“A single violation is sufficient for…revoking a [Federal Firearms] license.”  These words were not spoken by the Biden Administration during his “Zero Tolerance” program towards the gun industry.  Nor were they spoken by an ATF official carrying out that Administration’s agenda.  They are not the words of the Obama White House or the ATF under his direction.  These are the words of a Federal District Court in 2001 (DiMartino v. Buckles, 2001).    

In the days following the most recent election a lot of gun industry members were very excited that everything would change immediately.  We definitely agree the termination of the very misguided “Zero Tolerance” policy is a positive step in the right direction; FFLs need not have their livelihoods ruined or face the prospect of tens of thousands of dollars of legal fees or tens or hundreds of thousands of dollars in lost production and sales if an honest mistake on behalf of an employee of an FFL led to a minor violation of ATF regulations.  However, the Gun Control Act remains in effect and the ATF is charged by law with enforcing it.  FFL revocations continue.  This means that compliance with ATF regulations is still important given that most courts hearing an appeal from an FFL revocation proceeding have agreed that ATF is empowered to revoke a license after “a single violation.”

Revocation is often spoken of the most.  And rightfully so given that it can shut down a small family-run retail store or lead to a significant disruption in operations for large manufacturers.  FFLs may escape revocation, but poor inspection results can lead to recall inspections.  Most businesses are not fond of the prospect of government authorities continually going through their records and remaining on premises when it has the tendency to make employees and customers uncomfortable.  This has the tendency to impact sales in the retail space and output in the manufacturing space.  The question is, has been, and will remain (at least until Congress revokes the Gun Control Act) – how do I ensure a successful inspection that is conducted quickly and results in little to no violations?

FFLs should undertake the following actions as an absolute minimum to reduce their risk:

• Properly train and educate your employees as to their responsibilities under ATF regulations insofar as it pertains to their job.

Employees carry out the actions of the FFL.  Thus, if an FFL is revoked it is very often not via the actions of the Responsible Person.  It is most often an employee who is unaware that what they did was not compliant.  Proper training is not handing an employee a Form 4473 and an A&D Book and telling them to read it.  Training should be provided by someone with years of experience or a legal/regulatory professional.

• Create an ATF compliance program consisting of documented policies and procedures.

Let’s face it, the law is boring.  It’s not a set of song lyrics that everyone memorizes.  FFLs have to operate within the confines of hundreds of regulations, rulings, guidance documents, variances, etc.  Create policies, SOPs, and reference material for your workforce that covers your ATF obligations.  As the laws and regulations change, so too must your program. 

• Audit your FFL.

Auditing is more than counting serial numbers.  It’s more than ensuring your 4473s are in chronological order.  And it’s more than having 2 employees check a Form 4473 at the time of transfer.  We’ve seen thousands of 4473s that have had 2 or even 3 sets of eyes on them and still found violations.  We’ve seen A&D Books that require duplicate data entry that still have violations.  Audit all of your regulatory obligations and the data contained within all of your records.

Did you know that Orchid ATF Rapid Review offers free automated internal auditing with any Orchid eBound subscription? Streamline your internal compliance process head-on with a daily automatic audit of every A&D transaction and Electronic 4473, delivered to your inbox. 

• When you find noncompliance; address the cause.

As stated before, many violations are the result of an accident.  However, they may occur due to employee carelessness or outright disregard of their responsibilities.  Failure to deal with such issues can lead to a finding by the ATF (and a court) that the organization didn’t care enough about their obligations to prevent violation (i.e., they made a “willful” decision to disregard the regulations).  
If the violations found during an internal audit are due to software issues or the company’s recordkeeping practices, change the software or the practice.  While correction of the discovered violation is good, failing to address the underlying cause will only lead to more violations to correct – they may not all be corrected when ATF shows up!

The foregoing is a starting point to keep your FFL in the good graces of the ATF.  These are not activities to undertake after an inspection or when you receive a couple hours heads up from the ATF they are about to begin an inspection – buying car insurance after the accident usually doesn’t help.  Just like buying auto insurance when you don’t plan on getting into a head on collision, taking care of compliance and reducing the risk to your license should occur when the ATF is the farthest thing from your mind.  It’s at that point in time to instill good business practices in your organization.  While time and money dedicated to regulatory compliance may seem like money down the drain with no return, it would not have been for the thousands of businesses that have lost their licenses.  And if you are unsure of how to begin or execute, like the homeowner who doesn’t want to get electrocuted when his electricity is on the fritz…call a professional.