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 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), (c)(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.

With some exceptions, the Youth Handgun Safety Act (“YHSA”), 18 U.S.C. 922(x), makes it unlawful for a person to sell, deliver, or otherwise transfer to a juvenile a handgun, or ammunition suitable for use only in a handgun, and for a juvenile to knowingly possess such items. The YHSA's implementing regulations are set forth in 27 CFR part 478, subpart F—Conduct of Business. In July 1998, ATF published a final rule titled “Posting of Signs and Written Notification to Purchasers of Handguns” ^[3] (“1998 final rule”). ATF published that rule in response to a presidential memorandum ^[4] that was part of an effort to implement the YHSA and to make handgun purchasers familiar with its provisions. The regulation, 27 CFR 478.103, requires each licensed importer, manufacturer, dealer, or collector (“federal firearms licensee” or “FFL”) that delivers a handgun to a non-licensee to (1) provide written notice to the non-licensee ( e.g., use ATF I 5300.2 or include the required information in the sales receipt, invoice, or other packing material) and (2) display a sign (ATF I 5300.1) at its licensed premises.

Prior to issuing the 1998 final rule, ATF published a proposed rule in 1997 with a public notice and comment period.^[5] One commenter disputed ATF's authority under the GCA to require any sort of warning or notice of the YHSA requirements to handgun purchasers.^[6] Section 922(x) itself contains no such requirement. Similarly, another commenter noted that ATF had not required notices or signs to warn purchasers about other GCA provisions or the statutory prohibitions against certain categories of persons possessing firearms.^[7]

II. Proposed Rule

ATF has reevaluated the 1998 final rule and agrees with the commenters that the GCA does not require any sort of warning or notification under section 922(x). ATF has also reevaluated the costs and benefits of the 1998 final rule and has concluded that the 1998 final rule's required written notices and displays place an undue burden on FFLs.

The original impetus for providing a warning or notice was to “advise handgun purchasers of the still relatively new requirements of the YHSA.” ^[8] Over 30 years have passed since the YHSA was enacted. Its requirements are no longer “relatively new.” The law is well-established, and FFLs and the public are aware of its requirements. Widespread use of the internet has only increased licensees' and the public's awareness. The YHSA's requirements are readily available on several websites that are easy to find on search engines. Information about the YHSA is more readily accessible now than ever before. Moreover, ATF discusses federal, state, and local requirements with first-time FFL applicants at in-person interviews,^[9] and those interviews discuss the requirements of section 922(x). In addition, the YHSA was published in the Statutes at Large and the U.S. Code, which self-executes notice. See Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384 (1947) (“[E]veryone is charged with knowledge of the United States Statutes at Large.”). There are no new requirements of which to make the public and FFLs aware. Thus, the regulation's impetus is moot, and its requirements are superfluous. Nothing in the statute requires, or authorizes, the separate sort of notice, or signs, that the regulation requires. Therefore, ATF proposes rescinding 27 CFR 478.103. Rescinding the regulation will better honor the YHSA's text and eliminate an unnecessary and unduly burdensome regulatory requirement.

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.

The Office of Management and Budget (“OMB”) has determined that this rule would not be a “significant regulatory action” under Executive Order 12866. Therefore, it did not review this rule. ATF provides the following analysis to comply with Executive Orders 12866 and 13563.

1. Need Statement

While juveniles are not permitted to possess a handgun or ammunition, the YHSA requirements have been published, and the public has been aware of its requirements over the course of 30 years. ATF has reevaluated the 1998 final rule and concludes that requiring FFLs to provide notice unnecessarily burdens FFLs. Because the majority of FFLs are small businesses, ATF is seeking ways to reduce the administrative hurdles that would inhibit growth for small businesses. ( printed page 25189)

2. Benefits

Rescinding 27 CFR 478.103 would achieve significant cost-savings for FFLs. Specifically, FFLs would no longer need to provide signs or paper notices about the YHSA for all sales to non-licensed individuals acquiring a handgun. ATF estimates that, over the course of 10 years, the undiscounted cost-savings would be $8 million.

Because the notice requirements apply to every handgun or pistol transfer by a licensee, ATF had to first estimate the number of such firearms transferred or otherwise disposed of (“transferred” or “transfers”) per year, from which to calculate projected savings. Every year, ATF inspects a certain subset of FFLs for compliance purposes. As part of the inspection process, ATF may ask that FFLs provide a general estimate on the number of transfers that have occurred over the calendar year. ATF's data does not specify whether the firearms are transferred to other FFLs or to individuals. Dealer-FFL transfers are typically retail sales to non-licensed individuals. Importer-FFLs and manufacturer-FFLs may also engage in retail sales to non-licensed individuals, but generally their transfers are intermediary shipments to other FFLs. Therefore, this analysis relied on the data reported by dealer-FFLs as the most likely to involve transfers to non-licensees. Because FFL-reported transfers do not specify whether they were sales to other FFLs or to non-licensed individuals, ATF acknowledges that this analysis under-reports the savings likely to accrue from this proposed rule for transfers to non-dealer FFLs. Table 1 shows the historical number of dealer-estimated transfers by year.

However, the dealer-estimated transfers include sales of all firearms, including rifles and shotguns, while this rulemaking pertains only to sales of handguns (pistols and revolvers). ATF excluded the sales of all other firearms by using the ratio of handguns to other firearms manufactured each year, as a proxy for the number of handguns sold. ATF estimates that the number of firearms manufactured each year closely approximates the number sold, due to market forces. Currently, manufacturers must submit to ATF an Annual Firearms Manufactured or Exported Report. ATF used data from those reports for this analysis. Table 2 provides an annual, historic number of firearms manufactured in the United States, as reported in ATF's Firearms Commerce in the United States report.^[10]

ATF estimated the annual number of handguns sold to non-licensed individuals by each dealer-FFL by taking the percentages of handguns manufactured each year and applying it to the average number of transfers by dealer-FFLs. Then, to estimate this proposed rule's cost savings for each FFL, ATF multiplied the average number of transfers by the cost to print a black-and-white copy of each notice, which ATF estimates would be $0.03.^[11 12] Table 3 provides the average number of transfers, estimated number of handgun sales to non-licensed individuals, and estimated cost for each FFL to provide print notices.

( printed page 25190)

As Table 2 shows, the average annual cost to provide YHSA notices with all handgun sales between 2018 and 2022 was $16 per FFL. ATF assumes these percentages would remain consistent in the future, as the population of FFLs is typically stable.^[13] Under this proposed rule, FFLs would not incur these costs, so the future projected cost savings from this rule would also be $16 annually per FFL. Based on data from ATF's Federal Firearms Licensing Center, there are approximately 50,000 dealer FFLs in any given year. At $16 per FFL, this rulemaking would provide an annual or annualized industry savings of $794,272. Over the course of 10 years, the undiscounted savings would be $8 million.

3. Costs

To the extent this proposed rule imposes any costs on anyone, those costs could only relate to the risk that the public might not be informed of existing requirements not to deliver or transfer firearms to juveniles. That risk is de minimis because, as already discussed above, the YHSA was published in the Statutes at Large and the U.S. Code, which self-executes notice. Moreover, the statutory requirement has existed for 30 years, during which time all purchasers have been notified consistently.

4. Regulatory Alternatives

Alternative 1. Maintaining the status quo (the no-action alternative).

Maintaining the status quo would continue requiring FFLs to provide notices, with every purchase of a handgun, that transferring or delivering handguns and ammunition to juveniles is illegal. This alternative would not create additional costs or additional benefits because this is the current and existing requirement. ATF has rejected this alternative because other alternatives provide more benefits by removing burdens for FFLs.

Alternative 2. Rulemaking (the proposed alternative).

ATF considered the alternative of rulemaking to rescind the requirement to provide paper notification of the YHSA's provisions upon every handgun purchase. Because the notices contain information that is already readily available—in its entirety—in the U.S. Code and Statutes at Large, and the paper-notice requirement has been in effect for 30 years, the paper-notice requirement is an administrative burden that is unnecessary and redundant. Removing the paper-notice requirement will provide cost savings and benefits, especially to small businesses who may have smaller profit margins than large businesses and may benefit from reduced administrative burdens.

Alternative 3. Issuing guidance.

This alternative was considered but rejected. While this alternative would not impose any additional costs, it would not rescind the requirements currently published by regulation. It also would not have the force and effect of a regulation, so the guidance would not be able to affect the existing regulatory requirement, which is unnecessary; therefore, this alternative was rejected.

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 as defined in 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. This proposed rule would remove a regulatory requirement to post signs and provide notices, and would provide an undiscounted savings of $8 million over the course of 10 years. In addition, ATF expects this rule, if finalized as proposed, to qualify as an Executive Order 14192 deregulatory action (defined by OMB Memorandum M-25-20 as a final action that imposes total costs less than zero).

C. Executive Order 14294

Executive Order 14924 (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 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 proposed 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. ( printed page 25191)

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 (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 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 impact on a substantial number of small entities because it removes previous regulatory requirements, thereby also removing any costs or burdens of complying with them. This proposed rule is deregulatory and would 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 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.

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. In addition, ATF 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-AA87 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 described 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-AA87. 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. ( printed page 25192)

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-AA87).

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. Remove and reserve § 478.103.

91 FR 25187