H.R. 1740 — Default Proceed Sale Transparency Act

This section amends the Gun Control Act of 1968 and Section 103 of the Brady Handgun Violence Prevention Act (34 U.S.C. 40901), which established the National Instant Criminal Background Check System (NICS) for instant checks on prospective firearm transferees, to address firearm transfers that proceed by default before NICS completion, as follows: (1) requires federally licensed firearm importers, manufacturers, and dealers conducting such transfers to report them to the FBI within 24 hours (with transmittal to state or local authorities if applicable); (2) directs the Attorney General to establish, within 180 days of enactment, an online portal and telephone hotline exclusively for such reporting to enable NICS prioritization; (3) requires NICS to prioritize background checks for reported default transfers; and (4) prohibits NICS from destroying related records until the background check is completed. (Thus, federally licensed dealers must now report default-proceed transfers—previously allowed after three business days without a NICS denial or proceed—and NICS must retain and expedite those checks.)

This section directs the Director of the Federal Bureau of Investigation (FBI) to make publicly accessible, within 300 days of enactment and annually thereafter, a written report on default firearm transfers under 18 U.S.C. §922(t)(7) (i.e., transfers by licensed dealers, manufacturers, or importers proceeding after three business days without a final National Instant Criminal Background Check System (NICS) response), covering (1) the number of such transfers by state; (2) the number with completed NICS checks; (3) of completed checks, the number approved (with unique identification number), denied (due to violations of 18 U.S.C. §922(d), (g), or (n) or state/local/tribal law, with reasons and prohibiting criteria), and retrieval rates for denied transfers by Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) field division and state; (4) for the first report, unresolved NICS checks purged in the prior five years; and (5) the number of licensees conducting such transfers by state of sale. (As background, NICS—established under the Brady Handgun Violence Prevention Act—conducts background checks to enforce federal and state prohibitions on firearm possession; unresolved checks are purged after three business days to balance privacy and public safety, allowing default transfers.) This section further directs the ATF Director to make publicly accessible parallel annual reports on (1) the average time between such illegal default transfers and firearm recovery; (2) the number of such firearms recovered in criminal investigations by state; and (3) of those, interstate recoveries disaggregated by transfer state and recovery state. This section specifies that FBI reports under this provision qualify as annual statistical aggregate data under a proviso in the FY2012 Department of Justice Appropriations Act (i.e., authorizing their public release).