Halloween is just around the corner, but we aren’t trying to “scare you” with today’s discussion on ATF revocations! It’s important for FFLs to learn from our various teachings that include compliance advisory, business performance matters and ATF processes. Just remember, your primary goal should be to achieve proactive compliance and keep yourself free and clear of ATF ROVs, Warning Conferences, and definitely license revocations!
Let’s dive into what is involved.
As a Federal Firearm Licensee, you are subject to ATF compliance inspections. According to ATF, “ATF industry operations investigators (IOI) conduct inspections of FFLs to ensure compliance with the law and regulations and to educate licensees on the specific requirements of those laws and regulations.”
If you’ve been through an inspection before you know that it consists of two main components. (1) An inventory of on-hand, serialized product (i.e., open A&D Book dispositions); and (2) A review of your ATF required records, including Forms, Licenses, A&D transactions and much more. Although you work hard to avoid them, deficiencies are often uncovered and cited as violations. These violations are analyzed for the nature of the issue, the number of instances of the violation, and the overall the risk to public safety. At the end of an inspection, the ATF IOI and Area Supervisor make a closing recommendation that can result in a Report of Violations, Warning Letter, Warning Conference, or Revocation.
Have you ever heard the term “willful violation?” This is one of many factors that ATF may use when pursuing a revocation. They may cite (and sometimes called upon to prove) that an FFL has “willfully” violated the provisions of the Gun Control Act of 1968. Willful is essentially defined as “knowingly or intentionally”. ATF states “Willfulness is not defined in the regulations, but is defined by case law to mean the intentional disregard of a known legal duty or plain indifference to a licensee’s legal obligations. In the case of an FFL who has willfully violated the law, has shown an intentional disregard for regulatory requirements, or has knowingly participated in criminal acts, revocation often becomes the only viable option.” In 2012 the NSSF launched a program called “Sweat the Details” – and they meant it. The program was intended to reinforce FFL awareness that, in this industry, the finer points of compliance can make a significant difference especially when willful consideration becomes a factor in your future livelihood.
After the inspection is complete and the revocation recommendation made, the Area Supervisor and the Director of Industry Operations (DIO) both review the Report of Violations and the narrative inspection report. The DIO has internal agency authority to revoke the FFL and if he/she concurs with the revocation recommendation. If so, the DIO will start the process by issuing a Notice of Revocation to the FFL.
This notice outlines the violations which meet the criteria for revocation. It also explains the FFL’s rights during the process, which include a request for a revocation hearing. This request must be made to the DIO within 15 days of receiving the notice. ATF Headquarters is also notified as the Deputy Assistant Director (DAD) for Industry Operations is updated on the violations cited during the inspections. The DAD ensures that the ATF IOIs are consistent with the violations they cite and the recommendations they make, nationwide. Ultimately, the DAD will advise the DIO on whether or not to proceed with the revocation process on the field division level.
The actual revocation hearing may consist of the following players, for example: (1) The ATF IOIs who participated in the most recent inspection and possible IOIs from prior inspections. The IOIs explain their inspection findings and nature of the violation. (2) The local ATF Field Division Counsel, who defines and presents the case for the government. (3) The Hearing Officer who mediates the proceeding, captures the hearing on an audio tape, and subsequently writes a hearing report. (4) You, the FFL, and any Orchid Advisors or Legal Counsel you may obtain. Most recently, we’ve seen DIOs directly participating in the process as well.
The hearing can take a matter of hours or a matter of days depending on the number of violations and the amount of supporting material provided by the ATF or FFL. While the hearing is fairly informal, there is a set process which allows both sides of the case to present and cross examine. ATF states, “During a hearing, the licensee has the opportunity to challenge the violations and establish that the violations were not willful. Based on the evidence presented at the hearing by the licensee and ATF, the hearing officer submits a report of findings to the DIO. Based upon the hearing testimony, exhibits presented during the hearing, and the hearing officer’s findings, the DIO decides whether to continue with the revocation. If the DIO’s decision is to revoke following a hearing, or in cases where a hearing is not requested by the FFL, then a final notice of revocation is sent to the licensee with a summary of the findings and the legal conclusions that warrant revocation”.
After the DIO has an opportunity to review the Hearing Officer’s report and analyze the inspection results, through the narrative report and the ROV, a decision is made. This decision is communicated via a formal writing from ATF to the FFL (or Counsel). If the license is called for revocation, the FFL has 60 days to file a petition for de novo review with the U.S. District Court and further review. During the appeal process the FFL is authorized to continue business operations until a final decision is made. Note, there are some severe circumstances that can lead to an immediate freeze of business, but that too must follow a process not discussed herein.
The entire revocation process can be emotionally and physically exhausting, as you might expect. Several months can be consumed with multiple levels of inspection review, conflicts in hearing date scheduling, and waiting for the final decision. Unfortunately, as the FFL, you are along for the roller coaster ride.
How do you avoid this process altogether? Comply with the relevant laws and regulations. Ideally, your compliance program will include a balance of Policy, Education, Process / System Controls, and Self-Inspections.
Good luck! If you need more help, give Orchid Advisors a call. Or, attend the annual Orchid Advisors Firearms Industry Compliance conference, the Orchid Regional Manufacturing conferences or NSSF’s Regional Retailer conferences.