The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has finalized a rule to implement provisions of the Bipartisan Safer Communities Act (BSCA), enacted in June 2022, which amended federal law to clarify that those “engaged in the business” of dealing in firearms to “predominantly earn a profit” must obtain a Federal Firearms License (FFL) and conduct background checks on unlicensed customers. The ATF’s final rule follows the September 2023 proposed rule, aiming to crack down on unlicensed dealers by providing civil and administrative guidelines to help determine when someone must get an FFL. As a result, the market for guns sold without background checks will become much smaller as previously unlicensed dealers become FFLs and run background checks on potential customers.
The final rule comes on the heels of a new ATF report identifying unlicensed dealers as the top source of firearms for gun traffickers, representing 41 percent (3,404 cases) of trafficking investigations between 2017 and 2021, ahead of straw purchasers and thefts from FFLs.
Protecting the Public
The rule, which goes into effect 30 days after it’s published in the Federal Register, represents a significant win for public safety. Not only will gun dealers who obtain FFLs be required to run background checks on prospective customers, but they’ll also have to follow other FFL requirements that assist with law enforcement investigations and help prevent gun trafficking. For example, FFLs must keep firearm transaction and inventory records to assist the ATF with crime gun traces; report when customers attempt to purchase two or more handguns within five business days (as well as certain semi-automatic rifles if they are located in a state along the U.S.-Mexico border), which can help the ATF detect and disrupt trafficking rings; and add serial numbers to any “ghost guns” that enter their inventories and conduct background checks on those who purchase them.
According to the final rule, a person will be presumed to be “engaged in the business” of dealing in firearms in civil and administrative proceedings if they, among other things:
- Resell, or offer to resell, any number of firearms and represent to potential buyers that they are willing to purchase and sell additional firearms;
- Repetitively obtain or resell firearms through straw purchasers or businesses, or guns that cannot be lawfully purchased, received or possessed;
- Repetitively offer for sale firearms within 30 days after they were purchased, or guns that are new, or like new, in their original packaging, or of the same make, model, or variant, within a year; or
- As a former FFL, resell firearms that were in their business inventory and not transferred to a personal collection at least a year before the sale is made.
The final rule also provides that in civil and administrative proceedings, a person will be presumed to have the intent to “predominantly earn a profit” from selling firearms if they:
- Repetitively or continuously advertise, market, or otherwise promote a firearm business (e.g., advertise or post firearms for sale online, create a website for selling firearms, make business cards, etc.);
- Repetitively or continuously secure space to display firearms for sale;
- Maintain records to document and track profits and losses;
- Purchase merchant services, security, or insurance for the business; or
- Establish a business entity, trade name, or online business account.
If fully implemented, these measures should make it harder for unlicensed gun dealers to continue operating through online marketplaces, like Armslist and GunBroker, or through gun shows. It also makes it easier for unlicensed sellers to determine if they need to get an FFL. The ATF estimates that around 23,000 people are currently dealing firearms and would need to obtain an FFL in accordance with the rule once it goes into effect. The application fee for a gun dealer’s FFL is $200 — a cost that hasn’t changed since 1993.
Nearly 388,000 people submitted comments after the proposed rule was announced, with the overwhelming majority — 258,000, or 67 percent — expressing support for the rule. Another 99,000 (26 percent) opposed the rule, and the rest were outside the scope of the rule.
The Gun lobby reacts
Importantly, the final rule notes that “a person will not be presumed to be engaged in the business of dealing in firearms when reliable evidence shows that the person is only reselling or otherwise transferring firearms occasionally as bona fide gifts, to obtain more valuable, desirable, or useful firearms for the person’s personal collection; occasionally to a licensee or to a family member for lawful purposes; to liquidate all or part of a personal collection; to liquidate firearms they have inherited; or to liquidate firearms pursuant to a court order.”
But this didn’t stop the National Rifle Association from calling the final rule a “blatant attempt to coerce Americans to forego legal activity with firearms under threat of potential confiscation of their lawfully acquired and constitutionally protected property.” The NRA also said that it is “already working to use all means available to stop this unlawful rule.” More extreme gun groups called the final rule an “infringement on the Second Amendment” and a “despotic overreach,” though the ATF is tasked with implementing and enforcing the laws passed by Congress to regulate the gun industry.
A spokesman for the National Shooting Sports Foundation (NSSF), the gun industry’s trade association, said the final rule was a “naked power grab to circumvent Congress and negate #2A rights.” But it was Congress that enacted the BSCA and amended the “engaged in the business” definition, requiring the ATF to promulgate the rule in the first place. As Senator Chris Murphy (D-CT), a lead author of the BSCA, said on the Senate floor during consideration of the BSCA, “We clarify in this bill the definition of a federally licensed gun dealer to make sure that everybody who should be licensed as a gun [dealer] is.”1168 Cong. Rec. S3055 (daily ed. June 22, 2022), https://www.congress.gov/117/crec/2022/06/22/168/106/CREC-2022-06-22-pt1-PgS3053.pdf.
It’s also unclear why the NSSF would resist a measure that might increase the number of FFLs and help secure the firearm supply chain. As the ATF noted in the rule, “Licensed dealers are at a competitive disadvantage when, for example, similar firearms are being sold at a nearby table at a gun show by a seller who is engaged in the business of dealing in firearms but is not following the requirements that licensed dealers must follow.”