118 HR 7042 IH: Reining in Federal Licensing Enforcement Act of 2024
U.S. House of Representatives
2024-01-18
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EN
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I
118th CONGRESS
2d Session
H. R. 7042
IN THE HOUSE OF REPRESENTATIVES
January 18, 2024
Mr. Mann (for himself, Mr. Davidson, Mr. Ezell, Mr. Ellzey, Mr. Grothman, Mr. Moran, Mr. Rouzer, Mr. Tiffany, Mr. Walberg, Mr. Jackson of Texas, Mr. McCormick, Mr. Alford, Mr. Duncan, Mr. LaMalfa, Mr. Clyde, Mrs. Miller of Illinois, and Mr. Burchett) introduced the following bill; which was referred to the Committee on the Judiciary
A BILL
To reform the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
1.

Short title
This Act may be cited as the “Reining in Federal Licensing Enforcement Act of 2024” or the “RIFLE Act of 2024”.
2.

Graduated penalties for civil violations by Federal firearms licensees
Section 923 of title 18, United States Code, is amended by striking subsections (e) and (f) and inserting the following:
“(e)
(1)
(A)
If the Attorney General determines that a licensee under this section has violated this chapter—
(i)
in the case of a violation that is not willful, the Attorney General shall notify the licensee of the violation and work with the licensee to rectify the violation within a commercially reasonable time frame; or
(ii)
in the case of a willful violation, if the Attorney General, after working with the licensee to rectify the violation within a commercially reasonable time frame, finds that a lesser action (such as a warning, warning letter, or warning conference) is not likely to lead to future compliance, and the Attorney General seeks revocation of the license in an administrative action, the Attorney General may—
(I)
if the licensee has no history of noncompliance with this chapter, suspend the license for not more than 30 days or such lesser period as would apply on compliance with such conditions as are specified by the Attorney General; or
(II)
in any other case, revoke the license.
(B)
In applying subparagraph (A), the Attorney General shall presume that the violation is not willful, absent clear and convincing evidence to the contrary.
(C)
For purposes of subparagraph (A):
(i)
A violation of this chapter with respect to 2 or more firearms during a single transaction shall be considered a single violation.
(ii)
A violation of this chapter with respect to any category of record keeping requirements, even if involving multiple instances, shall be considered a single violation.
(D)
The Attorney General may not commence an enforcement action under subparagraph (A) with respect to a violation, after the 3-year period that begins with—
(i)
the date the violation occurred; or
(ii)
if the licensee intentionally obstructed discovery of the violation, the date the violation is discovered.
(E)
The Attorney General may not commence an enforcement action under subparagraph (A) with respect to a violation without first notifying the licensee of the reasons for the contemplated action and affording the licensee an opportunity to demonstrate or achieve compliance with this chapter and to submit facts, arguments, or proposals of adjustment.
(2)
(A)
(i)
Not less than 60 days before the effective date of any penalty imposed on a licensee by reason of a determination made under paragraph (1), the Attorney General shall send the licensee a written notice by certified return receipt mail—
(I)
of the determination, and the grounds on which the determination was made;
(II)
that sets forth the facts on which the Attorney General relied as a basis for the determination, including the facts pertaining to any determination of willfulness;
(III)
of the nature of the penalty; and
(IV)
that the licensee may, within 60 days after receipt of the notice, request in writing a hearing to review the determination.
(ii)
Within 5 calendar days after serving the written notice on the licensee, the Attorney General, shall give written notice to the licensee of the date the written notice was so served and provide the licensee with proof of the service.
(B)
A hearing to review a determination made under paragraph (1) with respect to a licensee shall not be held unless the licensee or an agent of the licensee requests such a hearing within 60 days after receiving the written notice required by subparagraph (A), and if held, shall be open to the public
(C)
On timely receipt from the licensee of a request for such a review, the Attorney General shall stay the imposition of any penalty under paragraph (1), pending resolution of the hearing, unless, in the case of a license revocation, the Attorney General establishes, at a hearing before an administrative law judge, by clear and convincing evidence, that the licensee committed the violation willfully and that the continued operation by the licensee of the business involved poses an immediate and grave threat to public safety.
(3)
(A)
Within not fewer than 60 days after timely receipt from a licensee or an agent of the licensee of a written request for a hearing to review a determination made under paragraph (1) (or at such later time as is agreed to by the Attorney General and the licensee), an administrative law judge shall hold an evidentiary hearing, at a location convenient to the licensee, to review the determination, except that, if the licensee moves for leave to take the deposition of any witness identified by the Attorney General or any officer or employee of the Department of Justice who was involved in the inspection or examination, or any prior inspection or examination on which the Attorney General relies, the administrative law judge shall grant the motion and adjust the hearing date accordingly.
(B)
Not less than 30 days before the hearing, the Attorney General shall deliver to the licensee—
(i)
a document identifying each person whom the Attorney General intends to call as a witness during the hearing and a summary of the proposed sworn testimony of the witness;
(ii)
a copy of each document, in unredacted form, that will be introduced by the Attorney General as evidence at the hearing;
(iii)
copies of all documents on which the determination is based;
(iv)
a complete copy of the file of the licensee maintained by the Attorney General; and
(v)
a sworn statement from the Attorney General as to whether or not there is a pending criminal investigation by the Attorney General of the licensee, which statement shall be supplemented or amended by the Attorney General if a criminal investigation is initiated before the conclusion of the hearing.
(C)
(i)
Within 120 days after the hearing, the administrative law judge shall issue a written decision setting forth findings of fact and conclusions of law, and a decision as to whether to affirm, modify, or reverse the determination.
(ii)
The findings of fact and conclusions of law and decision of the administrative law judge shall be—
(I)
de novo and not predicated on a presumption that the determination of the Attorney General was correct; and
(II)
based on a clear and convincing standard of proof, which shall be borne by the Attorney General.
(iii)
The administrative law judge shall not make a determination to revoke a license unless the administrative law judge finds, by clear and convincing evidence, that—
(I)
the Attorney General notified the licensee in writing of all reasons for the contemplated action of the Attorney General;
(II)
the Attorney General afforded the licensee a commercially reasonable opportunity to demonstrate or achieve compliance with this chapter; and
(III)
the licensee has not complied, and is unlikely to be able to achieve compliance, with this chapter.
(iv)
The Attorney General shall provide to the licensee a complete copy of the hearing transcript, including exhibits, within 60 days after the date of the hearing.
(D)
On request of the licensee, the Attorney General shall stay the effective date of any penalty, suspension, or revocation until there is a final, unreviewable judgment with respect to the determination of the administrative law judge, unless, in the case of a license revocation, the Attorney General establishes, at a hearing before an administrative law judge, by clear and convincing evidence, that the licensee committed the violation willfully and that the continued operation by the licensee of the business involved poses an immediate and grave threat to public safety.
(E)
An action of an administrative law judge under this subsection shall be considered final agency action for all purposes, and may be reviewed only as provided in subsection (f).
(4)
This subsection shall not be interpreted to affect the authority of the Attorney General under section 922(t)(5), except that the provisions of section 922(t)(5) regarding notice and opportunity for a hearing shall be subject to the procedural and evidentiary requirements provided in this subsection.
(f)
(1)
Within 60 days after a party receives a notice issued under subsection (d) of a decision to deny a license, or a notice issued under subsection (e)(3)(C) of a determination to suspend or revoke a license, the party may file a petition with the United States district court for the district in which the party resides or has a principal place of business for a de novo trial of the determination.
(2)
In a proceeding conducted under this subsection, the court shall, on application of a party, consider any evidence submitted by the parties to the proceeding whether or not the evidence was considered at the hearing held under subsection (d) or (e)(3).
(3)
(A)
If the court decides that the determination was not authorized by law, the court shall order the Attorney General to take such action as may be necessary to comply with the judgment of the court.
(B)
The court shall not make a determination to revoke a license unless the court finds, by clear and convincing evidence, that—
(i)
the Attorney General notified the licensee in writing of all reasons for the contemplated action of the Attorney General;
(ii)
the Attorney General afforded the licensee a commercially reasonable opportunity to demonstrate or achieve compliance with this chapter; and
(iii)
the licensee has not complied, and is unlikely to be able to comply, with this chapter.
(4)
If criminal proceedings are instituted against an applicant for a license under this chapter or a licensee alleging a violation of this chapter, and the applicant or licensee, as the case may be, is acquitted of the charges, or the proceedings are terminated, other than on motion of the Government before trial on the charges, the Attorney General shall be absolutely barred from denying a license under this chapter, or suspending or revoking a license granted under this chapter, if the action would be based in whole or in part on the facts which form the basis of the criminal charges.
(5)
The Attorney General may not institute a proceeding to suspend or revoke a license granted under this chapter, more than 1 year after the filing of the indictment or information.
(6)
The Attorney General may not institute a proceeding to suspend or revoke a license granted under this chapter, based on a violation that is finally determined to have occurred with respect to a different license.”.
3.

Consideration of Federal firearms license applications
Section 923(d) of title 18, United States Code, is amended by striking paragraph (2) and inserting the following:
“(2)
The Attorney General shall make a preliminary determination as to whether to approve or deny an application submitted under subsection (a) or (b). If the preliminary determination is to deny the application, the Attorney General shall notify the applicant in writing of the preliminary determination and the reasons for the preliminary determination, and shall afford the applicant an opportunity to supplement the application with additional information and to request a hearing on the application. If the applicant, in a timely manner, requests such a hearing, the Attorney General shall hold the hearing at a location convenient to the applicant, and shall notify the applicant in writing of the time and place of the hearing.
(3)
The Attorney General may not deny an application for a license based on—
(A)
any prior violation of this chapter by the applicant, if more than 5 years have elapsed since the date a license previously issued to the applicant under this chapter was terminated, unless the Attorney General finds that the applicant is a person described in section 922(g);
(B)
the applicant having been employed by, or a responsible party for, a licensee whose license under this chapter was revoked, unless there is clear and convincing evidence that the applicant willfully violated this chapter in that capacity; or
(C)
the applicant being a spouse, former spouse, or child of a licensee whose license under this chapter was revoked, unless there is clear and convincing evidence that the applicant willfully violated this chapter as a responsible party under the license.
(4)
The procedures provided for in subsection (e) shall apply with respect to any applicant for a license under this chapter and any application for such a license.”.
4.

Definition of “willfully”; certain evidence inadmissible to prove willfulness
Section 923(e) of title 18, United States Code, as amended by section 2(a) of this Act, is amended by adding at the end the following:
“(5)
For purposes of this subsection, the term willfully means, with respect to conduct of an individual who holds a license or is designated in the records of the Attorney General as a responsible party under a specific license, that the person—
(A)
had actual knowledge of a clearly established legal duty;
(B)
understood the obligation imposed by the legal duty; and
(C)
engaged in the conduct knowingly and in deliberate disregard of the legal duty.
(6)
Evidence that a person has received a document or other communication containing information about a requirement imposed by or under this chapter and evidence that the person has signed an acknowledgment that the person understands the legal obligations of the person under this chapter shall not be admissible as part of the determination of the Attorney General, in an administrative law hearing or in a court of law, to prove actual knowledge and shall not be admissible as evidence to establish a willful violation of this chapter.
(7)
Evidence that a person has substantial experience as a licensee, or has in other instances successfully complied with this chapter, shall not be admissible as part of the determination of the Attorney General, in an administrative law hearing or in a court of law, to prove actual knowledge and shall not be admissible as evidence to established a willful violation of this chapter.
(8)
In determining under this subsection whether conduct of a licensee was willful, the entire historical administrative record of the licensee shall be considered.”.
5.

Reconsideration of applications from former licensees whose licenses were revoked, in light of new rules pertaining to willfullness
The Attorney General shall reconsider each application for a license under chapter 44 of title 18, United States Code, that is submitted by an individual whose license under such chapter was revoked or whose application for a license was denied before the date of the enactment of this Act, and that was disposed of on or before such date of enactment, and, in doing so, the Attorney General shall apply the amendments made by section 4 of this Act.
6.

Establishment of formal inspection, examination, and investigative standards
(a)

In general
The Attorney General shall establish written standards for how the Bureau of Alcohol, Tobacco, Firearms, and Explosives is to—
(1)
conduct inspections, examinations, or investigations of a possible violation of chapter 40 or 44 of title 18, United States Code; and
(2)
make license application denial, license suspension, license revocation or other adverse determinations regarding an applicant or licensee.
(b)

Inclusion of mitigating factors
The standards shall include mitigation factors that must be considered before the Attorney General initiates any adverse action against an applicant or licensee.
(c)

Availability
The written standards shall be made available to the public, and shall be provided by the Attorney General to applicants and licensees at the time of any license application and on demand.
7.

Limitations on use of firearms purchaser information
Section 923(g)(1)(D) of title 18, United States Code, is amended in the last sentence by inserting “, except that information identifying a person who has purchased or received firearms or ammunition and who is not prohibited from doing so may not be so made available or so provided unless the agency involved has certified that the agency will not disclose the information to any entity other than a court, federal, State or local law enforcement agency, or prosecutor” before the period.
8.

Liquidation of inventory in Federal firearms license expiration, surrender, or revocation cases
Section 923 of title 18, United States Code, is amended by adding at the end the following:
“(m)
(1)
Except as provided in paragraph (2), an entity whose license issued under this chapter is expired, surrendered, or revoked shall be afforded 90 days from the effective date of the expiration, surrender, or revocation (not counting any period in which an appeal of such a revocation is pending) to liquidate the firearms business inventory of the entity, which time may be extended on a showing of reasonable cause. During the 90-day period (including any extension of the period), the license involved shall continue to be considered valid, notwithstanding the expiration, surrender, or revocation, and the Attorney General shall issue letters of authorization to the entity on which licensees under this chapter and commercial third parties may rely. At any time before the expiration of the disposition period, the entity may transfer any remaining firearms from the firearms business inventory of the entity to the entity or, if more than 1 person holds an interest in the entity, to the interest holders, at which point the firearms are deemed to be a personal collection of the entity or interest holders, as the case may be.
(2)
Paragraph (1) shall not apply with respect to a person if a United States district court for the judicial district in which the person resides or in which the principal place of business of the person subject to the license is located finds, by clear and convincing evidence, that the continued operation by the person of the firearms business involved poses an immediate and grave threat to public safety, in which case the person may transfer all firearms from the firearms business inventory of the person to the personal collection of the person or to another licensee for consignment or other liquidation at the direction of the person.”.
9.

Opportunity to cure violations after acquisition of firearms business
Section 923 of title 18, United States Code, is further amended by adding at the end the following:
“(n)
If the Attorney General is made aware that a business licensed under this chapter has been transferred to a surviving spouse or child of the licensee, to an executor, administrator, or other legal representative of a deceased or incompetent licensee, to a receiver or trustee in bankruptcy, to an assignee for benefit of creditors, or to an entity holding a security interest in an item as collateral pursuant to Article 9 of the Uniform Commercial Code (U.C.C. § 9–102(a)(73)), and, before the transfer, or on the first inspection or examination by the Attorney General of the records of the licensee after the transfer, the licensee is found to be operating the business in violation of this chapter, the Attorney General—
(1)
shall notify the transferee of the violation by the transferor; and
(2)
shall not presume that the transferee is committing the violation.”.
10.

Standards for criminal violations of recordkeeping requirements
Section 922(m) of title 18, United States Code, is amended—
(1)
by striking “any false entry” and inserting “a materially false entry”;
(2)
by striking “appropriate entry” and inserting “a materially significant entry”; and
(3)
by striking “properly maintain” and inserting “retain custody of”.