Rule2026-19693
Implementing the Safe Explosives Act
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 25, 2026
Effective
October 26, 2026
Issuing agencies
Justice DepartmentAlcohol, Tobacco, Firearms, and Explosives Bureau
Abstract
The Bureau of Alcohol, Tobacco, Firearms, and Explosives ("ATF") is finalizing two Department of Justice ("Department") interim final rules ("IFRs") implementing the Safe Explosives Act. This rule formally ends those rules' interim status, responds to public comments from 2003 on the IFRs, rescinds ATF Ruling 2003-5 issued in response to IFR comments, and makes certain revisions to IFR provisions in response to the comments. They clarify when federal licensees/ permittees must report changes in responsible persons and authorized employees; eliminate verifying identity of persons accepting delivery on behalf of distributees; and amend regulatory exemption language governing aspects of transporting explosive materials.
Full Text
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<title>Federal Register, Volume 91 Issue 185 (Friday, September 25, 2026)</title>
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[Federal Register Volume 91, Number 185 (Friday, September 25, 2026)]
[Rules and Regulations]
[Pages 61074-61111]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19693]
[[Page 61073]]
Vol. 91
Friday,
No. 185
September 25, 2026
Part III
Department of Justice
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Bureau of Alcohol, Tobacco, Firearms, and Explosives
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27 CFR Part 555
Implementing the Safe Explosives Act; Final Rule
Federal Register / Vol. 91, No. 185 / Friday, September 25, 2026 /
Rules and Regulations
[[Page 61074]]
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DEPARTMENT OF JUSTICE
Bureau of Alcohol, Tobacco, Firearms, and Explosives
27 CFR Part 555
[ATF No. 2002R-341F]
RIN 1140-AA00 and 1140-AA20
Implementing the Safe Explosives Act
AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives,
Department of Justice.
ACTION: Final rule.
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SUMMARY: The Bureau of Alcohol, Tobacco, Firearms, and Explosives
(``ATF'') is finalizing two Department of Justice (``Department'')
interim final rules (``IFRs'') implementing the Safe Explosives Act.
This rule formally ends those rules' interim status, responds to public
comments from 2003 on the IFRs, rescinds ATF Ruling 2003-5 issued in
response to IFR comments, and makes certain revisions to IFR provisions
in response to the comments. They clarify when federal licensees/
permittees must report changes in responsible persons and authorized
employees; eliminate verifying identity of persons accepting delivery
on behalf of distributees; and amend regulatory exemption language
governing aspects of transporting explosive materials.
DATES: This rule is effective October 26, 2026.
FOR FURTHER INFORMATION CONTACT: Office of Regulatory Affairs, by email
at <a href="/cdn-cgi/l/email-protection#3f706d7e7f5e4b5911585049"><span class="__cf_email__" data-cfemail="aee1fcefeecfdac880c9c1d8">[email protected]</span></a>, by mail at Office of Regulatory Affairs; Enforcement
Programs and Services, Bureau of Alcohol, Tobacco, Firearms, and
Explosives; U.S. Department of Justice; 99 New York Avenue NE;
Washington, DC 20226; or by telephone at (202) 648-7070.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
II. Background
III. Analysis of Comments and Decisions for Interim Rule IFR 1
A. Reporting Changes in Responsible Persons and Employees
Authorized To Possess Explosive Materials
B. eZ-Check System
C. Relief From Disabilities
D. Limited Permittee Transaction Report, ATF Form 5400.4
E. Explosives Employee Possessor Questionnaire, ATF Form 5400.28
F. Rocket Motors
G. Warrantless Inspections
H. Transportation Issues
I. Safe Storage and Retaining Records
J. License/Permit Requirements for Treatment, Storage, Disposal
Facilities
K. Possessing Explosives Prior to Completing a Background Check
L. Meaning of ``Possess''
M. Safely Handling Explosives and Record-Keeping Manual
N. Errors in Regulatory Text
O. IFR Costs and Benefits Section
P. IFR Paperwork Reduction Act Section
IV. Analysis of Comments and Decisions for Interim Final Rule (IFR)
2
A. Obligations To Verify Persons Accepting Explosives Delivery
and ATF Ruling 2003-5
B. ``Private'' Carriers and Common/Contract Carriers
C. Carriers of Non-Placarded Loads
D. Request To Use Company Identification Card
V. Final Rule
A. Amendment to Sec. 555.57
B. Amendment to Sec. Sec. 555.103 and 555.105
C. Technical Amendments
D. Guidance Documents Affected by This Final Rule
VI. Statutory and Executive Order Reviews
I. Executive Summary
A. Purpose of the Regulatory Action
The Safe Explosives Act (``SEA''), Title XI, Subtitle C of Public
Law 107-296, of the Homeland Security Act of 2002 (November 25, 2002)
(``HSA''), amended the federal explosives laws in 18 U.S.C. chapter 40
to, among other things: (1) include a federal licensing/permitting
requirement for all explosive materials purchased or received on or
after May 24, 2003; (2) create additional categories of persons
prohibited from shipping, transporting, receiving, or possessing
explosive materials; and (3) create a new ``limited permit'' for
certain types of explosives purchasers.
On March 20, 2003, ATF published an interim final rule in the
Federal Register implementing the SEA, Implementation of the Safe
Explosives Act, Title XI, Subtitle C of Public Law 107-296, 68 FR 13768
(Mar. 20, 2003) (``IFR 1''). On September 11, 2003, ATF published
another interim final rule in the Federal Register, Implementation of
the Safe Explosives Act, Title XI, Subtitle C of Public Law 107-296--
Delivery of Explosive Materials by Common or Contract Carrier, 68 FR
53509 (Sep. 11, 2003) (``IFR 2''), which removed the requirement set
forth in IFR 1 that all common/contract carriers making deliveries on
or after May 24, 2003, complete ATF Form 5400.8, Explosives Delivery
Record (``Form 5400.8''), prior to taking possession of explosive
materials for delivery to a federal explosives licensee/permittee. This
final rule adopts the regulations set forth in both interim final rules
(collectively, ``IFRs'') with minor technical amendments for purposes
of clarity and some modifications in response to comments received.
B. Summary of the Major Provisions of This Rule
The SEA and its implementing regulations created important benefits
to public security and safety. Prior to the SEA, ATF performed
background checks on licensee/permittee responsible persons (``RPs''),
but not on other employees who were authorized to possess explosive
materials in the course of their employment. The SEA introduced a
requirement that ATF also perform background checks on employees
authorized to possess explosive materials to ensure that these
employees are not prohibited by law from shipping, transporting,
receiving, or possessing explosive materials.\1\ This requirement was
added to enable ATF to prevent a prohibited person, who otherwise might
be hired if no background check was performed, from gaining access to
and possessing explosives while employed by an explosives licensee/
permittee. Moreover, the required background checks were introduced to
help to ensure that criminals and other prohibited persons are not
permitted to obtain explosive materials for illicit use. Thus, the SEA,
as implemented through the two IFRs, introduced preventative tools to
increase public safety and security.
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\1\ The Attorney General is responsible for enforcing the SEA.
The Attorney General has delegated the responsibility for
administering and enforcing the SEA and federal explosives laws to
the Director of ATF, subject to the direction of the Attorney
General and Deputy Attorney General. See 18 U.S.C. 847; 28 CFR
0.130(a).
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The SEA also added that all persons who wish to acquire, but not
deal in, explosive materials must obtain, at minimum, a ``limited
permit.'' Further, the SEA added a requirement that ATF inspect all
licensee/permittee storage facilities. This mandate was introduced to
authorize ATF to verify that explosive materials are stored in
accordance with the regulations and that stored explosive materials do
not pose a threat to public safety. These changes were also implemented
via the two IFRs in 2003.
This final rule adopts most provisions from IFRs 1 and 2 without
change. However, this final rule does modify the verification
requirements that apply when explosive materials are delivered via
common/contract carrier. IFR 1 required common/contract carriers to
verify the identity of the person accepting delivery on behalf of the
distributee, verify that the person was authorized to accept on behalf
of the distributee, note the type and number of the identification
document furnished by the person, and report that information to the
distributor. When IFR
[[Page 61075]]
1 was issued, explosives and transportation industry members informed
ATF that these requirements placed an undue burden on common/contract
carriers, and drivers were concerned that the requirements would be
overly time consuming and potentially cause them to be held personally
liable if the explosives were delivered to unauthorized persons.\2\
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\2\ See ATF Ruling 2003-5 (May 23, 2003), Distribution of
Explosives to Limited Permittees, <a href="https://www.atf.gov/media/19706/download">https://www.atf.gov/media/19706/download</a> [<a href="https://perma.cc/3RCR-SDKR">https://perma.cc/3RCR-SDKR</a>].
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ATF acknowledged these concerns in two subsequent documents,
issuing ATF Ruling 2003-5 in May 2003 and IFR 2 in September 2003.
Pursuant to 27 CFR 555.22, which allows ATF to approve alternative
procedures or variations from requirements, Ruling 2003-5 created a
variance from the IFR 1 requirement to verify the identity of the
person accepting explosive materials on behalf of a limited permittee.
The ruling authorizes a variance from the requirements of Sec.
555.105(b)(6)(iii) for federal explosives licensees/permittees
distributing explosive materials to limited permittees via common/
contract carrier. As an alternative method or procedure, such
distributors may verify receipt of the explosive materials by
telephone, facsimile, email, or other means within three business days
after shipping the materials, in lieu of requiring the common/contract
carrier to verify the identity of the individual accepting delivery of
the explosives. In such cases, the distributor must note on ATF Form
5400.4, Limited Permittee Transaction Report (``Form 5400.4''), when
delivery occurred and when they contacted the distributee. The ruling,
however, did not remove the regulatory requirement from Sec.
555.105(b)(6)(iii) and did not address the identity verification
requirements for common/contract carriers when delivering to licensees/
user permittees. IFR 2 removed the requirement from Sec.
555.103(b)(2)(ii) that common/contract carriers must verify the
identity of persons accepting on the licensee/user permittee
distributee's behalf but also did not remove the requirement from Sec.
555.105(b)(6)(iii).
The remaining requirements that the recipient's identity be
verified by the common/contract carrier or the distributor when such
carriers delivered to a limited permittee remained a concern for
industry. Industry members raised burden issues and expressed concern
about reconciling the ruling and the regulatory provision, as well as
concerns about the different requirements for different distributees,
in public comments ATF received on both IFRs 1 and 2. Having considered
the concerns expressed in the comments, ATF is issuing this final rule
to remove the remaining IFR 1 verification and reporting requirement
for common/contract carriers and to rescind ATF Ruling 2003-05 and its
variance.
II. Background
Title XI of the Organized Crime Control Act of 1970 (``OCCA''),
Public Law 91-452, 84 Stat. 922 (1970), added chapter 40 (Importation,
Manufacture, Distribution, and Storage of Explosive Materials) to title
18 of the U.S. Code.\3\ This act established the foundational federal
framework for regulating manufacturing, distributing, and storing
explosive materials. One of title XI's stated purposes was to reduce
the ``hazard to persons and property arising from misuse and unsafe or
insecure storage of explosive materials.'' Public Law 91-452, sec.
1101, 84 Stat. at 952. The Attorney General is responsible for
implementing title XI. See 18 U.S.C. 847. Congress and the Attorney
General have delegated that responsibility to the Director of ATF
(``Director''), subject to the direction of the Attorney General and
the Deputy Attorney General.\4\ See 28 U.S.C. 599A(b)(1), (c)(1); 28
CFR 0.130(a)(1)-(2); Treas. Order No. 221(2)(a), (d), 37 FR 11696-97
(June 10, 1972). Accordingly, ATF has promulgated regulations
implementing title XI in 27 CFR part 555.
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\3\ Some provisions of 18 U.S.C. chapter 40 still refer to the
``Secretary of the Treasury.'' However, the HSA transferred the
functions of ATF from the Department of the Treasury to the
Department of Justice, under the general authority of the Attorney
General. 26 U.S.C. 7801(a)(2)(A); 28 U.S.C. 599A(c)(1). Thus, for
ease of reference, this rule refers to the Attorney General where
relevant.
\4\ In Attorney General Order Number 6353-2025, the Attorney
General has delegated authority to the Director to issue regulations
pertaining to matters within ATF's jurisdiction, including under
OCCA, the National Firearms Act, and the Gun Control Act. ATF's
jurisdiction also includes the Arms Export Control Act and the
Contraband Cigarette Trafficking Act.
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The Safe Explosives Act (``SEA''), Title XI, Subtitle C of Public
Law 107-296, 116 Stat. 2135, 2280, of the HSA (November 25, 2002),
amended the federal explosives laws in 18 U.S.C. chapter 40 to, among
other things, (1) include a federal licensing/permitting requirement
for purchasing and receiving explosive materials on or after May 24,
2003; (2) create additional categories of persons prohibited from
shipping, transporting, receiving, or possessing explosive materials;
and (3) create a new ``limited permit'' for certain types of explosives
purchasers. In general, the provisions of the HSA became effective 60
days after the date enacted, on January 24, 2003.
A. Provisions of SEA Effective January 24, 2003
Pursuant to section 4 of the HSA, the following provisions of the
SEA became effective on January 24, 2003, the general effective date
provision for the entire HSA:
<bullet> Adding three categories of persons (citizen renunciants,
aliens with certain exceptions, and persons dishonorably discharged
from the Armed Forces) who may not lawfully ship, transport, receive,
or possess explosive materials (HSA sec. 1123(a), (b));
<bullet> Specifying that it violates the law if a prohibited person
ships or transports explosives or materials for explosives, or receives
or possesses explosives or materials for explosives that have been
shipped or transported, in or affecting interstate or foreign commerce
(HSA sec. 1123(b)(3));
<bullet> Providing ATF with the authority to require licensed
manufacturers, licensed importers, and persons who manufacture or
import explosive materials or ammonium nitrate to provide ATF with
samples, information on chemical composition, and other information
relevant to identifying the product (HSA sec. 1124);
<bullet> Adding to the types of property which it is a crime to
maliciously damage or destroy, or attempt to do the same, particularly
when tied to explosives, property owned, possessed by, or leased to any
institution or organization receiving federal financial assistance (HSA
sec. 1125);
<bullet> Expanding ATF's authority to grant relief from
disabilities to all categories of prohibited persons if the applicant
is found not to be likely to act in a manner dangerous to public safety
and that such relief is not contrary to the public interest (HSA sec.
1126); and
<bullet> Adding a new theft-reporting violation, providing felony
penalties for a licensee/permittee who fails to report a theft of
explosives within 24 hours of discovery (HSA sec. 1127).
B. Provisions of SEA Effective May 24, 2003
Pursuant to section 1122(i)(1) of the HSA, the following provisions
of the SEA became effective on May 24, 2003, 180 days after the date
the HSA was enacted:
<bullet> Requiring each person receiving explosives to obtain a
federal license/permit (HSA sec. 1122(b));
<bullet> Creating a new type of permit, the ``limited permit'' (HSA
sec. 1122(c)(1)(A));
[[Page 61076]]
<bullet> Providing that only licensees and holders of user permits
must post their licenses and permits and make them available for
inspection (HSA sec. 1122(g));
<bullet> Requiring applicants to include specified identifying
information for employees authorized to possess explosive materials, as
well as fingerprints and photographs of ``responsible persons,'' in
applications for licenses and permits (HSA sec. 1122(c)(1)(B));
<bullet> Requiring ATF to conduct background checks on responsible
persons and employees authorized to possess explosive materials (HSA
sec. 1122(h));
<bullet> Extending the time for ATF to act on an application for a
license/permit from 45 days to 90 days (HSA sec. 1122(e)); and
<bullet> Authorizing warrantless inspections of explosives storage
for applicants of limited permits and holders of limited permits (HSA
sec. 1122(f)).
C. Interim Rules
On March 20, 2003, ATF published IFR 1, implementing the SEA. 68 FR
13768. The IFR 1 comment period ran through June 18, 2003. On September
11, 2003, ATF published IFR 2, which removed the requirement from IFR 1
that common/contract carriers complete Form 5400.8 prior to taking
possession of explosive materials for delivery to a licensee/user
permittee, regardless of whether the carrier was hired by the
distributor or distributee. 68 FR 53509. ATF believed that this
requirement was unduly burdensome and unnecessary due to Department of
Transportation (``DOT'') and Transportation Security Administration
(``TSA'') regulations that became effective after IFR 1 was
published.\5\
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\5\ See Hazardous Materials: Enhancing Hazardous Materials
Transportation Security, 68 FR 23832 (May 5, 2003) (DOT interim
final rule); Limitations on the Issuance of Commercial Driver's
Licenses with a Hazardous Materials Endorsement, 68 FR 23844 (May 5,
2003) (DOT interim final rule); Security Threat Assessment for
Individuals Applying for a Hazardous Materials Endorsement for a
Commercial Drivers License, 68 FR 23852 (May 5, 2003) (DHS interim
final rule).
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Once the DOT and TSA rules were published, certain employees of
motor, water, air, and rail carriers were no longer subject to 18
U.S.C. 842(i) while commercially transporting explosives. Rather, these
employees became subject to DOT and TSA security threat assessment
standards. To evaluate relevant security threat assessments, DOT and
TSA began to collect specific information to ensure that employees of
common/contract carriers transporting explosives do not pose a security
threat. Thus, ATF determined that there was a significantly diminished
need to collect similar information via Form 5400.8 to ensure that
explosives were not handed to prohibited persons for possible diversion
to criminal or terrorist use. However, ATF continued to require that
distributors verify the identity of persons accepting explosive
materials on behalf of the common/contract carriers and required
distributors to record the name of the common/contract carrier and the
full name of the driver in their permanent records. The comment period
for IFR 2 closed on October 14, 2003.
III. Analysis of Comments and Decisions for IFR 1
In response to IFR 1, ATF received 20 comments. Comments were
submitted by explosives industry members; mining, ski, and
transportation associations; model hobby rocket enthusiasts; and
individuals. Most commenters expressed specific concerns regarding the
interim regulations, which are addressed below.
A. Reporting Changes in Responsible Persons and Employees Authorized To
Possess Explosive Materials
Effective May 24, 2003, the SEA required ATF to conduct background
checks on RPs and employees authorized to possess explosive materials,
upon request by a licensee/permittee. The regulations at 27 CFR
555.57(b) therefore specify that all persons who have been issued
licenses/permits since May 24, 2003, ``must report to the Chief,
Federal Explosives Licensing Center, any change in responsible persons
or employees authorized to possess explosive materials.''
Comments Received
Three commenters expressed concerns regarding the phrase ``any
change.'' An explosives industry technical association stated that the
reporting requirement should apply only when a new RP or ``possessor
employee'' is added.
Another commenter, a trade association for ski resorts, asked
whether the reporting requirement applies to both additions and
deletions to a permittee's list of authorized employees. The commenter
requested that deletions be limited to employees not eligible for
rehire so that employers would not have to delete and then re-add the
same seasonal employees that return year after year.
Similar concerns were raised by an explosives industry
representative organization. This commenter contended that the phrase
``any change'' was very broad and could be interpreted to mean
retirement, resignation, dismissal, reassignment, or promotion. The
commenter believed that ATF intended the reporting requirement to apply
only when a new RP or employee, not previously reported to ATF, is
authorized to possess explosive materials, and suggested that the
regulation be amended to reflect this.
ATF Response
ATF acknowledges commenters' concerns about IFR 1's reporting
requirements for changes in RPs and employees authorized to possess
explosive materials. ATF recognizes that the commenters may be
interpreting ``any change'' to mean they must report only new RPs and
employees authorized to possess explosive materials because Sec.
555.57(b) does not specify the method for reporting other changes in
employment. However, there is a public safety risk and potential harm
to the licensee/permittee of not reporting RPs or employees who are no
longer authorized by the licensee/permittee. Former RPs have, in some
such cases, removed all other persons from the licensee/permittee or
put the licensee/permittee out of business, and formerly authorized
employees, in some such cases, have acquired explosives in the name of
the licensee/permittee, also causing them to incur charges for such
purchases. Due to the risks that former RPs or former employees
authorized to possess explosive materials could pose if not reported to
ATF and removed from authorized actions, ATF intended that the
regulations at Sec. 555.57(b) require a licensee/permittee to report
to ATF (1) new RPs or employees authorized to possess explosive
materials, (2) RPs that cease to be employed by, or otherwise vacate
their positions as RPs with, the licensee/permittee, and (3) any
employee authorized to possess explosive materials that leaves or
otherwise ceases to be an employee of, or ceases to need to possess
explosives as part of their employment with, the licensee/permittee.
Accordingly, this final rule amends Sec. 555.57(b) to clarify that
the licensee/permittee must report each new and each removed RP to the
Chief, Federal Explosives Licensing Center (``FELC''),\6\ within 30
days of adding or removing the RP. The licensee/permittee must report
each new RP by submitting ATF
[[Page 61077]]
Form 5400.13A/5400.16 (now changing to Form 5400.27), Explosives
Responsible Person Questionnaire (``Form 5400.13A/5400.16''), but may
just notify ATF in writing when they remove an RP. This final rule also
amends Sec. 555.57(c) to clarify that the licensee/permittee must
report each new and each removed employee authorized to possess
explosive materials to the Chief, FELC, within 30 days of adding or
removing the employee or the employee's authorization to possess
explosive materials for that licensee/permittee. The licensee/permittee
must report each new employee authorized to possess explosive materials
by submitting ATF Form 5400.28, Explosives Employee Possessor
Questionnaire (``Form 5400.28''), but may just notify ATF in writing
when the licensee/permittee wants to remove an employee. Finally, the
rule amends Sec. 555.57(d) to clarify that new RPs and employees
authorized to possess explosive materials may possess explosive
materials as part of their job duties from the time they are hired, as
long as the licensee/permittee submits the required form to add them,
along with all accompanying items, as required by the regulations, and
unless or until the Chief, FELC, notifies the licensee/permittee that
the individual is prohibited from doing so.
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\6\ On August 11, 2014, ATF issued a final rule titled
``Technical Amendments to Regulations,'' which, among other things,
updated this position title in Sec. 555.57 and wherever it appeared
in 27 CFR part 555. 79 FR 46690.
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B. eZ-Check System
The SEA mandates that each person who wishes to acquire explosives,
whether in interstate or intrastate commerce, obtain a federal
explosives license/permit. In general, the interim regulations at Sec.
555.103(b)(1)(ii) provide that a licensed importer, licensed
manufacturer, or licensed dealer selling or otherwise distributing
explosive materials must verify the license/permit status of the
distributee prior to releasing the explosive materials to them. Section
555.103(b)(2)(i) requires that, prior to or with the first order of
explosive materials, the distributee must provide the distributor with
a certified copy of the distributee's license/permit.
With respect to firearms, ATF has established a system that federal
firearms licensees (``FFLs'') may voluntarily use to verify the
validity of a license held by another FFL. This system, the FFL eZ-
Check system, is accessed via ATF's website. The eZ-Check system is
popular with FFLs and is an efficient method of verifying license
status. ATF believed a similar system would be useful for verifying the
explosives license/permit status of persons ordering explosives.
Accordingly, in IFR 1 ATF requested comments on the feasibility and
utility of such a system and whether it should be used in conjunction
with the procedures set forth in the regulations.
Comments Received
Two commenters addressed this subject and endorsed establishing an
eZ-Check-type system for explosives licenses/permits.
ATF Response
Although this rule does not establish or mandate the use of such a
system, ATF separately agreed with the commenters and developed a
federal explosives licensee/permittee eZ-Check system. Since 2017, ATF
has made available to federal explosives licensees/permittees an eZ-
Check system on its website. Although creating the eZ-Check system was
responsive to the comments on this topic, it did not affect the
regulations. As a result, ATF is not making any changes in this final
rule in response to these comments.
C. Relief From Disabilities
Prior to the SEA, federal law authorized ATF to grant relief from
prohibitions that disable a person from distributing, receiving,
possessing, and shipping or transporting explosives. However, this
authority applied only to prohibited persons disabled because they were
under indictment for or convicted of a felony. The SEA amended 18
U.S.C. 845(b), expanding ATF's authority to grant relief from
disabilities to all categories of prohibited persons if ATF finds that
the applicant is not likely to act in a manner dangerous to public
safety and that granting such relief is not contrary to the public
interest. The Attorney General delegated this authority to the
Director, and IFR 1 implemented this provision of the law in 27 CFR
555.142.
Section 555.142 also specifies categories of persons to whom the
Director generally will not grant relief unless there are extraordinary
circumstances or a compelling need, where granting such relief is
consistent with the public interest. Such categories of persons
generally presumed ineligible for relief include persons who have not
been discharged from parole or probation for at least two years,
fugitives from justice, prohibited aliens, persons who are unlawful
users of or addicted to any controlled substances, persons adjudicated
as ``mental defective'' or committed to a mental institution (with
certain exceptions), and persons prohibited by the law of the state
where the person resides from receiving or possessing explosive
materials. Section 555.142 also provides that the Director may grant
relief to aliens who have been lawfully admitted to the United States
or to persons who have not been discharged from parole or probation for
a period of at least two years if the Director determines that the
applicant has a compelling need to possess explosives, such as for
purposes of employment.
Comments Received
Four commenters expressed concerns regarding the provisions of
Sec. 555.142. One commenter argued that there is a group of
individuals for whom granting relief from disability is in the public
interest, for whom there is a compelling need to possess explosives,
and for whom special processing of relief from disability applications
is warranted. The commenter stated that each year, ski resorts employ
citizens of Australia, New Zealand, France, and Canada to work in the
U.S. as ski patrollers. According to the commenter, many of these
employees are highly skilled and experienced avalanche-control workers
who return to the same resorts in the U.S. year after year to work
specifically in avalanche control.
The commenter contended that the expertise and skill these
international employees provide to the ski industry and the resulting
benefit to public safety warrant them having relief from disability.
The commenter requested that ATF allow these employees to apply for
relief from disability before they arrive in the U.S. for the season,
with some provision that approving their seasonal visa would act as the
final step in their clearance to possess explosives at resorts and to
work in avalanche control. In addition, the commenter stated that once
such employees are granted relief from disability, they should not be
required to reapply for relief for subsequent ski seasons or,
alternatively, they should have to reapply for relief from disability
only every three to five years. The commenter added that if its
suggested revisions to the regulation do not appear workable, an
expedited relief from disability process should be established to
accommodate these employees.
Another commenter, a professor who works in the mining engineering
arena, expressed similar concerns. The commenter stated that the
commenter's university has developed an international reputation for
explosives engineering and has had many foreign students and scholars
visit its department over the past 20 years. According to the
commenter, several students have only student visas and, in light of
the SEA, are unable to take any ``hands-on'' explosives classes or do
research in explosives. The commenter
[[Page 61078]]
noted that some students had applied for relief from disabilities in
accordance with the regulations, but that the application process is
very lengthy. Accordingly, the commenter recommended ``a relief process
that only takes a couple of weeks'' or ``a guided step-by-step process
given on the web with an example so that applicants have something to
go by.''
Except as provided in Sec. 555.142(c)(3), the regulations specify
that the Director will not grant relief if the applicant is prohibited
by the law of the state where the applicant resides from receiving or
possessing explosive materials. A third commenter argued that because
Congress has granted DOT authority to preempt state and local
requirements as to transporting hazardous materials, the requirement
that the Director not grant relief if there is conflict with state law
should apply only in very limited circumstances. A fourth commenter
expressed similar concerns and stated that the requirement should apply
only to aliens handling explosives incidental to, and in connection
with, the commercial export of explosives by rail or truck to Canada
from the U.S.
ATF Response
ATF disagrees that the regulations need to be revised as suggested.
As described above, the Director may grant relief to an alien who has
been lawfully admitted to the U.S. if the Director determines that (1)
the alien is not likely to act in a manner dangerous to public safety,
(2) granting such relief is not contrary to the public interest, and
(3) the alien has a compelling need to possess explosives, such as for
employment. To receive relief, the alien must submit ATF Form 5400.29
(now 5400.31), Application for Restoration of Explosives Privileges
(now Request for Relief from Explosives Disability) (``Form 5400.29''),
and include certain additional documentation.
The SEA does not require that relief applications be submitted from
a location within the U.S. Therefore, an alien who has been lawfully
authorized to enter the U.S. may submit the alien's relief application
from a location outside the U.S. before arriving in the U.S. However,
in submitting a relief application, whether from a location within or
outside the U.S., the alien must be able to show that they have been
lawfully admitted to the U.S. (See Sec. 555.142(f)(1)(ix)).\7\ In
addition, the alien must provide certification that they are legally
authorized to work in the U.S., or other purposes for which they are
required to possess explosives; certification from an appropriate law
enforcement agency in the applicant's country of citizenship stating
that the applicant does not have a criminal record; and, if applicable,
certification from a federal explosives licensee/permittee or other
employer (including a university or college) stating that the applicant
is employed by the employer and must possess explosive materials for
purposes of employment.
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\7\ Although an alien may begin the application process to
request a relief from disability while still outside the United
States, they cannot receive the relief until they have been lawfully
admitted. Certain steps of ATF's assessment process must also occur
after the alien has been admitted to the United States.
---------------------------------------------------------------------------
The regulation at Sec. 555.142(d) states that any person who has
been granted relief is relieved of all disabilities disclosed on the
application for relief. This paragraph further states that the relief
from disabilities granted to aliens will be effective only so long as
the aliens retain their lawful immigration status. Therefore, provided
that aliens have not failed to disclose any prohibitive disabilities in
their initial relief applications, do not incur any new disabilities,
and retain lawful immigration status on each subsequent or intermittent
return to the U.S., the aliens would not be required to reapply for
relief.
In response to commenters requesting an expedited process or step-
by-step instructions, ATF has detailed instructions in Form 5400.29
(now 5400.31) that identify additional documents that aliens must
include with their applications. Further, ATF also provides detailed
information on completing a relief application on its website.\8\ While
considering and reviewing each application, ATF relies not only on the
information provided with the application, but also on information
provided by other sources to verify that the information received with
the application is accurate. Processing delays often occur as a result
of an incomplete or improperly completed relief application package;
ATF's inability to contact, locate, or schedule in-person interviews
with persons identified within the relief application; and delays in
responses from other federal, state, or foreign government law
enforcement agencies. Public safety requires that ATF obtain
information from other agencies and through personal interviews; any
expedited processes or shortened timelines could negatively affect
ATF's ability to obtain vital information. Despite these requirements,
ATF attempts to process relief applications as quickly as possible, and
in less than the 120 days that applicants are told to expect.
Therefore, ATF declines to adopt the commenter's suggestion to develop
an expedited relief process for foreign visitors studying at academic
institutions. However, due to some confusion expressed about when
aliens may begin the relief request process, ATF is amending Sec.
555.142(f)(1)(ix) to clarify that aliens can begin the request process
before they enter the U.S., although it cannot be completed until they
have been lawfully admitted.
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\8\ See ATF, Apply for Relief from Federal Explosives
Disabilities (Mar. 13, 2025), <a href="https://www.atf.gov/explosives/tools-services-explosives-industry/current-licensees/apply-relief-federal-explosives-disabilities">https://www.atf.gov/explosives/tools-services-explosives-industry/current-licensees/apply-relief-federal-explosives-disabilities</a> [<a href="https://perma.cc/P26U-HC48">https://perma.cc/P26U-HC48</a>].
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The other commenters suggested that ATF, when evaluating relief
from explosives disability applications, should disregard state
prohibitions as they relate to persons transporting explosive materials
within the U.S. and under the regulation of DOT. The commenters refer
to a specific example where DOT was authorized to exempt specific state
transportation laws that regulate the transportation of hazardous
materials. Federal law, at 18 U.S.C. 845(a)(1), exempts from ATF
regulation any aspect of transporting explosive materials via railroad,
water, highway, or air that pertain to safety, including security, and
that are regulated by DOT or the Department of Homeland Security
(``DHS''). In other words, if DOT or DHS have issued regulations on
safety or security aspects of transporting explosive materials by those
means, ATF will not also issue regulations on that topic. Following the
publication of IFR 1, DOT and DHS published regulations generally
exempting persons from the application of 18 U.S.C. 842(i) while they
are commercially transporting explosives.\9\
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\9\ See footnote 5, supra.
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ATF believes the provision at 27 CFR 555.142(c)(2)(vi), which
generally prohibits granting relief if the person is prohibited by the
law of the state where the person resides from receiving or possessing
explosive materials, is an effective and appropriate interpretation of
the ``public interest'' standard of 18 U.S.C. 845(b)(2). It is not in
the public interest to expend federal resources to investigate and act
on a relief application if the applicant is barred from possessing
explosives in his or her state of residence. In addition, ATF believes
it is appropriate to recognize the state's interest in determining the
categories of persons who may lawfully possess explosives while
residing within that state. ATF declines to second-guess state
officials by
[[Page 61079]]
conducting investigations of individuals who have categorically been
prohibited from receiving and possessing explosives under state law.
ATF also believes the contentions of these commenters relating to
DOT preemption of state law are not relevant to relief from disability
applications. To the extent that prohibited persons receive or possess
explosives during aspects of transporting them that are regulated by
DOT and relate to safety and security, the preemption provisions of 18
U.S.C. 845(a)(1) would apply, and such possession in these
circumstances would not be prohibited under this chapter. Because it is
not relevant if a person transporting explosives during aspects covered
by DOT regulations is prohibited from possessing explosives, the person
does not need relief from ATF to possess explosives while under the DOT
regulations. As a result, ATF neither disregards nor considers state
prohibitions as they relate to persons transporting explosive materials
within the U.S. under DOT's regulation.
For these reasons, ATF declines to adopt these commenters'
recommendations relating to relief applicants and state law
disabilities.
D. Limited Permittee Transaction Report, ATF Form 5400.4
Prior to the SEA, intrastate purchasers of explosives could acquire
explosives without a federal license/permit but needed to complete ATF
Form 5400.4, Explosives Transaction Record (``Form 5400.4''). The form
required the intrastate purchaser to certify that the purchaser was not
a prohibited person. Effective May 24, 2003, ATF revised the Explosives
Transaction Record form and retitled it as Limited Permittee
Transaction Report. Limited permittees complete the form when
purchasing explosive materials from licensees/permittees within their
state of residence. Among other things, the form requires that the
limited permittee provide information regarding their intended use of
the explosive materials. ATF stated in IFR 1 that the form also
provides an option for the distributor to document information
concerning the manufacturer's or importer's identification marks and
the size of the explosives to be distributed. In addition, ATF
solicited comments as to whether this optional information should be
mandatory.
Comments Received
Three commenters expressed concerns with respect to Form 5400.4.
One contended that ATF's use of the same form number, Form 5400.4, for
two different information collections was confusing and that ATF should
have issued a new information collection utilizing a new form number.
Specifically, the commenter stated, ``Over the last 30 years, the
explosives industry has become very familiar with the present Form
5400.4, completing the form almost 23,000 times annually.'' The
commenter added that the new Form 5400.4 would be ``completed by a
different population of explosive users, have different content, and
have different subsequent procedures than the present form.''
With respect to the revised Form 5400.4, the commenter acknowledged
that recording identification marks could be helpful to law enforcement
officials in tracing explosives. However, the commenter recommended
against a requirement to identify the size of explosives. According to
the commenter, ATF could look up the identification marks in the
inventory records, taking only a few minutes, while it would take the
regulated community hours to record the same information on the form.
Another commenter recommended that the option for the distributor
to document information concerning identification marks and explosives
size be removed from the form or, as an alternative, clearly
highlighted as not being required by law. According to the commenter,
IFR 1 did not show how this information would benefit ATF nor did it
provide data or information on why the optional information was added
to the form.
A third commenter expressed concern regarding the availability of
the revised Form 5400.4. This commenter stated that the form was not
available until shortly before the time designated for compliance.
Although the form could be obtained by downloading copies from ATF's
website, the commenter argued that a large number of explosives
distributors were located in areas where they might not have access to
the internet. Accordingly, the commenter stated that ATF should allow
licensees additional time to comply with use of the form. Similar
concerns were raised by another commenter.
ATF Response
ATF declines to assign a different form number to the Limited
Permittee Transaction Report. Over the 20-plus years since the interim
rules were issued, ATF has seen no evidence that using the old
explosives transaction form number for the new Limited Permittee
Transaction Report has caused confusion among industry members, nor
have there been any enforcement problems associated with the use of the
form number.
ATF agrees that ATF can readily locate information regarding the
size of the explosives listed on Form 5400.4 in other required
explosives records at the premises. Therefore, entry of this
information on the form will remain optional. ATF also agrees with the
suggestion that the form should clearly note that this information is
optional. As a result, Form 5400.4 was revised in 2003 to prominently
include the term ``optional'' next to the ``size'' column heading on
the form.
ATF recognizes that the revised Form 5400.4 was not made available
to the public until immediately prior to the effective date of the
applicable SEA provisions. This was primarily due to the short time
frame to implement the SEA. The new forms were made available as soon
as possible, and ATF took steps to inform the industry of new or
revised requirements that affected their conduct of business.\10\
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\10\ See ATF Explosives Industry Newsletter (May 2003), <a href="https://www.atf.gov/media/28951/download">https://www.atf.gov/media/28951/download</a> [<a href="https://perma.cc/PY78-9YTW">https://perma.cc/PY78-9YTW</a>], and
ATF Explosives Industry Newsletter (December 2003), <a href="https://www.atf.gov/media/29071/download">https://www.atf.gov/media/29071/download</a> [<a href="https://perma.cc/988D-WNY6">https://perma.cc/988D-WNY6</a>].
---------------------------------------------------------------------------
Regarding the topic of entering the identification marks on the
Limited Permittee Transaction Report, ATF has determined that it will
remain optional to complete this section of the form because ATF can
readily locate information regarding the identification marks listed on
the report in other required explosives records at the premises. Form
5400.4 was revised to show that this information is optional.
E. Employee Possessor Questionnaire, ATF Form 5400.28
The interim regulations at 27 CFR 555.45 specified that license/
permit applications postmarked on or after March 20, 2003, must be
accompanied by Form 5400.28. Prior to May 24, 2003, responsible
persons, i.e., applicants and others who had the authority to direct
the policies of the applicant with respect to explosive materials, were
required to answer on this form whether they fell within any of the
categories of persons prohibited from possessing explosive materials.
The interim regulations also provided that on and after May 24, 2003,
Form 5400.28 (which was retitled in 2003 as the Employee Possessor
Questionnaire and has since been retitled in 2021 as the Explosives
Employee Possessor Questionnaire), must be completed by each individual
who will possess explosive materials in the course of his or her
employment. Employees
[[Page 61080]]
completing the Form 5400.28 must provide appropriate identifying
information, including residence address and name of employer, and must
declare whether they fall within any of the categories of persons
prohibited from possessing explosive materials. Beginning from that
same time in 2003, RPs no longer completed Form 5400.28 because the
identifying information for RPs was collected on ATF Form 5400.13/
5400.16 (now changing to Form 5400.13), Application for an Explosives
License/Permit (``Form 5400.13/5400.16''). In 2023, ATF received
approval from the Office of Management and Budget (``OMB'') to collect
the identifying information for RPs on Form 5400.13A/5400.16 (now Form
5400.27) and no longer collects this information on Form 5400.13/
5400.16 (now Form 5400.13).
Comments Received
Two commenters expressed concerns regarding Form 5400.28. One
commenter contended that using the same form number for a completely
different information collection was confusing and that ATF should have
used a different form number for the Employee Possessor Questionnaire.
The commenter also argued that the new Form 5400.28 is not necessary
for ATF's performance of its duties. According to the commenter, ``The
FEL [federal explosives law] entitles ATF to obtain `the names of and
appropriate identifying information regarding all employees who will be
authorized by the applicant to possess explosive materials [18 U.S.C.
843(a)]' from a license or permit applicant.'' The commenter added that
the FEL does not give ATF explicit authority to obtain the extensive
information required by the new Form 5400.28.
The second commenter expressed similar concerns, stating that ``ATF
should only ask for the minimum identifying information necessary in
order to properly conduct the background check to determine
qualification.'' The other commenter also claimed that approximately
one half of the information required on the form was unnecessary for
ATF to perform its duties and recommended that ATF obtain only the
names and appropriate identifying information of employees authorized
to possess explosive materials, and do so through the license/permit
application form instead.
ATF Response
ATF does not believe that using an existing form number for the
Explosives Employee Possessor Questionnaire, Form 5400.28, has caused
confusion or hindered proper execution of the form. Form 5400.28 has
been in use since May 2003, and ATF has not been apprised of any
logistic or administrative problems as a result of retaining the number
Form 5400.28 for this form. Therefore, ATF is not adopting the
suggestion that ATF change the form number.
Additionally, ATF does not agree with the commenters' assertion
that Form 5400.28 seeks to collect more than the minimum identifying
information necessary to efficiently and appropriately carry out ATF's
statutory mandate to conduct background checks on employees authorized
to possess explosive materials. The commenters did not provide any
specifics on the identifying information in the Form 5400.28 fields
that they believe is unnecessary. The SEA amended several provisions of
the federal explosives laws, and Form 5400.28 is directly related to
implementing these provisions. For example, the SEA (1) added in 18
U.S.C. 842(i) new categories of persons prohibited from receiving or
possessing explosive materials; (2) required in section 843(a) that all
applicants for a license/permit submit the names of, and appropriate
identifying information regarding, all employees who will be authorized
by the applicant to possess explosive materials; and (3) required in
section 843(h)(1) that ATF determine if any RP or employee authorized
to possess explosive materials is a prohibited person under section
842(i). Further, 18 U.S.C. 847 authorizes the Attorney General to issue
rules and regulations she deems reasonably necessary to implement the
law.
ATF uses Form 5400.28 to assist in background checks and the
application process. Some of the requested information is applicable to
specific prohibiting factors, such as the U.S.-issued alien
registration number if an employee is not a U.S. citizen. ATF requires
this and other requested information to address the broad range of
circumstances that may be encountered when conducting background
checks. A thorough and accurate background check ensures public safety
and security by keeping explosives out of the hands of felons and other
prohibited persons. In addition, obtaining thorough information results
in quicker background checks so employers can be assured they are not
placing explosives in the hands of prohibited persons.
With regard to the commenter's statement that certain information
could be obtained from the license/permit application rather than
through Form 5400.28, ATF does not agree. Form 5400.28 is the only
document where this information is requested from an employee being
authorized to possess explosive material. Although ATF asks for similar
information for RPs, that reporting pertains only to RPs, not
employees. Accordingly, ATF does not believe that Form 5400.28 is
duplicative, and this final rule does not adopt the commenters'
recommendation.
F. Rocket Motors
The SEA requires that all persons receiving explosives on or after
May 24, 2003, obtain a federal explosives license/permit. In addition,
even before the SEA, licensees/permittees were required to comply with
the provisions of part 555 including, among other things, storage and
other safety requirements, as well as record-keeping and theft-
reporting. In the past, ATF took the position that these requirements
of the SEA and part 555 applied to ammonium perchlorate composite
propellant (``APCP''), including when APCP is used as a component of a
rocket motor. (A rocket motor consists essentially of APCP, black
powder, or other low explosives encased by a cardboard, plastic, or
metallic cylinder.)
On March 16, 2009, the U.S. District Court for the District of
Columbia vacated ATF's classification of APCP as an explosive as
defined under 18 U.S.C. 841(d). Tripoli Rocketry Ass'n, Inc. v. ATF,
No. 00-0273, 2009 WL 10737191 (D.D.C. Mar. 16, 2009). On July 17, 2009,
ATF issued an open letter to all federal explosives licensees/
permittees informing them that rocket motors that contain only APCP are
no longer regulated under the federal explosives laws; that no one is
required to obtain a federal explosives license/permit to manufacture,
import, purchase, distribute, transport, or receive APCP; and that
these types of rocket motors are not subject to regulatory requirement
under 27 CFR part 555.
1. Rocket Motors and Rocket Propellants Are Not Explosives
Comments Received
Five commenters argued that rocket motors and rocket propellants
(including APCP) are not explosives and should not be regulated by ATF.
One of the commenters stated, ``[e]xtensive testing by [the National
Association of Rocketry Standards and Testing Committee] of ammonium
perchlorate involving irradiation by radio waves, high temperatures
(>100 [deg]C), physical shock, static discharge (several
[[Page 61081]]
thousand volts), and unconfined burning has not revealed any explosive-
like properties. Furthermore, the burn rate for ammonium perchlorate is
well below that considered to be deflagration.''
ATF Response
The definition of explosive materials as it pertains to APCP and
rocket motors was not affected by the enactment of the SEA. Under 18
U.S.C. 841(d), the term ``explosives'' is defined as ``any chemical
compound[,] mixture, or device, the primary or common purpose of which
is to function by explosion.'' The definition states that the term
``includes, but is not limited to, dynamite and other high explosives,
black powder, pellet powder, initiating explosives, detonators, safety
fuses, squibs, detonating cord, igniter cord, and igniters.'' ATF is
also required under the law to publish an annual list of items that
fall within the definition of explosives. Beginning with the
publication of the first ``Explosives List'' in 1971, ATF classified
APCP as an explosive. This classification was based upon the statutory
definition of ``explosives,'' which contemplates that items can
``function by explosion'' either by detonating (dynamite and other high
explosives detonate) or by deflagrating (low explosives, such as black
powder, pellet powder, and rocket propellants, deflagrate, or burn very
quickly). Because APCP deflagrates when confined, ATF classified it as
an explosive. The SEA had no impact on this definition or
classification, so at the time the IFRs were published, APCP remained
an explosive.
In 2006, three years after the IFRs were published, ATF addressed
the subject of rocket motors in a final rule, Commerce in Explosives-
Hobby Rocket Motors, 71 FR 46079 (Aug. 11, 2006) (``hobby rocket motors
rule''). In this rule, ATF affirmed and reinstated into its regulations
an exemption for rocket motors containing 62.5 grams or less of APCP
and other explosive propellants. In 1981, ATF exempted from regulation
Class C explosives, which included ``common fireworks'' and certain
other explosives designated by DOT regulations, one of which was
originally termed ``toy propellant devices and toy smoke devices'' that
contained a ``small charge'' of slow-burning propellant or smoke-
producing powder. DOT subsequently renamed these devices ``model rocket
motors.'' However, between 1996 and 1998, when ATF updated its
regulations to reflect various DOT revisions, it inadvertently removed
the exemption language. Despite this administrative error, ATF
continued to exempt sport rocket motors containing 62.5 grams or less
of propellant, and in the 2006 final rule, it reinstated the exemption
in 27 CFR 555.141(a)(10). The exemption is for model rocket motors that
consist of APCP, black powder, or other similar low explosives, contain
no more than 62.5 grams of total propellant weight, and are designed as
single-use motors or as reload kits capable of reloading no more than
62.5 grams of propellant into a reusable motor casing. Id.
However, as discussed above, on March 16, 2009, the U.S. District
Court for the District of Columbia vacated ATF's classification of APCP
as an explosive as defined under 18 U.S.C. 841(d). Tripoli Rocketry
Ass'n, Inc., 2009 WL 10737191. Accordingly, APCP is no longer
classified by ATF as an explosive material, and rocket motors that
consist solely of APCP, irrespective of the total APCP weight contained
therein, are no longer regulated by ATF.
Notwithstanding the court's decision on APCP, black powder and
other low explosives used to manufacture and assemble rocket motors
continue to be subject to ATF regulations. As noted above, ATF exempts
single-use rocket motors or reload kits containing 62.5 grams or less
of black powder or other low explosives or propellants. However,
persons purchasing, storing, or engaging in the business of importing,
manufacturing, or dealing in these materials (other than APCP) remain
subject to the federal explosives laws and regulations.
2. Model Rockets/Rocket Motors Containing APCP Are ``Propellant-
Actuated Devices'' and, as Such, Are Exempt From ATF Regulation
Propellant-actuated devices manufactured, imported, or distributed
for their intended purposes are exempt from explosive regulations
pursuant to 27 CFR 555.141(a)(8). Prior to amendment in 2009,\11\ the
term ``propellant-actuated device'' was defined in Sec. 555.11 as
``[a]ny tool or special mechanized device or gas generator system which
is actuated by a propellant or which releases and directs work through
a propellant charge.'' In applying that regulatory definition, ATF
classified certain specific aircraft slide inflation cartridges,
inflatable automobile occupant restraint systems, nail guns, and diesel
and jet engine starter cartridges as propellant-actuated devices. The
comments discussed below were submitted during the time this definition
was still in effect. It has since been revised.
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\11\ Commerce in Explosives--Amended Definition of ``Propellant
Actuated Device,'' 74 FR 1878 (Jan. 14, 2009) (``2009 propellant
rule'').
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Comments Received
Two commenters asserted that model rocket motors met the definition
of a propellant-actuated device and, as such, were exempt from ATF
regulation. According to one of the commenters, the intended purpose of
model rocket motors is not to function by explosion. Rather, their
intended purpose is to propel a model rocket. The second commenter
stated the following:
[P]ropellant actuated devices are exempted from BATFE regulation.
As any first year aeronautical student can tell you, rocket motors
function by the expulsion of propellant mass according to the mass
equation[--]
F = -c (dm<INF>e</INF>)/(dt)
They do not explode. Under these definitions, rocket motors are
exempt from BATFE regulation.
ATF Response
The definition of a propellant-actuated device was not affected by
the enactment of the SEA. The comments regarding rocket motors' status
as a propellant-actuated device were submitted when ATF's regulations
did not address rocket motors as propellant-actuated devices. The
question of whether a rocket motor is a propellant-actuated device is
now moot. ATF amended the definition of ``propellant actuated device''
in the 2009 propellant rule to exempt from the term ``hobby rocket''
motors consisting of APCP, black powder, or other similar low
explosives, regardless of amount, and rocket-motor reload kits that can
be used to assemble hobby rocket motors containing APCP, black powder,
or other similar low explosives, regardless of amount.
3. Exemption of Rocket Motors Containing 62.5 Grams or Less of
Propellant
Comments Received
As stated above, at the time of the interim final rule in 2003, ATF
had exempted from regulation rocket motors containing 62.5 grams or
less of explosive propellant, including APCP. One commenter requested
that ATF continue this exemption, stating that ``[a]ll of my rockets
have been, and will be within that limit.'' Another commenter indicated
that the 62.5-gram exemption threshold should be increased in order to
launch larger model rockets.
[[Page 61082]]
ATF Response
The passage of the SEA did not affect ATF's exemption of rocket
motors containing 62.5 grams or less of propellant. This final rule
maintains the existing regulatory exemption.
In the hobby rocket motors rule, published August 11, 2006, ATF
explained its historical determination of using 62.5 grams as an
appropriate threshold for the amount of propellant exempt from
explosive regulations. 71 FR 46079. In keeping with guidelines
published by the National Fire Protection Association, and with
regulations promulgated by the predecessor of the Consumer Product
Safety Commission, and at the request of both the National Association
of Rocketry (``NAR'') and Estes Industries, ATF determined that 62.5
grams was an appropriate ceiling for what could be considered a ``small
charge'' of propellant for these ``toy'' devices. 71 FR 46084. As
explained in that same rulemaking, ATF believes that rockets utilizing
motors containing 62.5 grams of propellant or less have a shorter range
and are less likely to be used as weapons against a particular target
without detection. In addition, rockets powered by motors containing
62.5 grams of propellant or less have less power to cause significant
damage when used against a target. ATF further believes that rocket
motors containing more than 62.5 grams of propellant pose a significant
threat to public safety because they can be modified for use as
weapons. The 62.5-gram limit achieves a reasonable balance between
ATF's goal of allocating its resources in the most efficient and
effective manner and its goal of maintaining public safety. Therefore,
ATF will not revisit the weight threshold for the exemption of rocket
motors at this time.
4. Model Rocket Propellant Is Not a Threat to Public Safety or Homeland
Security
Comments Received
One commenter argued that model rocket propellant should not be
regulated because it does not pose a significant risk to public safety
and is not a threat to homeland security. According to the commenter,
due to the cost and limited use of hobby rocket propellent in ``toy''
rockets, criminals are not going to buy hobby rocket motors for
nefarious activities. Since hobby rocket motors do not have guidance
systems and warheads, they are, according to the commenter, useless as
weapons.
ATF Response
ATF already addressed the issue of the potential for model rocket
propellants to pose a risk to homeland security when it published the
2009 propellant rule (described above), affirming ATF's long-standing
policy of 62.5 grams as an appropriate threshold for exempting rocket
model propellant from explosive regulations. Therefore, further
discussion of this issue is unnecessary.
5. IFR 1 Fails To Recognize Its Economic Effects on Businesses
Comments Received
Two commenters argued that IFR 1 will have a significant economic
impact on businesses. One commenter stated that many people are unable
to get a permit due to storage requirements and would need to purchase
land to build a magazine, which is beyond what a typical person can
afford. The commenter argued that permitting, storage, and other
requirements for rocket motors containing more than 62.5 grams of
propellant are overly burdensome for the average sport rocketry
hobbyist. Furthermore, the commenter asserted that reduced
participation in the hobby will have a negative effect: ``Businesses
will die. They've already started collapsing.''
The second commenter challenged ATF's certification, pursuant to
the Regulatory Flexibility Act, that IFR 1 would not have a significant
impact on a substantial number of small entities. The commenter stated
that commercial shipping companies will not ship hobby rocket motors
because the interim rule requires that these companies ensure their
employees who handle explosive materials are not prohibited persons
under the law. According to the commenter, shipping companies do not
want to risk fines or criminal prosecution if a prohibited person might
have access to explosives in the process. This makes the cost of
shipping rocket motors more expensive.
ATF Response
ATF disagrees with the commenters' assertion that the interim
regulations were likely to result in significant reduction in
participation by rocketry hobbyists, which, in turn, would have had a
negative effect on small businesses. A review of NAR Board of Trustees'
meeting minutes dated February 6, 2004 (on file with ATF), stated that
the organization's membership base had remained statistically flat for
the preceding three years, even though IFR 1 was issued and became
effective nearly one year before that period ended. In addition, a
review of NAR's meeting minutes dated July 28, 2008, indicated that its
membership was holding between 4,500 and 4,600 and that membership dues
income was stable. These figures showed no decrease in numbers during
the time in which APCP was regulated, before ATF's classification was
overturned. In August 2009, the NAR Board of Trustees stated that
membership had increased to 4,750.\12\ Further, NAR's Board meeting
minutes from February 2013 noted that membership had risen to over
5,670.\13\ As of 2025, NAR's website states that it has over 9,000
members.\14\ Although ATF has no specific data on rocketry sales, ATF
has seen no evidence that participation in the sport has declined or
that small businesses were negatively impacted by IFR 1. ATF
acknowledges that the increase in NAR membership numbers after 2009 may
have been partly due to the removal of APCP as a regulated explosive
material, but, as noted above, even when APCP was still regulated, NAR
membership remained steady following the promulgation of IFR 1. This
suggests that IFR 1 did not in fact negatively impact small businesses
such as those dealing in model rockets.
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\12\ NAR, Board of Trustees' Meeting Minutes (Aug. 6-7, 2009).
\13\ NAR. Board of Trustees' Meeting Minutes (Feb. 21-22, 2013).
\14\ NAR, About the National Association of Rocketry, <a href="https://www.nar.org/content.aspx?page_id=22&club_id=114127&module_id=667398">https://www.nar.org/content.aspx?page_id=22&club_id=114127&module_id=667398</a>
(last visited July 23, 2025) [<a href="https://perma.cc/8Y8V-CX89">https://perma.cc/8Y8V-CX89</a>].
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The commenter's concern regarding the interim rule's requirements
for shipping companies to ensure that prohibited persons are not
handling explosives is also moot. In IFR 2, published in 2003, ATF made
clear that as a result of the publication of certain rules by DOT and
DHS, employees of motor, water, air, and rail carriers were no longer
subject to the provisions of 18 U.S.C. 842(i) regarding prohibited
persons while they are engaged in the commercial transportation of
explosives.
ATF also disagrees with the underlying premise of the comment
asserting that many rocketry hobby enthusiasts would leave the sport,
in part as a result of burdensome storage requirements of the SEA. ATF
notes that the SEA made no changes to the requirements for proper
storage of regulated explosives as they relate to participants within
the rocketry hobby or the explosives industry. All such persons have
been required to properly store regulated explosive materials since the
inception of the federal explosives
[[Page 61083]]
regulations in January 1971. The federal explosives regulations
relating to the proper storage of regulated explosives can be found at
part 555, subpart K--Storage.
ATF also disagrees with the same commenter's assertion that the
costs of licensing or permitting would be prohibitive. Even prior to
enactment of the SEA, persons wishing to obtain explosive materials
from out-of-state sources or to transport materials in interstate
commerce were required to obtain an ATF license/permit, and those
wishing to engage in the business of manufacturing, importing, and
dealing regulated rocket motors were required to obtain the appropriate
ATF license. In contrast, persons could acquire explosive materials in
the state where they resided, including rocket motors containing
greater than 62.5 grams of propellant, without needing to obtain a
federal explosive license/permit. The enactment of the SEA and the
implementing regulations primarily affected only these latter persons
engaging in intrastate acquisitions and transportation of explosive
materials, including rocket motors containing greater than 62.5 grams
of propellant. With these persons in mind, Congress created the limited
permit, which allows a person to acquire explosive materials up to six
times per year and transport the materials within their own state. This
permit costs $25 for the original permit for a one-year period and is
renewable each year for $12. It is unlikely that these minimal costs
will be so onerous as to cause a significant percentage of hobbyists to
abandon their rocketry activities.
6. Burdens of the Permit and Storage Requirements on Model Rocket
Hobbyists
The SEA requires that any person receiving, shipping, transporting,
or causing the transportation or distribution of explosive materials on
or after May 24, 2003, obtain a federal license/permit. A federal
explosives license is required to authorize continual explosives
distributions. A federal explosives permit authorizes a person to
distribute only surplus explosives stock; it does not authorize the
distribution of explosive materials as a matter of continual business
operations. There are two types of explosives permits: (1) a ``user
permit,'' which allows the holder to transport, ship, or receive
explosive materials in interstate or foreign commerce; and (2) a
``limited permit,'' which allows the holder to receive explosive
materials only within his or her state of residence on no more than six
separate occasions during the one-year period of the permit. Although
applicants for a federal explosive license/permit have always been
required to have a place of storage for explosive materials, the SEA
amended 18 U.S.C. 843(b)(4), to require that ATF, prior to issuing a
license/permit, verify by inspection ``that the applicant has a place
of storage for explosive materials which meets such standards of public
safety and security against theft as the Attorney General by
regulations shall prescribe.''
Comments Received
Several commenters expressed concerns regarding the impact of
permit and storage requirements on the model rocket hobby. A couple of
commenters indicated that the compliance requirements for rocket motors
containing more than 62.5 grams of propellant were overly burdensome
and would result in reduced participation in the hobby. One commenter
stated that, since obtaining a permit would require a background check,
fingerprints and photographs, and interviews, hobbyists would quit the
hobby rather than apply for the permit.
A few commenters stated that rocket model hobbyists would be unable
to obtain a federal permit because of storage requirements and the fees
associated with obtaining a permit. In particular, they stated that
many cities would not allow explosives to be stored in a residential
area. According to one commenter, purchasing land and constructing an
explosives magazine was not a viable option. Another commenter stated
that he had had an explosives license since 1997 and had never been
required to have storage \15\ but indicated that storage was not an
issue for him because ``I manage my acquisition of `explosives' [rocket
motors] so that I never have excess stock.'' According to the
commenter, the effect of the interim rule would be that he would either
obtain an explosives magazine or not renew his license.
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\15\ Explosives regulations were first issued by the IRS (before
ATF was created as a bureau) in 1971 and codified at 26 CFR part
181; those regulations included the requirement that all applicants
for an explosives license/permit have a place of storage. See Title
26--Internal Revenue, 36 FR 658 (Jan. 15, 1971). That storage
requirement has remained in effect continuously since then, although
ATF's explosives regulations have since moved to 26 CFR part 555.
However, ATF also allows applicants to use a contingency storage
agreement to meet this requirement. See, e.g., ATF Explosives
Industry Newsletter at 2 (Jan. 2014), <a href="https://www.atf.gov/media/29021/download">https://www.atf.gov/media/29021/download</a>; ATF Form 5400.13/5400.16 (now becoming Form
5400.13), Application for Explosives License or Permit (which has
included a contingency plan option since at least 2003), <a href="https://www.atf.gov/rules-and-regulations/form-and-information-collection-notices/application-explosives-license-or-permit-atf-f-5400-13/5400-16">https://www.atf.gov/rules-and-regulations/form-and-information-collection-notices/application-explosives-license-or-permit-atf-f-5400-13/5400-16</a>. These contingency storage agreements are between the applicant
(including renewal applicants) and an active licensee/permittee, who
agrees to provide the applicant access to their magazine if the
applicant needs to store explosives. The commenter might have been
referring to this practice.
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Another commenter stated the limited permit was not useful because
many states did not have a vendor that sold high-power rocket motors.
Rocket model hobbyists would therefore be required to obtain a user
permit (to acquire and transport explosive materials interstate), which
would be cost prohibitive.
Lastly, one model rocket hobbyist stated that he was in the process
of applying for a user permit. The commenter noted that he was having
difficulty completing the application because it requested information
that did not pertain to rocket hobbyists. For example, the commenter
stated that he was not in the business of selling explosives and, as
such, did not have ``business hours.''
ATF Response
ATF disagrees that the compliance requirements for rocket motors
containing more than 62.5 grams of propellant are overly burdensome. As
previously stated, the propellants contained within model rocket motors
has been regulated by ATF since 1971 (including APCP until March 2009).
Therefore, since 1971, any person receiving rocket motors containing
more than 62.5 grams of propellant in interstate commerce was required
to obtain a federal explosives license/permit and maintain all
appropriate storage and records for their rocket motors. Moreover, ATF
no longer classifies APCP as an explosive, and thus rocket motors
consisting solely of APCP (regardless of the weight of the APCP) are
not currently subject to regulation by ATF.
Individuals do not appear to be discouraged in pursuing the rocket
model hobby despite requirements that they undergo a background check
and submit fingerprints and photographs as part of obtaining a federal
explosives license/permit. Membership in groups such as the NAR has
increased over time since implementation of the SEA, as discussed in
section III.F.5 of this preamble. With passage of the SEA, Congress
made clear that all persons acquiring non-exempt explosive materials
must obtain a license/permit from ATF and submit information to enable
ATF to conduct background checks. ATF believes that the information it
requires applicants to submit is part of a reasonable process that
helps to ensure that prohibited
[[Page 61084]]
persons do not gain access to explosive materials.
ATF also believes that the storage requirements are not overly
burdensome or inappropriate. Prior to the SEA, the federal explosives
laws and regulations required that all persons store explosive
materials in conformity with the regulations at part 555. See 18 U.S.C.
842(j); 27 CFR 555.29. These provisions remain unchanged post-SEA
enactment. Additionally, ATF storage regulations in 27 CFR part 555,
subpart K, have always prohibited any person from storing explosives
within a residence or dwelling, and require that all persons store
explosives in accordance with the tables of distances to inhabited
buildings, highways, passenger railways, and other magazines.
Compliance with the federal explosives laws and regulations confers no
right or privilege for persons to store explosives contrary to state or
local laws that may impose additional storage requirements. Other than
a new verification and a requirement for inspection prior to issuing a
federal explosives license/permit, neither the SEA, the SEA interim
regulations, nor this final rule changed the storage requirements.
Congress added the verification requirement to provide tighter security
over explosive materials and to ensure that storage requirements are
being met.
Though ATF is cognizant of the cost of a new explosives storage
magazine, ATF has provided the industry with alternate means of storing
explosive materials in place of individually purchased and owned
storage magazines. These alternatives include shared storage
arrangements, off-site storage, and club and association storage
arrangements. See ATF Explosives Industry Newsletter at 2-3 (Jan.
2014); ATF Form 5400.13, Application for Explosives License or Permit.
As a result, ATF does not believe that the requirement to obtain and
substantiate the proper and secure storage of explosive materials is
overly burdensome or inappropriate.
Although some rocketry enthusiasts without in-state access to
rocket motors would need to obtain a user permit to go out of state to
acquire and transport explosive materials, ATF notes that persons,
including rocket model hobbyists, acquiring or transporting regulated
explosive materials from out-of-state sources have already been
required since 1971 to obtain a federal explosives license/permit. The
fee for a user permit, which is valid for three years, is $100, or
about $33.33 per year. 27 CFR 555.43. The user permit fee has remained
unchanged since 1998. See 27 CFR 55.43; Commerce in Explosives (95R-
036P), 63 FR 44999, 45002 (Aug. 24, 1998).
To defray costs, rocketry enthusiasts may join or form rocketry
clubs. These clubs can be set up to take responsibility for obtaining
all appropriate licenses or permits, as well as storage. Notably, in
such club arrangements, the club may not ``distribute'' explosives to
its members; rather, one of the club's RPs must oversee all explosives
activities of its members. In addition, the club members may incur the
cost of membership dues, but as members they may participate in their
hobby without having to individually bear the costs of complying with
storage, licensing, or permitting requirements. Sharing the cost of
compliance reduces the cost and burden to any individual club member.
Accordingly, ATF disagrees that fees to obtain the appropriate license/
permit are overly burdensome or cost prohibitive.
Another commenter stated that he was having difficulty completing
the explosives permit application because it appears that some portions
may not pertain to his proposed activities. ATF is aware that some
individuals may have questions regarding proper completion of the form.
Therefore, ATF FELC's telephone number and address are included with
each application packet. Additionally, ATF's website contains general
information regarding the application process.
7. Exemption for Black Powder in Small Quantities
Comments Received
One commenter suggested that an exemption be given for small
amounts of black powder for use in model rocket ejection systems, i.e.,
to deploy the parachute. The commenter stated that he uses about 20 to
30 grams of black powder per year to release the parachute on his model
rockets.
ATF Response
ATF cannot grant an exemption for small quantities of black powder
used in model rockets because black powder is an explosive material. In
exempting up to 50 pounds of commercially manufactured black powder,
Congress limited the exemption to that black powder intended for use
solely in sporting, recreational, or cultural purposes in antique
firearms and antique devices. 18 U.S.C. 845(a)(5); 27 CFR 555.141(b).
However, rocket motors and other rocket component parts (e.g.,
parachute ejection systems) are not antique firearms or antique
devices, and, therefore, the black powder used in these devices does
not fall under this statutory exemption. The implementation of the SEA
had no effect on the black powder exemption specified at 18 U.S.C.
845(a)(5) and therefore it is not within ATF's statutory authority to
grant the requested exemption.
G. Warrantless Inspections
The SEA authorized warrantless inspections of places of storage
maintained by federal explosives licensees, permittees, and applicants
for limited permits. 18 U.S.C. 843(f). Regulations that implement this
provision of the law are in 27 CFR 555.24.
Comments Received
One commenter objected to warrantless inspections, stating that
``[w]arrantless searches of any sort are prohibited by the
constitution. This phrase should be struck for that reason.''
ATF Response
ATF declines to adopt the commenter's suggestion to strike from the
regulations the reference to warrantless inspections. Contrary to the
commenter's assertion, the U.S. Supreme Court has held that only
``unreasonable searches'' without a warrant are prohibited, and
therefore some warrantless searches of business, residences, and
private property are constitutional. ``The touchstone of the Fourth
Amendment is reasonableness, and the reasonableness of a search is
determined `by assessing, on the one hand, the degree to which it
intrudes upon an individual's privacy and, on the other, the degree to
which it is needed for the promotion of legitimate governmental
interests.' '' United States v. Knights, 534 U.S. 112, 118-19 (2001)
(citing Wyoming v. Houghton, 526 U.S. 295, 300 (1999)).
The Court has specifically recognized the validity of warrantless
regulatory inspections of business premises when they are limited in
time, place, and scope and when there is express statutory authority to
conduct such inspections. For instance, in United States v. Biswell,
406 U.S. 311 (1972), a pawnbroker licensed under the Gun Control Act of
1968 (``GCA'') sought to exclude evidence obtained during a warrantless
inspection of his business premises. The pawnbroker alleged that the
provision of the GCA authorizing warrantless searches of business
premises was unconstitutional under the Fourth Amendment. The Supreme
Court upheld the warrantless inspection, noting that close scrutiny of
the traffic in firearms is essential to prevent violent crime and to
assist the
[[Page 61085]]
states in regulating firearms within their borders. Id. at 315. The
Court also stated that inspections for compliance with the requirements
of the GCA posed limited threats to the pawnbroker's justifiable
expectations of privacy because of pervasive federal regulation of the
firearms industry. Id. at 316.
The Supreme Court also has recognized the validity of warrantless
searches of residences and private property. In Griffin v. Wisconsin,
483 U.S. 868 (1987), the Court held that the warrantless search of a
probationer's residence was ``reasonable'' because it was conducted
pursuant to a valid regulation governing probationers. Id. at 880. The
Court's holding was based on the proposition that the government
operation of a probation system, like its supervision of a regulated
industry, presents ``special needs'' beyond normal law enforcement that
may justify departures from the usual warrant and probable-cause
requirements. Id. at 875-76.
Such ``special needs'' have been extended to drug testing of
students and federal employees. Citing Griffin, the Supreme Court has
explained:
[I]n certain limited circumstances, the Government's need to
discover such latent or hidden conditions, or to prevent their
development, is sufficiently compelling to justify the intrusion on
privacy entailed by conducting such searches without any measure of
individualized suspicion. Therefore, in the context of safety and
administrative regulations, a search unsupported by probable cause
may be reasonable when special needs, beyond the normal need for law
enforcement, make the warrant and probable-cause requirement
impracticable.
Bd. of Educ. v. Earls, 536 U.S. 822, 829 (2002) (internal citations and
quotations omitted). Applying this standard, the Court in Earls found a
school's drug testing policy constitutional because of the student's
diminished expectation of privacy in school and the school's interests
in the testing.
The lower federal courts also have applied the ``special needs'' to
an individual's property outside of the home. In Palmieri v. Lynch, 392
F.3d 73 (2d Cir. 2004), the court noted that warrantless searches have
been allowed when conducted under a regulatory scheme where there was a
reduced expectation of privacy. Id. at 79. Applying the test outlined
in Earls, the Second Circuit held that the special needs exception
applied to an individual's property surrounding his home because of the
government's interest in regulating construction on protected wetlands,
the minimal intrusion at issue, and the individual's diminished
expectation of privacy, which resulted from a combination of the plain
view doctrine and the individual's voluntary application for a permit
to build on wetlands and notice that the process would require some
form of on-site inspection. Id. at 81-83.
One of the purposes of Title XI of the OCCA is to reduce hazards to
individuals and property arising from the misuse and unsafe or insecure
storage of explosive materials. In furtherance of Congress's intention
to provide tighter security over explosive materials, the SEA amended
the OCCA to include provisions that authorize warrantless inspections
of places of storage of applicants for federal explosives licenses/
permits, 18 U.S.C. 843(f), and that require the Attorney General, prior
to issuing a license/permit, to verify by inspection that ``the
applicant has a place of storage for explosive materials which meets
such standards of public safety and security against theft as the
Attorney General by regulations shall prescribe,'' id. 843(b)(4). ATF's
authority to conduct an inspection and examination of a licensee's/
permittee's premises pursuant to 18 U.S.C. 843(f) is generally limited
to normal business hours, even where a permittee may not have business
hours.
Just as the courts have recognized the governmental interest in
regulating probationers and construction on wetlands, there is a
substantial government interest in regulating the storage of explosive
materials, including those stored in a residential area: explosives
present a substantial and immediate threat to all people in the
vicinity, and the government accordingly has a substantial interest in
reducing that threat.
Licensees/permittees who voluntarily seek the privilege to receive
and possess explosives, a highly regulated activity, accept the legal
responsibility of complying with federal explosives laws. As discussed,
the SEA and implementing regulations explicitly provide for warrantless
inspection of storage locations to ensure public safety, and such
inspections are limited to both normal business hours and the storage
location. Through the application process, applicants learn of their
responsibilities in storing the explosives and keeping accurate
acquisition and disposition records. Applicants are required to confirm
that they understand these requirements. Accordingly, applicants are
aware that by voluntarily taking on this responsibility, they have a
reduced expectation of privacy in the records they are required to
maintain and in the storage location.
An individual applicant is responsible for choosing the storage
location. The indoor storage of explosives in, or directly adjacent to,
a residence or dwelling is generally prohibited and will only be
allowed if the applicant applies to ATF for and is approved a variance
from the storage regulations to do so.\16\ If an applicant chooses to
store explosives at or near a residence and is granted a variance by
ATF to do so, the applicant is aware that the storage area will be
inspected as provided by law, which includes the possibility of a
warrantless inspection.
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\16\ See 27 CFR 555.22, 555.208(b)(1), 555.210(b)(1),
555.211(b)(1); ATF Ruling 2002-3, Indoor Storage of Explosives in a
Residence or Dwelling (Aug. 23, 2002), <a href="https://www.atf.gov/explosives/docs/ruling/2002-3-indoor-storage-explosives-residence-or-dwelling/download">https://www.atf.gov/explosives/docs/ruling/2002-3-indoor-storage-explosives-residence-or-dwelling/download</a> [<a href="https://perma.cc/668W-XQEN">https://perma.cc/668W-XQEN</a>]; ATF Ruling 2002-
4, Indoor Storage of Explosives in Business Premises Directly
Adjacent to a Residence or Dwelling (Aug. 23, 2002), <a href="https://www.atf.gov/explosives/docs/ruling/2002-4-indoor-storage-explosives-business-premises-directly-adjacent/download">https://www.atf.gov/explosives/docs/ruling/2002-4-indoor-storage-explosives-business-premises-directly-adjacent/download</a> [<a href="https://perma.cc/2PHV-7VZ7">https://perma.cc/2PHV-7VZ7</a>].
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The leading case on the ``closely regulated'' or ``pervasively
regulated'' industry exception to the warrant requirement of the Fourth
Amendment is New York v. Burger, 482 U.S. 691 (1987). The Court held
that the automobile junkyard industry was a ``closely regulated''
business and that a warrantless inspection was reasonable and thereby
comported with the Fourth Amendment. Id. at 712.
The Burger analysis has four parts. As a threshold matter, a court
examines the nature and extent of government regulation of the relevant
industry to determine whether the industry is in fact ``closely
regulated.'' Id. at 703-05. Then, if the industry is indeed closely
regulated, a warrantless inspection will be constitutional if (1) there
is a substantial government interest that informs the regulatory scheme
giving rise to the inspection, (2) the warrantless inspection is
necessary to further the regulatory scheme, and (3) the regulatory
scheme includes a constitutionally adequate substitute for a warrant,
such as by giving regulated parties notice that inspections will occur
and defining the scope of the inspections. Id. at 708-12.
At the threshold, the explosives industry is ``closely regulated.''
In Burger, the Court determined that junkyards were pervasively
regulated because the provisions regulating the industry were
extensive: operators could not engage in the industry without first
obtaining a license, including meeting registration
[[Page 61086]]
requirements and paying a fee; they had to maintain acquisition and
disposition records and make the records and inventory available for
inspection; they had to display their registration number at the place
of business; and they were subject to criminal penalties, losing the
license, or receiving civil fines for not complying. Id. at 704-05. In
addition, the Court noted that the regulatory scheme's duration was
also relevant to the ``closely regulated'' inquiry. Id. at 705.
Federal explosives regulations, enforced by ATF and other agencies,
are just as extensive as the regulatory scheme in Burger. The
regulations touch all aspects of the industry, including storing and
inventorying, licensing, permitting, and record-keeping, consumer and
occupational safety, transporting, and environmental impact, among
others. In addition, the explosives statute and regulations include all
characteristics that the Court itemized for junkyards in Burger,
including licenses, records, inspections, and penalties. And as to
duration, the federal government has regulated explosives since at
least the Federal Explosives Act of 1917, Public Law 65-68, 40 Stat.
385 (Oct. 6, 1917) (previously codified at 50 U.S.C. 121-144), which
was significantly amended in 1941, see Act of Dec. 26, 1941, Public Law
77-381, 55 Stat. 863 (Dec. 26, 1941). Although the Federal Explosives
Act was repealed by OCCA in 1970, see 84 Stat. at 960, OCCA
simultaneously replaced it with 18 U.S.C. chapter 40, which continues
to regulate explosives, and which was modified by the SEA in 2003.
Given the extent and duration of explosives regulation, the explosives
industry is a closely regulated industry within the meaning of Burger.
Indeed, the regulatory scheme governing the explosives industry is
entirely analogous to that regulating the firearms industry, see e.g.,
United States v. Fillman, 162 F.3d 1055, 1057 (10th Cir. 1998) (finding
18 U.S.C. 842(i) of the explosives statute ``in pari materia with 18
U.S.C. 922(n),'' a provision of the Gun Control Act of 1968)), which
industry has already been found to be a pervasively regulated industry,
see United States v. Biswell, 406 U.S. 311 (1977). Because the
explosives industry is ``closely regulated,'' the question is then
whether the regulatory scheme satisfies the remaining three
requirements of Burger. It does. Regarding the first requirement, there
is a substantial government interest in ensuring that explosives do not
fall into the hands of prohibited persons, are not lost or stolen or
used in terrorist activities, and are stored and transported in ways
that minimize risk to public safety. Regarding the second requirement,
inspecting licensee/permittee operations and records is necessary to
further these substantial government interests because doing so allows
ATF to observe the explosives, assess how they are stored, compare them
with records to ensure all explosives are accounted for, and ensure the
regulatory safeguards are being met. Finally, regarding the third
requirement, federal explosives laws at 18 U.S.C. 842 and 843(f) and 27
CFR part 555 provide an adequate substitute for a warrant because they
clearly describe the responsibilities of federal explosives licensees;
define the scope of ATF's inspection authority; and place licensees/
permittees on notice of the fact and frequency of inspections. The
explosives industry thus also satisfies these last three steps in the
Burger test, such that warrantless inspections are reasonable.
The federal explosives laws were patterned after the GCA, and the
warrantless inspection provisions of 18 U.S.C. 843(f) are substantially
similar to those of the GCA upheld as constitutional by the Supreme
Court in Biswell. As with explosives licensees/permittees, firearms
licensees whose business premises and places of storage are located in
a residence or private property are subject to warrantless inspection.
See, e.g., United States v. Cerri, 753 F.2d 61 (7th Cir. 1985). The
rationale set forth in the Biswell case is applicable to federal
explosives licensees/permittees. The inspections conducted to ensure
that explosive licensees/permittees are complying with federal law and
the regulatory scheme, are non-criminal in nature and are minimal in
that they are limited to the places where records and explosives are
stored. Under these circumstances, there is a limited invasion of
privacy, and no violation of the Fourth Amendment.
H. Transportation Issues
1. Regulatory Exemption Language Should Track Statutory Language
Comments Received
Under 18 U.S.C. 845(a)(1), ``aspects of the transportation of
explosive materials via railroad, water, highway, or air that pertain
to safety, including security, and are regulated by the Department of
Transportation or the Department of Homeland Security'' are exempted
from the federal explosives laws (except for specified plastic
explosives and bombing and arson offenses). To avoid any confusion
regarding the impact of the interim rule implementing the SEA on the
transportation and shipping of explosives, several commenters
recommended that the regulatory language at 27 CFR 555.141(a)(1) track
the text of the statute.
ATF Response
ATF believes that amending the regulatory language to reflect that
of the statute will improve clarity for regulated parties. Therefore,
ATF is revising the regulation at Sec. 555.141(a)(1) to read as,
``[a]spects of transporting explosive materials via railroad, water,
highway, or air that pertain to safety, including security, and are
regulated by the Department of Transportation or the Department of
Homeland Security.''
2. Explosives Delivery Record, ATF Form 5400.8
In the preamble of IFR 1, ATF stated that, on and after May 24,
2003, all common/contract carriers, prior to taking possession of
explosive materials for delivery to a federal explosives licensee/
permittee (including a limited permittee), were to complete Form 5400.8
(68 FR at 13771). The implementing regulations required all
distributors to document and certify certain identifying information of
the individual accepting possession of the explosive materials for the
common/contract carrier.
Comments Received
A few commenters expressed concerns regarding the delay in issuing
the form and its availability. They stated that the form was not
available to the public until approximately two weeks before the
effective date. Furthermore, the commenters disagreed with ATF's
recommendation at the time that licensees download the form and make
copies of it until they received their supply of the forms. The
commenters contended that many explosives distributors are located in
remote areas where they may not have access to the internet. One
commenter stated that these distributors might not be able to obtain,
or might have difficulty in obtaining, the form as a result.
Furthermore, the same commenter added that, subsequent to
publication of IFR 1, DOT and DHS published interim final rules that
affected the transportation exception at 18 U.S.C. 845(a)(1).\17\
According to the commenter, ``DOT/DHS rules now occupy the field of
transporter qualification and credentialing . . . . Consequently, Form
5400.8 has no effect.'' The commenter urged ATF to eliminate those
aspects of the form that
[[Page 61087]]
impose obligations on individuals who have been qualified to transport
commercial explosives pursuant to DOT's regulations.
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\17\ See footnote 5, supra.
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ATF Response
ATF recognizes that the revised Form 5400.8 was not made available
to the public until immediately prior to the effective date of the
applicable SEA provisions. This was due primarily to the short time
frame for implementation of the SEA. ATF made the new forms available
as soon as possible and took steps to inform the industry of new or
revised requirements that affected their conduct of business.
ATF's publication of IFR 2 on September 11, 2003, made Form 5400.8
obsolete. In that IFR, ATF amended ATF regulations to remove the
procedures related to the use of Form 5400.8 in transactions among
licensees, user permittees, and limited permittees. ATF explained its
conclusion that the information required on Form 5400.8 was not needed
to trace delivery of explosives to a common/contract carrier. 68 FR
53511. Furthermore, in light of rules published by DOT and DHS, ATF
concluded there was no longer a significant reason to collect all of
the information required by the form. Instead, ATF stated that it was
continuing certain verification requirements (addressed in comment
responses in section III.H.3 of this preamble) but was instead allowing
distributors to record the relevant information in their permanent
records, which are subject to inspection. ATF stated that it did not
believe that elimination of the form would result in diversion of
explosive materials to criminal or terrorist use. Id. Because Form
5400.8 has been obsolete since 2003, ATF believes this issue was
resolved through IFR 2, and the comments were addressed through that
process.
3. Transporter Obligations To Verify Identity of Person Accepting
Delivery
The SEA mandated that all persons who wish to acquire explosive
materials, whether in interstate or intrastate commerce, must obtain a
federal explosives license/permit. IFR 1, which implemented the SEA,
required distributors to verify certain information prior to
relinquishing possession of explosive materials.
As implemented by IFR 1, Sec. 555.103, which regulates
transactions among licensees/user permittees, included in paragraph
(b)(2)(ii) a requirement that distributees must provide the distributor
a list of individuals authorized to accept delivery on behalf of the
distributee and keep it updated. In addition, this paragraph prohibited
a distributor from transferring explosive materials to any person whose
name does not appear on the current version of that list. These
requirements continue to remain in effect. In addition, Sec.
555.103(b)(2)(ii) required that, in all instances, the distributor was
required to verify the identity of the person accepting possession of
explosive materials on behalf of the distributee by examining an
identification document before relinquishing possession.
As written in IFR 1, these last two requirements (distributor must
not transfer to unauthorized person and must verify identity of person
accepting) also applied to common/contract carriers of explosive
materials, because they could be deemed to be filling both the role of
distributee when accepting possession of explosive materials from a
licensee/user permittee and the role of distributor when transferring
possession of explosive materials to a licensee/user permittee.
Therefore, a few months after IFR 1, ATF issued IFR 2, which amended
Sec. 555.103(b)(2)(ii) to explicitly except common/contract carriers
from the requirement to verify the identity of the accepting person
during deliveries to licensees/user permittees. It did so by adding
``except as provided by paragraph (b)(3) of this section'' before the
phrase ``in all instances.'' Paragraph (b)(3) was titled ``Delivery of
explosive materials by common or contract carrier.'' The exception for
common/contract carriers from the Sec. 555.103(b)(2)(ii) requirement
to verify the identity of persons accepting explosive materials on
behalf of licensee/user permittee distributees is still in effect.
Section 555.103(b)(3), as implemented in IFR 1, also specifically
required that prior to relinquishing explosive materials, distributors
had to verify the identity of the person accepting possession on behalf
of the common/contract carrier and required the common/contractor
carrier to complete Form 5400.8 (discussed in section III.H.2 of this
preamble) for this purpose. A similar requirement also existed in Sec.
555.105, Distributions to limited permittees, in Sec.
555.105(b)(6)(iii)-(iv). The requirement in both Sec. Sec. 555.103 and
555.105 for the distributor to verify the identity of the common/
contract carrier and driver remains in effect, but IFR 2 removed the
requirement to use Form 5400.8 in both.
In addition, as implemented by IFR 1, Sec. 555.105(b)(6)(iii)
required that, if the common/contract carrier was hired by the
distributor, then the common/contract carrier was required to verify
the identity of the person accepting delivery on behalf of the limited
permittee distributee and provide that information back to the
distributor. This requirement was premised on ATF's view, at the time
of IFR 1, that the common/contract carrier was acting as an agent of
the distributor.
However, shortly after IFR 1 became effective on March 20, 2003,
and before the comment period for IFR 1 closed, ATF issued ATF Ruling
2003-5 \18\ on May 23, 2003, to reduce the identity verification burden
placed by Sec. 555.105(b)(6)(iii) on common/contract carriers when
transporting to limited permittees. Ruling 2003-5 provided an alternate
method for meeting the identity verification obligations in deliveries
to limited permittees from those in the regulation, and allowed the
distributors, rather than the common/contract carriers, to verify that
the explosive materials were received by limited permittees no later
than three business days after shipment. This change was further
reinforced by ATF guidance.\19\ Both the regulatory requirement for
common/contract carriers to verify the recipient's identity and the
ruling's alternative option for distributors to verify instead remain
in effect.
---------------------------------------------------------------------------
\18\ See footnote 2, supra.
\19\ ATF Explosives Industry Newsletter at 6 (June 2005),
<a href="https://www.atf.gov/media/28996/download">https://www.atf.gov/media/28996/download</a>.
---------------------------------------------------------------------------
Comments Received
In 2003, several commenters raised concerns about carrier
obligations under these provisions as implemented through IFR 1. These
commenters argued that the requirement for carriers to verify the
identity of the person accepting possession of explosive materials was
burdensome, impractical, and created potential liability issues for
carriers. One commenter expressed concerns that it would be both
burdensome and impractical for carriers, in either a distributor or a
distributee role, to be prohibited from receiving or relinquishing
explosive materials unless they had a current list of persons
authorized to accept such materials. This commenter stated that the
carrier would not be able to verify, at the time the explosive
materials are loaded in the vehicle, the identity of the person who
would later accept delivery because the carrier would not have that
person's identification to match against the list provided to the
distributor. The commenter added that the carrier driver could not be
presumed to later check the identification against the list at the time
of delivery. The commenter stated
[[Page 61088]]
that ATF would therefore need to provide instructions on how
identification credentials would be exchanged to enable the distributor
to verify the accepter's identity before delivery.
Another commenter also described the impracticalities of requiring
a carrier, in a distributor role, to verify the identity of the person
accepting the explosive materials. This commenter stated it was not
always possible for carriers to verify the identity of the person
accepting possession because of the complex and various methods of
distribution and transportation used by the industry. They asked ATF to
clarify how identification credentials were to be exchanged between the
distributor and the distributee to meet these obligations.
One commenter recommended an alternative method in which the
distributees (rather than the carrier or the distributor) would be
required to confirm delivery of an explosives shipment via common
carrier by the end of the next business day after the explosives were
delivered. If the distributee did not confirm delivery by the end of
the next business day after the scheduled delivery date, distributors
would be required to check the status of the shipment with the
distributee by the end of the second business day after the scheduled
delivery.
A third commenter raised concerns that focused on the similar
requirements of Sec. 555.105(b)(6)(iii). This commenter stressed that
the time and complications involved in requiring carrier drivers to
verify identity would cause delays that would seriously compromise both
the ``just in time'' delivery system relied upon by manufacturers and
retailers, and one of the central principles of hazardous materials
transportation safety--i.e., minimizing travel time. The commenter also
noted that delays in delivery were contrary to the hazardous materials
regulations and provided some examples of delays caused by the named
recipient being out sick, no longer employed, or married with a
different last name, thereby preventing delivery until the situation
was resolved.
Although ATF issued Ruling 2003-5, described above, to provide an
alternative method to the carrier verification requirements for limited
permittee transactions in Sec. 555.105(b)(6)(iii), this commenter
contended that the ruling did not address the larger issue that
distributors were still required to verify the identity of recipient
licensee/user permittee distributees under Sec. 555.103(b)(2)(ii),
even though almost all such transfers were performed by carriers. This
comment was made before IFR 2 was issued a few months later, in which
Sec. 555.103's requirement was addressed. The commenter concluded by
stating that ATF's interim regulations ``impose burdens on transporters
of explosives regulated by the DOT.'' In addition to concerns that
verification would be overly time consuming, commenters were also
concerned that they could be held personally liable for delivering
explosives to persons not authorized to receive them.
Several commenters argued that ATF did not have the authority to
impose the requirement that carriers, whether common or private, verify
and confirm the identity of the person accepting on behalf of a
distributee. Lastly, where regulations required that a distributor have
a current list of the names of ``persons'' authorized to accept
delivery, one commenter asked that ATF clarify whether ``person'' means
``person'' as defined in the law (18 U.S.C. 841(a)) or if it refers to
an ``individual.''
ATF Response
ATF acknowledges that the regulations at Sec. Sec.
555.103(b)(2)(ii) and 555.105(b)(6)(iii), as implemented through IFR 1,
placed additional duties on common/contract carriers by requiring them
to verify identity and delivery. Therefore, as mentioned above, after
issuing IFR 1 in March 2003, ATF issued Ruling 2003-5 in May 2003 and
IFR 2 in September 2003 to address these concerns.
With regard to Sec. 555.103, ATF agrees with the commenter's
contention that Ruling 2003-5 did not address the issue that
distributors were still compelled to verify the identity of individuals
accepting explosives on behalf of licensees/user permittees because
Ruling 2003-5 provided an alternative only to requirements in Sec.
555.105. However, ATF believes that IFR 2 resolved this commenter's
concern with the requirement in Sec. 555.103(b)(2)(ii). IFR 2 amended
Sec. 555.103(b)(2)(ii) to except common/contract carriers from the
identity and delivery verification requirements when delivering to
licensee/user permittee distributees by adding ``except as provided in
paragraph (b)(3)'' before the distributor's requirement to verify the
identity of the person accepting delivery ``in all instances.'' IFR 2
also amended paragraph (b)(3) of the section, covering deliveries made
via common/contract carrier, to remove the requirement for the common/
contract carrier to verify the identity of the person authorized to
accept delivery of the explosive materials on behalf of licensee/user
permittee distributees.
For clarity, ATF notes that these amendments did not affect the
distributor's requirement under Sec. 555.103(b)(2)(ii) to verify the
identity of the individual accepting the explosive materials on behalf
of the distributee prior to relinquishing them when the distribution
occurs ``by distributor''--directly between the distributor and the
distributee or their authorized person, whether at the distributor's
premises or via delivery by the distributor or their employee (not
involving a common/contract carrier). That requirement remains in
effect.
With regard to Sec. 555.105, Ruling 2003-5 allowed a variance from
the requirement under Sec. 555.105(b)(6)(iii) that a common/contract
carrier must verify the identity of persons accepting delivery on
behalf of a limited permittee distributee. Specifically, Ruling 2003-5
allowed an alternative method by which distributors of explosives,
rather than the carriers, could verify no later than three business
days after shipment that the limited permittee distributee received the
explosive materials. The ruling did not remove the requirement from the
regulation, however, and the provision at Sec. 555.105(b)(6)(iii),
still requires that carriers, if hired by a distributor, verify the
identity of the person accepting the delivery on behalf of the
distributee and provide that information back to the distributor. ATF
agrees with commenters that the existence of this regulatory provision
along with the variance in Ruling 2003-5 is not the clearest way to
address the situation.
ATF, therefore, sees merit in making further clarifying amendments
to Sec. Sec. 555.103(b) and 555.105(b) in light of the above comments
and pursuant to discussions with industry members. In this final rule,
ATF is amending these sections in a manner that provides greater
consistency, reduces burden on common/contract carriers and
distributors, and still addresses Congress's concern that the
explosives regulations provide for substantial security. Specifically,
the final rule amends Sec. Sec. 555.103 and 555.105 to make clearer
the verification procedures applicable under the following
circumstances: (a) distribution of explosive materials by distributor;
and (b) distribution of explosive materials via common/contract
carrier. The revised regulations thus differentiate between two clear
circumstances, improving on the somewhat confusing current divisions
between four circumstances.
[[Page 61089]]
With regard to distributions effected ``by distributor''--at the
distributor's premises or by distributor delivery--this final rule does
not change the requirement in either Sec. Sec. 555.103 or 555.105 that
the distributor must verify the identity of the distributee, or the
person accepting on the distributee's behalf. This rule makes the
following edits with regard to ``by distributor'' distributions in both
sections for clarity: (1) to combine distributions at the distributor's
premises and via distributor delivery into one set where they have
previously been split, and (2) to change the word ``person'' to
``individual'' in response to comments requesting that ATF clarify
which requirements apply to a ``person'' (which by definition can
include a corporation, etc.) versus an ``individual'' (which does not
include corporations or other entities).
However, this final rule eliminates any remaining requirement in
either section for a distributor or a common/contract carrier to verify
the identity of a person accepting possession on the distributee's
behalf when distributions occur via common/contract carrier. This rule
also makes the following edits, parallel to those for ``by
distributor'' distributions, with regard to ``via common/contract
carrier'' distributions in both Sec. Sec. 555.103 and 555.105 for
clarity: (1) to combine carriers hired by distributor and carriers
hired by distributee into one set where they have previously been
split, and (2) to change the word ``person'' to ``individual'' in
response to comments requesting that ATF clarify which requirements
apply to a ``person'' (which by definition can include a corporation,
etc.) versus an ``individual'' (which does not include corporations or
other entities).
Under this rule, when the distribution occurs via a common/contract
carrier, the distributor must still verify the identity of the
carrier's driver and record that information, as before. However, the
rule removes the requirements for the common/contract carrier or the
distributor (as previously required by IFR 1 or alternatively by Ruling
2003-5, respectively) to verify the accepting person's identity or to
verify that the delivery occurred. Removing the common/contract carrier
requirement to verify will now apply consistently to distributions
involving licensee/user permittee distributees and ones involving
limited permittee distributees, rather than having differing
requirements for each.
For security and law enforcement reasons, ATF believes it would be
best to have verification occur for all distributions. However, ATF
recognizes the need to balance those concerns with the verification
limitations inherent in common/contract carrier deliveries. ATF
considers there to still be value in verifying identity whenever
feasible, so ATF continues to retain the verification requirements for
``by distributor'' distributions and the identity verification
requirements for common/contract carrier drivers.
Although removing the requirement to verify distributee identity
when the distribution occurs via common/contract carrier presents a
risk, ATF believes that this approach to such deliveries is preferable
to the two-part option suggested by one of the commenters and will more
smoothly fit into standard business practices. Some of the risk arising
from not verifying in these cases can be offset by the fact that the
distribution will occur at the distributee's premises, where certain
actions will naturally occur as part of standard business practices and
other obligations. For example, the distributee has a vested interest
in ensuring that it receives the explosive materials it ordered and
paid for, and already, as a matter of standard business practice, will
check to ensure delivery occurred. If it does not receive the expected
delivery, the distributee will reach out to the distributor and/or
carrier to notify them that the delivery did not occur and find out
what happened. This will help ensure that any potential diversion of
the explosives for criminal or other improper purposes does not go
unnoticed and can instead be reported to the proper authorities.
Furthermore, the distributee also already has the responsibility of
ensuring that it designates individuals authorized to accept explosives
on its behalf and provides a list of authorized individuals to the
distributor. ATF still considers this an important accountability step
in light of the statute's requirement that explosives be distributed
only to licensees/permittees. So, the requirement that distributors
must verify that they are distributing to an authorized individual when
they do so directly (not via a common/contract carrier) remains, even
when the distributor is delivering to the distributee, because both
ends of the equation in this situation (unlike in situations involving
common/contract carriers) have an obligation in this regard. However,
the distributee also has a responsibility on its end to ensure that an
authorized person is present and accepts the delivery, even when a
common/contract carrier is delivering. In addition, the distributee
must still record the delivery in its acquisition record, which helps
ensure the delivery went to the permitted person.
In response to other comments, ATF also concurs that the regulation
at Sec. 555.103(b)(2)(ii) should be clarified with regard to
individuals accepting on the distributee's behalf. This section would
better achieve the objectives of the SEA by changing the term
``persons'' in this section to ``employees and responsible persons''
(the term ``responsible person'' is defined, and ATF is therefore not
changing the word ``person'' to ``individual'' in this context). The
language in Sec. 555.103 is being amended accordingly in this final
rule.
4. Definition of ``Possess'' as It Applies to Transportation
Comments Received
In IFR 1, ATF stated its belief that it is essential that Form
5400.8 be executed in all instances when licensees/permittees transfer
possession of explosive materials to a truck driver who is not an
employee of the distributor. Completing Form 5400.8 would ``help ensure
that explosives are not placed in the hands of prohibited persons for
possible diversion to criminal or terrorist use.'' 68 FR 13772. This
requirement was in effect until May 24, 2003. After that date, ATF
continued to require common/contract carriers taking possession of
explosive materials, whether hired by the distributor or distributee,
to complete Form 5400.8. But ATF no longer required employees of
purchasers to complete the form. 68 FR 13771.
Two commenters interpreted ATF's requirements to mean that persons
who transport explosives are ``possessors.'' They both argued that
federal law makes a clear distinction between those who transport and
those who receive or possess explosive materials, with one of these
commenters noting that, ``Congress would not have distinguished these
classes of persons if they were deemed to be one and the same.'' Both
commenters believed that persons who transport explosives should not be
considered possessors and should not be subject to the
disqualifications imposed by 18 U.S.C. 842(i). One commenter stated
that ``ATF should affirmatively renounce its interpretation that
persons engaged in transportation in commerce also `possess'
explosives'' within the meaning of federal explosives law.
ATF Response
ATF agrees that Congress did not intend the terms ``transport or
ship'' and ``receive or possess,'' as applied to
[[Page 61090]]
persons, to have identical meanings. However, ATF disagrees with the
commenters' conclusions that these terms must necessarily apply to
completely separate and exclusive groups of persons. Rather, both of
these terms can apply to the same person at the same time. For example,
a person who manufactures explosive materials, places them on a
vehicle, and drives this vehicle to another location in order to use
the materials both ``possesses'' and ``transports or ships'' the
materials. Therefore, ATF is not adopting the suggestion that ATF
generally interpret these terms as having exclusive applications to
different groups of persons. Additionally, common/contract carriers are
exempted from provisions of the SEA that are regulated by DOT or DHS.
See 18 U.S.C. 845(a)(1).
As stated above, ATF amended ATF regulations with the publication
of IFR 2, making Form 5400.8 obsolete.
5. Selective Application of Statutory Provisions
Comments Received
ATF regulations at 27 CFR 555.26(a) provide that, ``[n]o person,
other than a licensee/permittee knowingly may transport . . . any
explosive materials.'' Two commenters claimed that there is some
confusion as to whether common carriers are required to obtain a permit
to transport explosives. One commenter argued that this confusion is
based, in part, on information ATF provided on its website regarding
implementation of the SEA. The commenter argued that ``If the permit
requirements of the statute and regulations are not being applied [to
commercial transportation], ATF needs to clarify if it is because the
transportation exception [in the federal explosives law] is effective .
. . or because ATF has chosen not to exercise its authority.''
ATF Response
Both the statute at 18 U.S.C. 845(a)(1) and the regulations at 27
CFR 555.141(a)(1) make clear that a common/contract carrier that is
regulated by DOT, and whose explosives activities are limited to
commercial transportation, is not required to obtain a federal
explosives license/permit. Therefore, ATF is not amending the
regulation.
I. Safe Storage and Retaining Records
The regulations at Sec. 555.121 provide that licensees/permittees
must keep records pertaining to explosive materials in permanent form
(e.g., commercial invoices, record books). Such records must be kept on
the business premises for five years from the date a transaction occurs
or until the licensee/permittee discontinues business or operations.
Comments Received
A commenter expressed concerns about protecting personally
identifiable information (``PII'') in the required records. The
commenter noted that ATF did not provide guidance on how to store or
protect mandated records that contain PII, which created privacy
concerns, particularly when, the commenter explained, those records are
delivered to the custody of a private entity. The commenter did not
explain why they thought PII might be delivered to the custody of a
private entity, but ATF notes that it does not require records be
transferred to anyone other than ATF. The commenter requested that ATF
provide information on safekeeping and eventually destroying the
required records. Another commenter expressed similar concerns.
ATF Response
ATF has not been granted authority under the federal explosives law
to mandate that licensees and permittees maintain their required
explosives records in accordance with particular security
specifications. The SEA had no effect on, nor did it initiate any
changes relating to, the federal record-keeping requirements in regard
to securing PII or other security procedures for records. As a result,
ATF is unable to implement the commenters' suggestions. However, it
would be prudent for industry members to develop internal controls on
securely storing the required records as a matter of good business
practice, given that such records are subject to inspection.
J. License/Permit Requirements for Treatment, Storage, Disposal
Facilities
Section 555.102(b)(2) provides that, on and after May 24, 2003,
permittees are not authorized to engage in the business of selling or
distributing explosive materials. However, permittees may dispose of
surplus stocks of explosive materials to other licensees/permittees in
accordance with Sec. Sec. 555.103 and 555.105.
Comments Received
One commenter stated that the U.S. Environmental Protection Agency
(``EPA'') used the term ``dispose/disposing'' in the context of EPA
disposal time and tracking requirements triggered once a licensee/
permittee declares explosive materials to be a hazardous waste. As a
result, the commenter explained, it would create confusion for ATF to
use the same terms when referring to handling surplus stocks of
explosive materials. The commenter stated that this overlap would
suggest that EPA-regulated treatment, storage, and disposal facilities
(``TSDFs'') must also obtain an explosives license/permit to dispose of
hazardous waste explosives. The commenter also stated that EPA had
regulated the disposal of ``reactive'' wastes, which include
explosives, since 1976 and that TSDFs were subject to stringent
permitting requirements.
The commenter raised this question to EPA, which, according to the
commenter, suggested that ATF use terms such as ``surplus or
recycling,'' rather than ``dispose/disposing,'' to distinguish between
usable explosives being returned to stock at some other location and
explosives that have been declared waste and are destined for permanent
destruction.
ATF Response
Federal explosives laws and regulations require that any person
intending to acquire explosive materials must first obtain a federal
explosives permit. Therefore, unless subject to an exemption, a TSDF
receiving explosive materials is required to be permitted under 27 CFR
part 555.
Regarding the suggestion that ATF use terms such as ``surplus or
recycling,'' rather than ``dispose/disposing,'' to distinguish between
usable explosives being returned to stock at some other location and
explosives that have been declared waste and are destined for permanent
destruction, ATF notes that the regulation authorizing permittees to
``dispose of surplus stocks of explosive materials to other licensees
or permittees'' dates back to 1971. ATF has no record of any previous
complaints or confusion within the explosives industry regarding the
use of the terms ``dispose'' or ``disposition'' in federal explosives
laws or regulations. ATF also has no record of the EPA or any other
government agency expressing concern over any potential confusion in
relation to these terms in federal explosives laws or regulations, or
any potential for these terms to be confused with any related terms
established in the laws or regulations that fall within their
enforcement jurisdictions. Accordingly, ATF is not adopting the
commenter's suggestion.
K. Possessing Explosives Prior to Completing a Background Check
Effective May 24, 2003, the SEA required ATF to conduct background
checks on the individuals listed on license/permit applications as RPs
and employees authorized to possess
[[Page 61091]]
explosive materials. The law requires ATF to determine whether any of
the RPs or employees are prohibited persons under 18 U.S.C. 842(i) and
to notify the employer of the determination.
Comments Received
A commenter requested that ATF clarify whether employees for whom
background check paperwork has been submitted may possess explosives
prior to ATF's response and until notification is received from ATF
that such employee is prohibited from possessing explosive materials.
Because ski resort business is highly seasonal, the commenter contended
that ``[l]imitations on the ability of an employee to possess
explosives while awaiting a letter of clearance from ATF--unless brief,
expedited processing deadlines were put in place--could put our
avalanche control operations at risk.''
ATF Response
ATF recognizes that industry members often have a limited time in
which to staff positions that require an employee to possess
explosives. ATF strives to process background check requests and issue
appropriate letters to explosives companies and individuals in a timely
manner. Despite these efforts, processing necessarily takes time, and
requiring proprietors to wait for a response from ATF prior to allowing
a newly hired employee to possess explosives would place a significant
burden on the industry.
To address this burden, and in response to the comments raising
concerns about such a burden, ATF has decided to amend Sec. 555.57 to
clarify that it will exercise its discretion under 18 U.S.C. 843(d) to
refrain from seeking to revoke the license/permit of a licensee/
permittee that employs prohibited persons under certain narrow
circumstances. In particular, so long as the licensee/permittee has
complied with the requirement to report any new RP or any newly hired
or rehired employees authorized to possess explosive materials to ATF's
FELC within 30 days after the date they were hired or otherwise placed
in the position; and so long as neither the licensee/permittee nor the
relevant RP knows, or has reason to know, that the new RP or employee
is prohibited from possessing explosives, ATF will not revoke the
license/permit on the basis that the licensee/permittee employed a
person who, upon completing the relevant background check, was
determined to be a prohibited person under section 842(i). For clarity,
ATF notes that this safe harbor would cease to be available if the
licensee/permittee continues to employ a new RP or employee in a role
that requires possessing explosive materials after learning that the
new RP or employee is in fact a prohibited person, whether the
licensee/permittee learns that information through the results of a
background check or otherwise.
L. Meaning of ``Possess''
As explained in IFR 1 (68 FR 13772-73), actual possession exists
when a person is in immediate possession or control of explosive
materials and includes instances where a person knowingly has direct
physical control over the explosive materials at a given time. Where
direct physical control over explosive materials is absent, a person
has constructive possession where they knowingly have the power and
intention to exercise dominion and control over the explosive
materials, either directly or indirectly through others.
Comments Received
Various comments addressed the meaning of ``possess'' in the
regulations. According to one commenter, although the term ``possess''
or one of its derivatives is used 59 times in the interim regulations,
the term was not defined. This commenter believes this term should be
defined because its meaning ``bears so greatly on maintaining
compliance'' with the laws and regulations.
Another commenter, an organization, similarly asked for a
definition or clarification on the meaning of ``possess,'' explaining
that many of its members are involved in support activities (e.g.,
consultants, suppliers) where they may come into contact with
commercial explosives and could be considered possessors. The commenter
stated that prior to the SEA, these members would not have needed to
obtain an explosives license/permit, but that it was now unclear
whether they would be considered ``possessors'' under the interim rule.
This commenter contended that ATF had provided inconsistent answers,
``especially as it relates to the distinction between receivers and
possessors.''
The second commenter likewise argued that ATF had sent mixed
messages as to whether persons such as blasting consultants, emergency
response services, and commercial motor carriers, would be considered
possessors and therefore need a permit. The commenter stated that ``in
some cases, ATF is equating `receive' to `possess,' and in others ATF
is not'' and explained their belief that none of these types of persons
needs an explosives permit from ATF unless the person purchases
explosives. In their view, not only did federal explosives law clearly
intend a distinction between ``possess'' and ``receive,'' but also, ATF
had enforced the laws for over 30 years in a manner that distinguished
between the two terms.
A third commenter, which represents the crushed stone, sand and
gravel--or aggregate--industries, also noted confusion regarding the
meaning of ``possess'' in the context of who would be regarded as a
``responsible person.'' Such persons are required to be listed on a
license/permit application and undergo a background check. ATF had
previously stated that possession may be either actual or constructive.
According to this commenter, ``the term `constructive possession' was
so open-ended and vague that a strict interpretation applied by [ ]ATF
could result in costly compliance action by the commenter's member
companies for little, if any, benefit.'' The commenter further argued
that ``it is not the intent of Congress to require background checks
for every corporate officer or director of a company.'' All three
commenters asked that ATF provide more specific guidance to the
industry on the meaning of ``possess'' and who or what is covered in
certain situations.
ATF Response
Although no definition of ``possess'' exists in the federal
explosives statutes, the terms ``possess'' and ``possession'' have long
been defined by the courts in both civil and criminal contexts, which
ATF has used to provide guidance to the industry. See, e.g., United
States v. Van Horn, 277 F.3d 48, 54-55 (1st Cir. 2002) (``Under settled
law, possession may be actual or constructive, sole or joint . . . .
Constructive possession is commonly defined as the power and intention
to exercise control, or dominion and control, over an object not in
one's `actual' possession . . . . Constructive possession exists when a
person knowingly has the power and intention at a given time to
exercise dominion and control over an object, either directly or
through others.'') (internal citations omitted).
Relying on such case law, ATF has long construed the terms
``possess'' or ``possession'' as applying to an employee who is either
in actual or constructive possession of the materials. On Form 5400.13/
5400.16 (now becoming Form 5400.13) and Form 5400.28, ATF explains that
actual possession exists ``when a person is in immediate possession or
control of
[[Page 61092]]
explosive materials (e.g., an employee who physically handles explosive
materials as part of the production process; an employee who handles
explosive materials in order to ship, transport, or sell them; or an
employee such as a blaster, who actually uses explosive materials).''
The forms also explain that constructive possession exists ``when an
employee lacks direct physical control over explosive materials, but
knowingly has the power and intention to exercise dominion and control
over the explosive materials, either directly or indirectly through
others (e.g., an employee at a construction site who keeps keys for
magazines in which explosive materials are stored, or who directs the
use of explosive materials by other employees; or an employee
transporting explosive materials from a licensee to a purchaser).''
Whether a person ``possesses'' explosive materials, either actually
or constructively, has a bearing on determining whether one is an
employee authorized to possess explosive materials, but not on whether
one falls under the definition of ``responsible person.'' ATF believes
the third commenter mistakenly applied standards for employees
authorized to possess explosive materials to RPs. The SEA, at 18 U.S.C.
841(s), defines ``responsible person'' as ``an individual who has the
power to direct management and policies of the applicant pertaining to
explosive materials.'' ATF regulations (Sec. 555.11) further clarify
that this term includes ``partners, sole proprietors, site managers,
corporate officers and directors, and majority shareholders.''
ATF recognizes that the industry would like more specific
guidelines regarding applicability of requirements regarding employees
authorized to possess explosive materials as they pertain to industry
members' particular situations. ATF published guidance in the May 2003
edition of the ATF Explosives Industry Newsletter \20\ and maintains
information on the ATF website.\21\ Unfortunately, it is impossible for
ATF to formulate a general rule that would address every potential
situation involving an employee authorized to possess explosive
materials that may arise in the industry. Each licensee/permittee must
make a good-faith effort to determine which of its employees qualifies
as an employee authorized to possess explosive materials. There may be
situations in which, after consulting the above resources, an industry
member still has questions or needs clarification on an issue involving
an employee authorized to possess explosive materials. ATF field
personnel are available to answer questions, and ATF will continue to
respond to such requests and provide written responses to the industry
on a case-by-case basis. Although ATF acknowledges that the meaning of
``possess'' has a bearing on whether a person needs to comply with
federal explosive law and regulations, ATF believes the terms
``possess'' or ``employee authorized to possess explosive materials''
are sufficiently clear and therefore declines to define these terms.
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\20\ Other Frequently Asked Questions, ATF Explosives Industry
Newsletter (ATF, Washington, D.C.), May 2003, at 5, <a href="https://www.atf.gov/file/56531/download">https://www.atf.gov/file/56531/download</a> [<a href="https://perma.cc/9WAQ-UYBD">https://perma.cc/9WAQ-UYBD</a>].
\21\ See ATF, Who is a ``responsible person''? (Apr. 23, 2025),
<a href="https://www.atf.gov/explosives/qa/who-%E2%80%9Cresponsible-person%E2%80%9D">https://www.atf.gov/explosives/qa/who-%E2%80%9Cresponsible-person%E2%80%9D</a> [<a href="https://perma.cc/K8MN-LMRG">https://perma.cc/K8MN-LMRG</a>]; ATF, Who is a
``possessor of explosives''? (Sep. 28, 2018) <a href="https://www.atf.gov/explosives/qa/who-%E2%80%9Cpossessor-explosives%E2%80%9D">https://www.atf.gov/explosives/qa/who-%E2%80%9Cpossessor-explosives%E2%80%9D</a> [<a href="https://perma.cc/2FHQ-QNJA">https://perma.cc/2FHQ-QNJA</a>].
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ATF also agrees that the terms ``receive'' and ``possess'' are not
synonymous with respect to the federal explosives regulations. With
limited exceptions (for example, common/contract carriers transporting
explosive materials), federal explosives laws and regulations require
that any person receiving or possessing explosive materials must have a
federal explosives license/permit. Although it is generally the case
that all individuals receiving explosives also possess those materials,
it is not necessarily the case that all persons in possession have
``received'' materials as the term is applied for purposes of complying
with the regulations. For example, a person transporting explosive
materials at a work site on behalf of their employer possesses the
explosives, but they would not be considered to have ``received'' the
materials for licensing, record-keeping, or other purposes under part
555.
It is important to note that such a distinction does not apply to
those who acquire explosives unlawfully. Such individuals would likely
have ``received'' and will be in ``possession'' of these materials
under the law. For example, a person not employed by a licensee/
permittee who purchases explosives in an illicit transaction or an
employee authorized to possess explosive materials who steals
explosives from an employer's explosives magazine would have received
and would possess such materials.
Commenters stated that ATF has provided inconsistent guidance
regarding which types of industry workers (e.g., blasting consultants,
emergency response services, and commercial motor carriers) receive or
possess explosives, and, therefore, require a license/permit under part
555. However, it is not feasible for ATF to formulate a general rule or
attempt to develop a significant number of examples that would address
every potential ``receipt'' versus ``possession'' situation that may
arise in the industry. For ATF to determine which types of persons or
entities receive or possess explosive materials (e.g., emergency
responders, consultants, waterfront facilities), each scenario and its
attendant circumstances must be examined. For example, an industry
consultant in one scenario may purchase explosives for demonstration
purposes, whereas a consultant in another scenario may provide
instruction without ever purchasing or possessing explosives.
Therefore, ATF will continue to make such determinations individually,
considering factors and circumstances pertinent to each case.
M. Safely Handling Explosives and Record-Keeping Manual
Comments Received
One commenter recommended that the final rule include a provision
that requires explosives licensees/permittees to maintain a written
handling and record-keeping manual onsite that would contain the
necessary paperwork and records required by ATF, as well as require
employee training and procedures to ensure explosive materials are
under custody of authorized personnel at all times. According to the
commenter, when they visited locations where explosives were handled,
the commenter frequently observed mishandling of explosive materials.
The commenter cited examples such as magazines left open, residual and
unused explosives left throughout the facility, and areas ready for
blasting left unattended for long periods. Additionally, they observed
that required records could be difficult to locate when ATF was
conducting renewal or compliance inspections. The commenter stated that
these situations were extremely dangerous and provided unauthorized
individuals access to explosives.
ATF Response
Federal explosives laws generally grant the Attorney General the
authority to prescribe rules and regulations necessary to carry out the
provisions of 18 U.S.C. chapter 40. 18 U.S.C. 846. ATF has accordingly
prescribed
[[Page 61093]]
regulations on various aspects of an explosive licensee's/permittee's
business activities. ATF believes that the most effective regulations
are those that address possessing, transferring, transporting, and
shipping explosives, and ATF prioritized such regulations to ensure
that prohibited persons do not possess explosives and that explosives
are safely stored, shipped, transported, and possessed. ATF regulations
contain requirements that licensees/permittees must meet to properly
and safely store and manage explosives and to create and maintain
required records, among other provisions, and ATF inspects operations
to assess compliance with these important public safety components.
Implicit in these requirements is a need for licensees/permittees to
develop training and procedures to ensure that their employees comply
with ATF's requirements. Including an additional regulatory requirement
that licensees/permittees must develop and manage employee conduct,
training, and procedures in a particular way as mandated by ATF would
essentially duplicate this preexisting need without adding any further
public benefit. Such a requirement would also be costly and difficult
to enforce because ATF would have to review employee manuals, monitor
employee training, or otherwise spend resources that could be better
directed towards enforcing requirements with greater public benefits.
In addition, because the explosives industry consists of more than 25
sectors, each with its own operational needs and using different types
of explosives and in different ways, it is unrealistic for ATF to
attempt to regulate procedures, training, and employee conduct at a
detailed level. ATF would have to develop more than 25 sector-specific
regulations for such practices, constantly update them as technology
and explosives composition change for each industry sector, and also
adjust for innovations in industry practice. ATF does not have the
resources to do the research and constant monitoring of changes in
technology, explosives, and more, or the necessary testing to go along
with it. Nevertheless, ATF works closely with industry members not only
to ensure compliance with all regulations under part 555, but also to
address voluntary safety and security measures.\22\ In addition, ATF
inspects licensee/permittee operations and records to ensure compliance
with part 555 requirements.
---------------------------------------------------------------------------
\22\ See, e.g., ATF, Explosives Safety and Security (Mar. 13,
2025), <a href="https://www.atf.gov/explosives/tools-services-explosives-industry/current-licensees/explosives-safety-and-security">https://www.atf.gov/explosives/tools-services-explosives-industry/current-licensees/explosives-safety-and-security</a> [<a href="https://perma.cc/NVX4-B7W9">https://perma.cc/NVX4-B7W9</a>].
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ATF encourages persons with information relating to unsafe or
unsecured explosives practices to contact their nearest ATF field
office, whose information can be found on ATF's website. In addition,
there are other federal and state government agencies, in addition to
many notable groups within the explosives industry, that have prepared
explosives-related publications that address the safe handling and use
of explosive materials.
N. Errors in Regulatory Text
Comments Received
The interim regulation at Sec. 555.106(c), introductory text,
reads as follows:
(c) A licensee shall not distribute any explosive materials to any
person knowing or having reason to believe that the person . . .
According to a commenter, ``[c]urrent rules state that `persons'
are subject to the receipt disqualifications at 18 U.S.C. 842(d) when
the statutory applicability is to an `individual.' ATF should correct
this error to be consistent with the FEL [federal explosives law].''
ATF Response
The IFRs did not affect the applicability of Sec. 555.106(c) to
persons, as noted by the commenter, and therefore this issue is not
within the scope of the notice. In any event, by using the term
``person,'' rather than ``individual,'' the regulation reflects the
fact that, under federal law, it is unlawful for a person to assist any
prohibited ``person,'' including an individual or a legal entity such
as a corporation, to receive or possess explosives. See 18 U.S.C. 2,
842(i). Therefore, ATF is not adopting the commenter's suggestion.
O. IFR Costs and Benefits Section
To implement the SEA, IFR 1 incorporated new requirements into ATF
explosives regulations and included an accompanying cost-benefit
analysis. Those requirements went into effect over 20 years ago with
the publication of IFR 1 and have remained in effect. The costs
stemming from these requirements were addressed in the IFR and became,
for the purposes of standard economic analyses, sunk costs for industry
after ten years. This section of the preamble is responding to comments
that were submitted in 2003 on the IFR 1 cost-benefit analysis, and
therefore affect only the IFR 1 projected costs through 2012. However,
because time has passed since the IFRs were issued, ATF now has
historical data on some of the elements originally projected in 2003.
To respond to these comments as accurately as possible, ATF is
therefore responding to these comments using actual historical data
where available.
For IFR 1 or IFR 2 requirements that are being revised through this
final rule, ATF has included a new cost-benefit analysis covering those
current costs in section VI.A.2 of this preamble. Therefore, the
responses in this section do not include any new costs arising from
this final rule. Specifically, ATF notes that IFR 2 covered only
verification of delivery by common/contract carriers, and economic
comments pertaining to IFR 2 were on that topic. However, ATF is
removing that verification requirement via this final rule, so costs
related to that issue are updated and addressed in the cost-benefit
analysis in section VI.A.2 of this preamble.
1. Population of User Permittees and Limited Permittees
To implement the SEA, IFR 1 required that all persons (at the time
of publication) who used explosives as part of their operations, but
who were not otherwise licensed/permitted at the time, would thereafter
have to obtain a license/permit prior to obtaining additional
explosives. The SEA had created a new type of permit, a limited permit,
that was intended to provide an easier option for such ``non-
permittees'' to comply with the new licensing/permitting requirement.
Therefore, in IFR 1, ATF estimated that 20,000 non-permittees would
obtain a limited permit, which ATF concluded would mean that they could
purchase explosives (at most) six times per year. In addition to
obtaining a limited permit, ATF estimated that these new permittees
would also need to undergo an inspection for an additional related
cost.
Comments Received
One public commenter suggested that some non-permittee users of
explosives--who would have had to acquire a license/permit as a result
of the new SEA requirements--might have applied for a user permit
instead of a limited permit because six purchases in a year might not
have been sufficient for all non-permittees. This commenter broke out
the estimated 20,000 applicants into two groups: suggesting that half
(10,000) of the estimated affected population would apply for a limited
permit and half (10,000) would apply for a user permit. The commenter
also noted that there would be additional downstream effects (beyond
[[Page 61094]]
inspections) from increasing the number of permittees, such as appeals
of adverse background checks and applications for relief of
disabilities.
ATF Response
ATF agrees with the commenter that some of the non-permittees might
have chosen to acquire user permits beginning in 2003 instead of
limited permits. In addition, because ATF has historical data on the
numbers of permit applications, ATF has used this data to re-calculate
the types of permits the affected population would have acquired in
response to IFR 1 (rather than using estimated projections, as occurs
in regulatory analyses conducted when a rule is issued)--if the 2003
cost-benefit analysis had included both kinds of permits.
To calculate the increase in user permits that could have been
attributed to the SEA/IFR 1 requirement, ATF first ascertained a
baseline of annual applications it received before the requirement.
Because there is no means of determining which user permit applications
stemmed from preexisting requirements versus those created by the SEA/
IFR 1, ATF used the historical number of user permit applications it
received from 2000 to 2002 to establish the pre-SEA average annual
baseline. The annual average number of user permit applications during
those three years was 2,074. Therefore, ATF uses the 2,074 average
historical number as the baseline for purposes of responding to this
comment. Any increment above 2,074 user permit applications in a given
year as is treated as stemming from the SEA/IFR 1 requirement. Table 1
shows the number of permit applications received during the 2000-2002
baseline period, and the resulting average. Note that ATF did not
receive any limited permit applications during that time because the
limited permit was a new type of permit added pursuant to the SEA/IFR
1. Table 2 provides the total number of applications ATF received for
limited and user permits from 2002-2012. Table 2 also includes the
estimated total number of permittees that may have applied for either a
user permit or a limited permit due to the SEA requirement.
Table 1--Historical User Permit Data and Baseline Average
----------------------------------------------------------------------------------------------------------------
All user permit
Fiscal year (FY) Limited permit applications applications
----------------------------------------------------------------------------------------------------------------
2000................................................. n/a 1,985
2001................................................. n/a 1,798
2002................................................. n/a 2,438
----------------------------
Average.......................................... ............................ 2,074
----------------------------------------------------------------------------------------------------------------
Table 2--Historical Limited/User Permit Data, Net Total Permit Increases
----------------------------------------------------------------------------------------------------------------
Limited permit User permit Net user permits Combined increase in
Fiscal year (FY) applications received applications received over pre- permits attributed
(new) received SEA baseline to SEA
----------------------------------------------------------------------------------------------------------------
2003........................ 745 5,692 3,618 4,363
2004........................ 748 2,460 386 1,134
2005........................ 641 2,066 0 633
2006........................ 466 2,636 562 1,028
2007........................ 377 3,116 1,042 1,419
2008........................ 280 2,239 165 445
2009........................ 230 3,065 991 1,221
2010........................ 259 2,967 893 1,152
2011........................ 180 3,025 951 1,131
2012........................ 182 4,199 2,125 2,307
----------------------------------------------------------------------------------------------------------------
Although ATF concurs that there were additional, ancillary effects
arising from implementing this SEA licensing/permitting requirement in
IFR 1, the majority of these effects are discussed in responses to
specific comments in the rest of section III.O of this preamble, below.
ATF notes that these effects stem from the incremental increase in
permit applications. To determine the effect of the incremental
increase on activities such as inspections, appeals of adverse
background checks, and applications for relief of disabilities, ATF
first had to calculate the proportion of affected permits within the
historical data on user permits applied for during 2003-2012. ATF did
this by subtracting the 2,074 baseline (developed in Table 1 for pre-
SEA annual numbers of user permits) from each year's total data on
limited/user permit applications and then dividing the number of
affected permits by the total number of permits to calculate the
proportion affected. Table 3 illustrates the total historical number of
limited/user permits; the combined total of affected permits (both
limited permits and incremental addition of user permits); and the
proportion. Table 3 thus illustrates the increased proportion of
permits stemming from the SEA.
Table 3--Proportion of SEA-Attributed Permits From Total Permits
----------------------------------------------------------------------------------------------------------------
Total limited/user Attributed limited/ Proportion of SEA-
FY permits user permits attributed permits (%)
----------------------------------------------------------------------------------------------------------------
2003...................................... 6,437 4,363 68
2004...................................... 3,208 1,134 35
2005...................................... 2,707 641 24
[[Page 61095]]
2006...................................... 3,102 1,028 33
2007...................................... 3,493 1,419 41
2008...................................... 2,519 445 18
2009...................................... 3,295 1,221 37
2010...................................... 3,226 1,152 36
2011...................................... 3,205 1,131 35
2012...................................... 4,381 2,307 53
----------------------------------------------------------------------------------------------------------------
ATF used these percentages in its responses to comments below to
determine the incremental impact (from the requirement that all persons
using explosives must be licensed/permitted) on inspections, RPs,
employees authorized to possess explosives, appeals of adverse
background checks, and applications for relief of disabilities.
2. Population of Responsible Persons and Employees Authorized To
Possess Explosive Materials
In IFR 1, ATF estimated that the requirement for more people to
have a permit would result in 100,000 RPs and 1,000 employees
authorized to possess explosive materials.
Comments Received
One commenter suggested that ATF underestimated the number and
ratio of RPs to employees authorized to possess explosives materials.
The commenter requested that ATF use historical data.
ATF Response
ATF partially concurs with using historical data. Although ATF has
overall numbers on background checks for explosives RPs and employees
authorized to possess explosive materials (``EP'' in this response and
Table 4), ATF systems do not separate background checks to
differentiate between those pertaining to EPs or RPs specifically.
Therefore, based on the overall number of background checks, ATF had to
perform further calculations to derive a ratio from the total number of
background checks to estimate the proportions of RPs and EPs.
Based on ATF's internal database, ATF determined the average ratio
of RPs to EPs is one RP to nine EPs. ATF then used this ratio in Table
4 to update the number of RPs and EPs.
To determine the estimated number of RPs and EPs affected by SEA/
IFR 1's licensing/permitting requirement, ATF started with actual data
on the number of background checks reported through NICS \23\ each
year, 2003-2012. Because each permit requires a background check, ATF
then applied the annual proportion of permits attributed to the SEA/IFR
1 requirement (Table 3), to the number of background checks each year,
resulting in the net number of additional background checks attributed
to IFR 1. The first two columns of Table 4 reflect this calculation.
Because RPs and EPs both undergo background checks, ATF then determined
the number of RP/EP sets associated with the entire number of
background checks occurring each year. It then applied the proportions
attributable to SEA/IFR 1's requirement from Table 3 to the number of
sets per year, resulting in the number of RP/EP sets attributable to
IFR 1. The middle two columns of Table 4 illustrate this calculation.
The last two columns illustrate how many RPs and EPs were thus affected
by this rule (two RPs per set, and 18 EPs per set).
---------------------------------------------------------------------------
\23\ NICS is the Federal Bureau of Investigation's National
Instant Criminal Background Check System. For more information on
NICS and how it conducts background checks, see <a href="https://www.fbi.gov/how-we-can-help-you/more-fbi-services-and-information/nics/about-nics">https://www.fbi.gov/how-we-can-help-you/more-fbi-services-and-information/nics/about-nics</a>.
Table 4--Total Number of Background Checks, Proportion Attributed to SEA/IFR 1, Estimated Number of RP and EP Background Checks Attributed to SEA/IFR 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net background Sets of RPs/EPs Sets of RPs/EPs
FY Background checks due to based on attributed to RPs attributed EPs attributed
checks IFR 1 background checks IFR 1 to IFR 1 to IFR 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003...................................... 30,172 20,451 1,023 693 1,386 12,474
2004...................................... 35,421 12,521 626 221 442 3,978
2005...................................... 60,417 14,306 715 169 338 3,042
2006...................................... 70,686 23,425 1,171 388 776 6,984
2007...................................... 62,791 25,508 1,275 518 1,036 9,324
2008...................................... 71,599 12,648 632 112 224 2,016
2009...................................... 54,254 20,104 1,005 372 744 6,696
2010...................................... 67,053 23,945 1,197 427 854 7,686
2011...................................... 82,949 29,272 1,464 517 1,034 9,306
2012...................................... 78,500 41,337 2,067 1,088 2,176 19,584
--------------------------------------------------------------------------------------------------------------------------------------------------------
3. Appeals of Adverse Background Checks, Applications for Relief of
Disabilities, and Number of Inspections
Another cost that ATF calculated in its analysis for IFR 1 was the
cost for an inspection. Inspections were included because, upon an
initial application for a permit, a non-permittee must undergo a
qualification inspection; hence, the number of inspections would
increase with the number of new permits. ATF attributed no ancillary
costs other than those discussed above to the permitting increase at
the time.
Comments Received
One commenter concurred that it was appropriate to include the cost
of
[[Page 61096]]
inspections but suggested that an increase in permittees would result
in additional actions/costs not included in ATF's analysis. The
commenter cited appeals of adverse determinations from background
checks and applications for relief of disabilities. As for inspections,
the commenter concurred with ATF's assessment for inspections.
ATF Response
ATF concurs that additional costs to appeal adverse background-
check determinations and request relief from disabilities should have
been included in the analysis in IFR 1. ATF therefore includes
historical data on these costs in this response to public comments. See
Table 5. In other words, because these persons would have had to become
licensed/permitted due to the IFRs, they would have had to begin
undergoing inspections. This increase in inspections would have
resulted in additional background checks, which would in turn have
resulted in additional appeals from background checks and additional
requests for relief from disabilities.
Although the commenter did not raise a concern with the original
inspection data, because ATF is updating all the hourly wages and costs
for the original IFR 1 cost analysis--such as costs of appeals from
background checks and requests for relief from disabilities--as well as
the ones suggested by the commenter (see section III.O.7 of this
preamble), ATF is also including historic data in Table 5 for
inspections, appeals from background checks, and requests for relief
from disabilities.
Table 5--Total Numbers of Background Check Appeals, Requests for Relief, and Inspections
----------------------------------------------------------------------------------------------------------------
Appeals from Requests for
FY background relief from Inspections
checks disabilities
----------------------------------------------------------------------------------------------------------------
2003............................................................ 1 240 3,631
2004............................................................ 4 240 1,892
2005............................................................ 146 270 1,617
2006............................................................ 188 405 1,367
2007............................................................ 111 229 1,298
2008............................................................ 170 235 1,136
2009............................................................ 164 273 1,116
2010............................................................ 269 269 1,108
2011............................................................ 239 239 1,254
2012............................................................ 193 192 1,602
----------------------------------------------------------------------------------------------------------------
As mentioned previously, not all historical numbers of permits,
background checks, appeals, requests for relief, or inspections are
attributable to IFR 1. Applications for permits and actions such as
background check appeals and requests for relief from disabilities are
all activities that existed prior to implementing the SEA. In other
words, the SEA added to the existing permitting programs with
background checks and appeals that supplemented the existing programs.
Permittees and background checks that would have occurred regardless of
implementing the SEA are considered sunk costs and were not included as
historical costs arising from implementing the SEA.
During the initial period after implementing the SEA, there was an
increase in applications; therefore, only the estimated increase is
being attributed to IFR 1. As outlined in Table 3 above, ATF estimated
the proportion of limited/user permits attributable to IFR 1. ATF has
now applied those same proportions to the Table 5 historical numbers of
background check appeals, requests for relief, and inspections. This
calculation is reflected in Table 6 as a net increase attributable to
IFR 1.
For the purposes of this analysis, ATF assumes that the number of
inspections performed equals the number of incremental applications
received for permits for 2003 because the increase in applications that
year was due to the new requirement and they would all have been
initial applications requiring an inspection the same year. For years
after 2003, ATF used the historical percentages to calculate a net
number of inspections because only a subset of existing permittees
undergo compliance inspections in a given year. Table 6 illustrates the
estimated net number of background check appeals, requests for relief
from disabilities, and inspections attributable to the SEA/IFR 1
permitting requirement.
Table 6--SEA/IFR 1-Attributable Increases in Background Check Appeals, Requests for Relief, and Inspections
----------------------------------------------------------------------------------------------------------------
Net appeals Net requests
from for relief Net
FY background from inspections
checks disabilities
----------------------------------------------------------------------------------------------------------------
2003............................................................ 1 163 4,363
2004............................................................ 1 85 1,284
2005............................................................ 35 57 448
2006............................................................ 62 89 536
2007............................................................ 45 165 555
2008............................................................ 30 40 229
2009............................................................ 61 87 421
2010............................................................ 96 97 399
2011............................................................ 84 95 391
2012............................................................ 102 126 660
----------------------------------------------------------------------------------------------------------------
[[Page 61097]]
4. Other Populations Not Considered by ATF
Comments Received
One commenter listed other requirements not considered as costs in
the analyses in IFRs 1 and 2. The commenter attributed these proposed
costs to the IFR 1 requirement that common/contract carriers verify the
identity of the person accepting delivery of explosive materials and
for the distributor to also maintain a list of authorized people. In
particular, the commenter suggested that common/contract carriers would
have to complete Form 5400.8 as part of verifying the recipient's
identity and that distributors would be charged a service fee for
returned shipments if the common/contract carrier was unable to verify
the recipient.
The same commenter also noted that a list of persons authorized to
receive explosives on behalf of a distributee would likely be identical
to the list of persons authorized to order explosives for the same
distributee, which was a list already required by the regulations at
the time of IFR 1. Therefore, the commenter noted, costs for a list of
authorized recipients required by IFR 1 would be minimal, at most.
ATF Response
ATF concurred in 2003 with the public commenter regarding
prohibitive costs concerning explosives shipments via common/contract
carriers. As a result, ATF alleviated those verification requirements
pursuant to Ruling 2003-5 a couple of months after IFR 1, allowing an
alternate process by which the distributor would verify receipt
directly with the distributee in cases involving limited permittees
receiving deliveries via common/contract carriers. ATF then removed the
verification requirement for common/contract carrier deliveries to
licensees/user permittees a few months later, via IFR 2.
In addition, ATF concurred in 2003 with the commenter's statement
that using Form 5400.8 was burdensome, and in IFR 2, ATF removed that
requirement as well. Therefore, no additional costs are being
calculated now with regard to these previously canceled requirements.
Through this final rule, ATF is removing the last portions of the
requirement to verify the identity of individuals accepting explosives
deliveries on behalf of limited permittees via common/contract
carriers. This results in a new cost-benefit analysis for this rule
(rather than an update to the IFR 1 analysis), set forth in section
VI.A.2 of this preamble.
As for the costs of maintaining a list of persons authorized to
accept delivery of explosives, ATF also concurs with the commenter that
the requirement for a list of authorized recipients would essentially
be the same list created by the preexisting requirement to maintain a
list of persons authorized to order explosives on behalf of the
permittee. ATF concurs that the cost to maintain a list of authorized
persons would therefore be de minimis. As a result, ATF is not updating
costs for the list in response to the comments.
5. Items Outlined as Application or Supporting Documentation Costs
In IFR 1, ATF supplied the following permit application and renewal
costs as well as costs for RPs and authorized employees to obtain
supporting documentation (such as fingerprints and photographs) to
submit with the permit application for their background checks. Table 7
provides the breakdown of such cost items that were included in IFR 1.
Table 7--Cost Items for Permit Applications and Supporting Documentation
------------------------------------------------------------------------
Cost item Cost Renewal cost
------------------------------------------------------------------------
Fingerprint-based submission............ $10.00 ..............
Passport photo.......................... 1.50 ..............
Limited permit fee...................... 25.00 12
User permit fee......................... 100.00 50
------------------------------------------------------------------------
Comments Received
One commenter (IME-8) concurred with the item costs and commented
only that the expenses for renewals over time were not included in the
IFR 1 analysis.
ATF Response
ATF disagrees that IFR 1 did not address recurring costs. IFR 1 did
include a statement about recurring fees. However, ATF agrees the
recurring costs were not illustrated over time. ATF concurs that a ten-
year schedule would better illustrate recurring costs and is therefore
including them in these responses to public comments. Because the costs
include both the specific fees and costs originally included in Table 7
above and the hourly burden of acquiring fingerprints, etc., ATF has
combined the updated data on these costs with the updated data on
hourly burden and reflected the totals over ten years in Table 12 (in
section III.O.7 of this preamble).
6. Hourly Burdens
Comments Received
One commenter made suggestions regarding ATF's estimated hourly
burden to perform certain actions, such as obtaining fingerprints,
photographs, and documents to support requests for relief from
disabilities. This commenter suggested that the time burden to acquire
these items, such as traveling to and from a police station to complete
fingerprint cards or traveling to and from appointments to obtain
photographs, was more than the time calculated for completing the forms
themselves. The commenter also included suggested hourly burdens for
the time to draft a request for relief from disability and for actions
associated with such requests, such as interviews of coworkers,
neighbors, or family. The commenter also included suggested hourly
burdens to acquire documents or to participate in reference interviews.
Further, the commenter suggested that technical advisors would be
needed to review and complete an application for a permit.
ATF Response
ATF agrees that the original IFR 1 analysis did not include all the
costs identified by the commenter and concurs with including most of
them as part of updating the costs in response to these comments. Table
8 reflects the updated hourly burden analysis in response to these
comments. To calculate the time to complete a permit application form
or a transaction report, ATF used information contained on the actual
ATF forms based on testing when the form was developed. ATF used the
times provided by the commenter for all the other time costs. However,
ATF disagrees with the commenter that technical advisors would be
needed to
[[Page 61098]]
review and complete applications. The application consists of business
details that an RP (such as a manager) would know and individual
information that the proposed RP or employee authorized to possess
explosives would know for the individual's own background checks.
Table 8--Hourly Burdens To Perform Actions *
------------------------------------------------------------------------
Estimated
Hourly burden action hourly burden Source
------------------------------------------------------------------------
Application.................... 0.33 ATF information
collection (OMB-
approved 1140-0070
(ATF Form 5400.13/
5400.16--now Form
5400.13) **).
Managerial application......... 0.33 Public comment #8 (pg
16).
Renewal application............ 0.33 ATF information
collection (OMB-
approved 1140-0022
(ATF Form 5400.14/
5400.15--now Form
5400.14)).
Obtain fingerprints............ 1 Public comment #8 (pg
15).
Obtain photograph.............. 0.5 Public comment #8 (pg
15).
Request for relief from 5.92 Public comment #8 (pg
disability. 18).
Managerial relief from 1 Public comment #8 (pg
disability. 18).
Interviews and references of 2 Public comment #8 (pg
coworkers. 18).
Home interviews................ 0.51 Public comment #8 (pg
18).
Appeals for adverse background 2 Public comment #8 (pg
checks. 17).
Limited permit transaction 0.33 ATF information
report. collection (OMB-
approved 1140-0075
(ATF Form 5400.4)).
------------------------------------------------------------------------
* Data from ``ATF information collection'' sources comes from the hourly
burden reported on the involved forms.
** Form 5400.13/5400.16 (now Form 5400.13) included, in 2003, the
information on RPs that has since been split into a separate document
(Form 5400.13A/5400.16, now Form 5400.27). However, the hourly burden
in this table includes the time the form would have taken with both
parts included in 2003.
7. Wages and Costs
Comments Received
One commenter suggested that ATF use a different source for wages
than it relied upon in IFR 1. The commenter suggested ATF use Bureau of
Labor Statistics (``BLS'') executive and managerial wages for RPs and
blue-collar occupation wages for employees authorized to possess
explosives. The commenter also suggested other employee wages in
support of their statement that technical personnel would be needed to
complete application forms (particularly, to develop schematic diagrams
as supporting statements for the forms). Furthermore, this commenter
suggested that if ATF were to incorporate the costs and wages as
proffered by the commenter, this rule would be economically
significant, meaning this rule would cost more than $100 million in any
one year.
ATF Response
ATF largely concurs with the commenter's suggested wage rates and
has adopted the occupations/wages supplied by the commenter to revise
the IFR 1 analysis in response to these comments. However, ATF used a
rounded calculation of the listed ``total compensation'' as the wages
for the occupations supplied by the commenter. ATF used ``total
compensation'' so as to include fringe benefit costs that accompany
salaries/wages, such as insurance. However, ATF disagreed with the
commenter's suggested employee wages for personal reference interviews
from individuals who are not employees of the permittee, such as
spouses. Because interviews of non-employees are performed during non-
work hours, ATF estimated a leisure wage rate based on a methodology
from the Department of Health and Human Services (``HHS'').\24\ The HHS
methodology is to first obtain the average U.S. median non-leisure
weekly wage from BLS, and divide it by 40 hours to derive the median
hourly non-leisure wage. Step two is to obtain the average U.S. real
household income before taxes and after taxes from the Census Bureau
and divide the post-tax income by the pre-tax income to determine the
net household income rate. Step three applies the net income rate to
the median non-leisure hourly rate derived in step one to calculate the
hourly leisure wage. Table 9 shows the steps and data used under this
methodology to determine the leisure wage.
---------------------------------------------------------------------------
\24\ Jennifer R. Baxter, et al., Valuing Time in U.S. Department
of Health and Human Services Regulatory Impact Analyses: Conceptual
Framework and Best Practices (June 2017), <a href="https://aspe.hhs.gov/sites/default/files/private/pdf/257746/VOT.pdf">https://aspe.hhs.gov/sites/default/files/private/pdf/257746/VOT.pdf</a>.
Table 9--Calculation of Leisure Wage Rate
------------------------------------------------------------------------
Inputs for leisure wage rate Cost inputs Source
------------------------------------------------------------------------
Median weekly wage............. $618 Earnings and
occupation: third
quarter of 2003: The
Economics Daily: U.S.
Bureau of Labor
Statistics (<a href="http://bls.gov">bls.gov</a>).
Median hourly wage............. $15 $618/40 hours = $15.
Real household income pre-tax.. $43,318 med-hh-inc2003.pdf
(<a href="http://census.gov">census.gov</a>).
Real household income post-tax. $38,300 Alternative Income
Estimates in the
United States: 2003
(<a href="http://census.gov">census.gov</a>).
State and federal taxation..... 88% $43,318 pre-tax income-
$38,300 post-tax
income = $5,018 tax.
$5,018 tax/$43,318 =
12% of wages as taxes.
100%-12% = 88% wages
post-tax.
Leisure wage................... $13.66 $15 median hourly wage
* 88% post-tax wage
rate = $13.66.
Rounded leisure wage rate...... $14 .......................
------------------------------------------------------------------------
[[Page 61099]]
Table 10 provides the rounded total compensation wage rates for
occupations that were suggested by the commenter and that ATF used to
reassess the IFR 1 analysis.
Table 10--Rounded Hourly Wage Rates for Related Occupations
------------------------------------------------------------------------
Total
Job title compensation Source
------------------------------------------------------------------------
Executive, administrative, and $47.00 https://www.bls.gov/
managerial. news.release/archives/
ecec_08262003.pdf.
Blue-collar occupations........ 23.00 <a href="https://www.bls.gov/news.release/archives/ecec_08262003.pdf">https://www.bls.gov/news.release/archives/ecec_08262003.pdf</a>.
Leisure........................ 14.00 <a href="https://www.census.gov/content/dam/Census/library/visualizations/2006/demo/2003-state-county-maps/med-hh-inc2003.pdf">https://www.census.gov/content/dam/Census/library/visualizations/2006/demo/2003-state-county-maps/med-hh-inc2003.pdf</a>.
------------------------------------------------------------------------
To calculate costs of fees and time associated with the ancillary
effects of the SEA/IFR 1 permitting increase (i.e., inspections,
appeals, and requests for relief), ATF primarily relied upon historical
data. In addition, where relevant, ATF also incorporated hourly burdens
and hourly wage rates proffered by the commenter. Table 11 lists the
revised per-action costs to comply with IFR 1.
Table 11--Per Unit Cost per Action
------------------------------------------------------------------------
Item Individual cost
------------------------------------------------------------------------
User permit fee and time (new)............ $116
User permit fee and time (renewal)........ 66
Limited permit fee and time (new)......... 41
Limited permit fee and time (renewal)..... 28
ATF inspection time....................... 94
Responsible person costs and time......... 54
Employee authorized to possess costs and 41
time.....................................
Appeal of background check costs and time. 79
Request for relief from disability costs 236
and time.................................
------------------------------------------------------------------------
Tables 12 and 13 combine the information from the tables above (in
section III.O of this preamble) to show the revised ten-year
undiscounted costs of implementing IFR 1, based on input from the
comments as discussed above.
Table 12--Annual Estimated Incremental Costs To Implement IFR 1: Increased Limited Permits, User Permits, RPs,
and Employees
----------------------------------------------------------------------------------------------------------------
Net user Employees
Year Limited permit permit Responsible authorized to Annual totals
applications applications persons possess
----------------------------------------------------------------------------------------------------------------
2003............................ $15,293 $22,388 $74,844 $511,434 $623,959
2004............................ 25,806 0 23,868 163,098 212,772
2005............................ 22,121 51,142 18,252 124,722 216,237
2006............................ 16,077 94,822 41,904 286,344 439,147
2007............................ 13,013 15,040 55,944 382,284 466,281
2008............................ 9,660 90,206 12,096 82,656 194,618
2009............................ 7,935 81,288 40,176 274,536 403,935
2010............................ 8,942 86,566 46,116 315,126 456,750
2011............................ 6,210 193,400 55,836 381,546 636,992
2012............................ 6,279 193,400 117,504 802,944 1,120,127
-------------------------------------------------------------------------------
10-year undiscounted total.. 131,336 828,252 486,540 3,324,690 4,770,818
----------------------------------------------------------------------------------------------------------------
Table 13--Annual Estimated Incremental Costs To Implement IFR 1: Increased Appeals, Requests for Relief, and
Inspections
----------------------------------------------------------------------------------------------------------------
Appeals from
Year background Relief from Inspections Annual totals
checks disability
----------------------------------------------------------------------------------------------------------------
2003............................................ 79 38,391 410,122 448,592
2004............................................ 79 20,060 120,696 140,835
2005............................................ 2,765 13,452 42,112 58,329
2006............................................ 4,898 21,004 50,384 76,286
2007............................................ 3,555 38,940 52,170 94,665
2008............................................ 2,370 9,440 21,526 33,336
2009............................................ 4,819 20,532 39,574 64,925
2010............................................ 7,584 22,892 37,506 67,982
[[Page 61100]]
2011............................................ 6,636 22,420 36,754 65,810
2012............................................ 8,058 29,736 62,040 99,834
---------------------------------------------------------------
10-year undiscounted total.................. 40,843 236,867 872,884 1,150,594
----------------------------------------------------------------------------------------------------------------
As illustrated by Tables 12 and 13, when the costs in the tables
are added together, the new undiscounted costs attributable to IFR 1
are $ 5,921,412. Therefore, IFR 1 would not have been economically
significant, as it would not have cost the industry $100 million in any
given year. IFR 1 has thus not been economically significant since its
implementation.
ATF notes that these costs already occurred more than ten years ago
and hence have already been incorporated into current industry
practices; thus, they are now considered sunk costs. These tables
reflect revisions to the costs of the original requirements in IFRs 1
and 2, but they do not reflect any new costs that may arise from
regulatory changes being made by this final rule. The cost-benefit
analysis for regulatory changes being made in this final rule is in
section VI.A.2 of this preamble.
8. Costs of Transportation
Comments Received
One commenter suggested that ATF also include transportation costs,
which they estimated at $6.2 million dollars annually, for shipment
surcharges that would be added to all explosive material shipments as a
result of implementing the SEA.
[…truncated; see source link]Indexed from Federal Register on September 25, 2026.
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