[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Proposed Rules]
[Pages 47033-47039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18874]


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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 478

[Docket No. ATF 40P; AG Order No. 3459-2014]
RIN 1140-AA41


Commerce in Firearms and Ammunition--Reporting Theft or Loss of 
Firearms in Transit (2007R-9P)

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), 
Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Justice proposes amending Bureau of Alcohol, 
Tobacco, Firearms, and Explosives (ATF) regulations that concern 
firearms stolen or lost in transit. The proposed rule specifies that 
when a Federal firearms licensee (FFL) discovers a firearm it shipped 
was stolen or lost in transit, that sender/transferor FFL must report 
the theft or loss to ATF and to the appropriate local authority. The 
rule also reduces an FFL's reporting burden when a theft or loss 
involves a firearm registered under the National Firearms Act (NFA) and 
ensures consistent reporting to ATF's NFA Branch. In addition, the rule 
specifies that transferor/sender FFLs must reflect the theft or loss of 
a firearm as a disposition entry in their required records not later 
than 7 days following discovery of the theft or loss, and specifies 
that FFLs that report the theft or loss of a firearm and later discover 
its whereabouts must advise ATF that the firearm has been located and 
must re-enter the firearm into their required records as an acquisition 
or disposition entry as appropriate.

DATES: Written comments must be postmarked and electronic comments must 
be submitted on or before November 10, 2014. Commenters should be aware 
that the electronic Federal Docket Management System will not accept 
comments after midnight Eastern Time on the last day of the comment 
period.

ADDRESSES: You may submit comments, identified by docket number (ATF 
40P), by any of the following methods--
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 648-9741.
     Mail: Brenda Raffath Friend, Mailstop 6N-602, Office of 
Regulatory Affairs, Enforcement Programs and Services, Bureau of 
Alcohol, Tobacco,

[[Page 47034]]

Firearms, and Explosives, U.S. Department of Justice, 99 New York 
Avenue NE., Washington, DC 20226; ATTN: ATF 40P.

    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to the Federal eRulemaking portal, http://www.regulations.gov, including any personal information provided. For 
detailed instructions on submitting comments and additional information 
on the rulemaking process, see the ``Public Participation'' heading of 
the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Brenda Raffath Friend, Office of 
Regulatory Affairs, Enforcement Programs and Services, Bureau of 
Alcohol, Tobacco, Firearms, and Explosives, U.S. Department of Justice, 
99 New York Avenue NE, Washington, DC 20226; telephone: (202) 648-7070.

SUPPLEMENTARY INFORMATION:

I. Background

    The Gun Control Act of 1968 (GCA) requires each licensed importer, 
licensed manufacturer, licensed dealer, or licensed collector of 
firearms to report the theft or loss of a firearm from the licensee's 
inventory or collection to ATF and to the appropriate local authorities 
within 48 hours after the theft or loss is discovered. See 18 U.S.C. 
923(g)(6) (requiring licensees to report thefts or losses to the 
Attorney General); 28 CFR 0.130(a) (delegating the Attorney General's 
authority to the Director of ATF).
    The regulation that implements section 923(g)(6) is 27 CFR 478.39a. 
This section provides that each Federal firearms licensee must report 
the theft or loss of a firearm from the FFL's inventory (including any 
firearm which has been transferred from the FFL's inventory to a 
personal collection and held as a personal firearm for at least 1 
year), or from the collection of a licensed collector, within 48 hours 
after the theft or loss is discovered. FFLs must report such thefts or 
losses by telephoning 1-888-930-9275 (nationwide ATF toll-free number) 
and by preparing a Federal Firearms Licensee Firearms Inventory Theft/
Loss Report, ATF Form 3310.11 (Form 3310.11), in accordance with the 
instructions on the form. The FFL must also report the theft or loss of 
a firearm to the appropriate local authorities.
    When there has been a theft or loss of a firearm registered under 
the National Firearms Act (NFA), 26 U.S.C. 5801 et seq., such as a 
short-barreled rifle or shotgun, silencer, machinegun, or destructive 
device, 27 CFR 479.141 imposes a separate and additional reporting 
requirement. Section 479.141 states that whenever any registered NFA 
firearm is stolen or lost, the person losing possession thereof must, 
immediately upon discovery of such theft or loss, make a report to the 
Director of ATF showing the following: name and address of the person 
in whose name the firearm is registered; kind of firearm; serial 
number; model; caliber; manufacturer of the firearm; date and place of 
theft or loss; and complete statement of facts and circumstances 
surrounding such theft or loss. Accordingly, when an FFL loses 
possession of an NFA firearm, it has reporting obligations under both 
27 CFR 479.141 and 27 CFR 478.39a.
    Currently, an FFL reporting the theft or loss of a registered NFA 
firearm prepares and submits Form 3310.11 to ATF's National Tracing 
Center (NTC), the receiving office designated on the form, to meet 27 
CFR 478.39a requirements. In addition, the FFL must submit a separate 
notification to the Director of ATF to meet the requirements of 27 CFR 
479.141. Because no form is directly associated with this requirement, 
FFLs typically submit a letter to the NFA Branch of ATF, as directed in 
the ``Important Notice'' section of Form 3310.11. As a backup to this 
requirement, when NTC receives a completed Form 3310.11 involving the 
theft or loss of an NFA firearm, it currently forwards a copy of the 
completed form to the NFA Branch, as the completed form often contains 
more information than the letters FFLs submit to the NFA Branch. Form 
3310.11 does not, however, address all required elements under 27 CFR 
479.141 (i.e., the name and address of the person in whose name the 
firearm is registered). Therefore, the NFA Branch may not currently be 
receiving consistent and complete information regarding the theft or 
loss of a registered firearm.
    The instructions on Form 3310.11 also provide that FFLs must 
reflect the theft or loss of a firearm as a disposition entry in the 
Record of Acquisition and Disposition required by subpart H of 27 CFR 
part 478. The disposition entry should indicate whether the incident is 
a theft or loss, the ATF issued Incident Report Number, and the 
Incident Number provided by the local law enforcement agency. The 
instructions further state that should any of the firearms be located, 
they should be re-entered into the Record of Acquisition and 
Disposition as an acquisition entry. In addition, the ``Important 
Notice'' section on Form 3310.11 provides that FFLs who report a 
firearm as missing and later discover its whereabouts should advise ATF 
that the firearms have been located.
    Current regulations do not address reporting requirements arising 
from firearms stolen or lost in transit between FFLs, including whether 
the stolen or lost firearm is considered the inventory of the sending 
or receiving FFL, or whether the sending or receiving FFL is 
responsible for reporting the theft or loss of a firearm in transit.
    These gaps in the regulations may result in no one reporting the 
theft or loss of a firearm stolen or lost in transit. Clarifying this 
responsibility is important to the effective administration of the GCA 
and the NFA. Congress delegated the authority to prescribe rules and 
regulations to carry out the provisions of the GCA and NFA to the 
Attorney General, who has delegated to ATF the authority to 
investigate, administer, and enforce those laws. 18 U.S.C. 926(a); 28 
CFR 0.130(a).

II. Initial Notice of Proposed Rulemaking

    On August 28, 2000, ATF published in the Federal Register a notice 
proposing several amendments to the firearms regulations (Notice No. 
902, 65 FR 52054). Among those amendments, ATF proposed specifying that 
when a firearm is stolen or lost in transit between licensees, for 
reporting purposes, the firearm is considered stolen or lost from the 
transferor's/sender's inventory. ATF noted that, in Fiscal Year (FY) 
1999, there were 1,271 crime gun traces in which an FFL claimed to have 
never received the firearm shipped to it and no one reported the theft 
or loss to ATF. As proposed in 2000, a firearm stolen or lost in 
transit between licensees, for reporting purposes, would be considered 
stolen or lost from the transferor's/sender's inventory. Further, as 
proposed, the transferor/sender of the stolen or missing firearm would 
have been required to report to ATF and to the appropriate local 
authorities the theft or loss of the firearm within 48 hours after the 
transferor/sender discovered the theft or loss. ATF determined that it 
was more logical to put the reporting burden on the transferor/sender, 
rather than on the transferee/buyer, because the transferor/sender was 
more likely to know the circumstances of when and how a firearm is 
shipped. Further, if a firearm is stolen or lost in transit, the 
notation in the transferor's/sender's acquisition and disposition book 
indicating the

[[Page 47035]]

firearm was disposed of to a particular transferee/buyer would be 
inaccurate. Therefore, as proposed in 2000, a transferor/sender would 
have been required to verify that the transferee/buyer received the 
shipped firearm in order to fulfill his or her statutory responsibility 
to maintain accurate records.
    In addition, to enable the transferor/sender of the stolen or lost 
firearm to obtain the knowledge necessary to comply with the theft or 
loss reporting requirements, ATF proposed that the transferor/sender 
must have or establish commercial business practices that confirm 
whether the transferee/buyer of the firearm ultimately received the 
firearm. Notice No. 902 addressed other issues as well.
    With the comments received in response to various issues addressed 
in the notice, the Department decided to study the issues further and 
it subsequently withdrew these proposals. See 69 FR 37757 (June 28, 
2004).

III. Current Notice of Proposed Rulemaking

    Theft or loss of firearms in transit continues to be a problem. In 
its earlier notice of proposed rulemaking on this issue, ATF stated 
that in FY 1999, there were 1,271 crime gun traces in which an FFL 
claimed to have never received the firearm shipped to it and no one 
reported the theft or loss to ATF. More recent data from NTC show that 
from FY 2008 through FY 2012, in an average of 1,525 crime gun traces 
per year, an FFL claimed to have never received the firearm allegedly 
shipped to it and no one reported the theft or loss to ATF. The 
omissions in the regulations regarding reporting the theft or loss of a 
firearm in transit adversely affect ATF's and local law enforcement's 
investigative and tracing capabilities. Therefore, the regulations 
should be amended to specify who is responsible for reporting the theft 
or loss of a firearm in transit.
    The Department has concluded that the transferor/sender of a 
firearm should bear the responsibility of reporting the theft or loss 
of that firearm when the theft or loss occurs in transit. This proposed 
rule is consistent with the GCA, which regulates commerce in firearms 
through FFLs. The GCA's scheme relies on firearms dealers to control 
commerce in firearms. Huddleston v. United States, 415 U.S. 814, 824 
(1975) (``The principal agent of federal enforcement is the dealer.'') 
Section 923(g)(6), in particular, places the burden of reporting stolen 
or lost firearms on licensees. Given that the statutory reporting 
obligation rests with licensees, and not with the common or contract 
carriers that transport firearms, it is reasonable to require by 
regulation that licensees report thefts or losses that occur in 
transit. The Department further believes that it should be the 
transferor/sender licensees, not the recipients, who bear the reporting 
obligations. The transferors/senders covered by this rule will be 
licensees who are subject to the reporting requirement under section 
923(g)(6)--but not every recipient in firearms transactions will 
necessarily be a licensee. Placing the reporting obligation on the 
transferor/sender licensee accordingly assures that, for every firearms 
transaction covered by section 923(g)(6), there will be an FFL 
responsible for reporting the theft or loss of a firearm in transit. 
The Department believes that this will ensure consistent reporting of 
stolen or lost firearms, thereby fulfilling the GCA's purpose of 
``strengthen[ing] Federal regulation of interstate firearms traffic,'' 
H.R. Rep. 90-1577 (1968), reprinted in 1968 U.S.C.C.A.N. 4410, 4412. 
Accordingly, this proposed rule specifies that, when a firearm is 
stolen or lost in transit on a common or contract carrier, for 
reporting purposes it is considered stolen or lost from the 
transferor's/sender's inventory. Therefore, the transferor/sender of 
the stolen or missing firearm must report the theft or loss to ATF and 
to the appropriate local authorities within 48 hours after the 
transferor/sender discovers the theft or loss.
    With respect to firearms stolen or lost in transit between FFLs, 
the Department considered but did not adopt the Uniform Commercial 
Code's (UCC) variable approach to the transfer of title for risk of 
loss purposes. In the absence of State law governing the transfer of a 
firearm between seller and buyer, the UCC allows a seller and buyer to 
establish contractually when title to items sold passes from seller to 
buyer. If the sales contract requires the seller to deliver the goods 
to a particular destination, the risk of loss passes to the buyer when 
the buyer receives or is able to accept delivery of the goods. In this 
situation, the seller assumes the risk of goods stolen or lost in 
transit. If the contract does not require the seller to deliver the 
goods to a particular destination, the risk of loss passes to the buyer 
when the seller delivers the goods to a common or contract carrier for 
shipment. In this situation, the buyer assumes the risk of goods stolen 
or lost in transit. Had the Department chosen to adopt the UCC's 
variable risk of loss approach, the seller of the firearms would 
generally assume the risk of loss of firearms stolen or lost in transit 
when the contract requires the seller to deliver the firearms to a 
particular destination.
    In any event, the Department has decided not to propose the 
variable UCC approach, which governs risk of loss, in the different 
context of allocating the responsibility for reporting to ATF the theft 
of loss of firearms in transit. Adopting the variable UCC approach for 
reporting firearms stolen or lost in transit would be problematic for 
FFLs to apply and for ATF to enforce. Rather than following a single, 
consistent rule holding the transferor/sender FFL responsible for 
reporting stolen or lost firearms, an FFL would need to examine each 
individual contract to determine who has reporting responsibility. For 
this same reason, it would be impracticable for ATF to ensure 
regulatory reporting compliance under the variable UCC approach. The 
UCC approach focuses on the ownership of the goods being shipped and 
allocating the risk of loss, but the primary focus of the GCA and its 
implementing regulations is, instead, the acquisition and disposition 
of firearms. Accordingly, the GCA theft or loss reporting and 
recordkeeping requirements must be complied with regardless of whether 
the seller or buyer has title to, or bears the risk of loss of, shipped 
firearms stolen or lost in transit.
    Therefore, the Department proposes to assign the theft/loss 
reporting requirement to the transferor/sender FFL, who would know how 
and when any firearms sent to the transferee were shipped. The 
transferee has an incentive to notify the transferor about any 
discrepancies because the transferee will not want to pay for an item 
the transferee did not actually receive. Upon being contacted by the 
transferee about a shipment discrepancy, the transferor is then in the 
best position to verify the theft or loss by reviewing his or her 
transaction records and the shipping information from the carrier the 
transferor had utilized. The transferor may also discover that the 
discrepancy is due to a recordkeeping or other human error. Whether the 
transferee or transferor arranges the shipment, the transferor would 
know how and when the firearms were shipped, and reporting of the theft 
or loss remains with the transferor/sender FFL.
    The proposed rule also applies to transfers from a licensee to a 
nonlicensee, including interstate shipments for firearms repair and 
replacement. In such transactions, the transferor/seller is the only 
FFL involved in the transaction, and

[[Page 47036]]

accordingly the FFL must assume responsibility for reporting to ATF if 
the shipment is lost or stolen in transit before the transferee 
acquires possession.
    The proposed rule allows a transferor/sender to rely on 
notification from the transferee/buyer that the shipment was not 
received, and such notification triggers the reporting requirement. To 
ensure that a transferee/buyer receives a shipped firearm, the 
Department is soliciting comment on whether a transferor/sender should 
be required to obtain from the carrier that delivers the firearm a 
written or electronic confirmation of the shipment and receipt of the 
firearm showing the date, time, and place of receipt, and the name of 
the individual who accepted receipt. In addition, the Department seeks 
comments on whether the transferor/sender should be required to retain 
the confirmation with the transferor's/sender's required records.
    The Department is also soliciting comment on the costs and benefits 
of requiring the transferor/sender to obtain from the carrier a 
confirmation of the shipment and retaining the confirmation in their 
records. How many shipments occur annually? To what extent do FFLs as 
part of their regular business practices already arrange to obtain a 
written or electronic confirmation from the common carrier or other 
shipper for such shipments? How often do FFLs retain records of 
confirmation currently? How might such requirements be developed so as 
to minimize any additional burden by meshing with the FFL's regular 
business practices?
    The proposed rule retains most of the current procedures for 
licensees reporting the theft or loss of firearms subject to the GCA, 
in accordance with the instructions on Form 3310.11. For example, 
instruction 7 on Form 3310.11 provides that FFLs must reflect the theft 
or loss of a firearm as a disposition entry in the Record of 
Acquisition and Disposition that is required by subpart H of part 478. 
It also provides that the disposition entry should indicate whether the 
incident is a theft or loss, the ATF Issued Incident Report Number, and 
the Incident Number provided by the local law enforcement agency. The 
proposed rule sets out these procedures in new paragraph (e) of 27 CFR 
478.39a with two modifications: (1) It prescribes a time period to 
reflect the theft or loss of a firearm as a disposition entry (i.e., 
not later than 7 days following discovery of the theft or loss; and (2) 
it requires, rather than recommends, that the disposition entry include 
specified information. The new, seven-day time-period for reporting is 
similar to the firearms receipt and disposition reporting requirement 
for licensed dealers in 27 CFR 478.125(e), which requires the ``sale or 
other disposition of a firearm'' to be recorded not later than 7 days 
following the date of such transaction. The Department considers a 
theft or loss to be a disposition that must be reported within this 
time period.
    In addition, the ``Important Notice'' section of Form 3310.11 
provides that licensees who report firearms as missing and later 
discover their whereabouts should advise ATF that the firearms have 
been located, and instruction 8 provides that licensees should re-enter 
these located firearms into the Record of Acquisition and Disposition 
as an acquisition entry. The proposed rule combines and sets out these 
procedures in new paragraph (f) of 27 CFR 478.39a with three 
modifications: (1) It changes the ``should advise ATF'' to ``shall 
advise the [ATF] Director''; (2) changes the ``should re-enter'' to 
``shall re-enter''; and (3) specifies that the re-entry could be an 
acquisition or disposition entry as appropriate. Making mandatory both 
the advising of ATF and the re-entry of the located firearm into the 
Record of Acquisition and Disposition will help to improve the accuracy 
of NTC data, which will greatly assist law enforcement in solving 
violent crimes and enhancing public safety.
    The proposed rule reduces a licensee's reporting burden to ATF for 
the theft or loss of a registered NFA firearm by allowing submission of 
one Form 3310.11 to meet the requirements of 27 CFR 478.39a and 27 CFR 
479.141. Currently, as discussed in section I, if a licensee's 
registered NFA firearm is lost or stolen, the licensee prepares and 
submits Form 3310.11 to ATF's NTC to comply with 27 CFR 478.39a 
requirements, which specify that Form 3310.11 be used. The licensee 
also provides to ATF's NFA Branch a separate notification--typically in 
the form of a letter--to comply with 27 CFR 479.141. This proposed rule 
revises 27 CFR 478.39a to stipulate that a licensee's submission of a 
completed Form 3310.11 to ATF for the theft or loss of a registered NFA 
firearm satisfies the notification requirements pursuant to 27 CFR 
478.39a and 27 CFR 479.141. This will reduce the licensee's reporting 
burden and help to ensure that information about the lost or stolen 
registered NFA firearm is consistently reported to the NFA Branch. As 
part of this rulemaking process, ATF proposes to revise Form 3310.11, 
and the corresponding instructions, to denote whether the firearm being 
reported as lost or stolen is a registered NFA firearm and to include 
the name and address of the person in whose name the firearm is 
registered. The Office of Management and Budget will review the 
proposed revisions to the form during the final rulemaking process, 
during which the public will have opportunity to comment on the 
paperwork burdens associated with the form.

IV. Statutory and Executive Order Reviews

A. Executive Orders 12866 and Executive Order 13563--Regulatory Review

    This proposed rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), The Principles of Regulation, and in accordance with Executive 
Order 13563, ``Improving Regulation and Regulatory Review,'' section 
1(b), General Principles of Regulation.
    The Department of Justice has determined that this proposed rule is 
a ``significant regulatory action'' under Executive Order 12866, 
section 3(f), and accordingly this proposed rule has been reviewed by 
the Office of Management and Budget. However, this proposed rule will 
not have an annual effect on the economy of $100 million or more; nor 
will it adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. Accordingly, this proposed rule is not an ``economically 
significant'' rulemaking under Executive Order 12866.
    Executive Orders 12866 and 13563 both direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. The Department has assessed the costs and benefits of this 
proposed regulation and believes that the regulatory approach selected 
maximizes net benefits.
    Under section 923(g)(6) of the GCA and its current implementing 
regulation, 27 CFR 478.39a, each FFL must report the theft or loss of a 
firearm from the licensee's inventory or collection within 48 hours 
after the theft or loss is discovered. The licensee must report the

[[Page 47037]]

theft or loss of a firearm to ATF and to the appropriate local 
authorities. Current regulations do not address reporting and 
recordkeeping requirements for firearms lost or stolen while in 
transit. This proposed rule specifies that when a firearm is stolen or 
lost in transit, for reporting purposes it is considered stolen or lost 
from the transferor's/sender's inventory.
    The GCA and the current implementing regulations have long required 
that a licensee must report the theft or loss of a firearm. This 
proposed rule specifies the licensee required to submit the required 
report if a firearm is lost or stolen in transit on a common or 
contract carrier from a licensee to another person. This proposed rule 
retains most of the existing requirements under 27 CFR part 478, 
subpart H, and the instructions for Form 3310.11 with respect to how 
FFLs are to record the theft or loss of firearms from their inventories 
in the Record of Acquisition and Disposition.
    The proposed rule would reduce the current reporting burden on 
licensees when the theft or loss involves a registered NFA firearm. 
Currently, as discussed in section I, licensees submit Form 3310.11 to 
NTC to comply with 27 CFR 478.39a, and, if the licensee is the person 
who lost the firearm, provide additional notification to the NFA Branch 
to comply with 27 CFR 479.141. In this proposed rule, a licensee, to 
meet 27 CFR 478.39a requirements, completes and submits Form 3310.11 to 
NTC. If the theft/loss involves a registered NFA firearm; NTC would 
notify the NFA Branch. This would satisfy 27 CFR 479.141 notification 
requirements; licensees would no longer have to submit additional 
notification to ATF.
    Although there is no definitive count of the total number of 
firearms that were lost or stolen in transit, ATF can provide some 
sense of volume based on tracing data. From FY 2008 through FY 2012, 
there was an average of 1,525 crime gun traces per year where the 
firearm was traced back to an FFL that claimed it never received the 
firearm allegedly shipped to it, but no theft or loss was reported to 
ATF. These numbers reflect only those cases in which a firearms trace 
was initiated. The full count of firearms lost or stolen in transit 
that are not being reported to ATF is likely significantly higher than 
those traced. That ATF and local authorities do not have timely 
information about lost or stolen firearms adversely affects their 
investigation and tracing capabilities, and therefore poses public 
safety risks.
    Pursuant to the instructions on Form 3310.11, a separate form is 
required for each theft/loss. ATF estimates that it takes an FFL 24 
minutes to complete Form 3310.11; the postage cost to mail the form to 
NTC is 49 cents. If an FFL completed a separate Form 3310.11 for each 
of the average of 1,525 firearms that tracing data indicates are lost 
or stolen yearly but are not currently being reported,\1\ ATF estimates 
the total burden hours to be 610 (1,525 x 24/60), and the current 
estimated cost is $20,005. (Cost of completing the form = 24 minutes at 
$31.57 per hour x 1,525 = $19,258; Cost of mailing the form = $.49 x 
1,525 = $747). ATF estimated the cost of the time for an FFL to 
complete Form 3310.11 using employee compensation data for December 
2013 as determined by the U.S. Department of Labor, Bureau of Labor 
Statistics (BLS). See Bureau of Labor Statistics, Employer Costs for 
Employee Compensation--December 2013, available at http://www.bls.gov/news.release/pdf/ecec.pdf. The BLS determined the hourly compensation 
(which includes wages, salaries, and benefits) for civilian workers to 
be $31.57.
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    \1\ As noted above, the full count of firearms lost or stolen in 
transit that are not being reported to ATF is likely significantly 
higher than the number discovered through tracing data. ATF 
nonetheless relies on the average of 1,525 firearms per year for 
this cost calculation because it is the best information available.
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    The instructions on Form 3310.11 also provide that FFLs must report 
firearms thefts/losses by telephone to ATF. ATF estimates that it takes 
an FFL 24 minutes to call and provide the requisite information to ATF. 
If an FFL called ATF for each of the average of 1,525 firearms that 
tracing data indicates are lost or stolen yearly but are not currently 
being reported,\2\ ATF estimates the total burden hours to be 610 
(1,525 x 24/60), and the current estimated cost is $19,258 (24 minutes 
at $31.57 per hour x 1,525).
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    \2\ See Footnote 1.
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    Therefore, the combined total estimated burden hours for submitting 
Form 3310.11 and calling ATF are 1,220 (610 + 610). The combined total 
estimated costs for fulfilling those same two requirements are $39,263 
($20,005 + $19,258).
    Alternatives, such as the UCC variable approach discussed in 
Section III of this SUPPLEMENTARY INFORMATION, are more burdensome than 
the approach taken in this proposed rule. The UCC variable approach 
would be more burdensome for FFLs because, in each case, the FFLs would 
need to examine the terms of the individual contracts to determine how 
the contract allocates the risk of loss as between the two parties. In 
contrast, the proposed rule provides a simple, consistent rule so there 
is no basis for uncertainty or a need for additional review. For 
reporting purposes, the proposed rule assigns the theft/loss reporting 
requirement to the transferor/sender.
    In addition, this proposed rule alleviates reporting burdens on 
licensees in that licensees need only report the theft or loss of a 
registered NFA firearm once to ATF, instead of reporting separately to 
NTC and the NFA Branch. As the licensee is basically providing the same 
information for both reporting requirements, ATF estimates that it 
takes the same amount of time and cost for postage, and uses the same 
hourly compensation as listed above (i.e., 24 minutes for time, 49 
cents for postage, and $31.57 for hourly compensation). Currently, the 
NFA Branch receives notification on the theft/loss of a registered NFA 
firearm from approximately 60 licensees annually. ATF estimates the 
total burden hours to be 24 (60 x 24/60) and the total cost to be $787. 
(Cost of submitting the notification = 24 minutes at $31.57 per hour x 
60 = $758; Cost of mailing the notification = $.49 x 60 = $29.00). 
Therefore, ATF estimates the savings to be these amounts.

B. Executive Order 13132

    This proposed rule will not have substantial direct effects on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, ``Federalism,'' the Attorney General has 
determined that this proposed regulation does not have sufficient 
federalism implications to warrant the preparation of a federalism 
summary impact statement.

C. Executive Order 12988

    This proposed rule meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice 
Reform.''

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental

[[Page 47038]]

jurisdictions. The Attorney General has reviewed this proposed 
regulation and, by approving it, certifies that this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities.
    Under section 923(g)(6) of the GCA and its implementing regulation, 
27 CFR 478.39a, each FFL must report the theft or loss of a firearm 
from the licensee's inventory or collection within 48 hours after the 
theft or loss is discovered. The licensee must report the theft or loss 
of a firearm to ATF and to the appropriate local authorities. This 
proposed rule clarifies that when a firearm is stolen or lost in 
transit, for reporting purposes, it is considered stolen or lost from 
the transferor's/sender's inventory.
    As discussed in section I, the current regulation requires that an 
FFL report thefts/losses telephonically to ATF and complete and submit 
to NTC a separate Form 3310.11 for each theft/loss. ATF estimates the 
time to complete the form as 24 minutes; the time for the telephone 
call as 24 minutes; and the postage cost as 49 cents. If an FFL called 
ATF to report the theft/loss, and completed a separate Form 3310 for 
each of the average of 1,525 firearms that tracing data indicates are 
lost or stolen yearly but are not currently reported, ATF estimates the 
total cost of completing and mailing the form and calling ATF to be 
$39,263. See section IV.A. for a full discussion of these costs. 
Therefore, this proposed rule will not impose a significant impact.

E. Small Business Regulatory Enforcement Fairness Act of 1996

    This proposed 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 proposed rule will not result in an annual effect on 
the economy of $100 million or more; a major increase in costs or 
prices; or significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign-based enterprises in 
domestic and export markets.

F. Unfunded Mandates Reform Act of 1995

    This proposed rule will not result in the expenditure by State, 
local, and tribal governments, in the aggregate, or by the private 
sector of $100 million 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. 2 U.S.C. 1532(a) and 1533(a).

G. Paperwork Reduction Act

    This proposed rule would revise an existing reporting and 
recordkeeping requirement under the Paperwork Reduction Act. It also 
proposes to eliminate an existing reporting requirement. The current 
regulation at 27 CFR 478.39a provides that each FFL must report the 
theft or loss of a firearm from the licensee's inventory or collection 
within 48 hours after the theft or loss is discovered. Licensees must 
report to ATF such thefts or losses both telephonically and by 
preparing Form 3310.11. The licensee must also report the theft or loss 
of a firearm to the appropriate local authorities.
    Pursuant to 27 CFR 479.141 and according to the instructions on 
Form 3310.11, licensees reporting the theft or loss of a registered NFA 
firearm must provide additional notification to ATF. As discussed 
previously in section I, no form exists for this purpose, and the 
person reporting typically submits a letter with the required 
information to the NFA Branch. As part of this rulemaking, ATF is 
proposing to revise Form 3310.11 to capture the information required by 
27 CFR 479.141. Therefore, a licensee would be able to satisfy the 
required notification to the NFA Branch by submitting Form 3310.11 to 
NTC, and NTC will notify the NFA Branch. Submitting Form 3310.11 will 
satisfy both requirements under 27 CFR 478.39a and 27 CFR 479.141 with 
one notification.
    In addition, Form 3310.11 instructions indicate that a licensee 
must reflect the theft or loss of a firearm as a disposition entry in 
the Record of Acquisition and Disposition required by subpart H of part 
478. These instructions further state that the disposition entry should 
indicate whether the incident is a theft or loss, the ATF-issued 
Incident Report Number, and the Incident Number provided by the local 
law enforcement agency. Finally, the instructions indicate that should 
any of the firearms be located, they should be re-entered into the 
Record of Acquisition and Disposition as an acquisition entry. The 
proposed rule adds both sets of these instructions to the regulatory 
text in 27 CFR 478.39a with modifications. See section III for full 
discussion of these revisions.
    The collections of information contained in 27 CFR 478.39a relate 
to Form 3310.11 and have been approved by the Office of Management and 
Budget under control number 1140-0039. This proposed rule specifies 
that when a firearm is stolen or lost in transit, for reporting 
purposes, it is considered stolen or lost from the transferor's/
sender's inventory.
    ATF is submitting a request to revise currently approved OMB 
control number 1140-0039. ATF requests public comments on all aspects 
of this proposed revised collection, including comments that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     enhance the quality, utility, and clarity of the 
information to be collected; and
     minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    The estimated total annual burden hours and related information 
(number of respondents, frequency of responses, costs, etc.) for the 
proposed revisions to Form 3310.11 appear below.
    OMB No.: 1140-0039.
    Estimated total annual reporting and/or recordkeeping burden: 2,210 
hours.
    Estimated average burden hours per respondent and/or recordkeeper: 
24 minutes.
    Estimated number of annual respondents and/or recordkeepers: 1,525.
    Estimated annual frequency of responses: 1.

Public Participation

A. Comments Sought

    ATF is requesting comments on the proposed rule from all interested 
persons. ATF is also specifically requesting comments on the clarity of 
this proposed rule and how it may be made easier to understand.
    Comments submitted in response to ATF's previous proposed rule 
relating to firearms stolen or lost in transit (Notice No. 902, August 
28, 2000, 65 FR 52054), if applicable, must be resubmitted for purposes 
of this rulemaking proceeding.
    All comments must reference this document docket number (ATF 40P), 
be legible, and include your name and mailing address. ATF will treat 
all comments as originals and will not acknowledge receipt of comments.

[[Page 47039]]

    Comments received on or before the closing date will be carefully 
considered. Comments received after that date will be given the same 
consideration if it is practical to do so, but assurance of 
consideration cannot be given except as to comments received on or 
before the closing date.

B. Confidentiality

    Comments, whether submitted electronically or in paper, will be 
made available for public viewing at ATF, and on the Internet as part 
of the eRulemaking initiative, and are subject to the Freedom of 
Information Act. Commenters who do not want their name or other 
personal identifying information posted on the Internet should submit 
their comment by mail or facsimile, along with a separate cover sheet 
that contains their personal identifying information. Both the cover 
sheet and comment must reference this docket number. Information 
contained in the cover sheet will not be posted on the Internet. Any 
personal identifying information that appears within the comment will 
be posted on the Internet and will not be redacted by ATF.
    Any material that the commenter considers to be inappropriate for 
disclosure to the public should not be included in the comment. Any 
person submitting a comment shall specifically designate that portion 
(if any) of his comments that contains material that is confidential 
under law (e.g., trade secrets, processes, etc.). Any portion of a 
comment that is confidential under law shall be set forth on pages 
separate from the balance of the comment and shall be prominently 
marked ``confidential'' at the top of each page. Confidential 
information will be included in the rulemaking record but will not be 
disclosed to the public. Any comments containing material that is not 
confidential under law may be disclosed to the public. In any event, 
the name of the person submitting a comment is not exempt from 
disclosure.

C. Submitting Comments

    Comments may be submitted in any of three ways:
     Mail: Send written comments to the address listed in the 
ADDRESSES section of this document. Written comments must appear in 
minimum 12-point font size (.17 inches), include your mailing address, 
be signed, and may be of any length.
     Facsimile: You may submit comments by facsimile 
transmission to (202) 648-9741. Faxed comments must:
    (1) Be legible and appear in minimum 12-point font size (.17 
inches);
    (2) Be on 8\1/2\'' x 11'' paper;
    (3) Contain a legible, written signature; and
    (4) Be no more than five pages long. ATF will not accept faxed 
comments that exceed five pages.
     Federal eRulemaking Portal: To submit comments to ATF via 
the Federal eRulemaking portal, visit http://www.regulations.gov and 
follow the instructions for submitting comments.

D. Request for Hearing

    Any interested person who desires an opportunity to comment orally 
at a public hearing should submit his or her request, in writing, to 
the Director of ATF within the 90-day comment period. The Director, 
however, reserves the right to determine, in light of all 
circumstances, whether a public hearing is necessary.

Disclosure

    Copies of this proposed rule and the comments received will be 
available for public inspection by appointment during normal business 
hours at: ATF Reading Room, Room 1E-062, 99 New York Avenue NE., 
Washington, DC 20226; telephone: (202) 648-8740.

Drafting Information

    The author of this document is Brenda Raffath Friend, Office of 
Regulatory Affairs, Enforcement Programs and Services, Bureau of 
Alcohol, Tobacco, Firearms, and Explosives.

List of Subjects in 27 CFR Part 478

    Administrative practice and procedure, Arms and ammunition, 
Authority delegations, Customs duties and inspection, Domestic 
violence, Exports, Imports, Law enforcement personnel, Military 
personnel, Nonimmigrant aliens, Penalties, Reporting and recordkeeping 
requirements, Research, Seizures and forfeitures, Transportation.

Authority and Issuance

    Accordingly, for the reasons discussed in the preamble, 27 CFR part 
478 is proposed to be amended as follows:

PART 478--COMMERCE IN FIREARMS AND AMMUNITION

0
1. The authority citation for 27 CFR part 478 is revised to read as 
follows:

    Authority: 5 U.S.C. 552(a); 18 U.S.C. 921-931; 44 U.S.C. 
3504(h).

0
2. Revise Sec.  478.39a to read as follows:


Sec.  478.39a  Reporting theft or loss of firearms.

    (a)(1) Each licensee shall report the theft or loss of a firearm 
from the licensee's inventory (including any firearm which has been 
transferred from the licensee's inventory to a personal collection and 
held as a personal firearm for at least 1 year), or from the collection 
of a licensed collector, within 48 hours after the theft or loss is 
discovered.
    (2) When a firearm is stolen or lost in transit on a common or 
contract carrier, it is considered stolen or lost from the 
transferor's/sender's inventory for reporting purposes. Therefore, the 
transferor/sender of the stolen or missing firearm shall report the 
theft or loss of the firearm within 48 hours after the transferor/
sender discovers the theft or loss.
    (b) Each licensee shall report the theft or loss by telephoning ATF 
at 1-888-930-9275 (nationwide toll free number), and by preparing and 
submitting to ATF a Federal Firearms Licensee Theft/Loss Report, ATF 
Form 3310.11, in accordance with the instructions on the form. The 
original of the report shall be retained by the licensee as part of the 
licensee's required records.
    (c) When a licensee submits to ATF a Federal Firearms Licensee 
Theft/Loss Report, ATF Form 3310.11, for the theft or loss of a firearm 
registered under the National Firearms Act, this also satisfies the 
notification requirement under Sec.  479.141 of this chapter.
    (d) Theft or loss of any firearm shall also be reported to the 
appropriate local authorities.
    (e) Licensees shall reflect the theft or loss of a firearm as a 
disposition entry in the Record of Acquisition and Disposition required 
by subpart H of this part, not later than 7 days following discovery of 
the theft or loss. The disposition entry shall record whether the 
incident is a theft or loss, the ATF-issued Incident Report Number, and 
the Incident Number provided by the local law enforcement agency.
    (f) Licensees who report the theft or loss of a firearm and later 
discover its whereabouts shall advise the Director that the firearm has 
been located, and shall re-enter the firearm in the Record of 
Acquisition and Disposition as an acquisition or disposition entry as 
appropriate.

    Dated: August 4, 2014.
Eric H. Holder, Jr.,
Attorney General.
[FR Doc. 2014-18874 Filed 8-11-14; 8:45 am]
BILLING CODE 4410-FY-P