SUPPLEMENTARY INFORMATION:

I. Background

Section 38 of the Arms Export Control Act of 1976 (“AECA”) at 22 U.S.C. 2778 authorizes the President of the United States to control importing and exporting defense articles and defense services in furtherance of world peace and the security and foreign policy of the United States. In 2013, the President delegated relevant AECA functions to the Secretary of State through Executive Order 13637, Administration of Reformed Export Controls,78 FR 16129 (Mar. 8, 2013), including a broad delegation of the functions under section 38 of the AECA, except as otherwise provided in section 1(n)(ii) of Executive Order 13637.

The broad delegation of the President's AECA section 38 authorities to the Secretary of State included, in relevant part, providing foreign policy guidance to persons of the United States involved in exporting and importing defense articles. See22 U.S.C. 2778(a)(1); E.O. 13637, sec. 1(n), 78 FR 16130. The Department of State promulgates regulations pursuant to its delegated AECA section 38 authorities in the International Traffic in Arms Regulations (“ITAR”), at 22 CFR parts 120-130 et seq. The Department of State's ITAR provisions include AECA foreign policy provisions, which in relevant part provide that “[i]t is the policy of the United States to deny licenses and other approvals for exports and imports of defense articles and defense services, destined for or originating in certain countries.” See22 CFR 126.1. Section 126.1 identifies those countries and the prohibitions that apply to them.

Within Executive Order 13637, the President delegated functions that relate to controlling permanently importing defense articles under section 38 of the AECA to the Attorney General. However, that delegation mandates that in carrying out such permanent import control functions, “the Attorney General shall be guided by the views of the Secretary of State on matters affecting world peace, and the external security and foreign policy of the United States.” E.O. 13637, sec. 1(n)(ii), 78 FR 16130; 27 CFR 447.55. This important qualification in the Attorney General's permanent import control delegation is also consistent with the broader delegation of AECA section 38 authorities to the Secretary of State as to foreign policy guidance for AECA defense articles.

The Attorney General, in turn, has delegated the responsibility for administering and enforcing section 38 of the AECA (relating to importing items on the United States Munitions Imports List and importing defense articles and defense services) ^[1] to the Director of ATF (“Director”), subject to the direction of the Attorney General and the Deputy Attorney General. See28 CFR 0.130(a)(6)(vi), (c).^[2] ATF thus implements U.S. policies denying applications to permanently import defense articles and services from certain countries and includes a list of these countries under 27 CFR 447.52(a)-(b).

II. Proposed Rule

In making any such determinations that affect “world peace, and the external security and foreign policy of the United States,” as provided in Executive Order 13637, the regulation at 27 CFR 447.55 reiterates that ATF will be “subject to the guidance” of the Secretary of State with regard to how it administers its permanent import control authority. The Department of State is responsible for determining restrictions on imports of defense articles and services based on country or geographic region and regularly updates its policies in 22 CFR 126.1, listing proscribed countries for which it establishes a policy of denying imports and exports. Because ATF has no independent role in U.S. international affairs or foreign policy and defers to the Department of State on such matters, ATF's proscribed-country list has historically mirrored the Department of State's list. However, ATF has not kept 27 CFR 447.52(a)—which lists the countries subject to AECA import restrictions—updated since 2007. ATF believes it will be more effective and will reduce compliance burdens to align its list with 22 CFR 126.1.

Accordingly, this rule proposes to remove the current content of ATF's regulations at 27 CFR 447.52(a) and replace it with a general statement of the U.S. policy on restricting imports from certain countries that would inform the public that ATF will base its arms import decisions on the Department of State's policies and lists in 22 CFR 126.1. This change would ensure that the list of proscribed countries and conditions will remain consistent across Departments. It will also better inform importers of defense articles under the ( printed page 24389) AECA and help ensure consistent application of foreign policy.

This rule also proposes to amend 27 CFR 447.52(b), which provides a list of countries for which all applications to permanently import firearms and ammunition manufactured or located in those countries must be denied (except for certain specifically exempted firearm models). The current list, which was added to the regulation in 1997, reflects a Department of State policy adopted after the United States entered into a Voluntary Restraint Agreement (“VRA”) with the Russian Federation in 1996. The list comprises the Russian Federation and the former Soviet countries of Georgia, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Ukraine, and Uzbekistan.

Thirty years later, this policy—and, by extension, the list in 447.52(b)(1)—reflects outdated trade and security concerns. Lifting these restrictions will ensure consistency with current U.S. foreign policy as directed by the Department of State, see22 CFR 126.1(a), and allow ATF to transition from a policy of denying all requests to import firearms from certain countries to a policy that permits ATF to review license applications on a case-by-case basis. Additionally, as the terms of the VRA remain in effect, ATF will continue to restrict certain firearms and ammunition imports from the Russian Federation.

III. Statutory and Executive Order Review

A. Executive Orders 12866 and 13563

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits.

Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of agencies quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting public flexibility.

This rule would amend 27 CFR 447.52(a) to remove ATF's list of proscribed countries and to instead inform the public that ATF will deny applications for permanent imports from countries based on Department of State policy, which is set forth at 22 CFR 126.1. The rule would also amend 27 CFR 447.52(b) to remove the list of former Soviet countries from which ATF currently denies applications to permanently import most firearms and ammunition, leaving only the Russian Federation as a proscribed country of origin for these imports.

The Office of Management and Budget (“OMB”) has determined that this rule would not be a “significant regulatory action” under Executive Order 12866. This rule would simply remove lists that are outdated and lift a blanket ban on importing defense articles from former Soviet countries. This rule would ensure consistency with current U.S. foreign policy as directed by the Department of State and thus inform the public of ATF's basis for denying applications for permanent imports. This proposed rule would not generate any costs for the public. ATF believes the rule would provide qualitative benefits to the public in the form of regularly updated and consistent information between Departments as well as increased flexibility in the countries from which importers can obtain firearms.

B. Executive Order 14192

Executive Order 14192 (Unleashing Prosperity Through Deregulation) requires an agency, unless prohibited by law, to identify at least ten existing regulations to be repealed or revised when the agency publicly proposes for notice-and-comment or otherwise promulgates a new regulation that qualifies as an Executive Order 14192 regulatory action (defined in OMB Memorandum M-25-20 as a final significant regulatory action under section 3(f) of Executive Order 12866 that imposes total costs greater than zero). In furtherance of this requirement, section 3(c) of Executive Order 14192 requires that any new incremental costs associated with such new regulations must, to the extent permitted by law, also be offset by eliminating existing costs associated with at least ten prior regulations. However, this proposed rule would not be an Executive Order 14192 regulatory action because it is not a significant regulatory action as defined by Executive Order 12866 and would not impose total costs greater than zero. ATF therefore expects this rule, if finalized as proposed, to qualify as an Executive Order 14192 deregulatory action (defined OMB Memorandum M-25-20 as a final action that imposes total costs less than zero) because it would remove an out-of-date, duplicative list, and remove outdated references to countries for which applications to permanently import firearms and ammunition must be denied.

D. Executive Order 14294

Executive Order 14294 (Fighting Overcriminalization in Federal Regulations) requires agencies promulgating regulations with criminal regulatory offenses potentially subject to criminal enforcement to explicitly describe the conduct subject to criminal enforcement, the authorizing statutes, and the mens rea standard applicable to each element of those offenses. This proposed rule would not create a criminal regulatory offense and is thus exempt from Executive Order 14294 requirements.

E. Executive Order 13132

This rule would not have substantial direct effects on the states, the relationship between the federal government and the states, or the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132 (Federalism), the Director has determined that this rule would not impose substantial direct compliance costs on state and local governments, preempt state law, or meaningfully implicate federalism. It thus does not warrant preparing a federalism summary impact statement.

F. Executive Order 12988

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

G. Regulatory Flexibility Act

Under the Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601-612, agencies are required to conduct a regulatory flexibility analysis of any rule subject to notice-and-comment rulemaking requirements unless the agency head certifies, including a statement of the factual basis, that the proposed rule would not have a significant economic impact on a substantial number of small entities. Small entities include certain small businesses, small not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

ATF performed an initial regulatory flexibility analysis of the potential impacts of the proposed rule on small businesses and other entities, if finalized as proposed.

Initial Regulatory Flexibility Analysis (“IRFA”)

The RFA establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the ( printed page 24390) businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to ensure that such proposals are given serious consideration.” Public Law 96-354, section 2(b), 94 Stat. 1164 (1980).

Under the RFA, the agency is required to consider whether the proposed rule would have a significant economic impact on a substantial number of small entities. Agencies must perform a review to determine whether the proposed rule would have such an impact. If the agency determines that it would, the agency must prepare an IRFA (or a regulatory flexibility analysis for a final rule) as described in the Act. See5 U.S.C 603(b).

ATF prepared the following IRFA assessing the proposed rule's impact on small entities.

1. Describing the Reasons Why the Agency Is Considering Taking Action

ATF is proposing this action to provide consistency for importers by aligning ATF's list of proscribed countries with the Department of State's list in 22 CFR 126.1. ATF's list has remained out of date for numerous years, and because ATF defers to the Department of State on matters of international affairs and foreign policy, it is reasonable to align ATF's list with the Department of State's list. ATF is also proposing to remove former Soviet countries from a proscribed list because it reflects outdated trade and security concerns. ATF does not anticipate that this rule would create significant economic costs for small entities, as it would provide beneficial deregulatory savings to federal firearms licensee (“FFL”) importers that would be able to import from previously proscribed countries.

2. Succinctly Stating the Objectives of, and Legal Basis for, the Proposed Rule

The objective of this proposed rule is to reduce regulatory confusion and align ATF regulations with those of the Department of State, which is responsible for determining restrictions on imports of defense articles and services based on country or geographic region and which regularly updates its policies in 22 CFR 126.1.

3. Describing and, Where Feasible, Estimating the Number of Small Entities to Which the Proposed Rule Would Apply

Based on ATF's Federal Firearms Licensing Center, there are an estimated 1,666 Type 08 FFL importers. If Type 08 FFL importers track the size of other FFLs, then most of these importers are likely to be small businesses, per the Small Business Administration's size standard. All importers would benefit from this proposed rule because it would align ATF's list of prohibited countries with the Department of State's list and ensure consistent application of foreign policy. Furthermore, it would allow all importers to import from formerly prohibited countries, thereby conferring a benefit in regulatory flexibility by increasing importing options. Finally, this rule would not impose any monetary costs.

However, there are approximately 21,499 domestic firearms manufacturers (Type 07 FFL manufacturers) that may be indirectly and negatively affected by this proposed rule due to increased competition from importers that would gain access to new foreign markets. ATF is unable to currently assess the significance of this negative impact and requests public comment from small entities that manufacture and/or sell domestic firearms.

4. Describing the Proposed Rule's Projected Reporting, Record-Keeping, and Other Compliance Requirements, Including an Estimate of the Classes of Small Entities Which Would Be Subject to the Requirement and the Type of Professional Skills Necessary To Prepare the Report or Record

There are no additional requirements or direct costs imposed by this proposed rule on importers. Nor are there direct costs or compliance requirements for manufacturers.

5. Identifying, to the Extent Practicable, All Relevant Federal Rules Which Might Duplicate, Overlap, or Conflict With the Proposed Rule

This proposed rule would not duplicate or conflict with other federal rules.

6. Describing any Significant Alternatives to the Proposed Rule Which Accomplishes the Stated Objectives of Applicable Statutes, and Which Minimizes any Significant Economic Impact the Proposed Rule Might Have on Small Entities

ATF has not identified other alternatives that would accomplish the stated objectives. The proposed rule is the only way to remove the outdated list and ensure consistency of foreign policy across Departments. To the extent that the rule could significantly impact small businesses, it would alleviate significant hurdles rather than impose new ones. ATF believes that the benefits of the proposed rule outweigh the potential impacts on domestic small businesses, who may or may not be indirectly affected by this proposed rule.

H. Unfunded Mandates Reform Act of 1995

This proposed rule does not include a federal mandate that might 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, ATF has determined that no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

I. Paperwork Reduction Act of 1995

Under the Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3521, agencies are required to submit to OMB, for review and approval, any information collection requirements a rule creates or any impacts it has on existing information collections. An information collection includes any reporting, record-keeping, monitoring, posting, labeling, or other similar actions an agency requires of the public. See5 CFR 1320.3(c). This proposed rule involves two existing information collections under the PRA. These information collections are OMB control number 1140-0005: Application/Permit to Import Firearms, Ammunition, and Defense Articles, which includes ATF Form 5330.3A (“Form 6, part I”), and OMB control number 1140-0007: Releasing/Receiving Imported Firearms, Ammunition, and Defense Articles, which includes ATF Form 5330.3C (“Form 6A”). This rule may increase the overall number of imported firearms, which would increase the frequency of responses for Form 6 and Form 6A by a corresponding amount.

ATF requests public comments regarding the anticipated overall impact this proposed rule would have on importers.

J. Congressional Review Act

The proposed rule would not be a major rule as defined by the Congressional Review Act, 5 U.S.C. 804(2).

IV. Public Participation

A. Comments Sought

ATF requests comments on the proposed rule from all interested persons. ATF specifically requests comments on the clarity of this proposed rule and how it may be made easier to understand. ( printed page 24391)

All comments must reference this document's RIN 1140-AA91 and, if handwritten, must be legible. If submitting by mail, you must also include your complete first and last name and contact information. If submitting a comment through the federal e-rulemaking portal, as described in section IV.C of this preamble, you should carefully review and follow the website's instructions on submitting comments. Whether you submit comments online or by mail, ATF will post them online. If submitting online as an individual, any information you provide in the online fields for city, state, zip code, and phone will not be publicly viewable when ATF publishes the comment on https://www.regulations.gov. However, if you include such personally identifying information (“PII”) in the body of your online comment, it may be posted and viewable online. Similarly, if you submit a written comment with PII in the body of the comment, it may be posted and viewable online. Therefore, all commenters should review section IV.B of this preamble, “Confidentiality,” regarding how to submit PII if you do not want it published online. ATF may not consider, or respond to, comments that do not meet these requirements or comments containing excessive profanity. ATF will retain comments containing excessive profanity as part of this rulemaking's administrative record but will not publish such documents on https://www.regulations.gov. ATF will treat all comments as originals and will not acknowledge receipt of comments. In addition, if ATF cannot read your comment due to handwriting or technical difficulties and cannot contact you for clarification, ATF may not be able to consider your comment.

ATF will carefully consider all comments, as appropriate, received on or before the closing date.

B. Confidentiality

ATF will make all comments meeting the requirements of this section, whether submitted electronically or on paper, and except as provided below, available for public viewing on the internet through the federal e-rulemaking portal, and subject to the Freedom of Information Act (5 U.S.C. 552). Commenters who submit by mail and who do not want their name or other PII posted on the internet should submit their comments with a separate cover sheet containing their PII. The separate cover sheet should be marked with “CUI//PRVCY” at the top to identify it as protected PII under the Privacy Act. Both the cover sheet and comment must reference this RIN 1140-AA91. For comments submitted by mail, information contained on the cover sheet will not appear when posted on the internet, but any PII that appears within the body of a comment will not be redacted by ATF and may appear on the internet. Similarly, commenters who submit through the federal e-rulemaking portal and who do not want any of their PII posted on the internet should omit such PII from the body of their comment and in any uploaded attachments. However, PII entered into the online fields designated for name, email, and other contact information will not be posted or viewable online.

A commenter may submit to ATF information identified as proprietary or confidential business information by mail. To request that ATF handle this information as controlled unclassified information (“CUI”), the commenter must place any portion of a comment that is proprietary or confidential business information under law or regulation on pages separate from the balance of the comment, with each page prominently marked “CUI//PROPIN” at the top of the page.

ATF will not make proprietary or confidential business information submitted in compliance with these instructions available when disclosing the comments that it receives but will disclose that the commenter provided proprietary or confidential business information that ATF is holding in a separate file to which the public does not have access. If ATF receives a request to examine or copy this information, it will treat it as any other request under the Freedom of Information Act (5 U.S.C. 552). In addition, ATF will disclose such proprietary or confidential business information to the extent required by other legal process.

C. Submitting Comments

Submit comments using either of the two methods described below (but do not submit the same comment multiple times or by more than one method). Hand-delivered comments will not be accepted.

• Federal e-rulemaking portal: ATF recommends that you submit your comments to ATF via the federal e-rulemaking portal at https://www.regulations.gov and follow the instructions. Comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that is provided after you have successfully uploaded your comment.
• 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, include the commenter's first and last name and full mailing address, and may be of any length. See also section IV.B of this preamble, “Confidentiality.”

Disclosure

Copies of this proposed rule and any comments received in response to it are available through the Federal e-rulemaking portal, at www.regulations.gov (search for RIN 1140-AA91), and a summary of this rule may be found at https://www.regulations.gov.

For the reasons discussed in the preamble, ATF proposes to amend 27 CFR part 447 as follows:

1. The authority citation for 27 CFR part 447 continues to read as follows:

Authority: 22 U.S.C. 2778; E.O. 13637, 78 FR 16129 (March 8, 2013).

2. In § 447.52, revise paragraph (a) and (b) to read as follows:

(a) It is the policy of the United States to deny imports of defense articles originating from the following countries:

(1) Countries identified in 22 CFR 126.1(d)(1),

(2) Countries subject to a policy of denying imports of defense articles as specified in 22 CFR 126.1(d)(2), and

(3) In any case where an import would not be in furtherance of world peace and the security and foreign policy of the United States.

(b) Notwithstanding paragraph (a) of this section, the appropriate ATF officer will deny applications to import into the United States the following firearms and ammunition located or manufactured in the Russian Federation:

(1) Any firearm that is not one of the models listed below:

(i) * * *

(ii) * * *

(2) Ammunition that is 7.62 x 25mm caliber (also known as 7.63 x 25mm caliber or .30 Mauser); or ( printed page 24392)

(3) * * *

91 FR 24387