66 FR 58304 (Oct. 30, 1998). 
Such discretion perforce extends to the changes effected by this rule, 
which requires much more prompt destruction of the information than do 
the regulations it amends. Moreover, by specifying in section 617 of 
the Omnibus bill the requirement for destroying certain information in 
records of allowed transfers not more than 24 hours after an FFL is 
advised of the determination, Congress has specifically authorized 
retaining these records for up to 24 hours.
    Several comments questioned whether records of allowed transfers 
would be kept beyond the beginning of the next day of NICS operations 
in computer system backup tapes. The

[[Page 43896]]

NICS currently maintains complete backups of the last ten calendar days 
of all data. The Omnibus provision provides no exception to the 
requirement for the destruction of the identifying information about 
allowed transactions within 24 hours of advising the FFL of the 
``proceed'' response. The FBI will therefore revise its backup 
procedures for NICS data to ensure that the relevant data is destroyed 
within the 24-hour time frame.
    Finally, the Department has determined that the regulations should 
more clearly distinguish between the final rule's use of the term 
``NICS business day'' and the term ``business day'' as used elsewhere 
in the regulations. The term ``business day'' is defined as ``a 24-hour 
day (beginning at 12:01 a.m.) on which state offices are open in the 
state in which the proposed firearm transaction is to take place.'' 
Ordinarily, this excludes weekends and all holidays on which state 
offices are closed. In contrast, the FBI NICS Section operates every 
day of the year during the hours of 8 a.m. to 1 a.m. eastern time, with 
the exception of Christmas Day. Therefore, in Sec.  25.9(b)(1)(iii), 
the final rule substitutes the term ``NICS operational day'' for the 
term ``NICS business day.'' ``NICS operational day'' is defined to mean 
``the period during which the FBI NICS Operations Center has its daily 
regular business hours.'' In conjunction with this change, the term 
``NICS Operations Center regular business hours'' has been removed from 
the regulations. This term was defined as 9 a.m. to 2 a.m. eastern 
time. Shortly after the FBI NICS Operations Center began operating, 
however, it established business hours of 8 a.m. to 1 a.m. eastern 
time. The definition of ``NICS Operations Center regular business 
hours'' is being removed so that an amendment to the rule is not 
required in the event of future changes in those hours. The FBI NICS 
Section will keep POCS and FFLs informed of any changes in its daily 
regular business hours.

2. Proposal 2: Individual FFL Audit Logs (Sec.  25.9(b)(4))

    The Department proposed to create Individual FFL Audit Logs upon 
prior written request from ATF for use in connection with ATF's 
inspections of FFL records. With the exception of denied transactions, 
the Individual FFL Audit Logs may contain only non-identifying 
information for each transaction. All information concerning denied 
transactions may be included in the Individual FFL Audit Logs. The FBI 
will create Individual FFL Audit Logs for the transactions processed by 
the FBI's NICS Operations Center. The Department expects the POC states 
to work with the FBI and ATF to ensure that such Logs will also be 
available to ATF for use in its inspections of FFLs in the POC states. 
The final rule provides: ``The FBI will provide POC states the means to 
provide to the FBI information that will allow the FBI to generate 
Individual FFL Audit Logs in connection with ATF inspections of FFLs in 
POC states. POC states that elect not to have the FBI generate 
Individual FFL Audit Logs for FFLs in their states must develop a means 
by which the POC will provide such Logs to ATF.''
    In the final rule, the Department has dropped the requirement that 
ATF destroy all records of allowed transfers and open transactions 
within 90 days of the date on which the Individual FFL Audit Log was 
created. The Department concluded that the proposed rule's requirement 
that ATF destroy this information and certify its destruction is not 
required by law and would create an unnecessary administrative burden. 
In addition, to give ATF the flexibility to obtain information covering 
a longer period of transactions for use in its inspections of FFLs, the 
final rule allows the Individual FFL Audit Logs to contain up to 60 
days, as opposed to the proposed 30 days, worth of allowed and open 
transfer records originating from the inspected FFL.
    Several comments on this proposal suggested that giving ATF only 
the NTN and date of inquiry on allowed transfers limits the utility of 
these logs in ATF inspections of FFLs. The Department notes that the 
Individual FFL Audit Logs will allow ATF to review dealer records in 
several ways that will deter FFL misuse of the NICS. First, by 
comparing the NTN issued by the NICS to the NTN recorded on the ATF 
Form 4473, ATF can deter FFLs from falsifying NTNs to conceal the fact 
that they did not request a NICS check on a transfer and detect any 
FFLs who have made such falsifications. Second, by comparing the number 
of NICS checks requested by an FFL during the 60-day period to the 
number of Forms 4473 that the FFL has for the same period, ATF will be 
able to ensure that for every NICS check there is a corresponding Form 
4473. When there are more NICS checks than there are Forms 4473, ATF 
will determine whether the FFL was running unauthorized NICS checks 
unrelated to firearm transfers. When there are fewer NICS checks than 
there are Forms 4473, ATF can investigate whether the FFL was 
transferring firearms without the required NICS check. In addition to 
using the 60 days of data in the Individual FFL Audit logs to detect 
these discrepancies, ATF can use statistical data that the FBI develops 
covering a longer period of time on the gross number of checks by the 
FFL and the gross number of responses by type given by the system 
(``proceed,'' ``denied,'' or ``open''). Since all checks must have a 
corresponding Form 4473, if such forms are missing, then possible NICS 
checks for improper purposes may be detected. These reviews by ATF will 
deter dealers from avoiding NICS checks or running unauthorized NICS 
checks and violating the right to privacy of persons subject to such 
checks.
    Other comments indicated that limiting the information about 
allowed transfers in the Individual FFL Audit Logs will prevent ATF 
from discovering certain types of dealer misuse of the NICS. As noted 
above, this information will continue to allow ATF to check for 
fictitious NTNs and discrepancies between the number of checks and the 
number of Forms 4473. It is true, however, that when the 24-hour 
destruction requirement in the Omnibus bill is implemented, ATF 
inspectors will no longer be able to compare the information on the 
4473 on proceeded firearm transactions with the information sent to the 
NICS to determine if an FFL sent the system different information to 
avoid the background check on the actual buyer. To date, however, ATF 
has not found such activity to be a problem. ATF believes that, in any 
event, it will be able to deter FFLs from deliberately sending the NICS 
information different from what is on the Form 4473 by conducting, as 
part of its inspections, NICS rechecks on a sample of proceeded 
transactions to see if the NICS would give the same ``proceed'' 
response as of the date of the original transaction. The FBI has also 
developed a new tool, the NTN validator, which ATF will use to detect 
fabricated NTNs.
    To be sure, the fact that the FBI and ATF were able to conduct 
comparisons of identifying information from the Form 4473 that was 
submitted to the NICS may have had some deterrent effect on dealers who 
would consider abusing the system. The FBI and ATF, however, will 
create a similar deterrent. As mentioned above, ATF has the authority 
to run NICS rechecks to see if the NICS returns a ``denied'' response 
on a transfer the Form 4473 shows as being allowed. The recheck 
determines whether the person was prohibited based on records showing 
the person's status at the time of the original check. The NICS 
regulations grant ATF authority to conduct NICS rechecks as part of its 
inspection process under 28 CFR 25.6(j)(2), which permits ATF

[[Page 43897]]

access to the NICS Index for civil and criminal law enforcement 
purposes under the Gun Control Act. ATF is also authorized to receive 
information from other databases checked by the NICS, including the 
NCIC, the Interstate Identification Index (``III''), and Bureau of 
Immigration and Customs Enforcement, Department of Homeland Security, 
databases. Any inconsistency between a proceed on a Form 4473 and a 
denied response on a recheck would suggest that the dealer had sent the 
NICS identifying information that differs from that which appears on 
the Form 4473. Upon the discovery of such a discrepancy, ATF can do a 
larger sample of rechecks to ascertain if there is a pattern of abuse 
or initiate an investigation of the FFL if warranted by the facts. 
Moreover, the rechecks can be done over a much longer period of time 
than the 60 days of transactions it was anticipated that ATF would 
review using the information saved and shared under the 90-day 
retention rule. Using the recheck approach to auditing FFL records of 
NICS checks increases the probability of irregularities being 
discovered because ATF can go back a year or more in its recheck 
sample. The Department has concluded that this recheck process will 
provide a deterrent to dealers who might consider submitting false 
information to the NICS, because sanctions for such misuse include 
suspension of NICS privileges and criminal prosecutions. In addition, 
under the new rule, the FBI will continue to be able to identify cases 
in which FFLs, after receiving a denial on a particular purchaser's 
identifying information, initiate one or more subsequent checks with 
slight variations of a name, date of birth, or social security number. 
These cases usually occur shortly after the initial denial or delay and 
are verified by referring back to the initial denied or open 
transaction. Finally, traditional law enforcement methods, such as 
undercover investigations finding cases of dealers submitting false 
information to the NICS, can lead to prosecutions or license 
revocations that will deter dealers from engaging in such illegal 
conduct.
    Other comments argued that the Brady Act does not allow the FBI to 
retain information about the FFL identification number (``FFL 
identifier'') or to transfer any information on allowed transfers or 
open transactions to ATF. The comments asserted that the FBI can only 
keep the NTN and date (without the associated FFL identifier) and may 
only share that information with ATF when there is a bona fide criminal 
investigation. As noted above, the Department's authority to retain 
information on allowed transfers, including the FFL identifier number, 
in the Audit Log for a limited time was upheld in National Rifle Ass'n 
of America, Inc. v. Reno, 216 F.3d 122 (D.C. Cir. 2000), cert. denied 
sub nom. National Rifle Ass'n of America, Inc. v. Ashcroft, 533 U.S. 
928 (2001). Also, for the reasons specified above, the Department 
believes that the record-destruction requirement in the Omnibus bill 
only applies to the identifying information submitted by or on behalf 
of the prospective purchaser. Sharing FFL identifiers with ATF in 
connection with its inspections of FFLs facilitates authorized audits 
of FFLs' use of the NICS.

3. Proposal 3: New Definition of ``Open'' Transaction (Sec.  
25.2)

    Initially, the purpose of this proposal was to create a separate 
category of transactions called ``unresolved.'' In the final rule, 
however, the name of the category is changed from ``unresolved'' to 
``open.'' ``Open'' transactions are those non-canceled transactions 
where the FFL has not yet been notified of the final determination. In 
such cases, additional information is needed before the NICS examiner 
can verify whether a ``hit'' in the database demonstrates that the 
prospective purchaser is disqualified from receiving a firearm under 
state or federal law. Under the final rule, the NICS will be able to 
maintain records of open transactions until either (1) a final 
determination on the transaction is reached and has been communicated 
to the FFL resulting in the transaction status being changed to a 
``proceed'' (24-hour destruction) or a ``denied'' (indefinite 
retention) status, or (2) 90 days elapse from the date of inquiry.
    Currently, approximately 74 percent of all transactions are 
completed immediately and approximately 92 percent are completed while 
the FFL is still on the telephone with the FBI NICS Section. Therefore, 
open transactions represent a very small percentage of all calls to the 
NICS. Creating an ``open'' category clarifies that the NICS can retain, 
as discussed above, the identifying information on such transactions 
beyond the 24-hour retention period for ``proceed'' transactions so 
that employees can complete research and analysis necessary to achieve 
an accurate determination. If the transaction's status is changed to 
``denied'' within 90 days, the NICS would be able to refer the matter 
to ATF for a possible firearm retrieval and retain the transaction 
information indefinitely.
    Several commenters raised the concern that the creation of a new 
``open'' category would change the statutory mandate in the Brady Act 
that allows an FFL to transfer a firearm if the NICS has not 
determined, within three business days, that the transaction is 
prohibited by law. However, the new category of ``open'' would not 
affect an FFL's ability to transfer or withhold a firearm after three 
business days, but would simply allow the NICS to keep accurate records 
of the precise status of NICS transactions. With this new category of 
``open'' transactions, the NICS will more accurately reflect the status 
of all transactions in the system, track changes in their status, and 
update its records accordingly.
    The definition of ``Delay'' has been amended to clarify that it 
means the response given to the FFL indicating that the transaction is 
in an ``Open'' status and that more research is required prior to a 
NICS ``Proceed'' or ``Denied'' response.
    Finally, several comments stated that the open category would be 
unnecessary if the record systems checked by the NICS had complete 
information. The Department agrees that all levels of government must 
continue to improve the completeness of disposition information in the 
criminal history record system so that such information can be 
available to the NICS without the need for further research. As record 
completeness improves, the number of open transactions should decrease. 
The Department is addressing the problem of missing dispositions by 
making the closing of such gaps a priority use of the funding available 
to the states under the National Criminal History Improvement Program 
(``NCHIP''). It is expected, however, that achieving improved 
completeness will take additional time, and that there will continue to 
be a need for the NICS to have an ``open'' category for the foreseeable 
future.

4. Proposal 4: Require POC States to Transmit State 
Determinations to the NICS (Sec.  25.6(h))

    Under current Sec.  25.6(h), POC states are encouraged, but not 
required, to transmit to the FBI determinations that a background check 
indicates a firearm transfer is denied. Unfortunately, most POC states 
currently do not transmit this information to the NICS. In order to 
provide the NICS with complete information about POC transactions, the 
Notice of Proposed Rulemaking contemplated that POC states would be 
required to transmit all determination information on all POC

[[Page 43898]]

determinations--approved, open, and denied--as soon as it is available.
    A number of POC states and interest groups commented that a 
requirement to transmit information about all determinations would 
overly and unduly burden the POC states and the NICS. In addition, they 
stated that POC denial information is the most valuable and necessary 
for the NICS to collect. The 24-hour destruction requirement in the 
Omnibus, however, makes it just as important that the NICS have notice 
of when a POC transaction is open, because otherwise it will have to 
assume the transaction has been approved and destroy the transaction 
information within 24 hours of the initial check. This result will mean 
that the NICS may not have information about the transaction even 
though the POC has not finished its review of or made a final 
determination concerning the open transaction. In turn, this would 
cause certain inefficiencies in the completion of POC checks, in some 
cases requiring the POC to run an open transaction a second time where 
the information about the initial check has been destroyed because the 
FBI is forced to assume the transaction has been proceeded.
    In light of these comments and the requirement of the Omnibus 
provision, the Department has changed the final rule to provide that 
POC states must transmit electronic NICS transaction determination 
messages to the FBI for the following transactions: (1) Open 
transactions that are not resolved before the end of the operational 
day on which the check is requested; (2) denied transactions; (3) 
transactions reported to NICS as open and later changed to proceed; and 
(4) denied transactions that have been overturned. The FBI will provide 
POCs with an electronic message capability to transmit this 
information.
    These electronic messages shall be provided to the NICS immediately 
upon communication of the POC determination to the FFL. For open 
transactions, the electronic messages shall be communicated no later 
than the end of the operational day on which the check was initiated. 
The FBI will assume that POC transactions that are not identified as 
denied or open have received a proceed response and will accordingly 
destroy certain information from those NICS records within 24 hours.
    The FBI has already provided and will continue to provide the POCs 
guidance and support on the system requirements for providing the NICS 
the required information about transaction status. In addition, the 
2004 Program Announcement for the National Criminal History Improvement 
Program (NCHIP), available on the website of the Bureau of Justice 
Statistics, provides that NCHIP funds are available to POC states ``to 
implement programming or operational changes in records management 
necessary to comply'' with new NICS requirements for POC participation 
resulting from the Omnibus bill.
    Receiving information about POC denials will enable the FBI to 
refer all denials, not just those made by the FBI NICS Operations 
Center, to ATF for investigation. Receiving notification of open POC 
transactions will allow the FBI to retain information about the POC 
transaction for up to 90 days, or until the transaction's status is 
changed to proceed before the expiration of 90 days, in the same way 
the FBI will retain information about open transactions handled by the 
FBI NICS Section.
    Several commenters were concerned that the new POC requirement 
might interfere with state record-retention rules. These issues are 
addressed by the current requirement in the NICS regulations regarding 
record retention by POC states. Specifically, 28 CFR 25.9(d) states:
    (d) The following records of state and local law enforcement units 
serving as POCs will be subject to the Brady Act's requirements for 
destruction:
    (1) All inquiry and response messages (regardless of media) 
relating to the initiation and result of a check of the NICS that 
allows a transfer that are not part of a record system created and 
maintained pursuant to independent state law regarding firearms 
transactions; and
    (2) All other records relating to the person or the transfer 
created as a result of a NICS check that are not part of a record 
system created and maintained pursuant to independent state law 
regarding firearms transactions.
    The Department gave the following explanation of this section in 
the Federal Register when the initial NICS regulations were published 
on October 30, 1998: ``Sections 25.9(d)(1) and (2) of the final rule 
were revised to make it clear that the referenced state records of 
allowed transfers would not be subject to the Brady Act record 
destruction requirement if they are part of a record system created and 
maintained pursuant to independent state law regarding firearms 
transfers. The reason for this clarification is to avoid interfering 
with state regulation of firearms. If a state is performing a gun 
eligibility check under state law, and state law requires or allows the 
retention of the records of those checks, the state's retention of 
records of the concurrent performance of a NICS check would not add any 
more information about gun ownership than the state already retains 
under its own law.'' 63 FR 58304. The Department does not believe that 
the Omnibus 24-hour record destruction provision affects this part of 
the NICS regulation. The Omnibus provision simply reduces the record 
retention time for records subject to the Brady Act's record 
destruction requirement; it does not expand the records that are 
subject to the destruction requirement.
    As noted above, however, POC states that do not have a state law 
regarding firearms transactions that requires or allows the retention 
of the records of gun eligibility checks must comply with the same 
record destruction schedule observed by the FBI. Therefore, to ensure 
that the Department observes the requirements of the Omnibus bill, 
beginning July 21, 2004, such POC states must destroy records relating 
to allowed transfers, in accordance with 28 CFR 25.9(d), no more than 
24 hours after advising FFLs of proceed determinations. Otherwise, NICS 
transactions in those states will have to be processed by the FBI to 
ensure compliance with the Omnibus provision.

5. Proposal 5: Voluntary Appeal File (Sec.  25.10(g))

    The final rule would permit lawful transferees to request that the 
NICS maintain information about themselves in a Voluntary Appeal File, 
a separate computer file that will be checked by the NICS, so that the 
NICS will not erroneously deny a firearm transfer in the future. 
Persons who may request that the NICS maintain information about them 
to facilitate future firearms transactions include lawful purchasers 
who have been delayed or denied a firearm transfer because they have a 
name and date of birth similar to that of a prohibited person. The NICS 
has the authority to maintain such information in order to reduce the 
number of requests it receives for the reasons underlying a delay or 
denial of a firearm transfer and the number of unnecessary appeals. 
Doing so will enhance the service that NICS provides to FFLs and lawful 
firearm transferees and help fulfill the Brady Act's goal of providing 
an ``instant'' background check where possible.
    This provision would also avoid erroneous denials or extended 
delays on NICS checks of persons who were convicted but have had their 
rights restored or have obtained from ATF relief from the firearm 
disability. Some

[[Page 43899]]

commenters noted that some states provide that the firearm privileges 
of certain convicted persons are automatically restored after the 
passage of a set period of time. The commenters asserted that use of 
the Voluntary Appeal File should not be available to persons receiving 
the restoration of their rights because possession of a firearm by such 
persons presents a threat to public safety. Under certain conditions, 
however, the Gun Control Act allows individuals with otherwise 
disqualifying convictions to possess and receive firearms if their 
civil rights have been restored. See 18 U.S.C. 921(a)(20) and 
921(a)(33)(B)(ii). The NICS is required by law to recognize such 
restorations of rights when determining a person's eligibility to 
obtain a firearm. The Department, therefore, declines to impose the 
suggested limitation on the use of the Voluntary Appeal File.
    At the suggestion of the FBI, the Department amends this provision 
to clarify that the FBI may remove a person from the Voluntary Appeal 
File when the FBI finds that a disqualifying record has been created 
after the date of the person's entry into the file. Thus, the following 
sentence is added to the end of the new Sec.  25.10(g): ``If the FBI 
finds a disqualifying record on the individual after his or her entry 
into the Voluntary Appeal File, the FBI may remove the individual's 
information from the file.'' The Department is also correcting an error 
in the last sentence of this section of the proposed rule, which used 
the term ``Voluntary Audit Log'' instead of ``Voluntary Appeal File.'' 
That sentence in the final rule reads: ``However, the FBI shall not be 
prohibited from retaining such information contained in the Voluntary 
Appeal File as long as needed to pursue cases of identified misuse of 
the system.''

6. Other Comments on the Proposed Rule

    One comment raised procedural objections concerning the delays in 
the effective date of the 90-day retention rule published in January 
2001. The Department provided explanations for the postponement of the 
effective date when those actions were taken. See 66 FR 12854 (Mar. 1, 
2001); 66 FR 22898 (May 3, 2001). Criticisms of those delays are 
irrelevant to the lawfulness of the process by which the current rule 
is being promulgated.

7. Effective Dates

    For the reasons specified below, the effective date for this rule 
is July 20, 2004, the date of its signature. No later than July 21, 
2004, the FBI will implement the 24-hour destruction requirement in the 
Omnibus provision, together with the associated changes to the NICS 
quality review process, and the creation of the ``open'' category under 
proposal 3.
    While the authority to provide ATF with Individual FFL Audit Logs 
under proposal 2 and to establish a Voluntary Appeals File 
under proposal 5 is effective as of July 20, 2004, the FBI 
will not be able to implement those system enhancements immediately. 
The FBI will implement those enhancements as soon after the effective 
date as practicable.
    No later than July 21, 2004, the FBI will establish the capacity 
for POCs to send to the NICS an electronic message on the status of the 
specified transactions as provided in proposal  4. Due to 
programming and other changes that have to be made for certain states 
to send the POC determination messages, some POCs will not be able to 
take advantage of this capacity on July 21, 2004. All POCs must, 
however, continue to work with the FBI to satisfy the final rule's POC 
determination message requirement.

Applicable Administrative Procedures and Executive Orders

Administrative Procedure Act

    The Department finds ``good cause'' for exempting this rule from 
the provision of the Administrative Procedure Act providing for a 
delayed effective date. 5 U.S.C. 553(d). Consistent with section 617 of 
the Omnibus bill, this rule must be in place by July 21, 2004 to ensure 
continued funding for the NICS system. Because it would be contrary to 
the public interest to have any interruption in this program, which 
protects the public by making it unlawful for felons and other 
prohibited persons from receiving or possessing firearms, this rule 
took effect July 20, 2004, upon signature.

Regulatory Flexibility Analysis

    The Attorney General, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 605(b)), has reviewed this final rule and by approving it 
certifies that this regulation will not have a significant economic 
impact on a substantial number of small entities. Although many FFLs 
are small businesses, they are not subject to any additional burdens 
under the plan adopted to audit their use of the NICS. In addition, the 
rule will not have any impact on an FFL's ability to contact the NICS, 
nor will it result in any delay in receiving responses from the NICS.

Executive Order 12866

    The Department of Justice has drafted this final rule in light of 
Executive Order 12866, section 1(b), Principles of Regulation. The 
Department of Justice has determined that this rule is a ``significant 
regulatory action'' under section 3(f) of Executive Order 12866, and 
accordingly it has been reviewed by the Office of Management and Budget 
(``OMB'').

Executive Order 13132

    This final rule will not have a substantial direct effect on the 
states, on the relationship between the national government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. The states are not required to act as 
POCs for the NICS, but do so voluntarily. The FBI consults with the 
state POCs on a regular basis about NICS operational issues and has 
held annual User conferences where POC questions and concerns are 
addressed. In addition, several POCs made comments on the current 
proposed rule and the rule has been modified to be more flexible in 
light of the concerns expressed by the POCs. For these reasons, in 
accordance with Executive Order 13132, it is determined that this rule 
does not have sufficient federalism implications to warrant the 
preparation of a Federalism Assessment.

Unfunded Mandates Reform Act

    This final rule will not result in the expenditure by state, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Small Business Regulatory Enforcement Fairness Act of 1996

    This final rule is not a major rule as defined by section 251 of 
the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 804. This rule will not result in an annual effect on the 
economy of $100,000,000 or more, a major increase in costs or prices, 
or have significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based companies to compete with foreign-based companies in 
domestic and export markets.

Paperwork Reduction Act of 1995

    Information collection associated with this regulation will be 
submitted to the

[[Page 43900]]

Office of Management and Budget for review under the provisions of the 
Paperwork Reduction Act of 1995. The OMB control number for this 
collection is 1110-0035.
    The proposed rule would have made a condition of state 
participation in the system as a POC the requirement to transmit all 
determination information to the NICS as soon as it is available to the 
state, including determinations that a firearm transfer may proceed, is 
denied, or the check is open. While the Department did not receive any 
comments specifically addressing the Paperwork Reduction Act, the FBI 
did receive comments from POC states addressing the burden and utility 
of the proposed information collection. As noted above, as a result of 
these comments, the final rule eliminates the requirement that POCs 
provide transaction status information to the FBI on approximately 74 
percent of the transactions, i.e. no information need be submitted for 
transactions in which POCs provide a ``proceed'' response to an FFL 
during the operational day on which the check was requested. The rule 
does require POCs to submit transaction status information on: (1) Open 
transactions that are not resolved before the end of the operational 
day the check is requested; (2) denied transactions; (3) transactions 
reported to NICS as open and later changed to proceed; and (4) denied 
transactions that have been overturned. As a result of this change in 
the final rule, POCs will only be required to submit information on 
approximately twenty-six percent of determinations.
    The number of respondents that will be affected by this information 
collection will be 18, the number of states that act as POCs for the 
NICS (states that do NICS checks only in connection with the issuance 
of firearm permits are not considered POCs for these purposes). The FBI 
estimates that it will require one minute for each POC state to send to 
the NICS the required information in each POC determination message. 
Collectively, the POCs conduct approximately 4 million NICS checks per 
year. Assuming a 74 percent immediate proceed rate, the POCs will have 
to send electronic messages with the details of the transaction in only 
26 percent of their determinations. Thus, it is estimated that the 
total public burden (in hours) associated with this collection from the 
estimated 19 respondents is 17,333 hours in the first year.

List of Subjects in 28 CFR Part 25

    Administrative practice and procedure, Computer technology, Courts, 
Firearms, Law enforcement officers, Penalties, Privacy, Reporting and 
recordkeeping requirements, Security measures, Telecommunications.

0
Accordingly, part 25 of title 28 of the Code of Federal Regulations is 
amended as follows:

PART 25--DEPARTMENT OF JUSTICE INFORMATION SYSTEMS

0
1. The authority citation for Part 25 continues to read as follows:

    Authority: Pub. L. 103-159, 107 Stat. 1536.

Subpart A--The National Instant Criminal Background Check System


Sec.  25.2  [Amended]

0
2. Section 25.2 is amended:
0
a. By revising the definition of ``Delayed'' to read as follows:
* * * * *
    Delayed means the response given to the FFL indicating that the 
transaction is in an ``Open'' status and that more research is required 
prior to a NICS ``Proceed'' or ``Denied'' response. A ``Delayed'' 
response to the FFL indicates that it would be unlawful to transfer the 
firearm until receipt of a follow-up ``Proceed'' response from the NICS 
or the expiration of three business days, whichever occurs first.
* * * * *
0
b. By adding the following definitions:
* * * * *
    NICS operational day means the period during which the NICS 
Operations Center has its daily regular business hours.
* * * * *
    Open means those non-canceled transactions where the FFL has not 
been notified of the final determination. In cases of ``open'' 
responses, the NICS continues researching potentially prohibiting 
records regarding the transferee and, if definitive information is 
obtained, communicates to the FFL the final determination that the 
check resulted in a proceed or a deny. An ``open'' response does not 
prohibit an FFL from transferring a firearm after three business days 
have elapsed since the FFL provided to the system the identifying 
information about the prospective transferee.
* * * * *
0
c. By removing the following definition:
* * * * *
    NICS Operations Center's regular business hours means the hours of 
9:00 a.m. to 2:00 a.m., Eastern Time, seven days a week.
* * * * *


Sec.  25.6  [Amended]

0
3. In Sec.  25.6, paragraph (h) is revised to read as follows:
* * * * *
    (h) POC Determination Messages. POCs shall transmit electronic NICS 
transaction determination messages to the FBI for the following 
transactions: open transactions that are not resolved before the end of 
the operational day on which the check is requested; denied 
transactions; transactions reported to the NICS as open and later 
changed to proceed; and denied transactions that have been overturned. 
The FBI shall provide POCs with an electronic capability to transmit 
this information. These electronic messages shall be provided to the 
NICS immediately upon communicating the POC determination to the FFL. 
For transactions where a determination has not been communicated to the 
FFL, the electronic messages shall be communicated no later than the 
end of the operational day on which the check was initiated. With the 
exception of permit checks, newly created POC NICS transactions that 
are not followed by a determination message (deny or open) before the 
end of the operational day on which they were initiated will be assumed 
to have resulted in a proceed notification to the FFL. The information 
provided in the POC determination messages will be maintained in the 
NICS Audit Log described in Sec.  25.9(b). The NICS will destroy its 
records regarding POC determinations in accordance with the procedures 
detailed in Sec.  25.9(b).
* * * * *


Sec.  25.9  [Amended]

0
4. Section 25.9 is amended by revising paragraph (b) to read as 
follows:
* * * * *
    (b) The FBI will maintain an automated NICS Audit Log of all 
incoming and outgoing transactions that pass through the system.
    (1) Contents. The NICS Audit Log will record the following 
information: Type of transaction (inquiry or response), line number, 
time, date of inquiry, header, message key, ORI or FFL identifier, and 
inquiry/response data (including the name and other identifying 
information about the prospective transferee and the NTN).
    (i) NICS Audit Log records relating to denied transactions will be 
retained for 10 years, after which time they will be transferred to a 
Federal Records Center for storage;
    (ii) NICS Audit Log records relating to transactions in an open 
status, except the NTN and date, will be destroyed

[[Page 43901]]

after not more than 90 days from the date of inquiry; and
    (iii) In cases of NICS Audit Log records relating to allowed 
transactions, all identifying information submitted by or on behalf of 
the transferee will be destroyed within 24 hours after the FFL receives 
communication of the determination that the transfer may proceed. All 
other information, except the NTN and date, will be destroyed after not 
more than 90 days from the date of inquiry.
    (2) Use of information in the NICS Audit Log. The NICS Audit Log 
will be used to analyze system performance, assist users in resolving 
operational problems, support the appeals process, or support audits of 
the use and performance of the system. Searches may be conducted on the 
Audit Log by time frame, i.e., by day or month, or by a particular 
state or agency. Information in the NICS Audit Log pertaining to 
allowed transactions may be accessed directly only by the FBI and only 
for the purpose of conducting audits of the use and performance of the 
NICS, except that:
    (i) Information in the NICS Audit Log, including information not 
yet destroyed under Sec.  5.9(b)(1)(iii), that indicates, either on its 
face or in conjunction with other information, a violation or potential 
violation of law or regulation, may be shared with appropriate 
authorities responsible for investigating, prosecuting, and/or 
enforcing such law or regulation; and
    (ii) The NTNs and dates for allowed transactions may be shared with 
ATF in Individual FFL Audit Logs as specified in Sec.  25.9(b)(4).
    (3) Limitation on use. The NICS, including the NICS Audit Log, may 
not be used by any Department, agency, officer, or employee of the 
United States to establish any system for the registration of firearms, 
firearm owners, or firearm transactions or dispositions, except with 
respect to persons prohibited from receiving a firearm by 18 U.S.C. 
922(g) or (n) or by state law. The NICS Audit Log will be monitored and 
reviewed on a regular basis to detect any possible misuse of NICS data.
    (4) Creation and Use of Individual FFL Audit Logs. Upon written 
request from ATF containing the name and license number of the FFL and 
the proposed date of inspection of the named FFL by ATF, the FBI may 
extract information from the NICS Audit Log and create an Individual 
FFL Audit Log for transactions originating at the named FFL for a 
limited period of time. An Individual FFL Audit Log shall contain all 
information on denied transactions, and, with respect to all other 
transactions, only non-identifying information from the transaction. In 
no instance shall an Individual FFL Audit Log contain more than 60 days 
worth of allowed or open transaction records originating at the FFL. 
The FBI will provide POC states the means to provide to the FBI 
information that will allow the FBI to generate Individual FFL Audit 
Logs in connection with ATF inspections of FFLs in POC states. POC 
states that elect not to have the FBI generate Individual FFL Audit 
Logs for FFLs in their states must develop a means by which the POC 
will provide such Logs to ATF.
* * * * *


Sec.  25.10  [Amended]

0
5. In Sec.  25.10, a new paragraph (g) is added to read as follows:
* * * * *
    (g) An individual may provide written consent to the FBI to 
maintain information about himself or herself in a Voluntary Appeal 
File to be established by the FBI and checked by the NICS for the 
purpose of preventing the future erroneous denial or extended delay by 
the NICS of a firearm transfer. Such file shall be used only by the 
NICS for this purpose. The FBI shall remove all information in the 
Voluntary Appeal File pertaining to an individual upon receipt of a 
written request by that individual. However, the FBI may retain such 
information contained in the Voluntary Appeal File as long as needed to 
pursue cases of identified misuse of the system. If the FBI finds a 
disqualifying record on the individual after his or her entry into the 
Voluntary Appeal File, the FBI may remove the individual's information 
from the file.

    Dated: July 20, 2004.
John Ashcroft,
Attorney General.
[FR Doc. 04-16817 Filed 7-22-04; 8:45 am]
BILLING CODE 4410-06-P