SUPPLEMENTARY INFORMATION:

I. Background

The Attorney General is responsible for enforcing the Gun Control Act of 1968 (“GCA”), as amended. This responsibility includes the authority to promulgate regulations necessary to enforce the provisions of the GCA.^[1] See18 U.S.C. 926(a). Congress and the Attorney General have delegated the ( printed page 24449) responsibility for administering and enforcing the GCA to the Director of ATF (“Director”), subject to the direction of the Attorney General and the Deputy Attorney General. See28 U.S.C. 599A(b)(1); 28 CFR 0.130(a)(1)-(2); Treas. Order No. 221(2)(a), (d), 37 FR 11696-97 (June 10, 1972).^[2] Accordingly, the Department and ATF have promulgated regulations to implement the GCA in 27 CFR part 478.

The GCA, 18 U.S.C. 921-934, is a comprehensive federal firearms regulatory scheme. For example, section 922 prohibits certain firearm transactions and makes certain individuals ineligible to possess or receive a firearm; section 923 sets forth the licensing requirements for certain individuals and organizations engaged in the firearms business and their legal obligations during a firearm transfer to an unlicensed person; and section 924 sets forth the penalties for substantive statutory violations.

When an individual seeks to acquire a firearm from a federal firearms licensee (“FFL”), the parties must comply with a series of statutory and regulatory requirements, to include identification verification requirements. This allows FFLs to verify that the person receiving the firearm at the point of purchase/transfer ( i.e., the immediate transferee) may lawfully possess the firearm. Additionally, properly identifying the immediate transferee of the firearm in the FFL's records is a critical step in aiding law enforcement with tracing a firearm used in violent crime. A straw purchase case arises when the immediate transferee provides false information on the ATF Form 5300.9, Firearms Transaction Record (“Form 4473”) that is material to the lawfulness of the firearm transfer, or the immediate transferee purchases a firearm with intent to convey the firearm to a prohibited person, a person who intends to commit a felony, federal crime of terrorism, or a drug trafficking crime, or a person who intends to transfer the firearm to a prohibited person. Commonly, the true purchaser/ultimate recipient of the firearm is ineligible to lawfully purchase a firearm; or, for any other reason does not want to undergo a background check, complete the required Form 4473, and be documented as the purchaser. The use of a straw purchaser effectively hides the identity of the true purchaser/ultimate recipient of the firearm and circumvents the regulatory requirements for a firearm transfer by forgoing background checks and impeding the ability of law enforcement to trace guns involved in the commission of a crime to the true purchaser/ultimate recipient.

Traditionally, federal law did not define the term “straw purchase” in statute or regulation. The legal doctrine concerning straw purchase currently involves three federal provisions: 18 U.S.C. 922(a)(6), 924(a)(1)(A), and 932. Prior to the enactment of the Bipartisan Safer Communities Act (“BSCA”) in 2022, sections 922(a)(6) and 924(a)(1)(A) encompassed the criminal conduct of providing false information to an FFL as part of a straw purchase. Criminal conduct under these sections is commonly known as “lying and buying” because section 922(a)(6) criminalizes a person, in connection with the acquisition or attempted acquisition of a firearm or ammunition from an FFL, knowingly making any false or fictitious statement or exhibiting false, fictitious, or misrepresented identification, which is intended or likely to deceive the FFL with respect to any fact material to the lawfulness of the sale or other disposition under the provisions of 18 U.S.C. chapter 44.

Similarly, section 924(a)(1)(A) makes it unlawful to knowingly make any false statement or representation with respect to the information required to be kept in the records of an FFL. Both statutory provisions criminalize “straw purchasing” by focusing on the false statement or representation by the immediate transferee to the FFL. Commonly, a false statement by the immediate transferee on the Form 4473 that they are the actual buyer when buying the firearm for someone else is the basis for criminal prosecution because the immediate transferee causes the FFL to record the incorrect transferee in the acquisition and disposition record that the FFL is required to maintain.

The straw-purchase doctrine that grew around these criminal provisions had an ambiguity concerning materiality. Initially, ATF maintained a narrower interpretation of straw purchasing because it viewed it as occurring only when a person purchased a firearm on behalf of the actual purchaser who was a prohibited person. This is the “narrower” understanding of a straw purchase. In other words, ATF did not deem purchasing a firearm on behalf of an eligible buyer to be a materially false statement to the transaction. See ATF Industry Circular 79-10 (Aug. 7, 1979), reprinted in (Your Guide To) Federal Firearms Regulation 78, https://www.ojp.gov/​ncjrs/​virtual-library/​abstracts/​your-guide-firearms-regulation-1978 [ https://perma.cc/​VDF9-3LSM]. This position changed in 1994 when ATF adopted a broader understanding of the term straw purchase. There is case law to support the position that 18 U.S.C. 922(a)(6) can be charged where the actual purchaser participating in the straw purchase is qualified to purchase a firearm and a false statement is made concerning the true purchaser of the firearm. This false statement is “material to the lawfulness of the sale.” See United States v. Ortiz-Loya, 777 F.2d 973, 979 (5th Cir. 1985); see also United States v. Carter, 60 F.3d 825 (4th Cir. 1995).

Congress codified the narrower understanding of the straw purchase doctrine, i.e., a purchase for a prohibited person or person falling into other categories identified by Congress, when it passed BSCA in 2022. In BSCA, Congress added 18 U.S.C. 932, which prohibits any person from knowingly purchasing, or conspiring to purchase, any firearm in or otherwise affecting interstate or foreign commerce for, on behalf of, or at the request or demand of another person knowing or having reasonable cause to believe such other person is prohibited from possessing firearms; intends to use or carry the firearm in furtherance of a felony, a federal crime of terrorism or a drug trafficking crime; or intends to sell or give the firearm to any person who is prohibited or a person who intends to use or carry the firearm in furtherance of a felony, a federal crime of terrorism, or a drug trafficking crime. Notably, unlike sections 924(a)(1)(A) and 922(a)(6), this section applies to any purchase or disposition of a firearm, not just transfers from FFLs.

As mentioned above, it was in 1994 when ATF concluded that purchasing a firearm on behalf of another person qualified as a materially false statement even if the other person (the actual purchaser or ultimate recipient) was not prohibited from possessing a firearm under federal law. In reaching this conclusion, ATF noted that these types of purchases inhibited the ability to trace firearms and resulted in the failure to complete a background check mandated by the Brady Act on the actual purchaser or recipient of the firearm.

In 2014, the Supreme Court agreed with the broader understanding of straw purchase. In Abramski v. United States, 573 U.S. 169 (2014), the Supreme Court ( printed page 24450) held that a transferee's false statement to an FFL dealer that he was the actual purchaser on a Form 4473 was a violation of 18 U.S.C. 922(a)(6) and 924(a)(1)(A) regardless of whether the true purchaser and ultimate recipient could legally possess the firearm. Like ATF, the Court noted that these statements inhibited background checks and firearm tracing. Following Abramski, a straw purchase under sections 922(a)(6) and 924(a)(1)(A) hinges on false statements by the individual involved in the firearms transaction to the FFL regardless of whether the true purchaser and ultimate recipient of the firearm is prohibited from receiving a firearm under federal law.

In accordance with the broader understanding of straw purchasing, versions of the Form 4473 issued after 1994 have required the transferee to certify that he is the “actual transferee/buyer” of the firearm. The Form 4473 has included instructions, which have evolved over time, as to when a person is the “actual transferee/buyer.” As of this drafting, the current Form 4473 (revised Aug. 2023) advises that a person is an actual transferee/buyer if he/she is purchasing or acquiring a firearm for him/herself ( e.g., redeeming the firearm from pawn, retrieving it from consignment, firearm raffle winner) or if purchasing the firearm as a bona fide gift for a third party. The Form 4473 also advises that a “gift is not bona fide if another person offered or gave the person completing this form money, service(s), or item(s) of value to acquire the firearm for him/her, or if the other person is prohibited by law from receiving or possessing the firearm.” The Form 4473 (revised Aug. 2023) continues with examples of when a person is not considered the “actual transferee/buyer” of the firearm. Specifically,

Mr. Smith asks Mr. Jones to purchase a firearm for Mr. Smith (who may or may not be prohibited). Mr. Smith gives Mr. Jones the money for the firearm. Mr. Jones is NOT THE ACTUAL TRANSFEREE/BUYER OF THE FIREARM.” However, if “Mr. Brown buys the firearm with his own money to give to Mr. Black as a gift (with no service or tangible thing of value provided by Mr. Black), Mr. Brown is the actual transferee/buyer of the firearm.”

ATF has always understood the broader straw purchase doctrine to exclude certain firearm acquisitions on behalf of another. Most notably, a straw purchase does not occur when a person purchases a firearm as a bona fide gift for another as the gift giver ( i.e., the actual purchaser) receives nothing of value for the firearm from the gift recipient. If, however, a person receives money or other value from the intended recipient, then the purchase is not a gift, and the intended recipient is the true purchaser.

Additionally, ATF has long understood the straw-purchase doctrine to exclude instances where parents purchase firearms on behalf of their minor children. See Firearms Regulation Guide (1978) at 82 (“A parent or guardian may purchase firearms and ammunition for a juvenile. GCA age restrictions are intended only to prevent juveniles from acting without their parents' or guardians' knowledge.”)]; see also Firearms Regulation Guide (1988-89) at 84 (advising the same). In this scenario, the parent purchases the firearm and takes responsibility for the weapon. The age restrictions in the GCA were designed to stop the unsupervised acquisition of firearms by minors; the GCA was not intended to prevent lawful possession or use by a minor. See S. Rep. No. 90-1097, at 79 (1968) (explaining that under the GCA “a minor or juvenile would not be restricted from owning or learning the proper usage of the firearm,” as any firearm “which his parent or guardian desired him to have could be obtained for the minor or juvenile by the parent or guardian.”). There are additional scenarios that are not considered straw purchases, including pawn redemption or consignment and storage pick-up. The instructions on the current Form 4473 provide: “For purposes of this form, a person is the actual transferee/buyer if he/she is . . . acquiring the firearm for him/herself. ( e.g., redeeming the firearm from pawn, retrieving it from consignment, firearm raffle winner.).” Form 4473, Firearms Transaction Record (Revised Aug. 2023), https://www.atf.gov/​firearms/​docs/​4473-part-1-firearms-transaction-record-over-counter-atf-form-53009/​download [ https://perma.cc/​H2R2-G6PR].

ATF has also permitted the retrieval of firearms left for repair for another person provided the person receiving the firearm is not prohibited. The Form 4473 (revised Aug. 2023) under Question 21.a. currently provides that, “[i]f you are only picking up a repaired firearm(s) for another person, you are not required to answer 21.a.,” which asks whether the individual is the actual transferee/buyer of the firearm listed on the form. Although the individual acquiring the firearm from the FFL is not the actual transferee or ultimate recipient, ATF does not consider a straw purchase to have occurred in these kinds of limited scenarios.

ATF has recently received inquiries regarding the gift of firearms or the purchase of firearms as marital property. This has led to some confusion among FFLs whether a purchase may be completed using money from a spouse or with a spouse present. ATF also continues to receive questions seeking clarification regarding who the actual transferee or purchaser of a firearm is for transactions involving redemptions from pawn, gunsmith repairs, consignment, storage, and bona fide gifts. In light of the need for more clarity to distinguish between the illegal conduct that constitutes a straw purchase and other behavior that does not come within ATF's historical understanding of a straw purchase, this rule proposes to add 27 CFR 478.105 to clarify the legal distinctions between unlawful straw purchases and lawful third-party transfers.

II. Proposed Rule

The rule proposes to create a new section in part 478 that would restate the law of straw purchasing. Paragraph (a) of the new section would make clear that a buyer of a firearm may not obtain a firearm from an FFL by being a straw purchaser and an FFL may not sell a firearm to a person who he knows or has reasonable cause to believe is a straw purchaser.

The remainder of the new section would describe who a “straw purchaser” is to explain two types of straw purchases. The new section would clearly demarcate two types of straw purchasing: (1) straw purchasing by making a material misstatement, which is elaborated by paragraphs (b)-(d), and (2) straw purchasing by purchasing for a prohibited person, which is elaborated by paragraph (e).

Paragraphs (b) and (c) would explain the longstanding interpretation of 18 U.S.C. 922(a)(6) as applied to straw purchasing, consistent with federal case law and the broader understanding of straw purchase ( i.e., purchasing on behalf of another person even if that person is not a prohibited person under the GCA). Particularly, paragraph (c) would delineate categories of lawful transactions that do not constitute straw purchases under paragraph (b), such as bona fide gifts, parental purchases for a “minor child” (which would be defined in paragraph (d)), purchases among spouses, and redemption or repair of firearms by their lawful owners. Importantly, these exceptions cover only straw purchases by material misstatement.

Paragraph (e) would address a different kind of straw purchasing: the purchase of a firearm for a prohibited ( printed page 24451) person. Congress codified this kind of straw purchasing as a criminal offense in 18 U.S.C. 932. This regulation reiterates and clarifies those prohibited transactions. Paragraph (e) would clarify that the exceptions listed in paragraph (c) to straw purchases by material misstatements do not apply to the prohibition against making straw purchases for a prohibited person. This clarification is important especially in cases of spousal transfers. A common straw purchase transaction involves one spouse purchasing on behalf of a prohibited spouse. This rule would make clear that such conduct is prohibited. On the other hand, among two spouses who may lawfully possess firearms and live at the same address, it does not matter which spouse fills out the form or hands over the money. Both the firearm and the funds used to pay for it will likely be martial property. For tracing purposes, the form will identify the name of a responsible adult who acquired the firearm and the correct address where that person lives. The exceptions to straw purchasing for spouses and for minor children under age 21 reflect that ATF will not micromanage family affairs. ATF retains an interest in such transactions only when a member of the family is prohibited by law from possessing a firearm.

As discussed above, the GCA is a comprehensive federal firearms regulatory scheme that was enacted to reduce violent crime by preventing felons and other prohibited persons from acquiring firearms. It ensures that the federal government can trace firearms involved in a crime to locate the perpetrator(s) through accurate records of FFLs showing the actual purchasers of the firearms and provide crime gun intelligence to locate and disrupt firearm trafficking networks using multiple sale reports with accurate purchaser information. ATF uses the crime gun intelligence model because it focuses on generating actionable intelligence related to connecting, identifying, and disrupting firearms violence through evidence-based methods using forensics and law enforcement investigations.^[3] These objectives are enforced through a combination of background checks, identification verification, and accurate record-keeping by FFLs, all of which depend on truthful identification of the actual transferee or purchaser. Straw purchasing undermines the statutory objectives of the GCA by subverting this regulatory framework.

While such conduct must remain clearly unlawful, not all third-party acquisitions are improper. As described above, longstanding ATF guidance has acknowledged that individuals may purchase firearms as bona fide gifts for others, provided no compensation is received and the recipient is not otherwise prohibited. Federal law does not bar private transfers or gifts between unlicensed persons residing in the same state as long as neither party is a prohibited person and such transfer does not violate any state or federal laws. Federal law does not bar private transfers or gifts between unlicensed persons residing in different states as long as the transfer is facilitated by an FFL in each of the respective states. As the Supreme Court emphasized in FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000), statutory interpretation must be guided by common sense.

Accordingly, ATF believes that by articulating these distinctions in regulation, the proposed § 478.105 will enhance industry compliance, assist law enforcement, and reduce confusion regarding the legality of common firearm transfers. It would also ensure consistent terminology and reinforce the GCA's goals without impeding lawful conduct.

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 proposed rule would amend 27 CFR part 478 to provide clarity to both FFLs and non-licensees regarding conduct that has been recognized by the courts and ATF as rising to the level of a straw purchase, which is prohibited by federal law.

The Office of Management and Budget (“OMB”) has determined that this proposed rule would not be a “significant regulatory action” under Executive Order 12866. Therefore, it did not review this rule. This proposed rulemaking provides qualitative benefits to the firearms industry and firearms purchasers by providing clarity on the scope of what constitutes unlawful straw purchasing. However, ATF does not have sufficient information to calculate quantifiable savings and thus requests more information from the public regarding the economic effects this rulemaking may have on the public and the regulated industries.

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 it would not impose total costs greater than zero.

C. 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.

D. Executive Order 13132

This proposed rule will 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 proposed rule would not impose substantial direct compliance costs on state and local governments, preempt state law, or ( printed page 24452) meaningfully implicate federalism. It thus does not warrant preparing a federalism summary impact statement.

E. 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).

F. 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 proposed 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.

The Director certifies, after consideration, that this proposed rule would not have a significant economic impact on a substantial number of small entities because it would simply provide clarity on the scope of what constitutes unlawful straw purchasing based on existing case law and long-standing agency guidance. This proposed rule will not impose any additional costs.

G. 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 would 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.

H. 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 would not create any new information collection requirements or impact any existing ones covered by the PRA.

I. Congressional Review Act

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

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. ATF also requests comments on the costs or benefits of the proposed rule and on the appropriate methodology and data for calculating those costs and benefits.

All comments must reference this document's RIN 1140-AA78 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://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 RIN 1140-AA78. 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 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 ( printed page 24453) 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.”

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 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 in response to it are available through the federal e-rulemaking portal, at https://www.regulations.gov (search for RIN 1140-AA78).

For the reasons discussed in the preamble, ATF proposes to amend 27 CFR part 478 as follows:

1. The authority citation for 27 CFR part 478 continues to read as follows:

Authority: 5 U.S.C. 552(a); 18 U.S.C. 847, 921-931; 44 U.S.C. 3504(h).

2. Add § 478.105 to subpart F to read as follows:

91 FR 24448