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107th Congress                                            Rept. 107-727
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
               PROTECTION OF LAWFUL COMMERCE IN ARMS ACT

                                _______
                                

                October 7, 2002.--Ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2037]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 2037) to amend the Act establishing the 
Department of Commerce to protect manufacturers and sellers in 
the firearms and ammunition industry from restrictions on 
interstate or foreign commerce, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     4
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     6
Committee Oversight Findings.....................................     9
Statement of General Performance Goals and Objectives............     9
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Committee Cost Estimate..........................................     9
Congressional Budget Office Estimate.............................     9
Federal Mandates Statement.......................................    10
Advisory Committee Statement.....................................    10
Constitutional Authority Statement...............................    10
Applicability to Legislative Branch..............................    11
Section-by-Section Analysis of the Legislation...................    11
Changes in Existing Law Made by the Bill, as Reported............    12
Dissenting Views.................................................    16

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Protection of Lawful Commerce in Arms 
Act''.

SEC 2. AMENDMENT TO ORGANIC ACT.

  The Act entitled ``An Act to establish the Department of Commerce and 
Labor'', approved February 14, 1903 (15 U.S.C. 1501 et seq.), is 
amended by redesignating section 13 as section 14 and by inserting 
after section 12 the following:

``SEC. 13. RESTRICTION ON COMMERCE.

  ``(a) Secretary of Commerce List.--The Secretary of Commerce shall 
establish and maintain a list consisting of each person that notifies 
the Secretary under subsection (b) that such person is a licensed 
manufacturer of a firearm or an ammunition product, a licensed seller 
of a firearm, a licensed seller of an ammunition product, or a trade 
association representing such manufacturers or sellers. The list shall 
contain the name of the person, the chief executive officer of the 
person, and the address and location of the headquarters of the person. 
The Secretary shall maintain and update the list and may publish the 
list in the Federal Register.
  ``(b) Notification.--Each person that--
          ``(1) is a licensed manufacturer of a firearm or an 
        ammunition product,
          ``(2) is a licensed seller of a firearm,
          ``(3) is a licensed seller of an ammunition product, or
          ``(4) is a trade association representing such manufacturers 
        or sellers,
may notify the Secretary of that person's existence and provide to the 
Secretary the information described in subsection (a).
  ``(c) Freedom From Restriction.--Conduct that--
          ``(1) is carried out by a licensed manufacturer of a firearm 
        or an ammunition product, involves such firearm or ammunition 
        product, and is described in paragraph (5) of subsection (f),
          ``(2) is carried out by a licensed seller of a firearm, 
        involves such firearm, and is described in paragraph (7) of 
        subsection (f),
          ``(3) is carried out by a licensed seller of an ammunition 
        product, involves such ammunition product, and is described in 
        paragraph (8) of subsection (f), or
          ``(4) is carried out by a trade association in the course of 
        organizing, advising, or representing its members who are 
        manufacturers of a firearm or an ammunition product, sellers of 
        a firearm, or sellers of an ammunition product, with respect to 
        conduct of such manufacturers or sellers described in paragraph 
        (5), (7), or (8) of subsection (f), as the case may be,
and that is lawful under applicable Federal, State, or local law, shall 
not be a basis for imposing a restriction on interstate or foreign 
commerce on a person on the list described in subsection (a) as a 
result of harm caused by the criminal, suicidal, negligent, or other 
unlawful misuse of any such firearm or ammunition product by any other 
person.
  ``(d) Absence From List.--The absence from the list maintained under 
this section of any person who is a manufacturer of a firearm or an 
ammunition product, a seller of a firearm, or a seller of an ammunition 
product shall not be construed to create any cause of action or to 
deprive such person of any lawful defense that may otherwise be 
available to such person.
  ``(e) Limitation of Use of List.--No officer, agency, or 
instrumentality of the United States may use the list established and 
maintained under this section for any purpose other than the 
enforcement of the provisions of this section.
  ``(f) Definitions.--In this section:
          ``(1) Ammunition product.--The term `ammunition product' 
        means `ammunition' as defined in section 921(a)(17) of title 
        18, United States Code, and includes a component part of such 
        ammunition product that has been shipped or transported in 
        interstate or foreign commerce.
          ``(2) Engaged in the business.--The term `engaged in the 
        business' has the meaning given that term in section 921(a)(21) 
        of title 18, United States Code, and, as applied to a seller of 
        an ammunition product described in paragraph (8)(A)(ii), means 
        a person who devotes time, attention, and labor to the sale of 
        ammunition products as a regular course of trade or business 
        with the principal objective of livelihood and profit through 
        the sale or distribution of the ammunition products.
          ``(3) Firearm.--The term `firearm' means `firearm' as defined 
        in section 921(a)(3)(A) or (B) of title 18, United States Code, 
        and includes--
                  ``(A) any `antique firearm' as defined in section 
                921(a)(16) of such title; and
                  ``(B) a component part of any firearm described in 
                this paragraph that has been shipped or transported in 
                interstate or foreign commerce.
          ``(4) Interstate or foreign commerce.--The term `interstate 
        or foreign commerce' has the meaning given that term in section 
        921(a)(2) of title 18, United States Code.
          ``(5) Manufacturer; licensed manufacturer.--
                  ``(A) Manufacturer.--The term `manufacturer of a 
                firearm or an ammunition product' means a 
                `manufacturer' as defined in section 921(a)(10) of 
                title 18, United States Code, who is engaged in the 
                business of manufacturing a firearm or an ammunition 
                product in interstate or foreign commerce.
                  ``(B) Licensed manufacturer.--The term `licensed 
                manufacturer of a firearm or an ammunition product' 
                means any manufacturer described in subparagraph (A) 
                who is licensed under chapter 44 of title 18, United 
                States Code, to be engaged in the business as such 
                manufacturer.
          ``(6) Restriction on interstate or foreign commerce.--The 
        term `restriction on interstate or foreign commerce'--
                  ``(A) means--
                          ``(i) civil damages or equitable relief, or
                          ``(ii) any other limitation or condition,
                awarded or ordered by a Federal, State, or local court, 
                that restricts the ability of a person on the list 
                established under subsection (a) to freely engage in 
                interstate or foreign commerce with respect to firearms 
                or ammunition products, or of a trade association on 
                the list established under subsection (a) to freely 
                engage in lawful activities on behalf of its 
                membership; and
                  ``(B) does not include any damages, equitable relief, 
                or other limitation or condition arising from--
                          ``(i) breach of contract or warranty in 
                        connection with the purchase of a firearm or an 
                        ammunition product;
                          ``(ii) physical injuries or property damage 
                        resulting directly from a defect in design or 
                        manufacture of a firearm or an ammunition 
                        product, when used as intended; or
                          ``(iii) the supplying of a firearm or an 
                        ammunition product by a seller of a firearm or 
                        seller of an ammunition product for use by 
                        another person when the seller knows or should 
                        know that the person to whom the product has 
                        been supplied is likely to use the product, and 
                        in fact does use the product, in a manner 
                        involving unreasonable risk of physical injury 
                        to that person and others.
          ``(7) Seller of a firearm; licensed seller.--
                  ``(A) Seller.--The term `seller of a firearm' means--
                          ``(i) an importer as defined in section 
                        921(a)(9) of title 18, United States Code, with 
                        respect to firearms, or
                          ``(ii) a dealer as defined in section 
                        921(a)(11) of title 18, United States Code,
                who is engaged in the business as such importer or 
                dealer in interstate or foreign commerce.
                  ``(B) Licensed seller.--The term `licensed seller of 
                a firearm' means a seller of a firearm who is licensed 
                under chapter 44 of title 18, United States Code, to be 
                engaged in the business as an importer or dealer 
                described in subparagraph (A).
          ``(8) Seller of ammunition product; licensed seller.--
                  ``(A) Seller.--The term `seller of an ammunition 
                product' means--
                          ``(i) an importer as defined in section 
                        921(a)(9) of title 18, United States Code, with 
                        respect to ammunition products, who is engaged 
                        in the business as such importer in interstate 
                        or foreign commerce; or
                          ``(ii) any other person who is engaged in the 
                        business of selling ammunition products, 
                        including component parts of such ammunition 
                        products, in interstate or foreign commerce at 
                        the wholesale or retail level, consistent with 
                        Federal, State, and local law.
                  ``(B) Licensed seller.--The term `licensed seller of 
                an ammunition product' means--
                          ``(i) an importer described in clause (i) of 
                        subparagraph (A) who is licensed to be engaged 
                        in the business as such an importer under 
                        chapter 44 of title 18, United States Code; and
                          ``(ii) any other person described in clause 
                        (ii) of subparagraph (A) who has met all 
                        applicable requirements under Federal, State, 
                        or local law to be licensed to be engaged in 
                        the business as a seller described in that 
                        clause.
          ``(9) State.--The term `State' includes the District of 
        Columbia, the Commonwealth of Puerto Rico, and any territory of 
        possession of the United States.
          ``(10) Trade association.--The term `trade association' means 
        any association or business organization (whether or not 
        incorporated under the laws of any State) that is not operated 
        for profit, and 2 or more members of which are manufacturers of 
        a firearm or an ammunition product, sellers of a firearm, or 
        sellers of an ammunition product.''.

                          Purpose and Summary

    The purpose of H.R. 2037 is to amend the Act establishing 
the Department of Commerce to protect manufacturers and sellers 
in the firearms and ammunition industry from restrictions on 
interstate or foreign commerce.

                  Background and Need for Legislation

    Over the past several years, over 30 cities and 
counties,\1\ as well as individuals, have sued the firearms 
industry. Represented by some of the same law firms that 
represented plaintiffs in tobacco litigation, municipal 
plaintiffs have targeted the firearms and ammunition industries 
for the damages and injuries resulting from guns used during 
the criminal acts of third parties. These suits are different 
from past lawsuits against the firearms industry--the cities 
and counties are not representing specific victims, nor are 
they claiming specific damage against city property. Instead, 
they are suing over the ``societal effects'' of firearms. 
Specifically, municipal plaintiffs claim that they are entitled 
to recover as damages the sums that they have been forced to 
expend as a result of ``gun violence'' (i.e., police, emergency 
medical care, court, prison and other costs associated with gun 
violence).
---------------------------------------------------------------------------
    \1\ Cities and counties filing cases against the firearms industry 
include: New Orleans; Chicago; State of Illinois; Miami; Bridgeport, 
CT; Atlanta; Cleveland; Detroit; Cincinnati; St. Louis; Cities of 
Northern California (Oakland, Berkeley, Sacramento, East Palo Alto, San 
Francisco, Alameda County and San Mateo County); Cities of Southern 
California (Los Angeles, Compton, West Hollywood, and Inglewood); 
County of Los Angeles; Camden County, NJ; Boston; Newark, NJ; Camden, 
NJ; Gary, IN; Wilmington, DE; Washington, DC; Philadelphia; New York 
City; the State of New York; and Jersey City, NJ.
---------------------------------------------------------------------------
    There are a number of legal theories under which plaintiffs 
are arguing the firearms industry should be held responsible, 
including improper or defective distribution, unsafe design or 
product liability, and public nuisance. To date, every case 
that has been litigated to conclusion has been dismissed, or 
dismissed voluntarily by the plaintiff.
    Municipal lawsuits against the gun industry, for the most 
part, have failed because they lack the necessary element of 
causation. In order to prove that a party is liable under tort 
law, a plaintiff must prove that the defendant caused the 
injury to the plaintiff. The municipalities argue that the 
firearms manufactured and sold by defendants to third parties 
are used to commit crimes and inflict injury on parties other 
than the cities and counties who are suing. Courts, however, 
have routinely found that the damages claimed by the municipal 
plaintiffs for such theories are too remote and too removed 
from the actions of the defendants to permit recovery.
    Moreover, these lawsuits have attempted to break new legal 
ground by arguing that every gun manufacturer should be held 
collectively liable for damages from guns made by any one of 
the manufacturers (called ``market share liability''). This 
type of liability is permitted if the goods are fungible, 
meaning the goods look and act identically so there is no way 
to distinguish between them. Courts, however, have not found 
firearms to be fungible goods; therefore, courts have not 
embraced that market share liability argument. Some fear that 
such tactics eventually will be used to target other 
industries, such as the spirits and beer makers, and even 
fastfood producers.
    Finally, courts have expressed concerns about the 
separation of powers issues and the role of the judicial branch 
in deciding these cases. Federal and state courts have been 
nearly unanimous in ruling against the notion that courts 
should legislate gun policy. As one court noted, it is the 
prerogative of the legislative body to ``make policy decisions 
related to gun control and the frustration at the failure of 
legislatures to enact laws sufficient to curb handgun injuries 
is not an adequate reason to engage the judicial forum in 
efforts to implement a broad policy change.'' Wasylow v. Glock, 
975 F. Supp. 370 (D.Mass. 1996). In fact, when given the 
opportunity to legislate, 26 states have opted to pass laws 
designed to prevent these lawsuits against firearms 
manufacturers and dealers. When challenged, these statutes have 
been upheld by federal and state courts.
    Despite the fact that the lawsuits filed against the 
firearms industry have not produced any successful results, 
cities and counties continue to file suit. In fact, in March 
2002, the day after the City of Boston voluntarily dismissed 
its lawsuit against the gun industry for lack of evidence, 
Jersey City, New Jersey filed suit. These lawsuits have cost 
municipalities, taxpayers and the firearms industry millions of 
dollars, but to date have produced no tangible benefits. H.R. 
2037 is specifically designed to curb such frivolous lawsuits.

                                Hearings

    The Subcommittee on Commerce, Trade, and Consumer 
Protection held a legislative hearing on April 18, 2002 on H.R. 
2037, the ``Protection of Lawful Commerce in Arms Act.'' At 
that hearing, the following persons testified: Lawrence G. 
Keane, Vice President and General Counsel, National Shooting 
Sports Foundation; Dr. H. Sterling Burnett, Senior Fellow, 
National Center for Policy Analysis; Jeff Reh, General Counsel, 
Beretta USA Corporation; Elisa Barnes, Law Offices of Elisa 
Barnes; and M. Kristin Rand, Legislative Director, Violence 
Policy Center.

                        Committee Consideration

    On Thursday, May 9, 2002, the Subcommittee on Commerce, 
Trade, and Consumer Protection met in open markup session and 
approved H.R. 2037, as amended, for Full Committee 
consideration by a voice vote, a quorum being present. On 
Wednesday, September 25, 2002, the Full Committee met in open 
markup session and ordered H.R. 2037 favorably reported to the 
House, as amended, by a rollcall vote of 30 ayes to 16 nays, a 
quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
following are the recorded votes taken on the motion by Mr. 
Tauzin to order H.R. 2037 reported to the House, and on 
amendments offered to the measure, including the names of those 
members voting for and against.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 2037 is to curb the frivolous lawsuits 
brought by municipalities and private individuals against the 
firearms and ammunitions industry for harm caused by the 
criminal, suicidal or negligent actions of third parties.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
2037, the Lawful Commerce in Arms Act of 2002, would result in 
no new or increased budget authority, entitlement authority, or 
tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 3, 2002.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2037, the 
Protection of Lawful Commerce in Arms Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Ken Johnson 
(for federal costs), Angela Seitz (for the state and local 
impact), and Cecil McPherson (for the private-sector impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 2037--Protection of Lawful Commerce in Arms Act

    H.R. 2037 would require the Department of Commerce to 
establish a voluntary list of manufacturers and sellers of guns 
and ammunition, as well as the trade associations that 
represent them. Under the bill, courts could not impose civil 
damages or other restrictions on the organizations on this list 
because of gun-related crimes committed by consumers of these 
products. In return for choosing to be listed, these entities 
would be protected from lawsuits that otherwise might result in 
such damages.
    Based on information from the Department of Commerce, CBO 
expects that implementing H.R. 2037 would require one staff 
member to manage the voluntary list. Assuming the availability 
of appropriated funds, CBO estimates that the cost of 
developing and maintaining the list would be negligible. 
Enacting the bill would not affect direct spending or receipts.
    H.R. 2037 would impose both an intergovernmental mandate 
and a private-sector mandate as defined in the Unfunded 
Mandates Reform Act (UMRA) by prohibiting state, local, and 
tribal governments and private-sector parties from entering 
into lawsuits against certain manufacturers or sellers of 
firearms and ammunition products, and related trade 
associations, when such products are used unlawfully to do 
harm. Only the entities who have registered with the Secretary 
of Commerce as a manufacturer or seller in interstate or 
foreign commerce of a firearm or an ammunition product, or a 
trade association representing such manufacturers or sellers, 
would be protected under the legislation.
    Depending on how lawsuits would be resolved under current 
law, plaintiffs could stand to receive significant amounts in 
damage awards. Because few lawsuits have been completed, CBO 
has no basis for predicting the level of potential damage 
awards, if any. Therefore, we cannot determine the costs of 
these mandates (forgone net revenues from damage awards), or 
whether such costs would exceed the annual thresholds 
established in UMRA for intergovernmental mandates ($58 million 
in 2002, adjusted annually for inflation) and for private-
sector mandates ($115 million in 2002, adjusted annually for 
inflation).
    The CBO staff contacts for this estimate are Ken Johnson 
(for federal costs), Angela Seitz (for the state and local 
impact), and Cecil McPherson (for the private-sector impact). 
The estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 establishes the short title of the bill as the 
``Protection of Lawful Commerce in Arms Act.''

Section 2. Amendment to Organic Act

    Section 2 amends the Department of Commerce organic statute 
(15 U.S.C. 1501 et seq.) by adding a new section 13. The bill 
requires that the Department of Commerce establish and maintain 
a voluntary list composed of federally licensed firearms 
manufacturers and sellers, federally licensed ammunitions 
manufacturers and sellers, and firearms trade associations, who 
would be subject to the protections of this bill.
    Section 13(d) states that the absence of a federally 
licensed firearms manufacturer and seller, federally licensed 
ammunition manufacturer or seller, and firearms trade 
association shall not be construed to deprive any such person 
or entity of any lawful defense they have under current law. 
Additionally, section 13(e) limits the use of the list only for 
enforcement of the provisions of this Act.
    Under section 13(c), actions taken by those persons and 
entities on this list, acting lawfully under all Federal, 
state, and local laws, cannot be the subject of a ``restriction 
on interstate or foreign commerce'' as a result of harm caused 
by the criminal, suicidal, negligent, or other unlawful misuse 
of a firearm or ammunition product by any other person.
    ``Restriction on interstate and foreign commerce'' is 
defined in section 13(f)(6) as civil damages or equitable 
relief, or any other limitation or condition awarded or ordered 
by a Federal, state, or local court that restricts the ability 
of a person on the list to freely engage in interstate or 
foreign commerce with respect to firearms or ammunition 
products, or of a trade association to freely engage in lawful 
activities on behalf of its members.
    The definition of ``restriction on interstate and foreign 
commerce'' does not include any damages, equitable relief, or 
other limitation arising from breach of contract or breach of 
warranty from the purchase of a firearm or ammunition product, 
physical injuries or property damage resulting directly from a 
defect in design or manufacture of a firearm or ammunition 
product when used as intended, or supplying a firearm or an 
ammunition product by a seller to a person the seller knows or 
should know is likely to use the product, and does use the 
product, in a manner involving unreasonable risk of physical 
injury to that person or others, otherwise known as ``negligent 
entrustment'' actions.
    Section 13(f) also includes definitions for ammunition 
product, engaged in the business, firearm, interstate or 
foreign commerce, manufacturer, seller of a firearm, and seller 
of ammunition product consistently with the definitions in 18 
U.S.C. 921. The bill further defines licensed manufacturers and 
sellers of firearm and ammunition products as those persons and 
entities previously defined who are licensed under chapter 44 
of title 18 and engaged in the business.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                        ACT OF FEBRUARY 14, 1903


      AN ACT To establish the Department of Commerce and Labor

           *       *       *       *       *       *       *


SEC. 13. RESTRICTION ON COMMERCE.

  (a) Secretary of Commerce List.--The Secretary of Commerce 
shall establish and maintain a list consisting of each person 
that notifies the Secretary under subsection (b) that such 
person is a licensed manufacturer of a firearm or an ammunition 
product, a licensed seller of a firearm, a licensed seller of 
an ammunition product, or a trade association representing such 
manufacturers or sellers. The list shall contain the name of 
the person, the chief executive officer of the person, and the 
address and location of the headquarters of the person. The 
Secretary shall maintain and update the list and may publish 
the list in the Federal Register.
  (b) Notification.--Each person that--
          (1) is a licensed manufacturer of a firearm or an 
        ammunition product,
          (2) is a licensed seller of a firearm,
          (3) is a licensed seller of an ammunition product, or
          (4) is a trade association representing such 
        manufacturers or sellers,
may notify the Secretary of that person's existence and provide 
to the Secretary the information described in subsection (a).
  (c) Freedom From Restriction.--Conduct that--
          (1) is carried out by a licensed manufacturer of a 
        firearm or an ammunition product, involves such firearm 
        or ammunition product, and is described in paragraph 
        (5) of subsection (f),
          (2) is carried out by a licensed seller of a firearm, 
        involves such firearm, and is described in paragraph 
        (7) of subsection (f),
          (3) is carried out by a licensed seller of an 
        ammunition product, involves such ammunition product, 
        and is described in paragraph (8) of subsection (f), or
          (4) is carried out by a trade association in the 
        course of organizing, advising, or representing its 
        members who are manufacturers of a firearm or an 
        ammunition product, sellers of a firearm, or sellers of 
        an ammunition product, with respect to conduct of such 
        manufacturers or sellers described in paragraph (5), 
        (7), or (8) of subsection (f), as the case may be,
and that is lawful under applicable Federal, State, or local 
law, shall not be a basis for imposing a restriction on 
interstate or foreign commerce on a person on the list 
described in subsection (a) as a result of harm caused by the 
criminal, suicidal, negligent, or other unlawful misuse of any 
such firearm or ammunition product by any other person.
  (d) Absence From List.--The absence from the list maintained 
under this section of any person who is a manufacturer of a 
firearm or an ammunition product, a seller of a firearm, or a 
seller of an ammunition product shall not be construed to 
create any cause of action or to deprive such person of any 
lawful defense that may otherwise be available to such person.
  (e) Limitation of Use of List.--No officer, agency, or 
instrumentality of the United States may use the list 
established and maintained under this section for any purpose 
other than the enforcement of the provisions of this section.
  (f) Definitions.--In this section:
          (1) Ammunition product.--The term ``ammunition 
        product'' means ``ammunition'' as defined in section 
        921(a)(17) of title 18, United States Code, and 
        includes a component part of such ammunition product 
        that has been shipped or transported in interstate or 
        foreign commerce.
          (2) Engaged in the business.--The term ``engaged in 
        the business'' has the meaning given that term in 
        section 921(a)(21) of title 18, United States Code, 
        and, as applied to a seller of an ammunition product 
        described in paragraph (8)(A)(ii), means a person who 
        devotes time, attention, and labor to the sale of 
        ammunition products as a regular course of trade or 
        business with the principal objective of livelihood and 
        profit through the sale or distribution of the 
        ammunition products.
          (3) Firearm.--The term ``firearm'' means ``firearm'' 
        as defined in section 921(a)(3)(A) or (B) of title 18, 
        United States Code, and includes--
                  (A) any ``antique firearm'' as defined in 
                section 921(a)(16) of such title; and
                  (B) a component part of any firearm described 
                in this paragraph that has been shipped or 
                transported in interstate or foreign commerce.
          (4) Interstate or foreign commerce.--The term 
        ``interstate or foreign commerce'' has the meaning 
        given that term in section 921(a)(2) of title 18, 
        United States Code.
          (5) Manufacturer; licensed manufacturer.--
                  (A) Manufacturer.--The term ``manufacturer of 
                a firearm or an ammunition product'' means a 
                ``manufacturer'' as defined in section 
                921(a)(10) of title 18, United States Code, who 
                is engaged in the business of manufacturing a 
                firearm or an ammunition product in interstate 
                or foreign commerce.
                  (B) Licensed manufacturer.--The term 
                ``licensed manufacturer of a firearm or an 
                ammunition product'' means any manufacturer 
                described in subparagraph (A) who is licensed 
                under chapter 44 of title 18, United States 
                Code, to be engaged in the business as such 
                manufacturer.
          (6) Restriction on interstate or foreign commerce.--
        The term ``restriction on interstate or foreign 
        commerce''--
                  (A) means--
                          (i) civil damages or equitable 
                        relief, or
                          (ii) any other limitation or 
                        condition,
                awarded or ordered by a Federal, State, or 
                local court, that restricts the ability of a 
                person on the list established under subsection 
                (a) to freely engage in interstate or foreign 
                commerce with respect to firearms or ammunition 
                products, or of a trade association on the list 
                established under subsection (a) to freely 
                engage in lawful activities on behalf of its 
                membership; and
                  (B) does not include any damages, equitable 
                relief, or other limitation or condition 
                arising from--
                          (i) breach of contract or warranty in 
                        connection with the purchase of a 
                        firearm or an ammunition product;
                          (ii) physical injuries or property 
                        damage resulting directly from a defect 
                        in design or manufacture of a firearm 
                        or an ammunition product, when used as 
                        intended; or
                          (iii) the supplying of a firearm or 
                        an ammunition product by a seller of a 
                        firearm or seller of an ammunition 
                        product for use by another person when 
                        the seller knows or should know that 
                        the person to whom the product has been 
                        supplied is likely to use the product, 
                        and in fact does use the product, in a 
                        manner involving unreasonable risk of 
                        physical injury to that person and 
                        others.
          (7) Seller of a firearm; licensed seller.--
                  (A) Seller.--The term ``seller of a firearm'' 
                means--
                          (i) an importer as defined in section 
                        921(a)(9) of title 18, United States 
                        Code, with respect to firearms, or
                          (ii) a dealer as defined in section 
                        921(a)(11) of title 18, United States 
                        Code,
                who is engaged in the business as such importer 
                or dealer in interstate or foreign commerce.
                  (B) Licensed seller.--The term ``licensed 
                seller of a firearm'' means a seller of a 
                firearm who is licensed under chapter 44 of 
                title 18, United States Code, to be engaged in 
                the business as an importer or dealer described 
                in subparagraph (A).
          (8) Seller of ammunition product; licensed seller.--
                  (A) Seller.--The term ``seller of an 
                ammunition product'' means--
                          (i) an importer as defined in section 
                        921(a)(9) of title 18, United States 
                        Code, with respect to ammunition 
                        products, who is engaged in the 
                        business as such importer in interstate 
                        or foreign commerce; or
                          (ii) any other person who is engaged 
                        in the business of selling ammunition 
                        products, including component parts of 
                        such ammunition products, in interstate 
                        or foreign commerce at the wholesale or 
                        retail level, consistent with Federal, 
                        State, and local law.
                  (B) Licensed seller.--The term ``licensed 
                seller of an ammunition product'' means--
                          (i) an importer described in clause 
                        (i) of subparagraph (A) who is licensed 
                        to be engaged in the business as such 
                        an importer under chapter 44 of title 
                        18, United States Code; and
                          (ii) any other person described in 
                        clause (ii) of subparagraph (A) who has 
                        met all applicable requirements under 
                        Federal, State, or local law to be 
                        licensed to be engaged in the business 
                        as a seller described in that clause.
          (9) State.--The term ``State'' includes the District 
        of Columbia, the Commonwealth of Puerto Rico, and any 
        territory of possession of the United States.
          (10) Trade association.--The term ``trade 
        association'' means any association or business 
        organization (whether or not incorporated under the 
        laws of any State) that is not operated for profit, and 
        2 or more members of which are manufacturers of a 
        firearm or an ammunition product, sellers of a firearm, 
        or sellers of an ammunition product.
  Sec. [13] 14. That this Act shall take effect and be in force 
from and after its passage: Provided, however, That the 
provisions of this Act other than those of section twelve in 
relation to the transfer of any existing office, bureau, 
division, officer or other branch of the public service or 
authority now conferred thereon, to the Department of Commerce 
and Labor shall take effect and be in force on the first day of 
July, nineteen hundred and three, and not before.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    H.R. 2037 would provide sweeping protections from liability 
lawsuits to all facets of the gun industry. The bill would deny 
the right of individuals and other entities harmed by gun 
violence to bring civil suits against gun manufacturers, 
sellers, and trade associations in all cases except breach of 
contract or warranty, product failure, or negligent 
entrustment. These are specific and special protections that 
are shared by no other industry. Additionally, the bill would 
deny legitimate legal courses of action to parties harmed by 
gun violence and would strip the rights of states to determine 
tort law, which traditionally has been solely within their 
jurisdiction.
    Americans rely on the civil justice system to impose on gun 
dealers and manufacturers a duty to act reasonably and 
responsibly when selling their products. Like every other 
business in America and everyone else in the country, if gun 
dealers and manufacturers do not act reasonably, they may be 
held liable. If they blatantly disregard the obvious 
consequences of their actions, injured parties may bring 
lawsuits against them in the nation's civil courts. Yet, if 
H.R. 2037 becomes law, the right of injured parties to bring 
civil suits against the gun industry, even in state court, 
under state law, would be denied.
    The extremity of this bill was starkly demonstrated when 
the Committee rejected a common-sense amendment to keep guns 
out of the hands of terrorists. During the full Committee's 
consideration of the bill, Rep. Henry A. Waxman offered an 
amendment to preserve civil liability for dealers or 
manufacturers who sell guns to terrorists, suspected 
terrorists, or people who are likely to provide these weapons 
to terrorists. This amendment would not have created new 
liabilities, but simply would have maintained current law 
protections if such sales are negligent or reckless. 
Nevertheless, the amendment was rejected.
    Proponents of this bill claim it is needed to protect the 
judiciary from frivolous lawsuits and to protect the livelihood 
of gun manufacturers and sellers, who may be bankrupted by 
judgments against them. However, the judicial system already 
has a mechanism for limiting frivolous lawsuits. Judges may 
sanction lawyers who bring frivolous lawsuits to their courts. 
These sanctions can be quite severe and are an effective 
deterrent to any lawyer considering filing a frivolous suit. 
Additionally, none of the lawsuits brought against the gun 
industry to date have been successful. Clearly, the industry is 
in no danger due to frivolous lawsuits.
    H.R. 2037 also raises questions of legal theory. This bill 
would ultimately harm the public because it prohibits 
legitimate courses of legal action to parties injured by the 
gun industry. To support H.R. 2037, proponents point to the 
fact that no lawsuits based on theories of public nuisance, 
negligence, and product liability that were filed by city, 
county, or state governments have yet been successful in court. 
However, it is problematic and short sighted to simply deny a 
course of legal action because no lawsuits have been successful 
thus far. In July 2002, the Supreme Court of Ohio ruled that an 
appeals court erred in dismissing a case brought by the City of 
Cincinnati against the Beretta Corporation and other entities 
of the firearms industry. The court found that, according to 
Ohio law, the case could legitimately be brought against the 
gun industry based on the legal theories of nuisance, 
negligence, and product liability. The court did not rule that 
the City of Cincinnati would win its case at trial. But, the 
court did rule that Cincinnati has a legal right, under state 
law, to bring the lawsuit.
    In August of this year, the California General Assembly and 
State Senate voted to repeal a law that provided similar 
liability protections to the gun industry, which was signed by 
the governor in September. If H.R. 2037 becomes law, it will 
trump the legitimate decisions of state governments, like those 
in California, in an area of tort law that is traditionally 
within the states' jurisdiction. As the American Bar 
Association stated to the Committee, ``H.R. 2037 would mandate 
new and unwarranted federal legislative `solutions' to issues 
that should properly be decided on a case-by-case basis in our 
nation's courts.'' We agree. The federal government should not 
mandate a one-size-fits-all liability preemption on the states 
and courts. Each case should be considered on the basis of the 
specific facts surrounding it.
    For these reasons, we believe H.R. 2037 is a misguided bill 
that should not become law.
                                   Diana DeGette.
                                   Henry A. Waxman.
                                   Bobby L. Rush.