H.R. 2618 — Federal Firearm Licensee Act

This section designates the short title of the Act as the “Federal Firearm Licensee Act” and sets forth the table of contents.

This section states congressional findings that (1) firearm dealers' sales practices affect the diversion of firearms to criminals and that accountability measures can reduce such diversion; (2) federal firearm dealer laws have not been updated in more than 30 years, protect dealers engaging in illegal practices, frustrate law enforcement efforts to curb trafficking and violence, and are inadequate for current conditions; (3) the Tiahrt Amendments limit Bureau of Alcohol, Tobacco, Firearms, and Explosives disclosure of crime gun trace data, prevent collection of information for effective policies, require destruction of most background check records within 24 hours, and prohibit government-mandated annual inventory audits for firearm dealers; and (4) federal law imposes no physical security requirements on dealer inventory, with firearm thefts from dealers increasing such that burglaries more than doubled and robberies tripled from 2013 to 2017.

This section adds to 18 U.S.C. §921(a) definitions for the following terms: (1) "facilitator," meaning any person engaged in the business of hosting a commercial marketplace in which offers for firearm sales, purchases, or other transfers are allowed, except for transactions on the person's website or mobile application that violate terms of service and are subject to quarterly audits for compliance; (2) "occasional," meaning fewer than 5 transactions in a 12-month period; (3) "personal collection," meaning any firearm obtained only for personal use and not for sale or trade (with inherited firearms excluded until possessed for 1 year); (4) "business inventory firearm," meaning a firearm required to be recorded in the acquisition and disposition logs of a firearms business; (5) "frame" (for handguns or variants), meaning the part housing the primary energized component prior to firing (such as a sear), and "receiver" (for rifles, shotguns, or other projectile weapons excluding handguns or variants), meaning the part housing the primary component to seal the breech prior to firing (such as a bolt); and (6) "semiautomatic shotgun," meaning any repeating shotgun that uses energy from a fired shell to extract the casing and chamber the next round and requires a separate trigger pull for each shell.

This section repeals the temporary Brady provision at 18 U.S.C. §922(s), which prohibited licensed firearms dealers from selling, delivering, or transferring a handgun to a non-licensee until the National Instant Criminal Background Check System (NICS) provided a response or three business days had passed, whichever occurred first. (Thus, background check requirements for all firearm transfers by licensed dealers, including handguns, are now governed solely by §922(t).) It also makes conforming amendments to §§922(t) and (y), 924(a)(5), and 925A to remove cross-references to former §922(s), and adds to §922(t)(8) a definition of "chief law enforcement officer" as the chief of police, sheriff, or equivalent officer, or their designee.

This section requires applicants for federal firearms licenses to submit with their application a security plan detailing how they will secure business premises from theft in accordance with forthcoming regulations (to be prescribed by the Attorney General under new 18 U.S.C. §926(d)), and to certify future compliance with the plan. (Thus, new licensees must implement the plan upon issuance.) This section further requires, for dealer license renewals, that the Attorney General inspect premises and provide written approval of the security plan, in addition to confirming no suspension or revocation of any license held by the applicant. This section directs the Attorney General to prescribe regulations ensuring premises of licensed manufacturers, importers, and dealers are secure from theft, including locked metal cabinets and fireproof safes; security systems, video monitoring, and alarms; security gates, strong locks, and site hardening; concrete bollards and access controls if necessary; and other appropriate features. (As background, federal firearms licensees—issued under the Gun Control Act of 1968—must transport, ship, and receive firearms and ammunition in interstate or foreign commerce; enhanced security aims to prevent theft of inventory often used in crimes.) This section requires such licensees to annually certify compliance with the new regulations, with dealers additionally submitting resale firearms inventory reconciliations and reports of any missing firearms (subject to civil penalties of up to $5,000 and potential license suspension for noncompliance). All requirements apply to existing licensees beginning one year after the regulations are prescribed.

This section amends federal firearms licensing requirements under the Gun Control Act of 1968 (18 U.S.C. 923) as follows: (1) permits licensed manufacturers, importers, and dealers to maintain personal collections of firearms but requires any firearm disposed of by a licensee to come from the licensee's business inventory; (2) requires each licensee to conduct quarterly physical checks of business firearms inventory and report any lost, stolen, or unaccounted-for firearms to the Attorney General and appropriate local authorities, directs the Attorney General to issue regulations requiring licensees to record specified details for each firearm (i.e., receipt date and source, manufacturer/importer, model/serial/type/caliber/gauge, and disposition date), and authorizes the Attorney General to require submission of such records; and (3) repeals appropriations riders from FY2004 through FY2013 that prohibited the Bureau of Alcohol, Tobacco, Firearms and Explosives from requiring dealers to conduct physical inventory checks of firearms.

This section revises firearms recordkeeping requirements for federal firearms licensees (FFLs) under the Gun Control Act of 1968 (chapter 44 of title 18, U.S. Code), as follows: (1) In 18 U.S.C. §923(g)(1)(A), requires retention of records of firearm sales or dispositions (including transaction records and corresponding receipt records) at business premises readily accessible for inspection until the business is discontinued (instead of a prescribed minimum period of 20 years from the transaction date), effective 1 year after enactment, and strikes the second sentence (previously prohibiting certain inventory reports); (2) In §923(g)(5)(A) and (7), authorizes electronic submission of specified records and oral notifications; (3) Adds §923(g)(9), directing the ATF National Tracing Center, not later than 3 years after enactment, to establish and maintain searchable electronic databases of all FFL-submitted records on firearm importation, production, shipment, receipt, sale, or disposition, accessible remotely by the Center only for criminal investigations (not searchable by personally identifiable information without a warrant), with FFLs permitted to provide direct electronic access and the Center permitted to access certain state databases with permission; (4) Adds §923(g)(10), requiring licensed dealers to maintain video surveillance (with audio) of firearm sales areas to non-licensees, retain recordings for at least 90 days, and post conspicuous notices; (5) In 18 U.S.C. §924(a)(3), increases the maximum prison term for willful recordkeeping violations from 1 year to 5 years and adds a 10-year maximum if related to firearms trafficking (18 U.S.C. §922(a)(6)) or possession by prohibited persons (§922(d)); and (6) In §926(a), eliminates the prohibition on rules requiring FFL records to be recorded at or transferred to a U.S. or state facility or establishing firearm registration systems (thus permitting centralized electronic databases), changes "Secretary's" to "Attorney General's" regarding criminal investigations, and adds §926(e) directing the Attorney General to facilitate and incentivize FFL adoption of electronic recordkeeping, including digital capture of paper records and law enforcement-accessible platforms for violent crime and crime gun trace investigations.

This section requires a federal firearms licensee, for a firearm transfer conducted pursuant to 18 U.S.C. 922(t)(1)(B)(ii) or (C)(ii) or (iii)—which allow certain transfers to proceed despite an incomplete or delayed National Instant Criminal Background Check System (NICS) response—to notify the Attorney General by the close of business on the transfer date that the firearm has been transferred to the person.

This section revises multiple firearm sales reporting and National Instant Criminal Background Check System (NICS) record retention requirements under the Gun Control Act of 1968 as follows: (1) expands federal firearms licensees' (FFL) obligation to report sales or dispositions of two or more firearms to the same unlicensed person within five business days to include semiautomatic rifles or shotguns and rifles or shotguns capable of accepting a high-capacity magazine (i.e., more than 10 rounds of ammunition, including those readily convertible), in addition to pistols and revolvers; (2) requires retention of NICS records for not less than 90 business days (previously immediate destruction, except identifying number and date the number was assigned), solely for purposes related to discovering misuse or avoidance of NICS or ensuring its proper operation; (3) directs the Attorney General to prepare and forward reports of multiple dispositions (i.e., two or more NICS checks for the same non-licensee within five consecutive business days) to ATF and state or local law enforcement in the relevant jurisdictions; and (4) for FFL multiple sales records involving a firearm involved in a crime or a suspect, requires retention for not less than 180 days after receipt (from no more than 20 days).

This section revises requirements under 18 U.S.C. 922(z) for licensed firearms dealers to provide secure gun storage or safety devices (i.e., expanding the scope from handguns to all firearms) and establishes requirements for warnings to purchasers by (1) directing dealers operating physical retail locations to post conspicuously all warnings required under applicable state and local law; and (2) requiring the Attorney General to develop and distribute to licensed dealers materials on suicide prevention, securing firearms from loss, theft, or access by a minor or prohibited person, and straw purchasing, which dealers must disseminate upon each firearm transfer to non-licensed persons.

This section mandates annual inspections by the Attorney General of high-risk licensed firearms dealers—determined based on whether, during the preceding five years, the dealer reported a lost or stolen firearm; during the preceding 10 years, the dealer was issued a report of violation, warning letter, or warning conference; or during the preceding year, multiple firearms sold by the dealer were used in a crime within three years after sale—and inspections not less frequently than every five years of other licensed dealers. The section further (1) authorizes the Attorney General to appoint an attorney to monitor high-risk dealers' compliance through in-store observation, record monitoring, random sales integrity tests, and employee training programs until the attorney certifies three consecutive years of compliance; (2) requires a follow-up inspection within 180 days after any inspection or security review identifies a violation; (3) eliminates prior limits restricting inspections of licensee records to those involving firearms traced to criminal investigations and of premises to business inventory and records; and (4) requires an independent security inspection—including review of the dealer's security plan—upon receipt of a dealer's report of a lost or stolen firearm, along with notice of any violations and recommendations for security improvements.

This section expands the Attorney General's authority to deny, revoke, or suspend federal firearms licenses (FFLs) under 18 USC 923, which are required for businesses importing, manufacturing, or dealing in firearms or ammunition and for collectors of curios and relics. Specifically, it (1) requires denial of initial or renewal applications if issuing the license would pose a danger to public safety or if the applicant is unlikely to comply with the law or otherwise unsuitable; (2) applies the same denial standard to license renewals; (3) revises the eligibility standard from no willful violations of law to no uncured violations; (4) requires that each employee in the business meet the local minimum age to possess a firearm and not be prohibited from firearms possession, transfer, transport, shipment, or receipt under federal or state/local/Tribal law; (5) authorizes license suspension in addition to revocation, with conforming changes to hearing and appeal procedures; (6) removes the limitation that the Attorney General may promulgate rules "only" as expressly authorized; and (7) repeals FY2012 and FY2013 appropriations riders that prohibited using funds to deny licenses due to lack of business activity.

This section doubles the Federal Firearms License (FFL) fees under 18 U.S.C. 923(a) for importers, manufacturers, and dealers of firearms and importers and manufacturers of ammunition—to $2,000 (from $1,000) for specified three-year licenses, $100 (from $50), $20 (from $10), $400 (from $200), and $180 (from $90)—and the fee under 923(b) for licensed collectors to $20 (from $10). (FFLs are required for persons engaged in the business of importing, manufacturing, or dealing in firearms or ammunition.)

This section eliminates the mandatory stay of the effective date of a federal firearms license revocation pending judicial review, changing it to discretionary upon a showing of good cause by the license holder (from upon mere request). (Thus, the Bureau of Alcohol, Tobacco, Firearms and Explosives may enforce revocations immediately absent good cause.)

This section eliminates the provision permitting federal firearms licensees indicted for a crime punishable by imprisonment exceeding one year to continue licensed operations pending a final determination of guilt or innocence (i.e., striking former 18 U.S.C. 925(b)). (Thus, such licensees become prohibited persons under 18 U.S.C. 922(g)(1) upon indictment and must cease dealing in firearms or ammunition.) It also redesignates former subsections (c) through (f) as (b) through (e), respectively, and makes conforming amendments to cross-references in 18 U.S.C. 922 and 925, the Foreign Military Sales Act (22 U.S.C. 2778), the NICS Improvement Amendments Act of 2007 (34 U.S.C. 40911), and the Atomic Energy Act of 1954 (42 U.S.C. 2201a).

This section authorizes the Attorney General, upon a showing of good cause by a federal firearms licensee, to permit the licensee to continue operations while an application for relief from federal firearms disabilities is pending. (Previously, the fourth sentence of 18 U.S.C. §925(b) prohibited such continued operations.)

This section increases civil penalties under 18 U.S.C. 922(t)(5) for a federal firearms licensee's knowing transfer of a firearm without a required background check (i.e., National Instant Criminal Background Check System check prior to transfer to an unlicensed person), specifying that criminal penalties (fine and/or imprisonment not more than five years) apply to a first violation and requiring, for a subsequent violation, immediate suspension or revocation of the licensee's federal firearms license and a $20,000 civil fine.

This section prohibits a firearms licensee (i.e., licensed importer, manufacturer, dealer, collector, or facilitator) who incurs a federal firearms disability or receives notice from the Attorney General of license suspension, revocation, or denied renewal from (1) transferring a business inventory firearm into the licensee's personal collection or to any person other than another licensee or a federal, state, or local law enforcement agency, or (2) receiving a business inventory firearm. (Thus, such a licensee must liquidate business inventory only to licensees or law enforcement.) The section authorizes the Attorney General to waive these restrictions for good cause if the licensee consents to records and inventory inspections; establishes criminal penalties of a fine, imprisonment for up to one year, or both for knowing violations; and requires license revocation or denial notices to specify prohibitions on unlicensed firearms dealing and these new restrictions.

This section establishes a new federal firearms license category for facilitators of firearm sales, purchases, or other transfers (i.e., operators of commercial marketplaces such as online platforms hosting such offers), requiring an annual fee of $1,000. It imposes duties on licensed facilitators, including (1) informing prospective sellers that transfers must be completed via a licensed importer, manufacturer, or dealer who takes possession of the firearm for background check compliance under 18 USC 922(t); (2) requiring such completion for all transfers; and (3) maintaining records of offers, including date, offeror name, receiving licensee's number, and firearm details (model, serial number, type, caliber/gauge). It further authorizes facilitators to require advance identification of the receiving licensee and directs such licensees to comply with all chapter requirements as if transferring from inventory. This section imposes criminal penalties on persons who accept offers via a facilitator's marketplace but knowingly transfer without a licensee intermediary—up to 1 year imprisonment (or 10 years if to a prohibited person under 922(d), (g), or (n) or if used in a crime of violence or drug trafficking crime). It makes conforming amendments throughout 18 USC chapter 44 to exempt licensed facilitators from prohibitions on hosting firearm transfer marketplaces, include them in recordkeeping and reporting requirements, and recognize their licenses.

This section requires the Attorney General, before issuing or renewing a federal firearms license, to conduct a national instant criminal background check system (NICS) background check on the applicant and any employee identified as trusted with possession or receipt of firearms at the licensed premises (i.e., to confirm no prohibition under 18 U.S.C. § 922(d), (g), or (n) or state, local, or tribal law). It further prohibits licensed dealers from allowing any employee to possess a firearm at licensed premises unless the employee meets applicable state/local minimum age requirements, the dealer conducts a NICS check, and the system confirms no prohibition under 18 U.S.C. § 922(d), (g), or (n) or state, local, or tribal law. The section also (1) revises NICS authority for licensee employment background checks to compulsory (from voluntary); and (2) requires all NICS checks to include a search of the National Data Exchange database.

This section replaces “willfully” with “knowingly” (or “willful” with “knowing”) in four provisions governing federal firearms licenses (FFLs) issued by ATF to importers, manufacturers, dealers, and collectors under the Gun Control Act of 1968, as follows: (1) in 18 U.S.C. § 923(d)(1)(D), a ground for license denial or revocation involving failure to disclose material information; (2) in 18 U.S.C. § 923(e), requiring license surrender upon notice of violation; (3) in 18 U.S.C. § 924(a)(1)(D), imposing criminal penalties; and (4) in 18 U.S.C. § 924(d)(1), authorizing forfeiture of firearms or ammunition. (Thus, it lowers the mental state threshold for ATF license actions and DOJ enforcement from purposeful intent to awareness of the violative conduct.)

This section amends 18 U.S.C. 924(n)—which criminalizes knowingly engaging in the business of dealing firearms without a license (i.e., a violation of 18 U.S.C. 922(a)(1)(A))—to authorize the Attorney General to issue a written notice of violation and impose a civil penalty of $2,500 to $20,000. It further adds a new subsection 924(q) establishing tiered civil and administrative penalties for licensed firearms dealers who violate regulations issued under 18 U.S.C. 926 (i.e., ATF regulations governing dealer operations). Penalties escalate as follows: (1) For non-gross negligence violations: (A) first violation: written notice; (B) second violation: civil penalty of $2,500 to $20,000; (C) third violation: license suspension until violation ceases; (D) fourth violation: license revocation; and (E) any violation preceded by a gross negligence violation: penalty one level greater in severity than the most recent prior penalty. (2) For gross negligence violations: (A) first violation: civil penalty of $2,500 to $20,000; (B) second violation: $20,000 civil penalty and license suspension until violation ceases; and (C) third violation: license revocation. (3) For any violation presenting an imminent risk to public safety: immediate license suspension (or revocation, if applicable) and securing of the dealer's firearms inventory until the violation ceases.

This section repeals or limits to specific fiscal years certain prohibitions on the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) contained in appropriations acts, as follows: (1) For FY2012, strikes the sixth proviso under ATF's Salaries and Expenses heading in the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112-55), which prohibited use of funds to include firearms trace data (i.e., records identifying initial retail purchasers of recovered crime guns) in any periodic ATF report made publicly available; for FY2010, 2009, 2008, 2006, and 2005, revises similar sixth provisos to apply only "in" the specified fiscal year (from "beginning in [year] and thereafter" or "with respect to any fiscal year"); and for FY2023, strikes from Section 644 of the Consolidated Appropriations Resolution, 2003 (P.L. 108-7), the phrase "or any other Act with respect to any fiscal year" (thus eliminating ongoing restrictions on public disclosure of trace data); (2) strikes "or hereafter" from the first proviso under ATF's Salaries and Expenses heading in the FY2012 act, which had prohibited consolidating and centralizing federal firearms licensees' records (i.e., acquisition and disposition logs) into any searchable database; and (3) revises Section 511 of the FY2012 act to require destruction of National Instant Criminal Background Check System (NICS) records within 24 hours by striking exception language.

This section authorizes the Attorney General to hire 650 additional industry operations investigators for the Bureau of Alcohol, Tobacco, Firearms, and Explosives, to be distributed among field divisions to match the number and distribution of persons licensed under chapter 44 of title 18, United States Code (i.e., federal firearms licensees such as dealers, manufacturers, and importers), in addition to personnel needed for this Act and its amendments or authorized by other law.

This section directs the Attorney General to submit to Congress, and publish on the Department of Justice website, a report on the implementation of this Act and its amendments not later than two years after the date of enactment. The report must identify steps needed to complete implementation and any additional resources required to (1) conduct regular inspections under chapter 44 of title 18, United States Code (i.e., firearms), and (2) enforce the Act against noncompliant federally licensed firearms dealers in a timely manner.

This section requires the Attorney General to submit to Congress, and publish on the Department of Justice website, a report on Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) inspections of Type 01 (dealers), Type 02 (pawnbrokers), and Type 07 (manufacturers) federal firearms licensees (FFLs)—not later than two years after enactment (covering the preceding two-year period) and annually thereafter (covering the preceding year). The report must include (1) the number of such inspections or examinations conducted by each ATF field division, delineated by high-risk dealers (as defined in section 923(g)(1)(B)(ii) of title 18, U.S. Code, as added by section 11) and non-high-risk dealers; (2) the number of security inspections prompted by FFL reports of lost or stolen firearms (under section 923(g)(6)(A), as added by section 11) and follow-up security inspections conducted within six months of a violation-finding inspection (under section 923(g)(6)(B)); (3) the average time spent on inspections of high-risk dealers, non-high-risk dealers, security inspections, and follow-up security inspections; and (4) an analysis of the most frequently cited violations and corrective actions or penalties imposed, including the number of license suspension or revocation recommendations, notices issued, hearings requested, ongoing hearings from the prior 12-month period, and final decisions by the ATF Director.