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< Back to current issue of Immigration Daily < Back to current issue of Immigrant's Weekly

[Federal Register: March 20, 2003 (Volume 68, Number 54)]
[Rules and Regulations]               
[Page 13767-13793]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20mr03-18]                         


[[Page 13767]]

-----------------------------------------------------------------------

Part II





Department of Justice





-----------------------------------------------------------------------



Bureau of Alcohol, Tobacco, Firearms and Explosives



-----------------------------------------------------------------------



27 CFR Part 555



Implementation of the Safe Explosives Act, Title XI, Subtitle C of 
Public Law 107-296; Interim Final Rule


[[Page 13768]]


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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms and Explosives

27 CFR Part 555

[ATF No. 1; Docket No. 2002R-341P]
RIN 1140-AA00

 
Implementation of the Safe Explosives Act, Title XI, Subtitle C 
of Public Law 107-296

AGENCY: Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), 
Department of Justice.

ACTION: Interim final rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) 
is amending the regulations to implement the provisions of the Safe 
Explosives Act, Title XI, Subtitle C of Pub. L. 107-296, the Homeland 
Security Act of 2002 (enacted November 25, 2002). This interim rule 
implements the law which: requires that all persons receiving 
explosives on and after May 24, 2003, obtain a Federal license or 
permit, and creates a new type of permit, the ``limited permit;'' 
requires applicants for licenses and permits to provide as part of 
their application the names and appropriate identifying information 
regarding employees authorized to possess explosive materials as well 
as fingerprints and photographs of ``responsible persons;'' extends the 
time for ATF to act on an application for a license or permit from 45 
days to 90 days; authorizes warrantless inspections of places of 
storage maintained by applicants for limited permits and holders of 
limited permits; provides that only licensees and holders of user 
permits must post their licenses and permits and make them available 
for inspection; requires that ATF conduct background checks on 
responsible persons and employees authorized to possess explosive 
materials; specifies additional categories of persons who may not 
lawfully receive or possess explosive materials, i.e., aliens (other 
than permanent resident aliens and other excepted aliens), persons 
dishonorably discharged from the military, and persons who have 
renounced their U.S. citizenship; broadens the interstate commerce 
element of the prohibited persons section of the law to specify that a 
violation is committed if possession of explosive materials affects 
interstate or foreign commerce; provides ATF the authority to require 
licensed manufacturers and licensed importers and persons who 
manufacture or import explosive materials or ammonium nitrate to 
provide samples, information on chemical composition, and other 
information relevant to the identification of the product; broadens the 
scope of a criminal violation of the law to include any institution or 
organization receiving Federal financial assistance within the 
categories of property covered by the violation; expands ATF's 
authority to grant relief from disabilities to all categories of 
prohibited persons; and adds a new theft-reporting violation, providing 
felony penalties for a licensee or permittee who fails to report thefts 
of explosives within 24 hours of discovery. This interim rule also 
incorporates the provisions of ATF Ruling 76-10, which will become 
obsolete as of May 24, 2003.
    The interim rule will remain in effect until superseded by final 
regulations.

DATES: Effective date: This interim rule is effective March 20, 2003.
    Comment date: Comments must be submitted on or before June 18, 
2003.

ADDRESSES: Send written comments to: James P. Ficaretta, Program 
Manager; Room 5150; Bureau of Alcohol, Tobacco, Firearms and 
Explosives; PO Box 50221; Washington, DC 20091-0221; Attn: ATF No. 1. 
Written comments must be signed, and may be of any length.
    E-mail comments may be submitted to: nprm@atf.gov. E-mail comments 

must contain your name, mailing address, and e-mail address. They must 
also reference this document number, as noted above, and be legible 
when printed on 8\1/2\'' x 11'' paper. ATF will tr0eat e-mail as 
originals and ATF will not acknowledge receipt of e-mail. See the 
Public Participation section at the end of the SUPPLEMENTARY 
INFORMATION section for requirements for submitting written comments by 
facsimile.

FOR FURTHER INFORMATION CONTACT: James P. Ficaretta; Firearms, 
Explosives and Arson; Bureau of Alcohol, Tobacco, Firearms and 
Explosives; U.S. Department of Justice; 650 Massachusetts Avenue, NW., 
Washington, DC 20226, telephone (202) 927-8203.

SUPPLEMENTARY INFORMATION:

Background

    Public Law 107-296 (116 Stat. 2135), the Homeland Security Act of 
2002, was enacted on November 25, 2002. In general, the provisions of 
the Homeland Security Act became effective 60 days after the date of 
enactment, January 24, 2003. Under Title XI, Subtitle B of the Homeland 
Security Act, the law enforcement responsibilities of the Bureau of 
Alcohol, Tobacco and Firearms, including its authority over explosives, 
were transferred to the new Bureau of Alcohol, Tobacco, Firearms and 
Explosives of the Department of Justice.
    Section 1512(a) of the Homeland Security Act provides in pertinent 
part that the completed administrative actions of an agency shall not 
be affected by either the enactment of the Act or the transfer of the 
agency to the Department of Homeland Security. In the regulations in 
Title 28, CFR, the Attorney General has delegated to the new Bureau of 
Alcohol, Tobacco, Firearms and Explosives (which will also be known as 
``ATF'') the statutory authorities that were transferred to the 
Attorney General by the Homeland Security Act, including authority over 
Chapter 40 of Title 18, United States Code. That regulation also 
provided that the regulations previously issued by ATF in 27 CFR part 
55, will continue in effect as if adopted by the Attorney General until 
recodified, superseded, repealed or amended.
    In a separate document published in the Federal Register on January 
24, 2003 (68 FR 3744), the regulations in 27 CFR part 55 were 
transferred from Chapter 1 to Chapter 2 of Title 27, and were 
redesignated as part 555.
    Title XI, Subtitle C of Public Law 107-296, the Safe Explosives Act 
(hereafter, ``the Act''), amended the Federal explosives laws in 18 
U.S.C. Chapter 40. As stated in House Report No. 107-658, 107th 
Congress, 2d Session, September 17, 2002, accompanying H.R. 4864, the 
``Anti-terrorism Explosives Act of 2002'' (the House version of the 
Act), the primary purpose of the Act is to provide tighter security for 
explosive materials and increased security measures for purchasers and 
possessors of explosives by requiring all persons who wish to obtain 
explosives, even for limited use, to obtain a Federal license or 
permit. The House Report notes that since September 11, 2001, the 
United States has been on high alert due to concern about possible 
terrorist threats and, accordingly, has increased security throughout 
our society. The report notes that additional precautions will help to 
prevent threats posed by explosive materials, and the legislation seeks 
to address such precautions. The report mentions incidents of concern 
such as the 1993 World Trade Center bombing, the 1995 Oklahoma City 
bombing, the 2002 attempt to detonate a bomb in a suspect's shoe on an 
aircraft, and the Federal Bureau of Investigation's (FBI's) uncovering 
of a terrorist plot to detonate

[[Page 13769]]

a ``dirty bomb.'' The report notes that the Attorney General has stated 
that suicide bombings and car bombings could be the next line of attack 
by terrorists in the United States.
    As noted by Senator Kohl during consideration of the Act in the 
Senate:

    Most Americans would be stunned to learn that in some States it 
is easier to get enough explosives to take down a house than it is 
to buy a gun, get a driver's license, or even obtain a fishing 
license. Currently, it is too easy for would be terrorists and 
criminals to obtain explosive materials. Although permits are 
required for interstate purchases of explosives, there are no 
current uniform national limitations on the purchase of explosives 
within a single State by a resident of that State.* * * We must take 
all possible steps to keep deadly explosives out of the hands of 
dangerous individuals seeking to threaten our livelihood and 
security. The Safe Explosives Act is critical legislation, supported 
by the administration. It is designed solely to [sic] the interest 
of public safety. It will significantly enhance our efforts to limit 
the proliferation of explosives to would be terrorists and 
criminals. It will close a loophole that could potentially cause 
mass destruction of property and life.

148 Cong. Rec. S 11374, 11391-11394, Vol. 148, No. 150 (November 19, 
2002)

Effective Dates for the Provisions of the Safe Explosives Act

A. Provisions Effective January 24, 2003

    The following provisions of the Act became effective January 24, 
2003:
    [sbull] Adding three new categories of persons who may not lawfully 
receive or possess explosive materials;
    [sbull] Broadening the interstate commerce element of the 
prohibited persons section of the law to specify that a violation is 
committed if possession of explosive materials affects interstate or 
foreign commerce;
    [sbull] Providing ATF the authority to require licensed 
manufacturers and licensed importers and persons who manufacture or 
import explosive materials or ammonium nitrate to provide samples, 
information on chemical composition, and other information relevant to 
the identification of the product;
    [sbull] Broadening the scope of a criminal violation of the law to 
include any institution or organization receiving Federal financial 
assistance within the categories of property covered by the violation;
    [sbull] Expanding ATF's authority to grant relief from disabilities 
to all categories of prohibited persons; and
    [sbull] Adding a new theft-reporting violation, providing felony 
penalties for a licensee or permittee who fails to report thefts of 
explosives within 24 hours of discovery.

B. Provisions Effective May 24, 2003

    The following provisions of the Act become effective May 24, 2003:
    [sbull] The requirement that all persons receiving explosives 
obtain a Federal license or permit, and the creation of a new type of 
permit, the ``limited permit;''
    [sbull] The requirement that applicants for licenses and permits 
provide as part of their application the names and appropriate 
identifying information regarding employees authorized to possess 
explosive materials as well as fingerprints and photographs of 
``responsible persons;''
    [sbull] The extension of the time for ATF to act on an application 
for a license or permit from 45 days to 90 days;
    [sbull] The authorization for warrantless inspections of places of 
storage for applicants for limited permits and holders of limited 
permits;
    [sbull] The provision that only licensees and holders of user 
permits must post their licenses and permits and make them available 
for inspection; and
    [sbull] The requirement that ATF conduct background checks on 
responsible persons and employees authorized to possess explosive 
materials.

Changes to Explosives Laws and Regulations

    The new statutory provisions and the regulatory changes 
necessitated by the law are as follows:

I. Limited Permit

    The Act amended the Federal explosives laws in 18 U.S.C. Chapter 40 
to require that all persons receiving explosives on and after the 
effective date (May 24, 2003) obtain a Federal permit. Existing law 
provides for a ``user permit'' that is necessary only if the holder 
transports, ships, or receives explosive materials in interstate or 
foreign commerce. The Act creates an additional type of permit, the 
``limited permit,'' that will authorize the holder to receive explosive 
materials only within his State of residence on no more than 6 separate 
occasions during the one-year period of the permit. The interim 
regulations specify that the term ``6 separate occasions'' means six 
deliveries of explosive materials. Each delivery must relate to a 
single purchase transaction and be documented on only one ATF Form 
5400.4, Limited Permittee Transaction Report; be referenced on a single 
commercial invoice or purchase order; and be delivered in one shipment 
to the purchaser.
    ATF Ruling 76-10 (1976-ATF C.B. 105) holds that a single Form 
5400.4 may be used for a series of deliveries of explosive materials 
made over a 30-day period. Since that ruling is inconsistent with the 
definition of ``6 separate occasions'' set forth in this rule, it will 
become obsolete as of May 24, 2003.
    Section 845, title 18 U.S.C., and implementing regulations at 
section 555.141, provide that the law and regulations, except for 
certain specified criminal violations, do not apply to activities and 
products specified therein. Among the exemptions listed are black 
powder (50 pounds for sporting and other limited purposes); small arms 
ammunition and components; Government agencies; and consumer fireworks. 
These exemptions are not changed by the Act or this interim rule.
    The Act also provides that the maximum fee to be charged for the 
limited permit is $50 for a one-year period, and the renewal fee may 
not exceed one-half the original fee.
    Regulations that implement these provisions of the Act are in 
Sec. Sec.  555.26, 555.27, 555.43, 555.45, 555.102, 555.103, 555.105, 
555.106, 555.125, and 555.126.

A. Section 555.26 (Prohibited Shipment, Transportation, Receipt, 
Possession, or Distribution of Explosive Materials)

    Section 555.26 has been amended to describe activities that are not 
authorized by a limited permit. Specifically, the section prescribes, 
in accordance with the provisions of the Act, that holders of limited 
permits may not transport, ship, cause to be transported or receive 
explosive materials in interstate or foreign commerce. Holders of 
limited permits may receive explosives only from distributors located 
in the permit-holder's State of residence and such receipt of explosive 
materials may occur no more than six times during the one-year duration 
of the limited permit. Persons seeking to acquire explosive materials 
more frequently or seeking to acquire or transport explosive materials 
in interstate commerce must obtain a Federal explosives license or user 
permit.
    This section has also been amended to reflect the newly expanded 
categories of persons prohibited from shipping, transporting, 
receiving, and possessing explosive materials. Newly added ``prohibited 
categories'' include illegal and nonimmigrant aliens, persons who have 
been discharged from the armed forces under dishonorable conditions, 
and persons who have renounced their United States citizenship. Section 
555.106 has been amended to reflect these new categories as well, in 
the

[[Page 13770]]

context of persons to whom distribution of explosive materials is 
prohibited.

B. Section 555.27 (Out-of-State Disposition of Explosive Materials)

    Effective May 24, 2003, the provisions of section 555.27 will no 
longer apply because this section contemplates that distributions of 
explosives can be made to persons not holding a Federal explosives 
license or permit. The Federal explosives law, as amended by the Act, 
now provides that all persons acquiring explosives must have, at 
minimum, a limited permit.

C. Section 555.43 (Permit Fees)

    Section 555.43 has been amended to describe the fee structure for 
the issuance of limited permits, including renewals of limited permits. 
The Act provides that the fee for a limited permit may not exceed $50. 
The fee for renewal of a limited permit is capped by statute at one-
half the amount of the original fee. This section sets the fee for a 
limited permit significantly lower than the statutory maximum, 
providing that the fee for an original limited permit will be $25 and 
providing also that the fee for each subsequent renewal of a limited 
permit will be $12. ATF believes this fee is affordable for most 
infrequent users but serves to offset some of the costs associated with 
processing an application. The fee for the limited permit is not 
intended as a ``user fee,'' because it does not compensate ATF for the 
full cost of processing the application, conducting an inspection of 
storage facilities, and conducting background checks for the applicant, 
responsible persons, and employees.

D. Section 555.45 (Original License or Permit)

    Section 555.45 explains that license and permit applications 
postmarked on or after the effective date of this interim rule, must be 
submitted along with ATF Form 5400.28 (Responsible Person 
Questionnaire) or, where applicable, multiple Forms 5400.28. On this 
form, applicants and others who will direct the policies of the 
applicant with respect to explosive materials will be required to 
answer whether they fall within any of the categories of persons 
prohibited from possessing explosive materials. Form 5400.28 includes 
questions concerning the newly added categories of prohibited persons. 
It is important that ATF obtain this information for all licenses and 
permits issued after the effective date to ensure that no persons with 
authority to direct the explosives operations of a licensee or 
permittee are prohibited by law from possessing explosive materials.
    For licenses and permits to be issued on and after May 24, 2003, 
ATF Forms 5400.13 and 5400.16 will mandate that all responsible persons 
be identified. The statutory requirement to include fingerprints and 
photographs of each responsible person will also become effective.
    On and after May 24, 2003, ATF Form 5400.28 will be re-titled as 
the Employee Possessor Questionnaire. Each person who will be 
possessing explosive materials in the course of his employment will be 
required to complete this form. Each person completing the form will be 
required to provide appropriate identifying information, including name 
of employer and residential address and will be required to declare 
whether he falls within any of the categories of persons prohibited 
from possessing explosive materials. This information will be used to 
conduct a background check to ensure that employees are not within the 
categories of persons Congress has determined should not possess 
explosive materials. Responsible persons will not complete a Form 
5400.28 because their identifying information will be submitted on the 
license or permit application form.
    An applicant for a license or permit that will be issued on and 
after May 24, 2003, must submit an application that includes the 
appropriate identifying information for responsible persons as well as 
their fingerprints and photographs. Fingerprints must be submitted on 
FBI Form FD-258 in accordance with the instructions on the form and 
must be submitted by the applicant with the application. Also, where 
applicable, Form 5400.28, Employee Possessor Questionnaire must be 
submitted with the application for each employee who will be possessing 
explosive materials in the course of his employment.

E. Section 555.102 (Authorized Operations by Permittees)

    Section 555.102 has been amended to reflect that, effective May 24, 
2003, persons not holding a Federal explosives license or permit will 
be prohibited from acquiring explosive materials. Accordingly, this 
section has been changed to provide that permittees disposing of 
surplus stocks of explosive materials may dispose of those stocks only 
to licensees or other permittees.

F. Section 555.103 (Transactions Among Licensees/Permittees and 
Transactions Among Licensees and Holders of User Permits)

    Section 555.103 has been amended to clarify the procedures to be 
followed where distributions of explosives are made by licensees to 
other licensees and holders of user permits. These procedures have been 
clarified to conform to the newly applicable procedures set forth in 
section 555.105 for transactions in which limited permittees are 
acquiring explosive materials. In this regard, section 555.103, like 
section 555.105, has been amended to comport with Congress' intention, 
as expressed in the House Report No. 107-658, 107th Congress, 2d 
Session, September 17, 2002, to ``provid[e] tighter security for 
explosive materials and increased security measures for purchasers and 
possessors of explosives.''
    In general, the procedures outlined in this section are similar to 
practices currently authorized (and/or required) under part 555. 
Included among these are a requirement that the distributor verify the 
licensed status of the licensee or permittee who wishes to purchase 
explosive materials and a requirement that, prior to or at the time of 
distribution, the distributee provide the distributor with a list of 
persons authorized to accept delivery of explosive materials and with a 
statement identifying the intended use for the explosive materials. 
Distributors will be required to verify that any person seeking to 
accept delivery of explosive materials on behalf of a distributee is, 
in fact, on the list of persons authorized to accept delivery and to 
verify the identity of such person by examining an identification 
document. The term ``identification document'' is defined in section 
555.11.
    Current regulations require that purchasers provide the distributor 
with a certified list of persons authorized to order explosive 
materials. Because most orders are placed via phone or fax, rather than 
over-the-counter, ATF believes this requirement is not particularly 
helpful in ensuring distribution of explosives to authorized persons. 
Accordingly, sections 555.103 and 555.105 have been revised to 
eliminate this requirement and to replace it with the requirement to 
provide a certified list of persons authorized to accept delivery of 
explosives. ATF believes this system is consistent with Congress' 
intention that there should be stringent security in the system 
established for transfers of explosive materials. The system set forth 
in sections 555.103 and 555.105 is designed to ensure that licensees 
and permittees deliver explosives only to persons affiliated with a 
purchaser holding a license or permit and to require verification of 
those persons' identities prior to relinquishing

[[Page 13771]]

possession of the explosive materials. Once all licenses and permits 
have been renewed under the licensing criteria of the Act, any person 
accepting delivery of explosives would have had a background check 
conducted in accordance with section 555.33, as an employee authorized 
to possess explosive materials. Thus, the regulatory system established 
in sections 555.103 and 555.105 will reduce the likelihood of the 
delivery of explosive materials to prohibited persons who are employed 
by members of the explosives industry. ATF believes these controls are 
essential in ensuring that persons who are likely to use explosives for 
criminal or terrorist purposes are denied access through legitimate 
industry channels.

G. Sections 555.105, 555.106, and 555.126 (Distribution of Explosive 
Materials and Records)

    Sections 555.105, 555.106, and 555.126 have been amended to conform 
to the Act's mandate that all persons who wish to acquire explosives, 
whether in interstate or intrastate commerce, must obtain a Federal 
explosives license or permit. As noted above, the Act created a new 
type of permit, the ``limited permit'' that can be used by persons who 
wish to obtain explosives only within their states of residence on no 
more than six occasions per year. Previously, ``intrastate'' purchasers 
of explosives could acquire explosives without a Federal license or 
permit. Intrastate purchasers prior to receiving explosive materials 
completed ATF Form 5400.4, Explosives Transaction Record. The form 
required the purchaser to certify that he was not a felon, fugitive, or 
other prohibited person. This system of transactions relied on the 
``honor system'' since background checks were not conducted on 
purchasers. Effective May 24, 2003, ATF Form 5400.4 will be revised and 
re-titled as the Limited Permittee Transaction Report. This form will 
be completed by limited permittees when purchasing explosive materials 
from licensees or permittees.
    The amended provisions of sections 555.105 and 555.126 outline 
procedures for explosives transactions involving holders of limited 
permits. These procedures have been amended to comport with Congress' 
intention, as expressed in the House Report No. 107-658, 107th 
Congress, 2d Session, September 17, 2002, to ``provid[e] tighter 
security for explosive materials and increased security measures for 
purchasers and possessors of explosives.''
    The amended provisions require that, prior to (or at the time of) 
taking distribution of explosive materials, a limited permittee must 
have submitted to the distributor a list of persons authorized to 
accept delivery of explosive materials on the limited permittee's 
behalf. Additionally, prior to a delivery of explosive materials, the 
limited permittee must complete the appropriate section on Form 5400.4 
and affix to the form one of his six original Intrastate Purchase of 
Explosives Coupons (IPECs), ATF Form 5400.30. Form 5400.4 (with the 
appropriate section completed and with IPEC affixed) must be provided 
by the limited permittee to the distributor prior to (or at the time 
of) distribution, and the distributor must, after verifying the 
identification of the purchaser and executing the appropriate section 
on the form, remit one copy of the form to ATF and retain the other 
copy in his permanent records as required by section 555.121.
    The information concerning acquisition of explosive materials by a 
particular limited permittee will be used to ensure that the permittee 
does not exceed the 6 transactions authorized by his permit and that 
the permittee has storage magazines suitable for the type and quantity 
of explosive materials acquired. If a Form 5400.4 indicates, for 
example, that a particular limited permittee acquired 1,000 pounds of 
explosive materials, but the application inspection indicated that the 
limited permittee maintained only a single indoor storage magazine 
(capable of lawfully storing only 50 pounds of explosives), the report 
would be referred to an ATF field office for investigation. This is 
another important safeguard to prevent theft, loss, or diversion of 
explosives into criminal channels due to unsafe or insecure storage.
    Form 5400.4 requires that the limited permittee provide information 
regarding the use to which he intends to put the explosive materials. 
Identifying information concerning the limited permittee and, if 
applicable, the person who will be accepting delivery of the explosive 
materials is also required. The form prescribes that the distributor 
examine an identification document provided by the person accepting 
delivery of explosive materials and that he note the type and number of 
the identification document. The distributor must also report the 
quantity, manufacturer, and description of the explosive materials to 
be distributed. The form also provides an option for the distributor to 
document information concerning marks of identification and size of the 
explosives to be distributed. This information is helpful in tracing 
explosives at the request of law enforcement officials who have 
recovered stolen explosives or explosives that have been used in an 
actual or attempted criminal or terrorist bombing. ATF is soliciting 
comment as to whether this optional information should be mandatory.
    Included among the provisions of sections 555.103 and 555.106 is a 
requirement that the distributor verify the status of the licensee or 
permittee who wishes to purchase explosive materials and a requirement 
that, prior to or at the time of distribution, the distributee provide 
the distributor with a list of persons authorized to accept delivery of 
explosive materials and a statement identifying the intended use for 
the explosive materials. Distributors will be required to verify that 
any person seeking to accept delivery of explosive materials on behalf 
of a distributee is, in fact, on the list of persons authorized to 
accept delivery and to verify the identity of such person by examining 
an identification document.
    Sections 555.103 and 555.105 also revise procedures for use of ATF 
Form 5400.8 (Explosives Delivery Record). In all cases, the distributor 
will be required to verify the identity of the person taking possession 
of explosive materials by examining an identification document and 
noting the type and number of the document on Form 5400.8. This 
procedure will remain in effect until May 24, 2003. On and after this 
date, the procedure for executing Form 5400.8 will require that all 
common or contract carriers taking possession of explosive materials 
for delivery to a licensee or permittee must complete this form prior 
to taking possession of explosive materials whether they are hired by 
the distributor or by the distributee. Employees of purchasers will no 
longer complete ATF Form 5400.8.
    ATF believes it is essential that Form 5400.8 be executed in all 
instances when licensees and permittees transfer possession of 
explosive materials to a truck driver who is not an employee of the 
distributor. Truck drivers employed by the distributor would be 
employees authorized to possess explosives and would have had a 
background check conducted in accordance with section 555.33. Execution 
of the delivery record by employees of common or contract carriers who 
transport explosive materials and verification of their identification 
will help ensure that explosives are not placed in the hands of 
prohibited persons for possible diversion to criminal or terrorist use.

[[Page 13772]]

    ATF believes the most efficient manner of conducting transactions 
with limited permittees would be a system whereby a distributor 
verifies the limited permittee's status and the number of authorized 
transactions remaining by conducting an online query of a database 
maintained by ATF. For distributors who do not have access to a 
computer, such queries would be conducted via a toll-free number 
connected to ATF's Firearms and Explosives Licensing Center. Such a 
system would virtually eliminate fraud since there would be no 
presentation of permits or Intrastate Purchase of Explosives Coupons. 
Such a system would also reduce the burden on buyers and sellers of 
explosives. ATF has established a similar system to be used voluntarily 
by Federal firearms licensees (FFLs) to verify the validity of a 
license held by another licensee. This system, the FFL eZ Check system, 
is accessed via ATF's website or by calling the Firearms and Explosives 
Licensing Center. The eZ Check system is popular with Federal firearms 
licensees and is an efficient method of verifying license status. ATF 
believes a similar system would be useful for verifying permit status 
of licensees and permittees as required under part 555. ATF seeks 
comment on the feasibility and utility of establishing such a system 
and whether such a system should be used in conjunction with the 
procedures required by sections 555.103 and 555.105.

H. Section 555.125 (Records Maintained by Permittees)

    Section 555.125 has been revised to set forth recordkeeping 
requirements for limited permittees. Because ATF has no statutory right 
to inspect such records, absent consent or a warrant, the requirements 
imposed are only those necessary to ensure the permittee's ability to 
detect a theft or loss of explosives and to respond to requests from 
ATF to trace explosives. Specifically, limited permittees will be 
required to take a physical inventory of explosives on an annual basis. 
Limited permittees will also be required to keep permanent acquisition 
and disposition records of explosive materials that include date of 
acquisition; name of manufacturer; manufacturer's marks of 
identification; quantity; description; and name, address and license 
number of the person from whom received. Significantly, this section 
provides that a commercial record may be used as the permanent record, 
if it includes all the foregoing information. It should be noted that 
no recordkeeping entries are required for explosive materials that are 
used by a limited permittee in its business or operations. However, 
limited permittees disposing of surplus stocks to other licensees or 
permittees would be required to make a permanent record of such 
dispositions. Because permittees are not authorized to engage in an 
explosives business, such disposition records would not be a commercial 
record. Accordingly, such record would take the form of a permanent 
written record, such as a notebook. Finally, section 555.127, which is 
not amended by this interim rule, will also apply to limited 
permittees. This section will require limited permittees to keep a 
daily summary of magazine transactions for each magazine used to store 
explosive materials. This summary requires recording, not later than 
the close of the next business day, the total quantity of explosives 
received in and removed from each magazine during a 24-hour period and 
the total explosives remaining on hand at the end of the day. This 
requirement has applied to all licensees and permittees since 1971. It 
enables licensees and permittees to readily detect discrepancies 
between physical inventory and record inventory so that thefts and 
losses can be promptly reported.

I. Elimination of the ``User-Limited'' Permit

    ATF is also soliciting comment on removal of the user-limited 
permit from part 555. This permit authorizes the holder to ship, 
transport, and receive explosive materials in interstate or foreign 
commerce, but is valid for only a single purchase transaction. ATF 
issues very few of these permits each year, generally to organizations 
that wish to obtain fireworks for annual Fourth of July displays. Most 
organizations have, in recent years, arranged for the distributor of 
the fireworks to arrive at the event and put on the fireworks display. 
This eliminates the need for the organization to obtain a permit and 
ensures that persons trained to handle explosive materials maintain 
custody and control of the explosives throughout the event. Those few 
organizations that wish to obtain explosives interstate for the Fourth 
of July or other purposes, may obtain a user permit. ATF believes that 
retention of the user-limited permit is unnecessary and proposes 
elimination of this permit from part 555.

II. Licensing Information and Criteria

    The Act amended Chapter 40 to require applicants for licenses and 
permits to provide with the application the names and appropriate 
identifying information regarding employees authorized to possess 
explosive materials as well as fingerprints and photographs of 
``responsible persons.'' The requirement to submit fingerprints and 
photographs ensures that a thorough background check can be completed. 
The term ``responsible person'' is defined in the law as an individual 
who has the power to direct the management and policies of the 
applicant pertaining to explosive materials. This would generally 
include sole proprietors, partners, site managers, corporate officers 
and directors, and majority shareholders.
    This provision does not require corporate applicants for licenses 
or permits to list every corporate officer or director as a 
``responsible person'' on its application. Those officials having no 
power to direct the management and policies of the applicant with 
respect to explosive materials are not ``responsible persons'' and may 
not be listed on the application. For example, in a large corporation 
that uses explosive materials in one of its many business activities, 
there will likely be many corporate officials having no responsibility 
or authority in connection with the company's explosives business. 
These officials should not be listed as ``responsible persons'' on the 
application, and need not submit fingerprints and photographs to ATF.
    The requirement that applicants provide names of, and appropriate 
identifying information for, all employees authorized to possess 
explosive materials allows ATF to verify, by conducting a background 
check, that these individuals are not prohibited from receiving or 
possessing explosive materials. As noted in the legislative history of 
the Act, ``[i]t is too easy for would-be terrorists and criminals to 
obtain access to explosive materials by obtaining jobs with explosives 
licensees or permittees.'' House Report No. 107-658, 107th Congress, 2d 
Session, September 17, 2002. Applicants for licenses and permits are 
not required to list every employee of the business. Rather, they must 
list only those employees expected to possess explosive materials as 
part of their duties. As directed by Congress (See House Report 107-
658, id.), ATF is guided by case law interpreting ``possession'' under 
the Gun Control Act of 1968 (GCA), 18 U.S.C. Chapter 44. Possession 
under the GCA may be either actual or constructive. 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

[[Page 13773]]

explosive materials at a given time. Thus, employees who handle 
explosive materials in the course of their employment would clearly be 
in possession of those materials. This would include employees who 
handle explosive materials as part of the production process; employees 
who handle explosive materials in order to ship, transport, or sell 
them; and employees, such as blasters, who actually use explosive 
materials.
    Where direct physical control over explosive materials is absent, 
an employee has constructive possession where he knowingly has the 
power and intention to exercise dominion and control over the explosive 
materials, either directly or indirectly through others. For example, 
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 would be in constructive 
possession of the explosive materials. Likewise, an employee 
transporting explosive materials from a licensee to a purchaser has 
constructive possession of the explosive materials, even though the 
employee may not have direct contact with the explosives.
    The criteria for issuing licenses have been revised to provide that 
a license will not be issued to an applicant if any of the employees 
authorized to possess explosive materials is described in any paragraph 
of section 842(i) of the statute. This section lists ``prohibited 
persons'' who may not lawfully receive or possess explosive materials 
including felons, unlawful drug users, and fugitives.
    A new provision has been added to require that applicants for 
limited permits provide a certification with the application stating 
that the applicant will not receive explosive materials on more than 6 
separate occasions during the 12-month period of the permit. This 
provision is effective May 24, 2003.
    Regulations that implement these provisions of the Act are in 
Sec. Sec.  555.11, 555.34, 555.49, 555.54, and 555.57.

III. Time Period for Acting on Applications

    Current law gives ATF 45 days to act on an application for a 
license or permit. The Act extended that period to 90 days. This 
provision is effective on May 24, 2003. Regulations that implement this 
provision of the Act are in Sec.  555.49.

IV. Inspection Authority

    The Act also amended the licensing criteria to provide that ATF 
must verify ``by inspection'' that applicants for user permits and 
licenses have places of storage for explosive materials that meet the 
standards of safety and security set forth in the regulations. This 
will require an on-site inspection of all new applicants for user 
permits and licenses issued on and after May 24, 2003, in order to 
verify compliance with the storage requirements specified in the 
regulations. The inspection requirement will also apply to renewals for 
user permits and licenses after the effective date.
    The Act does not require an on-site inspection of storage 
facilities for applicants for limited permits. Instead, it provides 
that ATF may verify by inspection or by such other means as the 
Attorney General determines appropriate that the applicant for the 
limited permit has suitable storage. The Act allows ATF the option to 
verify storage by means other than an on-site inspection for the first 
or second renewal of a limited permit, and requires an on-site 
inspection for the third renewal if an inspection has not been 
conducted within the previous 3 years. Other means of verification 
include written certifications, telephone interviews, site plans, 
magazine description worksheets, and other appropriate means. The above 
provisions of the Act are effective on May 24, 2003.
    Regulations that implement these provisions of the Act are in 
Sec. Sec.  555.24, 555.34, 555.49, 555.54, 555.57, 555.121, 555.125, 
and 555.126.

V. Posting of Permits

    The Act amended section 843(g) of the Federal explosives laws, 18 
U.S.C. 843(g), to provide that only licensees and holders of user 
permits must post their licenses and permits and make them available 
for inspection. Thus, holders of limited permits are exempted from this 
requirement. This provision is effective on May 24, 2003.
    Regulations that implement this provision of the Act are in Sec.  
555.101.

VI. Background Checks and Letters of Clearance

A. Voluntary Checks Not Associated With a License or Permit Application

    Effective May 24, 2003, the Act requires ATF to conduct background 
checks on responsible persons and employees authorized to possess 
explosive materials upon request by a licensee or permittee. In 
addition, the law requires ATF to determine whether any of the 
responsible persons or employees are prohibited persons under 18 U.S.C. 
842(i), and to notify the employer of the determination. Also, the Act 
requires ATF to issue a letter of clearance to the responsible person 
or employee, if the results of the background check do not indicate 
that the person is prohibited from possessing explosive materials. If 
the results of the background check indicate that the person may be 
prohibited from possessing explosive materials, ATF must notify the 
employer of the determination and issue a letter to the employee or 
responsible person advising of the determination, providing information 
concerning how the disability may be relieved, and explaining how the 
determination may be appealed.
    Regulations that implement these provisions of the Act are in 
Sec. Sec.  555.33. Section 555.33 provides that, if ATF receives from a 
licensee or permittee the names and appropriate identifying information 
of responsible persons and employees who will be authorized by an 
employer to possess explosive materials in the course of employment 
with an employer, ATF will conduct a background check to determine 
whether the responsible person or employee is one of the persons 
prohibited from possessing explosive materials. If ATF determines that 
the responsible person or the employee does not fall within a 
prohibited category, ATF will notify the employer in writing or 
electronically of the determination and issue, to the responsible 
person or employee, a letter of clearance that confirms the 
determination. As noted in House Report 107-658, ATF will not violate 
the privacy rights of an employee by disclosing to an employer the 
reason for the determination that an employee is a prohibited person. 
The employer will be notified only whether the employee is cleared or 
may be a prohibited person. Only an employee who ATF has determined is 
prohibited will receive information regarding the basis for the 
prohibition.
    If ATF determines that the responsible person or employee is 
prohibited from possessing explosive materials, ATF will notify the 
employer in writing or electronically of the determination and issue to 
the responsible person or the employee, as the case may be, a document 
that: confirms the determination; explains the grounds for the 
determination; provides information on how the disability may be 
relieved; and explains how the determination may be appealed. The 
employer must then take immediate steps to remove the responsible 
person from his position directing the management and policies of the 
business or operations as they relate to explosive materials or, as the

[[Page 13774]]

case may be, to remove the employee from a position requiring the 
possession of explosive materials. Also, if the employer has listed the 
employee as a person authorized to accept delivery of explosive 
materials, the employer must remove the employee from such list and 
immediately, and in no event later than the second business day after 
such change, notify distributors of such change.
    Section 555.33 also provides for an appeal process for a 
responsible person or employee to challenge an adverse determination. 
Such appeals must be submitted to the Director in writing within 45 
days of issuance of the determination. In the case of employees and 
responsible persons who have not submitted fingerprint cards, 
fingerprints must be submitted in accordance with the instructions in 
the letter of denial. In the case of both responsible persons and 
employees, it may be necessary to submit additional information or 
documents in support of an appeal, such as certified court records. 
Responsible persons and employees, where appropriate, are encouraged to 
contact the agency that originated the record containing the 
information causing the adverse determination. If the records are 
corrected as a result of contact with an originating agency, ATF will 
take steps to correct the record with the agency responsible for the 
record system.

B. Background Checks Conducted in Connection With Applications for 
License or Permit (Including Renewals)

    The background checks conducted under section 555.33 will also be 
done in conjunction with the issuance of a license or permit under 18 
U.S.C. 843.
    There is no requirement that persons holding a license or permit 
prior to May 24, 2003, submit names of responsible persons and 
employees for background checks. Such licensees and permittees need not 
provide this information until their license or permit is renewed on or 
after May 24, 2003. Moreover, ATF has no authority, prior to May 24, 
2003, to conduct background checks that are not associated with a 
license or permit application, including a renewal application.

C. Reporting Changes in Responsible Persons and Employees Authorized To 
Possess Explosive Materials

    All persons who have been issued licenses or permits, including 
renewals, on and after May 24, 2003, must report any change in 
responsible persons or employees authorized to possess explosive 
materials. ATF will then conduct a background check on any new 
responsible persons or employees in accordance with section 555.33. The 
report of such changes will ensure that all persons having access to or 
possession of explosive materials are not prohibited persons likely to 
misuse explosives for criminal or terrorist purposes. Regulations that 
implement these provisions of the Act are in Sec. Sec.  555.33 and 
555.57.

VII. Prohibited Persons

A. Definitions

    The Act amended 18 U.S.C. 842(d) and 842(i) to provide additional 
categories of persons who may not lawfully transport, ship, receive or 
possess explosive materials. Prior to amendment, persons under 
indictment for or convicted of a felony, fugitives from justice, 
unlawful users of or persons addicted to controlled substances, and 
persons adjudicated as a mental defective or committed to a mental 
institution were prohibited from transporting, shipping, receiving or 
possessing explosive materials. The Act added aliens (other than 
permanent resident aliens and certain other excepted aliens), persons 
dishonorably discharged from the military, and persons who have 
renounced their U.S. citizenship to the list of prohibited persons. 
These provisions of the law became effective on January 24, 2003.
    Definitions for the categories of prohibited persons are set forth 
in section 555.11 and are consistent with the definitions for the 
categories of persons prohibited from receiving or possessing firearms 
contained in 27 CFR 478.11. (For background information concerning 
these definitions see T.D. ATF-391, June 27, 1997; 62 FR 34634.) The 
definitions in this part and part 478 of this chapter are also 
consistent with judicial decisions interpreting the statutory 
categories of prohibited persons. The new definitions in section 555.11 
include the three new categories added to the law by the Act as well as 
definitions for categories that have been in the statute since 1970. 
These include ``committed to a mental institution,'' ``adjudicated as a 
mental defective,'' and ``unlawful user of or addicted to any 
controlled substance.'' It was necessary to define all these terms so 
that persons applying for explosives licenses or permits on or after 
the effective date of this interim rule, will know whether responsible 
persons (such as partners, corporate officers, and directors) are 
prohibited and therefore cannot be associated with the applicant. It is 
also necessary to define these terms so that persons who are subject to 
explosives disabilities are put on notice that they may not lawfully 
transport, ship, receive or possess explosives. These persons need to 
know the criteria ATF will use in determining who is subject to such 
disabilities so that they may apply for relief from disabilities 
pursuant to 18 U.S.C. 845(b) if they desire.
    Finally, it is also necessary to clearly define the categories of 
prohibited persons so that a thorough background check can be conducted 
on applicants for licenses and permits, responsible persons, and 
persons applying for relief from disabilities. A clear understanding of 
which persons fall within the different statutory categories is 
necessary to determine whether a particular person is a prohibited 
person under the law. Background checks will also be conducted on 
employees authorized to possess explosive materials by an employer 
applying for, or renewing, a license or permit that will be issued on 
and after May 24, 2003. Because it generally takes 90 days to process 
such applications, it is anticipated that many applications for the new 
limited permit will be submitted in February and March of 2003. Thus, 
background checks on employees may begin in February 2003, 
necessitating clear definitions for the guidance of those persons 
conducting the background checks. Clear definitions will also assist 
employees and responsible persons who appear to fall within a category 
of prohibited persons in preparing an appeal to a prohibited person 
determination they believe is erroneous or to file an application for 
relief from disabilities if they desire.
    An amendment has been made to section 555.45(a) requiring 
submission of ATF Form 5400.28, Responsible Person Questionnaire, for 
all applications for a license or permit postmarked on or after the 
effective date of this interim rule. The purpose of the questionnaire 
is to obtain a certification from each responsible person stating that 
he or she is not prohibited from receiving or possessing explosive 
materials under the new prohibited persons provisions of the law, i.e., 
non-excepted aliens, persons dishonorably discharged from the military, 
and renunciates.
    As stated previously in relation to licensing criteria, in 
determining whether a particular person is in possession of explosives, 
ATF is guided by case law under the Gun Control Act of 1968 (GCA), 18 
U.S.C. Chapter 44. Possession may be actual or constructive, but in all 
instances no violation of section 842(i) is committed unless the person 
``knowingly'' possesses the explosives.

[[Page 13775]]

    Regulations that implement the prohibited persons provisions of the 
Act are in Sec. Sec.  555.11, 555.26, 555.106, and 555.142.

B. Department of Transportation Exemption

    Current law, 18 U.S.C. 845(a)(1), provides an exemption from the 
Federal explosives laws (except for specified plastic explosives and 
bombing and arson offenses) for ``any aspect of the transportation of 
explosive materials via railroad, water, highway, or air which are 
regulated by the United States Department of Transportation and 
agencies thereof, and which pertain to safety.'' The Act did not amend 
this provision of the law. This provision exempts persons from 
application of the Federal explosives laws when (1) the Department of 
Transportation (DOT) has actually regulated a relevant aspect of the 
transportation of explosive materials or explicitly determined that 
regulation is not necessary; and (2) those regulations cover the 
particular aspect of the safe transportation of explosives that 
prompted Congress to enact the criminal statute from which exemption is 
sought. For purposes of this exemption, the term ``safety'' includes 
security concerns.
    DOT has recently issued an interim final rule, effective February 
3, 2003, that addresses security issues regarding transportation of 
explosives by aliens via commercial motor vehicles and railroads from 
Canada into the United States. 68 FR 6083 (February 6, 2003). In the 
new regulation, DOT has exercised its authority to make security 
determinations, and generally provides that Canadian truck and rail 
operators may transport explosives to the United States only after they 
have been the subject of security checks to ensure that the operators 
do not pose a security risk.
    The DOT interim rule did not establish new requirements regarding 
the transportation of explosives by air or by water, but the 
supplementary information to that rule discussed the existing rules and 
procedures enforced by the Federal Aviation Administration (FAA) and 
the Transportation Security Administration (TSA), and by the United 
States Coast Guard, regulating aliens transporting explosives in 
commerce into the United States by air or by water, respectively.
    DOT is currently assessing the need for new or revised regulations 
concerning security aspects of the commercial transportation of 
explosives and certain other hazardous materials by air, rail, highway, 
and vessel carriers. As part of this assessment, DOT is examining the 
extent to which security concerns related to prohibited persons who 
handle explosives incident to and in connection with the commercial 
transportation of explosives are already addressed under existing 
regulations. Where such concerns are not currently addressed in the 
existing DOT regulatory scheme, DOT has the authority to issue new or 
revised regulations in the future addressing the security risks posed 
by the commercial transportation of explosives by any of the categories 
of prohibited persons. For example, DOT has stated that it plans to 
issue regulations in the near future to implement the provisions of 
section 1012 of the USA Patriot Act, Pub. L. No. 107-56, 115 Stat. 272 
(2001). This statute requires, in pertinent part, that the Department 
of Justice conduct background checks on drivers of commercial motor 
vehicles applying to States for a hazardous materials endorsement and 
report the results of the background check to DOT, which will then 
determine whether the driver poses a security risk.
    When DOT has exercised its authority to assess the security risks 
related to persons who handle explosives incident to and in connection 
with the transportation of explosives in commerce, and has an existing 
regulation or has implemented a new or revised regulation addressing 
this aspect of the transportation of explosives by a particular mode, 
whether by truck, railroad, air, or water, ATF's authority to enforce 
the Federal explosives laws against such persons during the commercial 
transportation of explosives is preempted under 18 U.S.C. 845(a)(1), to 
the extent that the regulation and security assessment address the 
prohibited categories set forth in 18 U.S.C. 842(i). For example, if 
DOT conducts a security assessment and adopts regulations to permit 
certain felons to obtain a commercial driver's license with a hazardous 
materials endorsement, then ATF would have no authority to enforce 18 
U.S.C. 842(i)(1) against such felons while they are shipping, 
transporting, receiving, or possessing explosives incident to and in 
connection with the commercial transportation of explosives.
    It is important to note that DOT's regulatory authority covers 
commercial transportation only. Thus, the preemption of the explosives 
laws occurs only during the commercial transportation of the explosives 
(and applies only to the shipping, possessing and receiving incident to 
and in connection with commercial transportation). A prohibited person 
who ships, transports, receives, or possesses explosives not incident 
to and in connection with commercial transportation will violate 18 
U.S.C. 842(i) irrespective of DOT's regulation.
    ATF has amended 27 CFR 555.141(a)(1) to include language clarifying 
the DOT exception of 18 U.S.C. 845(a)(1).
    ATF has recently been advised that the trucking industry may employ 
persons who are subject to Federal explosives disabilities. It is ATF's 
longstanding position that a driver transporting explosive materials in 
a truck or other vehicle has possession of such materials. Thus, if the 
driver falls within any of the categories of prohibited persons, the 
driver may not knowingly ship or transport any explosive in interstate 
or foreign commerce or receive or possess any explosive which has been 
shipped or transported in interstate or foreign commerce, unless the 
person is addressed by a current DOT security assessment regulation as 
discussed above, or one of the other statutory exemptions applies. See 
18 U.S.C. 845(a).
    It is not ATF's intention to place unnecessary obstacles in the 
path of legitimate commerce in explosive materials. However, Congress 
has made it clear that the persons specified in section 842(i) may not 
lawfully possess explosives unless their activities fall within one of 
the statutory exceptions in 18 U.S.C. 845(a) or they apply for and 
receive relief from disabilities under 18 U.S.C. 845(b). ATF encourages 
any individual who is a prohibited person, who has a need to possess or 
transport explosives for purposes of his employment, and who is not 
within the scope of any DOT security assessment regulation, to apply 
for relief under 18 U.S.C. 845(b) as soon as possible. ATF will process 
relief applications as quickly as possible when a person's employment 
is contingent upon lawful possession of explosives.

VIII. Interstate Commerce Element of 18 U.S.C. 842(i)

    The Act also amended section 842(i) to broaden the interstate 
commerce element of the statute. Prior to amendment, section 842(i) 
made it unlawful for prohibited persons to ship or transport any 
explosive in interstate or foreign commerce or to receive or possess 
any explosive which has been shipped or transported in interstate or 
foreign commerce. The amendment adds ``or affecting'' before 
``interstate'' each place the term appears in section 842(i). This 
provision became effective on January 24, 2003.
    Regulations that implement this provision of the Act are in Sec.  
555.26.

[[Page 13776]]

IX. Samples of Explosive Materials and Ammonium Nitrate

    The Act added a new section 843(i) to Chapter 40 providing ATF the 
authority to require licensed manufacturers and licensed importers and 
persons who manufacture or import explosive materials or ammonium 
nitrate to provide samples, information on chemical composition, and 
other information relevant to the identification of the product. The 
Act requires ATF to authorize, by regulation, reimbursement of the fair 
market value of the samples furnished as well as reasonable cost of 
shipment.
    This provision became effective on January 24, 2003. Regulations 
that implement this provision of the Act are in Sec.  555.110.

X. Amendment of 18 U.S.C. 844(f)

    The Act amended section 844(f)(1) of Chapter 40 to broaden the 
scope of the statute. Prior to amendment, this section made it unlawful 
to damage or destroy by means of fire or explosive any building, 
vehicle, or other personal or real property owned, possessed by, or 
leased to a Federal agency. The amendment broadens the statute by 
including any institution or organization receiving Federal financial 
assistance within the categories of property covered by the 
prohibition. This amendment restores language inadvertently deleted 
from the statute by the Antiterrorism and Effective Death Penalty Act 
of 1996. This provision became effective on January 24, 2003.

XI. Relief From Disabilities

    The Act amended section 845(b) of Chapter 40 to expand ATF's 
authority to grant relief from disabilities to all categories of 
prohibited persons. Prior to enactment of the Act, the statute provided 
authority for ATF to grant relief only to persons under indictment for 
or convicted of a felony. ATF had no statutory authority to grant 
relief to persons falling within the remaining prohibited categories. 
Although all persons may now apply for relief, the statute did not 
expand the existing language allowing licensees or permittees who apply 
for relief due to an indictment or conviction for a felony to continue 
their operations until the application for relief is acted upon. Thus, 
because the law does not provide a similar benefit for other 
disabilities, licensees and permittees subject to other disabilities 
will not be allowed to continue operations during the pendency of a 
relief application. This provision became effective on January 24, 
2003.
    Regulations that implement this provision of the law are in Sec.  
555.142. The regulation requires an application for relief to be filed 
on ATF Form 5400.29, Application for Restoration of Explosives 
Privileges. The regulation also specifies categories of persons to whom 
the Director will generally not grant relief. Such categories of 
persons include persons who have not been discharged from parole or 
probation for at least 2 years, fugitives, non-excepted aliens, 
unlawful drug users, persons committed to a mental institution or 
adjudicated as a mental defective, and persons prohibited by the law of 
the State in which the applicant resides from receiving or possessing 
explosive materials. However, the Director will consider such 
applications and may grant relief in extraordinary circumstances where 
the granting of such relief is consistent with the public interest. The 
Director may also grant relief to non-excepted 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 2 years if 
he determines that the applicant has a compelling need to possess 
explosives, such as for purposes of employment. Thus, ATF will 
entertain relief applications from such persons who need to possess 
explosives for purposes of their employment with an explosives licensee 
or permittee or other employment where possession of explosives is 
required as part of the employee's duties. The regulation is intended 
to convey ATF's general policy that it is not in the public interest to 
grant relief to prohibited persons so they may lawfully possess 
explosives in the United States. This approach is consistent with the 
history and purposes of the Act, which indicate Congress' intention to 
prevent access to explosives by those categories of persons deemed most 
likely to misuse them in criminal or terrorist incidents.
    ATF has been advised that there may be a significant number of non-
excepted aliens who are employed by the explosives industry in the 
United States or who transport explosives via common carrier. To date, 
it appears that the majority of such aliens are Canadian citizens. As 
stated above, non-excepted aliens who have a need to possess explosives 
for purposes of employment fall within the ``compelling need'' 
provisions of the regulations and will have their applications for 
relief processed expeditiously. ATF has been working with the Canadian 
government to streamline the procedures for processing relief 
applications submitted by Canadian citizens, particularly with respect 
to criminal background checks conducted in connection with such 
investigations. Again, it is not ATF's intention to impose unnecessary 
obstacles to commerce in explosives. ATF anticipates granting relief to 
many Canadian citizens who have no criminal records and whose records 
and reputations indicate that their possession of explosives in the 
United States poses no threat to public safety. Likewise, citizens of 
other countries who have a need to possess explosives for purposes of 
employment can expect ATF to act as quickly as possible on properly 
completed applications for relief from disabilities.

XII. Theft Reporting

    The Act added a new section 844(p) to Chapter 40, providing for 
felony penalties for a licensee or permittee who fails to report thefts 
of explosives within 24 hours of discovery. Existing law, section 
842(k), makes it unlawful for any person having knowledge of the theft 
or loss of explosive materials to fail to report such theft or loss 
within 24 hours of discovery to ATF and local authorities. The penalty 
for violation of section 842(k) is a fine of not more than $100,000, 
imprisonment for not more than one year, or both. By contrast, the 
penalty for licensees or permittees who violate section 844(p) is a 
fine of not more than $250,000, imprisonment for not more than five 
years, or both. This provision became effective on January 24, 2003.
    Regulations that implement this provision of the Act are in Sec.  
555.165.

How This Document Complies With the Federal Administrative Requirements 
for Rulemaking

A. Executive Order 12866

    This rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review'' section 1(b), 
Principles of Regulation. The Department of Justice, Bureau of Alcohol, 
Tobacco, Firearms and Explosives has determined that this rule is a 
``significant regulatory action'' under Executive Order 12866, section 
3(f), Regulatory Planning and Review, and accordingly this rule has 
been reviewed by the Office of Management and Budget. However, this 
rule will not have an annual effect on the economy of $100 million, nor 
will it adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health, or safety, or State, local or tribal governments or 
communities. Accordingly, this rule is not an

[[Page 13777]]

``economically significant'' rulemaking as defined by Executive Order 
12866. Following is an assessment of the costs and benefits of this 
regulation.
1. Estimated Costs
    i. Cost of obtaining a ``limited permit'' for infrequent users of 
explosive materials. By statute, the fee for obtaining a ``limited 
permit'' is capped at $50 for an original permit and at one-half the 
origination fee for timely renewals. This rule sets the fee for 
obtaining an original limited permit significantly lower than the 
statutory allowance. The fee is set at $25 for an original limited 
permit and at $12 for each renewal. ATF estimates that the requirement 
to obtain a limited permit will impact approximately 20,000 persons. 
Each applicant for a limited permit must submit an application that 
includes information on each responsible person and employee possessor 
and which includes photographs and fingerprints for each responsible 
person. ATF estimates that applicants for a limited permit will 
generally have three to five responsible persons per applicant. ATF 
estimates that the average cost of taking and submitting photographs 
will be approximately $1.50 per photograph. Although some law 
enforcement agencies assess fees for taking fingerprints, others 
perform this service without charge. ATF is advised that, where a fee 
is assessed, the fee generally ranges from five to ten dollars per set 
of fingerprints. In connection with background checks conducted as part 
of the application process, employee possessors will have to submit 
fingerprints if the employee appeals an adverse determination or 
challenges the accuracy of the record upon which the adverse 
determination is based. ATF estimates that each applicant for a limited 
permit will have three to five employee possessors and that name-based 
checks of such employees will result in adverse determinations for less 
than one percent. ATF estimates that the time required to complete the 
application for a limited permit is 1 hour and 30 minutes. In addition, 
ATF estimates that the time required for each employee possessor to 
complete Form 5400.28 (Employee Possessor Questionnaire) is 20 minutes 
per employee. Finally, each applicant for a limited permit will spend 1 
to 2 hours complying with an ATF inspection of their storage 
facilities. Therefore, ATF estimates that the initial economic impact 
of this rule is as follows:

Application fee--20,000 applicants x $25 = $500,000.
Photographs for responsible persons-- 100,000 x $1.50 = $150,000.
Fingerprints for responsible persons-- 100,000 x $10 = $1,000,000.
Fingerprints for employees--1,000 x $10 = $10,000.
Time to complete application--20,000 x 1.5 hours x $13 (mean hourly 
wage for clerical worker) = $390,000.
Time to complete Form 5400.28-- 100,000 x .33 (hours) x $14 (mean 
hourly wage for blue collar worker) = $462,000.
Time spent on ATF inspection--20,000 x 2 (hours) x $17 (mean hourly 
wage for supervisory blue collar workers) = $680,000.

Accordingly, this interim rule will result in approximately a 
$3,192,000 cost to the explosives industry's nonlicensed/nonpermitted 
population.
    ii. No additional cost to limited permittees associated with 
storage of explosive materials. Existing law and regulations require 
that all persons storing explosive materials do so in accordance with 
27 CFR part 555, subpart K. Accordingly, persons who have been 
acquiring explosive materials, even on an infrequent basis, should 
already have proper explosives storage facilities. However, because the 
Safe Explosives Act brings previously nonlicensed/nonpermitted 
infrequent users of explosive materials under ATF's oversight and 
mandates that ATF verify the storage facilities of all licensees and 
permittees, certain persons may need to obtain an appropriate 
explosives storage magazine. Because infrequent users of explosive 
materials will not likely be storing large quantities of explosive 
materials, ATF believes that such users will acquire indoor explosives 
storage magazines. Quantity restrictions for indoor storage of 
explosive materials are limited to 50 pounds. The cost of indoor 
explosives storage magazines that meet the regulatory requirements of 
part 555, subpart K is approximately $300. However, because the 
requirement to properly store explosive materials is a pre-existing 
requirement for all persons, whether a licensee or permittee or a 
nonlicensed/nonpermitted person, this cost does not result from the Act 
and this rule.
    iii. Similar process for explosives transactions under existing 
regulations and new regulations. ATF regulations already require that 
nonlicensee/nonpermittee purchasers complete a transaction record 
requiring, among other things, that purchasers provide their names, 
addresses, appropriate identifying information, and a certification 
that they are not prohibited from receiving explosive materials. The 
distributor is required to verify the identity of the purchaser, and 
indicate on the transaction record the quantity and type of explosive 
materials distributed to the purchaser. This record is completed each 
time a seller distributes explosive materials to a nonlicensee/
nonpermittee.
    This rule will require the same basic information before a 
purchaser may be issued a ``limited permit'' and the six Intrastate 
Purchase of Explosives Coupons (IPECs). This rule continues the 
requirement that a distributor complete a form prior to distribution of 
explosive materials. However, much of the information required by the 
form is listed on the IPEC that will be affixed to the transaction 
record. This change will not result in significant costs.
    iv. Additional cost of compliance for licensees and holders of user 
permits. There are approximately 8,600 persons holding explosives 
licenses and user permits as of the date of this interim rule. Upon the 
first renewal of such licenses and permits on and after May 24, 2003, 
the holders must comply with the new photograph and fingerprint 
requirements of the Act. Each renewal application must also include a 
completed Form 5400.28 for each employee possessor. Assuming three to 
five responsible persons per licensee/permittee and three to five 
employee possessors for same, the additional estimated cost of 
compliance would be as follows:

Time to complete Form 5400.28--8,600 x 5 x $14 (mean hourly wage for 
blue collar worker) = $602,000.
Photographs for responsible persons--8,600 x 5 x $1.50 = $64,500.
Fingerprints for responsible persons--8,600 x 5 x $10 = $430,000.
Fingerprints for employees--430 x $10 = $4,300.

Accordingly, this interim rule will result in a cost to persons 
currently holding a license or permit of approximately $1,100,800.
2. Benefits
    The Act and this rule provide important benefits in public security 
and safety. The Act mandates ATF to perform background checks of 
persons and business entities to ensure that responsible persons and 
employee possessors of explosive materials are not prohibited from 
shipping, transporting, receiving, or possessing explosive materials. 
This mandate enables ATF to determine whether a person is subject to an 
explosives disability before such person may obtain explosive 
materials. Thus, the Act as implemented by this

[[Page 13778]]

rule provides preventative tools to increase public safety and 
security. Moreover, the required background checks may help to ensure 
that would-be terrorists are not permitted to obtain explosive 
materials for illicit use.
    Prior to enactment, ATF did not have the authority to verify that 
persons, except licensees and permittees, properly stored explosive 
materials. The Act requires that all persons who wish to acquire 
explosive materials obtain, at minimum, a ``limited permit,'' and that 
ATF verify the storage facilities of all licensees and permittees. This 
mandate authorizes ATF to verify that explosive materials are securely 
stored and that storage of explosive materials does not pose a threat 
to public safety.
3. Assessment
    The public security and safety benefits of this rule outweigh its 
costs. As stated above, the costs are minimal, affect a small sector of 
the economy, and in some cases represent pre-existing requirements 
(e.g., storage).

B. Executive Order 13132

    This regulation will not have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, ATF has determined that this regulation does 
not have sufficient federalism implications to warrant the preparation 
of a federalism summary impact statement.

C. Executive Order 12988: Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

D. Administrative Procedure Act (APA)

    Immediate implementation of this rule as an interim rule with 
provision for post-promulgation public comments is based upon the 
exceptions found at 5 U.S.C. 553(b)(A), (b)(B), and (d). The Safe 
Explosives Act was enacted in response to the terrorist attacks of 
September 11, 2001. Its provisions close numerous gaps in Federal law 
to prevent the threat of the use of explosives in future acts of 
terrorism. Issuance of a notice of proposed rulemaking followed by a 
comment period, consideration of the comments, and publication of a 
final rule would delay implementation of these important security and 
safety provisions. In addition, the effective date for certain 
provisions of the Safe Explosives Act was January 24, 2003, only 60 
days after enactment, with the remaining provisions effective on May 
24, 2003. The explosives industry needs immediate guidance to comply 
with the statute. For example, industry members will need to determine 
whether any of their employees are prohibited from possessing 
explosives under the new prohibited person categories added to 18 
U.S.C. 842(i). In addition, the explosives industry, responsible 
persons, employees who possess explosives in the course of their 
employment, and members of the general public need immediate guidance 
on the procedures for applying for relief from explosives disabilities 
under 18 U.S.C. 845(b). It is also necessary to provide immediate 
guidance concerning the limited permittee provisions of the law to give 
persons who may require such a permit time to learn the new 
requirements of the law, determine whether they should obtain a limited 
permit or a user permit, and file an application to avoid conduct which 
will be unlawful after the applicable effective date.
    The portion of this interim rule that reflects agency organization, 
procedure and practice is exempt under section 553(b)(A) of the APA. 
With respect to the portion of this interim rule that makes technical 
amendments, there is good cause for a finding that notice and public 
procedure is unnecessary and contrary to the public interest pursuant 
to section 553(b)(B) of the APA. With respect to the remainder of this 
interim rule, there is good cause for a finding that notice and public 
procedure is impracticable and contrary to the public interest, 
pursuant to section 553(b)(B) of the APA. The due and timely execution 
of the agency's responsibilities in implementing the Safe Explosives 
Act would be unavoidably impeded by a time-consuming notice and comment 
period. For the reasons stated above, there is also good cause for a 
finding that this interim rule is exempt from the effective date 
limitations under section 553(d).

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. The Director, Bureau of Alcohol, Tobacco, Firearms and 
Explosives, has reviewed this regulation and, by approving it, 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. This rule will affect persons 
who hold a Federal explosives license as a manufacturer or importer of, 
or dealer in, explosive materials. It will also affect persons who hold 
Federal user permits that authorize them to obtain explosives in 
interstate or foreign commerce. Users include farmers, construction 
companies, mining companies, logging companies, and hobbyists, such as 
fireworks and sport rocketry enthusiasts. The rule will also affect 
infrequent or occasional users who obtain explosive materials within 
their State of residence. The foregoing would include farmers, 
construction companies, mining companies, logging companies, and 
hobbyists, such as fireworks and sport rocketry enthusiasts. The rule 
will also affect ``responsible persons'' affiliated with Federal 
explosives licensees and permittees, as well as employees authorized by 
a licensee or permittee to possess explosive materials in the course of 
their employment. Finally, the rule will affect individuals subject to 
Federal explosives disabilities under 18 U.S.C. 842(i).
    Although a number of the persons affected by the rule may be small 
businesses, many of these businesses already hold Federal explosives 
licenses and permits and, therefore, the economic impact upon these 
businesses will not be significant. Moreover, the requirement for 
businesses to comply with the requirements of the rule is a statutory 
mandate that ATF must implement. The rule will improve ATF's service to 
the explosives industry and the general public by setting forth clear 
procedures for obtaining a license or permit under the new provisions 
of the law, by setting forth definitive criteria for conducting 
background checks, and by providing a thorough description of the 
relief from disabilities provisions of 18 U.S.C. 845(b). The 
obligations placed on limited permittees under the provisions of the 
interim rule are only those necessary to ensure that such persons are 
not prohibited from possessing explosives and to limit their access to 
explosives in accordance with the restrictions in the law. The rule has 
been drafted to impose as few obstacles as possible to the acquisition 
of explosive materials by these infrequent, intrastate users.

F. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 804 of the 
Small

[[Page 13779]]

Business Regulatory Enforcement Fairness Act of 1996. This rule will 
not result in an annual effect on the economy of $100 million or more; 
a major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, innovation, or on the ability of 
United States-based companies to compete with foreign-based companies 
in domestic and export markets.

G. Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector of $100 
million or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

H. Paperwork Reduction Act

    This regulation is being issued without prior notice and public 
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). 
For this reason, the collections of information contained in this 
regulation have been reviewed under the requirements of the Paperwork 
Reduction Act (44 U.S.C. 3507(j)) and, pending receipt and evaluation 
of public comments, approved by the Office of Management and Budget 
(OMB) under the following control numbers: 1140-0030, 1140-0073, 1140-
0074, 1140-0075, 1140-0076, 1140-0077, 1140-0078, 1140-0079, 1140-0080, 
1140-0081, 1140-0082, and 1140-0083. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a valid control number assigned by the 
Office of Management and Budget.
    The collections of information in this regulation are in 27 CFR 
555.33, 555.34, 555.41, 555.45, 555.49, 555.54, 555.57, 555.103, 
555.105, 555.110, 555.125, 555.126, and 555.142.
    This information is required to ensure compliance with the 
provisions of the Safe Explosives Act, Title XI, Subtitle C of Public 
Law 107-296. The collections of information are mandatory. The likely 
respondents are individuals and businesses.
    As indicated, the collections of information contained in this 
interim rule have been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collections of information should be 
sent to the Office of Management and Budget, Attention: Desk Officer 
for the Department of Justice, Bureau of Alcohol, Tobacco, Firearms and 
Explosives, Office of Information and Regulatory Affairs, Washington, 
DC, 20503, with copies to the Chief, Document Services Branch, Room 
3110, Bureau of Alcohol, Tobacco, Firearms and Explosives, 650 
Massachusetts Avenue, NW., Washington, DC 20226. Comments are 
specifically requested concerning:
    [sbull] Whether the collections of information are necessary for 
the proper performance of the function of the Bureau of Alcohol, 
Tobacco, Firearms and Explosives, including whether the information 
will have practical utility;
    [sbull] The accuracy of the estimated burden associated with the 
collections of information (see below);
    [sbull] How the quality, utility, and clarity of the information to 
be collected may be enhanced; and
    [sbull] How the burden of complying with the collections of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology.
    With respect to Sec.  555.33:
    Estimated total annual reporting and/or recordkeeping burden: 1,000 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: 2 hours.
    Estimated number of respondents and/or recordkeepers: 500.
    Estimated annual frequency of responses: 1.
    With respect to Sec.  555.34:
    Estimated total annual reporting and/or recordkeeping burden: 264 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .33 hours (20 minutes).
    Estimated number of respondents and/or recordkeepers: 800.
    Estimated annual frequency of responses: 1.
    With respect to Sec. Sec.  555.41 and 555.45:
    Estimated total annual reporting and/or recordkeeping burden: 2,000 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: 30 seconds.
    Estimated number of respondents and/or recordkeepers: 40,000.
    Estimated annual frequency of responses: 6.
    With respect to Sec.  555.49:
    Estimated total annual reporting and/or recordkeeping burden: 416 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: 30 seconds.
    Estimated number of respondents and/or recordkeepers: 50,000.
    Estimated annual frequency of responses: 1.
    With respect to Sec.  555.54:
    Estimated total annual reporting and/or recordkeeping burden: 170 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .17 hours (10 minutes).
    Estimated number of respondents and/or recordkeepers: 1,000.
    Estimated annual frequency of responses: 1.
    With respect to Sec.  555.57:
    Estimated total annual reporting and/or recordkeeping burden: 
100,000 hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: 1 hour.
    Estimated number of respondents and/or recordkeepers: 50,000.
    Estimated annual frequency of responses: 2.
    With respect to Sec.  555.103:
    Estimated total annual reporting and/or recordkeeping burden: 
25,000 hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .5 hours (30 minutes).
    Estimated number of respondents and/or recordkeepers: 50,000.
    Estimated annual frequency of responses: 1.
    With respect to Sec.  555.105:
    Estimated total annual reporting and/or recordkeeping burden: 
25,000 hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .5 hours (30 minutes).
    Estimated number of respondents and/or recordkeepers: 50,000.
    Estimated annual frequency of responses: 1.
    With respect to Sec.  555.110:
    Estimated total annual reporting and/or recordkeeping burden: 1,175 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .5 hours (30 minutes).
    Estimated number of respondents and/or recordkeepers: 2,350.
    Estimated annual frequency of responses: 1.
    With respect to Sec.  555.126:
    Estimated total annual reporting and/or recordkeeping burden: 
12,000 hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .08 hours (5 minutes).
    Estimated number of respondents and/or recordkeepers: 5,000.
    Estimated annual frequency of responses: 300.
    With respect to Sec.  555.142:
    Estimated total annual reporting and/or recordkeeping burden: 1 
hour.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: .02 hours (1 minute).
    Estimated number of respondents and/or recordkeepers: 50.

[[Page 13780]]

    Estimated annual frequency of responses: 1.

Public Participation

    ATF is requesting comments on the interim regulations from all 
interested persons. ATF is also specifically requesting comments on the 
clarity of this interim rule and how it may be made easier to 
understand.
    Comments received on or before the closing date will be carefully 
considered. Comments received after that date will be given the same 
consideration if it is practical to do so, but assurance of 
consideration cannot be given except as to comments received on or 
before the closing date.
    ATF will not recognize any material in comments as confidential. 
Comments may be disclosed to the public. Any material that the 
commenter considers to be confidential or inappropriate for disclosure 
to the public should not be included in the comment. The name of the 
person submitting a comment is not exempt from disclosure.
    You may submit written comments by facsimile transmission to (202) 
927-8525. Facsimile comments must:
    [sbull] Be legible;
    [sbull] Reference this document number;
    [sbull] Be 8\1/2\'' x 11'' in size;
    [sbull] Contain a legible written signature; and
    [sbull] Be not more than five pages long.
    ATF will not acknowledge receipt of facsimile transmissions. ATF 
will treat facsimile transmissions as originals.
    Any interested person who desires an opportunity to comment orally 
at a public hearing should submit his or her request, in writing, to 
the Director within the 90-day comment period. The Director, however, 
reserves the right to determine, in light of all circumstances, whether 
a public hearing is necessary.

Disclosure

    Copies of this interim rule and the comments received will be 
available for public inspection by appointment during normal business 
hours at: ATF Reference Library, Room 6480, 650 Massachusetts Avenue, 
NW., Washington, DC 20226, telephone (202) 927-7890.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in the Federal Register in April and October of each year. The RIN 
contained in the heading of this document can be used to cross-
reference this action with the Unified Agenda.

Drafting Information

    The author of this document is James P. Ficaretta; Firearms, 
Explosives and Arson; Bureau of Alcohol, Tobacco, Firearms and 
Explosives.

List of Subjects in 27 CFR Part 555

    Administrative practice and procedure, Authority delegations, 
Customs duties and inspection, Explosives, Hazardous materials, 
Imports, Penalties, Reporting and recordkeeping requirements, Safety, 
Security measures, Seizures and forfeitures, Transportation, and 
Warehouses.

Authority and Issuance

    For the reasons discussed in the preamble, 27 CFR Part 555, is 
amended as follows:

PART 555--COMMERCE IN EXPLOSIVES

    Paragraph 1. The authority citation for 27 CFR Part 555 continues 
to read as follows:

    Authority: 18 U.S.C. 847.


    Par. 2. Section 555.1 is amended by revising paragraphs (a) and 
(b)(3) to read as follows:


Sec.  555.1  Scope of regulations.

    (a) In general. The regulations contained in this part relate to 
commerce in explosives and implement Title XI, Regulation of Explosives 
(18 U.S.C. Chapter 40; 84 Stat. 952), of the Organized Crime Control 
Act of 1970 (84 Stat. 922), Pub. L. 103-322 (108 Stat. 1796), Pub. L. 
104-132 (110 Stat. 1214), and Pub. L. 107-296 (116 Stat. 2135).
    (b) * * *
    (3) The issuance of permits;
* * * * *

    Par. 3. Section 555.11 is amended by revising the definitions for 
``ATF officer,'' ``Bureau,'' ``Director,'' and ``Permittee'' and by 
adding new definitions for the terms ``Adjudicated as a mental 
defective,'' ``Alien,'' ``Appropriate identifying information,'' 
``ATF,'' ``Committed to a mental institution,'' ``Common or contract 
carrier,'' ``Controlled substance,'' ``Discharged under dishonorable 
conditions,'' ``Identification document,'' ``Limited permit,'' ``Mental 
institution,'' ``Renounced U.S. citizenship,'' ``Responsible person,'' 
and ``Unlawful user of or addicted to any controlled substance'' to 
read as follows:


Sec.  555.11  Meaning of terms.

* * * * *
    Adjudicated as a mental defective. (a) A determination by a court, 
board, commission, or other lawful authority that a person, as a result 
of marked subnormal intelligence, or mental illness, incompetency, 
condition, or disease:
    (1) Is a danger to himself or to others; or
    (2) Lacks the mental capacity to contract or manage his own 
affairs.
    (b) The term will include--
    (1) A finding of insanity by a court in a criminal case; and
    (2) Those persons found incompetent to stand trial or found not 
guilty by reason of lack of mental responsibility by any court or 
pursuant to articles 50a and 76b of the Uniform Code of Military 
Justice, 10 U.S.C. 850a, 876b.
    Alien. Any person who is not a citizen or national of the United 
States.
* * * * *
    Appropriate identifying information. The term means, in relation to 
an individual:
    (a) The full name, date of birth, place of birth, sex, race, street 
address, State of residence, telephone numbers (home and work), country 
or countries of citizenship, and position at the employer's business or 
operations of responsible persons and employees authorized to possess 
explosive materials;
    (b) The business name, address, and license or permit number with 
which the responsible person or employee is affiliated;
    (c) If an alien, INS-issued alien number or admission number; and
    (d) Social security number, as optional information (this 
information is not required but is helpful in avoiding 
misidentification when a background check is conducted).
* * * * *
    ATF. (a) Prior to January 24, 2003. The Bureau of Alcohol, Tobacco 
and Firearms, Department of the Treasury, Washington, DC.
    (b) On and after January 24, 2003. The Bureau of Alcohol, Tobacco, 
Firearms and Explosives, Department of Justice, Washington, DC.
    ATF officer. (a) Prior to January 24, 2003. An officer or employee 
of the Bureau of Alcohol, Tobacco and Firearms (ATF) authorized to 
perform any function relating to the administration or enforcement of 
this part.
    (b) On and after January 24, 2003. An officer or employee of the 
Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) authorized to 
perform any function relating to the administration or enforcement of 
this part.
* * * * *

[[Page 13781]]

    Bureau. (a) Prior to January 24, 2003. The Bureau of Alcohol, 
Tobacco and Firearms, Department of the Treasury, Washington, DC.
    (b) On and after January 24, 2003. The Bureau of Alcohol, Tobacco, 
Firearms and Explosives, Department of Justice, Washington, DC.
* * * * *
    Committed to a mental institution. A formal commitment of a person 
to a mental institution by a court, board, commission, or other lawful 
authority. The term includes a commitment to a mental institution 
involuntarily. The term includes commitment for mental defectiveness or 
mental illness. It also includes commitments for other reasons, such as 
for drug use. The term does not include a person in a mental 
institution for observation or a voluntary admission to a mental 
institution.
    Common or contract carrier. Any individual or organization engaged 
in the business of transporting passengers or goods.
* * * * *
    Controlled substance. A drug or other substance, or immediate 
precursor, as defined in section 102 of the Controlled Substances Act, 
21 U.S.C. 802. The term includes, but is not limited to, marijuana, 
depressants, stimulants, and narcotic drugs. The term does not include 
distilled spirits, wine, malt beverages, or tobacco, as those terms are 
defined or used in Subtitle E of the Internal Revenue Code of 1986, as 
amended.
* * * * *
    Director. (a) Prior to January 24, 2003. The Director, Bureau of 
Alcohol, Tobacco and Firearms, Department of the Treasury, Washington, 
DC.
    (b) On and after January 24, 2003. The Director, Bureau of Alcohol, 
Tobacco, Firearms and Explosives, Department of Justice, Washington, 
DC.
    Discharged under dishonorable conditions. Separation from the U.S. 
Armed Forces resulting from a dishonorable discharge or dismissal 
adjudged by general court-martial. The term does not include any 
separation from the Armed Forces resulting from any other discharge, 
e.g., a bad conduct discharge.
* * * * *
    Identification document. A document containing the name, residence 
address, date of birth, and photograph of the holder and which was made 
or issued by or under the authority of the United States Government, a 
State, political subdivision of a State, a foreign government, a 
political subdivision of a foreign government, an international 
governmental or an international quasi-governmental organization which, 
when completed with information concerning a particular individual, is 
of a type intended or commonly accepted for the purpose of 
identification of individuals.
* * * * *
    Limited permit. A permit issued to a person authorizing him to 
receive for his use explosive materials from a licensee or permittee in 
his state of residence on no more than 6 occasions during the 12-month 
period in which the permit is valid. A limited permit does not 
authorize the receipt or transportation of explosive materials in 
interstate or foreign commerce.
* * * * *
    Mental institution. Includes mental health facilities, mental 
hospitals, sanitariums, psychiatric facilities, and other facilities 
that provide diagnoses by licensed professionals of mental retardation 
or mental illness, including a psychiatric ward in a general hospital.
* * * * *
    Permittee. Any user of explosives for a lawful purpose who has 
obtained either a user permit or a limited permit under this part.
* * * * *
    Renounced U.S. citizenship. (a) A person has renounced his U.S. 
citizenship if the person, having been a citizen of the United States, 
has renounced citizenship either--
    (1) Before a diplomatic or consular officer of the United States in 
a foreign state pursuant to 8 U.S.C. 1481(a)(5); or
    (2) Before an officer designated by the Attorney General when the 
United States is in a state of war pursuant to 8 U.S.C. 1481(a)(6).
    (b) The term will not include any renunciation of citizenship that 
has been reversed as a result of administrative or judicial appeal.
    Responsible person. An individual who has the power to direct the 
management and policies of the applicant pertaining to explosive 
materials. Generally, the term includes partners, sole proprietors, 
site managers, corporate officers and directors, and majority 
shareholders.
* * * * *
    Unlawful user of or addicted to any controlled substance. A person 
who uses a controlled substance and has lost the power of self-control 
with reference to the use of a controlled substance; and any person who 
is a current user of a controlled substance in a manner other than as 
prescribed by a licensed physician. Such use is not limited to the use 
of drugs on a particular day, or within a matter of days or weeks 
before possession of the explosive materials, but rather that the 
unlawful use has occurred recently enough to indicate that the 
individual is actively engaged in such conduct. A person may be an 
unlawful current user of a controlled substance even though the 
substance is not being used at the precise time the person seeks to 
acquire explosive materials or receives or possesses explosive 
materials. An inference of current use may be drawn from evidence of a 
recent use or possession of a controlled substance or a pattern of use 
or possession that reasonably covers the present time, e.g., a 
conviction for use or possession of a controlled substance within the 
past year; multiple arrests for such offenses within the past 5 years 
if the most recent arrest occurred within the past year; or persons 
found through a drug test to use a controlled substance unlawfully, 
provided that the test was administered within the past year. For a 
current or former member of the Armed Forces, an inference of current 
use may be drawn from recent disciplinary or other administrative 
action based on confirmed drug use, e.g., court-martial conviction, 
nonjudicial punishment, or an administrative discharge based on drug 
use or drug rehabilitation failure.
* * * * *
    Par. 4. Section 555.24 is revised to read as follows:


Sec.  555.24  Right of entry and examination.

    (a) Any ATF officer may enter during business hours the premises, 
including places of storage, of any licensee or holder of a user permit 
for the purpose of inspecting or examining any records or documents 
required to be kept under this part, and any facilities in which 
explosive materials are kept or stored.
    (b) Any ATF officer may inspect the places of storage for explosive 
materials of an applicant for a limited permit or, in the case of a 
holder of a limited permit, at the time of renewal of such permit.
    (c) The provisions of paragraph (b) of this section do not apply to 
an applicant for the renewal of a limited permit if an ATF officer has, 
within the preceding 3 years, verified by inspection that the 
applicant's place of storage for explosive materials meets the 
requirements of subpart K of this part.

    Par. 5. Section 555.26 is revised to read as follows:


Sec.  555.26  Prohibited shipment, transportation, receipt, possession, 
or distribution of explosive materials.

    (a) General. No person, other than a licensee or permittee 
knowingly may transport, ship, cause to be transported, or receive any 
explosive materials:

[[Page 13782]]

Provided, That the provisions of this paragraph (a) do not apply to the 
lawful purchase by a nonlicensee or nonpermittee of commercially 
manufactured black powder in quantities not to exceed 50 pounds, if the 
black powder is intended to be used solely for sporting, recreational, 
or cultural purposes in antique firearms as defined in 18 U.S.C. 
921(a)(16), or in antique devices as exempted from the term 
``destructive device'' in 18 U.S.C. 921(a)(4).
    (b) Holders of a limited permit. No person who is a holder of a 
limited permit may--
    (1) Transport, ship, cause to be transported, or receive in 
interstate or foreign commerce any explosive materials;
    (2) Receive explosive materials from a licensee or permittee, whose 
premises are located outside the State of residence of the limited 
permit holder; or
    (3) Receive explosive materials on more than 6 separate occasions, 
during the period of the permit, from one or more licensees or 
permittees whose premises are located within the State of residence of 
the limited permit holder. (See Sec.  555.105(b) for the definition of 
``6 separate occasions.'')
    (c) Possession by prohibited persons. No person may ship or 
transport any explosive material in or affecting interstate or foreign 
commerce or receive or possess any explosive materials which have been 
shipped or transported in or affecting interstate or foreign commerce 
who:
    (1) Is under indictment or information for, or who has been 
convicted in any court of, a crime punishable by imprisonment for a 
term exceeding one year;
    (2) Is a fugitive from justice;
    (3) Is an unlawful user of or addicted to any controlled substance 
(as defined in section 102 of the Controlled Substances Act (21 U.S.C. 
802) and Sec.  555.11);
    (4) Has been adjudicated as a mental defective or has been 
committed to a mental institution;
    (5) Is an alien, other than an alien who--
    (i) Is lawfully admitted for permanent residence (as that term is 
defined in section 101(a)(20) of the Immigration and Nationality Act (8 
U.S.C. 1101)); or
    (ii) Is in lawful nonimmigrant status, is a refugee admitted under 
section 207 of the Immigration and Nationality Act (8 U.S.C. 1157), or 
is in asylum status under section 208 of the Immigration and 
Nationality Act (8 U.S.C. 1158), and--
    (A) Is a foreign law enforcement officer of a friendly foreign 
government, as determined by the Attorney General in consultation with 
the Secretary of State, entering the United States on official law 
enforcement business, and the shipping, transporting, possession, or 
receipt of explosive materials is in furtherance of this official law 
enforcement business;
    (B) Is a person having the power to direct or cause the direction 
of the management and policies of a corporation, partnership, or 
association licensed pursuant to section 843(a) of the Act, and the 
shipping, transporting, possession, or receipt of explosive materials 
is in furtherance of such power;
    (C) Is a member of a North Atlantic Treaty Organization (NATO) or 
other friendly foreign military force, as determined by the Attorney 
General in consultation with the Secretary of Defense, (whether or not 
admitted in a nonimmigrant status) who is present in the United States 
under military orders for training or other military purpose authorized 
by the United States, and the shipping, transporting, possession, or 
receipt of explosive materials is in furtherance of the military 
purpose; or
    (D) Is lawfully present in the United States in cooperation with 
the Director of Central Intelligence, and the shipment, transportation, 
receipt, or possession of the explosive materials is in furtherance of 
such cooperation;
    (6) Has been discharged from the armed forces under dishonorable 
conditions; or
    (7) Having been a citizen of the United States, has renounced 
citizenship.
    (d) Distribution to prohibited persons. No person may knowingly 
distribute explosive materials to any individual who:
    (1) Is under twenty-one years of age;
    (2) Is under indictment or information for, or who has been 
convicted in any court of, a crime punishable by imprisonment for a 
term exceeding one year;
    (3) Is a fugitive from justice;
    (4) Is an unlawful user of or addicted to any controlled substance 
(as defined in section 102 of the Controlled Substances Act (21 U.S.C. 
802) and Sec.  555.11);
    (5) Has been adjudicated as a mental defective or has been 
committed to a mental institution;
    (6) Is an alien, other than an alien who--
    (i) Is lawfully admitted for permanent residence (as that term is 
defined in section 101(a)(20) of the Immigration and Nationality Act (8 
U.S.C. 1101)); or
    (ii) Is in lawful nonimmigrant status, is a refugee admitted under 
section 207 of the Immigration and Nationality Act (8 U.S.C. 1157), or 
is in asylum status under section 208 of the Immigration and 
Nationality Act (8 U.S.C. 1158), and--
    (A) Is a foreign law enforcement officer of a friendly foreign 
government, as determined by the Attorney General in consultation with 
the Secretary of State, entering the United States on official law 
enforcement business, and the shipping, transporting, possession, or 
receipt of explosive materials is in furtherance of this official law 
enforcement business;
    (B) Is a person having the power to direct or cause the direction 
of the management and policies of a corporation, partnership, or 
association licensed pursuant to section 843(a) of the Act, and the 
shipping, transporting, possession, or receipt of explosive materials 
is in furtherance of such power;
    (C) Is a member of a North Atlantic Treaty Organization (NATO) or 
other friendly foreign military force, as determined by the Attorney 
General in consultation with the Secretary of Defense, (whether or not 
admitted in a nonimmigrant status) who is present in the United States 
under military orders for training or other military purpose authorized 
by the United States, and the shipping, transporting, possession, or 
receipt of explosive materials is in furtherance of the military 
purpose; or
    (D) Is lawfully present in the United States in cooperation with 
the Director of Central Intelligence, and the shipment, transportation, 
receipt, or possession of the explosive materials is in furtherance of 
such cooperation;
    (7) Has been discharged from the armed forces under dishonorable 
conditions; or
    (8) Having been a citizen of the United States, has renounced 
citizenship.
    (e) See Sec.  555.180 for regulations concerning the prohibited 
manufacture, importation, exportation, shipment, transportation, 
receipt, transfer, or possession of plastic explosives that do not 
contain a detection agent.

    Par. 6. Section 555.27 is revised to read as follows:


Sec.  555.27  Out-of-State disposition of explosive materials.

    (a) No nonlicensee or nonpermittee may distribute any explosive 
materials to any other nonlicensee or nonpermittee who the distributor 
knows or who has reasonable cause to believe does not reside in the 
State in which the distributor resides.

[[Page 13783]]

    (b) The provisions of this section do not apply on and after May 
24, 2003.

    Par. 7. Section 555.33 is added to subpart C to read as follows:


Sec.  555.33  Background checks and clearances (effective May 24, 
2003).

    (a) Background checks. (1) If the Director receives from a licensee 
or permittee the names and appropriate identifying information of 
responsible persons and employees who will be authorized by the 
employer to possess explosive materials in the course of employment 
with the employer, the Director will conduct a background check in 
accordance with this section.
    (2) The Director will determine whether the responsible person or 
employee is one of the persons described in any paragraph of section 
842(i) of the Act (see Sec.  555.26). In making such determination, the 
Director may take into account a letter or document issued under 
paragraph (a)(3) of this section.
    (3)(i) If the Director determines that the responsible person or 
the employee is not one of the persons described in any paragraph of 
section 842(i) of the Act (see Sec.  555.26), the Director will notify 
the employer in writing or electronically of the determination and 
issue, to the responsible person or employee, as the case may be, a 
letter of clearance which confirms the determination.
    (ii) If the Director determines that the responsible person or 
employee is one of the persons described in any paragraph of section 
842(i) of the Act (see Sec.  555.26), ATF will notify the employer in 
writing or electronically of the determination and issue to the 
responsible person or the employee, as the case may be, a document that 
confirms the determination; explains the grounds for the determination; 
provides information on how the disability may be relieved; and 
explains how the determination may be appealed. The employer will 
retain the notification as part of his permanent records in accordance 
with Sec.  555.121. The employer will take immediate steps to remove 
the responsible person from his position directing the management or 
policies of the business or operations as they relate to explosive 
materials or, as the case may be, to remove the employee from a 
position requiring the possession of explosive materials. Also, if the 
employer has listed the employee as a person authorized to accept 
delivery of explosive materials, as specified in Sec.  555.103 or Sec.  
555.105, the employer must remove the employee from such list and 
immediately, and in no event later than the second business day after 
such change, notify distributors of such change.
    (b) Appeals and correction of erroneous system information. (1) In 
general. A responsible person or employee may challenge the adverse 
determination set out in the letter of denial, in writing and within 45 
days of issuance of the determination, by directing his or her 
challenge to the basis for the adverse determination, or to the 
accuracy of the record upon which the adverse determination is based, 
to the Director. The appeal request must include appropriate 
documentation or record(s) establishing the legal and/or factual basis 
for the challenge. Any record or document of a court or other 
government entity or official furnished in support of an appeal must be 
certified by the court or other government entity or official as a true 
copy. In the case of an employee, or responsible person who did not 
submit fingerprints, such appeal must be accompanied by two properly 
completed FBI Forms FD-258 (fingerprint card). The Director will advise 
the individual in writing of his decision and the reasons for the 
decision.
    (2) Employees. The letter of denial, among other things, will 
advise an employee who elects to challenge an adverse determination to 
submit the fingerprint cards as described above. The employee also will 
be advised of the agency name and address that originated the record 
containing the information causing the adverse determination 
(``originating agency''). At that time, and where appropriate, an 
employee is encouraged to apply to the originating agency to challenge 
the accuracy of the record(s) upon which the denial is based. The 
originating agency may respond to the individual's application by 
addressing the individual's specific reasons for the challenge, and by 
indicating whether additional information or documents are required. If 
the record is corrected as a result of the application to the 
originating agency, the individual may so notify ATF which will, in 
turn, verify the record correction with the originating agency and take 
all necessary steps to contact the agency responsible for the record 
system and correct the record. The employee may provide to ATF 
additional and appropriate documentation or record(s) establishing the 
legal and/or factual basis for the challenge to ATF's decision to 
uphold the initial denial. If ATF does not receive such additional 
documentation or record(s) within 45 days of the date of the decision 
upholding the initial denial, ATF will close the appeal.
    (3) Responsible persons. The letter of denial, among other things, 
will advise a responsible person of the agency name and address which 
originated the record containing the information causing the adverse 
determination (``originating agency''). A responsible person who elects 
to challenge the adverse determination, where appropriate, is 
encouraged to apply to the originating agency to challenge the accuracy 
of the record(s) upon which the denial is based. The originating agency 
may respond to the individual's application by addressing the 
individual's specific reasons for the challenge, and by indicating 
whether additional information or documents are required. If the record 
is corrected as a result of the application to the originating agency, 
the individual may so notify ATF which will, in turn, verify the record 
correction with the originating agency and take all necessary steps to 
contact the agency responsible for the record system and correct the 
record. A responsible person may provide additional documentation or 
records as specified for employees in paragraph (b)(2) of this section.


(Approved by the Office of Management and Budget under control 
number 1140-0081)

    Par. 8. Section 555.34 is added to subpart C to read as follows:


Sec.  555.34  Replacement of stolen or lost ATF Form 5400.30 
(Intrastate Purchase of Explosives Coupon (IPEC)).

    When any Form 5400.30 is stolen, lost, or destroyed, the person 
losing possession will, upon discovery of the theft, loss, or 
destruction, immediately, but in all cases before 24 hours have elapsed 
since discovery, report the matter to the Director by telephoning 1-
888-ATF-BOMB (nationwide toll free number). The report will explain in 
detail the circumstances of the theft, loss, or destruction and will 
include all known facts that may serve to identify the document. Upon 
receipt of the report, the Director will make such investigation as 
appears appropriate and may issue a duplicate document upon such 
conditions as the circumstances warrant.


(Approved by the Office of Management and Budget under control 
number 1140-0077)

    Par. 9. Section 555.41 is revised to read as follows:


Sec.  555.41  General.

    (a) Licenses and permits issued prior to May 24, 2003. (1) Each 
person intending to engage in business as an importer or manufacturer 
of, or a dealer

[[Page 13784]]

in, explosive materials, including black powder, must, before 
commencing business, obtain the license required by this subpart for 
the business to be operated. Each person who intends to acquire for use 
explosive materials from a licensee in a State other than the State in 
which he resides, or from a foreign country, or who intends to 
transport explosive materials in interstate or foreign commerce, must 
obtain a permit under this subpart; except that it is not necessary to 
obtain a permit if the user intends to lawfully purchase:
    (i) Explosive materials from a licensee in a State contiguous to 
the user's State of residence and the user's State of residence has 
enacted legislation, currently in force, specifically authorizing a 
resident of that State to purchase explosive materials in a contiguous 
State; or
    (ii) Commercially manufactured black powder in quantities not to 
exceed 50 pounds, intended to be used solely for sporting, 
recreational, or cultural purposes in antique firearms or in antique 
devices.
    (2) Each person intending to engage in business as an explosive 
materials importer, manufacturer, or dealer must file an application, 
with the required fee (see Sec.  555.42), with ATF in accordance with 
the instructions on the form (see Sec.  555.45). A license will, 
subject to law, entitle the licensee to transport, ship, and receive 
explosive materials in interstate or foreign commerce, and to engage in 
the business specified by the license, at the location described on the 
license. A separate license must be obtained for each business premises 
at which the applicant is to manufacture, import, or distribute 
explosive materials except under the following circumstances:
    (i) A separate license will not be required for storage facilities 
operated by the licensee as an integral part of one business premises 
or to cover a location used by the licensee solely for maintaining the 
records required by this part.
    (ii) A separate license will not be required of a licensed 
manufacturer with respect to his on-site manufacturing.
    (iii) It will not be necessary for a licensed importer or a 
licensed manufacturer (for purposes of sale or distribution) to also 
obtain a dealer's license in order to engage in business on his 
licensed premises as a dealer in explosive materials.
    (iv) A separate license will not be required of licensed 
manufacturers with respect to their on-site manufacture of theatrical 
flash powder.
    (3) Except as provided in paragraph (a)(1) of this section, each 
person intending to acquire explosive materials from a licensee in a 
State other than a State in which he resides, or from a foreign 
country, or who intends to transport explosive materials in interstate 
or foreign commerce, must file an application, with the required fee 
(see Sec.  555.43), with ATF in accordance with the instructions on the 
form (see Sec.  555.45). A permit will, subject to law, entitle the 
permittee to acquire, transport, ship, and receive in interstate or 
foreign commerce explosive materials of the class authorized by this 
permit. Only one permit is required under this part.
    (b) Licenses and permits issued on and after May 24, 2003. (1) In 
general. (i) Each person intending to engage in business as an importer 
or manufacturer of, or a dealer in, explosive materials, including 
black powder, must, before commencing business, obtain the license 
required by this subpart for the business to be operated.
    (ii) Each person who intends to acquire for use explosive materials 
within the State in which he resides on no more than 6 separate 
occasions during the 12-month period in which the permit is valid must 
obtain a limited permit under this subpart. (See Sec.  555.105(b) for 
definition of ``6 separate occasions.'')
    (iii) Each person who intends to acquire for use explosive 
materials from a licensee or permittee in a State other than the State 
in which he resides, or from a foreign country, or who intends to 
transport explosive materials in interstate or foreign commerce, or who 
intends to acquire for use explosive materials within the State in 
which he resides on more than 6 separate occasions during a 12-month 
period, must obtain a user permit under this subpart.
    (iv) It is not necessary to obtain a permit if the user intends 
only to lawfully purchase commercially manufactured black powder in 
quantities not to exceed 50 pounds, intended to be used solely for 
sporting, recreational, or cultural purposes in antique firearms or in 
antique devices.
    (2) Importers, manufacturers, and dealers. Each person intending to 
engage in business as an explosive materials importer, manufacturer, or 
dealer must file an application, with the required fee (see Sec.  
555.42), with ATF in accordance with the instructions on the form (see 
Sec.  555.45). A license will, subject to law, entitle the licensee to 
transport, ship, and receive explosive materials in interstate or 
foreign commerce, and to engage in the business specified by the 
license, at the location described on the license. A separate license 
must be obtained for each business premises at which the applicant is 
to manufacture, import, or distribute explosive materials except under 
the following circumstances:
    (i) A separate license will not be required for storage facilities 
operated by the licensee as an integral part of one business premises 
or to cover a location used by the licensee solely for maintaining the 
records required by this part.
    (ii) A separate license will not be required of a licensed 
manufacturer with respect to his on-site manufacturing.
    (iii) It will not be necessary for a licensed importer or a 
licensed manufacturer (for purposes of sale or distribution) to also 
obtain a dealer's license in order to engage in business on his 
licensed premises as a dealer in explosive materials. No licensee will 
be required to obtain a user permit to lawfully transport, ship, or 
receive explosive materials in interstate or foreign commerce.
    (iv) A separate license will not be required of licensed 
manufacturers with respect to their on-site manufacture of theatrical 
flash powder.
    (3) Users of explosive materials. (i) A limited permit will, 
subject to law, entitle the holder of such permit to receive for his 
use explosive materials from a licensee or permittee in his state of 
residence on no more than 6 separate occasions during the 12-month 
period in which the permit is valid. A limited permit does not 
authorize the receipt or transportation of explosive materials in 
interstate or foreign commerce. Holders of limited permits who need to 
receive explosive materials on more than 6 separate occasions during a 
12-month period must obtain a user permit in accordance with this 
subpart.
    (ii) Each person intending to acquire explosive materials from a 
licensee in a State other than a State in which he resides, or from a 
foreign country, or who intends to transport explosive materials in 
interstate or foreign commerce, must file an application for a user 
permit, with the required fee (see Sec.  555.43), with ATF in 
accordance with the instructions on the form (see Sec.  555.45). A user 
permit will, subject to law, entitle the permittee to transport, ship, 
and receive in interstate or foreign commerce explosive materials of 
the class authorized by this permit. Only one user permit per person is 
required under this part, irrespective of the number of locations 
relating to explosive materials operated by the holder of the user 
permit.


[[Page 13785]]



(Approved by the Office of Management and Budget under control number 
1140-0083)

    Par. 10. Section 555.43 is revised to read as follows:


Sec.  555.43  Permit fees.

    (a) Each applicant must pay a fee for obtaining a permit as 
follows:
    (1) User--$100 for a three-year period.
    (2) User-limited (nonrenewable)--$75.
    (3) Limited--$25 for a one-year period.
    (b)(1) Each applicant for renewal of a user permit must pay a fee 
of $50 for a three-year period.
    (2) Each applicant for renewal of a limited permit must pay a fee 
of $12 for a one-year period.

    Par. 11. Section 555.45 is amended by adding a heading to paragraph 
(a) and two new sentences at the end of that paragraph; by adding a 
heading to paragraph (b) and two new sentences at the end of that 
paragraph; by adding a new paragraph (c); and by adding a parenthetical 
text at the end of the section to read as follows:


Sec.  555.45  Original license or permit.

    (a) Licenses issued prior to May 24, 2003. * * * The Chief, 
Firearms and Explosives Licensing Center, will not approve an 
application postmarked on or after March 20, 2003, unless it is 
submitted with a Responsible Person Questionnaire, ATF Form 5400.28. 
Form 5400.28 must be completed in accordance with the instructions on 
the form.
    (b) Permits issued prior to May 24, 2003. * * * The Chief, Firearms 
and Explosives Licensing Center, will not approve an application 
postmarked on or after March 20, 2003, unless it is submitted with a 
Responsible Person Questionnaire, ATF Form 5400.28. Form 5400.28 must 
be completed in accordance with the instructions on the form.
    (c) Licenses and permits issued on and after May 24, 2003. (1) 
License. Any person who intends to engage in the business as an 
importer of, manufacturer of, or dealer in explosive materials, or who 
has not timely submitted an application for renewal of a previous 
license issued under this part, must file an application for License, 
Explosives, ATF F 5400.13, with ATF in accordance with the instructions 
on the form. ATF Form 5400.13 may be obtained by contacting any ATF 
office. The application must:
    (i) Be executed under the penalties of perjury and the penalties 
imposed by 18 U.S.C. 844(a);
    (ii) Include appropriate identifying information concerning each 
responsible person;
    (iii) Include a photograph and fingerprints for each responsible 
person;
    (iv) Include the names of and appropriate identifying information 
regarding all employees who will be authorized by the applicant to 
possess explosive materials by submitting ATF F 5400.28 for each 
employee; and
    (v) Include the appropriate fee in the form of money order or check 
made payable to the Bureau of Alcohol, Tobacco, Firearms and 
Explosives.
    (2) User permit and limited permit. Except as provided in Sec.  
555.41(b)(1)(iv), any person who intends to acquire explosive materials 
in the State in which that person resides or acquire explosive 
materials from a licensee or holder of a user permit in a State other 
than the State in which that person resides, or from a foreign country, 
or who intends to transport explosive materials in interstate or 
foreign commerce, or who has not timely submitted an application for 
renewal of a previous permit issued under this part, must file an 
application for Permit, Explosives, ATF F 5400.16 or Permit, User 
Limited Display Fireworks, ATF F 5400.21 with ATF in accordance with 
the instructions on the form. ATF Form 5400.16 and ATF Form 5400.21 may 
be obtained by contacting any ATF office. The application must:
    (i) Be executed under the penalties of perjury and the penalties 
imposed by 18 U.S.C. 844(a);
    (ii) Include a photograph, fingerprints, and appropriate 
identifying information for each responsible person;
    (iii) Include the names of and appropriate identifying information 
regarding all employees who will be authorized by the applicant to 
possess explosive materials by submitting ATF F 5400.28 for each 
employee; and
    (iv) Include the appropriate fee in the form of money order or 
check made payable to the Bureau of Alcohol, Tobacco, Firearms and 
Explosives.
    (3) The Chief, Firearms and Explosives Licensing Center, will 
conduct background checks on responsible persons and employees 
authorized by the applicant to possess explosive materials in 
accordance with Sec.  555.33. If it is determined that any responsible 
person or employee is described in any paragraph of section 842(i) of 
the Act, the applicant must submit an amended application indicating 
removal or reassignment of that person before the license or permit 
will be issued.


(Approved by the Office of Management and Budget under control 
number 1140-0083)

    Par. 12. Section 555.49 is revised to read as follows:


Sec.  555.49  Issuance of license or permit.

    (a) Issuance of license or permit prior to May 24, 2003. (1) The 
Chief, Firearms and Explosives Licensing Center, will issue a license 
or permit if--
    (i) A properly executed application for the license or permit is 
received; and
    (ii) Through further inquiry or investigation, or otherwise, it is 
found that the applicant is entitled to the license or permit.
    (2) The Chief, Firearms and Explosives Licensing Center, will 
approve a properly executed application for a license or permit, if:
    (i) The applicant is 21 years of age or over;
    (ii) The applicant (including, in the case of a corporation, 
partnership, or association, any individual possessing, directly or 
indirectly, the power to direct or cause the direction of the 
management and policies of the corporation, partnership, or 
association) is not a person to whom distribution of explosive 
materials is prohibited under the Act;
    (iii) The applicant has not willfully violated any provisions of 
the Act or this part;
    (iv) The applicant has not knowingly withheld information or has 
not made any false or fictitious statement intended or likely to 
deceive, in connection with his application;
    (v) The applicant has in a State, premises from which he conducts 
business or operations subject to license or permit under the Act or 
from which he intends to conduct business or operations;
    (vi) The applicant has storage for the class (as described in Sec.  
555.202) of explosive materials described on the application, unless he 
establishes to the satisfaction of the Chief, Firearms and Explosives 
Licensing Center, that the business or operations to be conducted will 
not require the storage of explosive materials;
    (vii) The applicant has certified in writing that he is familiar 
with and understands all published State laws and local ordinances 
relating to explosive materials for the location in which he intends to 
do business; and
    (viii) The applicant for a license has submitted the certificate 
required by section 21 of the Federal Water Pollution Control Act, as 
amended (33 U.S.C. 1341).
    (3) The Chief, Firearms and Explosives Licensing Center, will 
approve or the regional director (compliance) will deny any application 
for a license or permit within the 45-day

[[Page 13786]]

period beginning on the date a properly executed application was 
received. However, when an applicant for license or permit renewal is a 
person who is, under the provisions of Sec.  555.83 or Sec.  555.142, 
conducting business or operations under a previously issued license or 
permit, action regarding the application will be held in abeyance 
pending the completion of the proceedings against the applicant's 
existing license or permit, or renewal application, or final action by 
the Director on an application for relief submitted under Sec.  
555.142, as the case may be.
    (4) The license or permit and one copy will be forwarded to the 
applicant, except that in the case of a user-limited permit, the 
original only will be issued.
    (5) Each license or permit will bear a serial number and this 
number may be assigned to the licensee or permittee to whom issued for 
as long as he maintains continuity of renewal in the same region.
    (b) Issuance of license or permit on and after May 24, 2003. (1) 
The Chief, Firearms and Explosives Licensing Center, will issue a 
license or permit if:
    (i) A properly executed application for the license or permit is 
received; and
    (ii) Through further inquiry or investigation, or otherwise, it is 
found that the applicant is entitled to the license or permit.
    (2) The Chief, Firearms and Explosives Licensing Center, will 
approve a properly executed application for a license or permit, if:
    (i) The applicant (or, if the applicant is a corporation, 
partnership, or association, each responsible person with respect to 
the applicant) is not a person described in any paragraph of section 
842(i) of the Act;
    (ii) The applicant has not willfully violated any provisions of the 
Act or this part;
    (iii) The applicant has not knowingly withheld information or has 
not made any false or fictitious statement intended or likely to 
deceive, in connection with his application;
    (iv) The applicant has in a State, premises from which he conducts 
business or operations subject to license or permit under the Act or 
from which he intends to conduct business or operations;
    (v) The applicant has storage for the class (as described in Sec.  
555.202) of explosive materials described on the application;
    (vi) The applicant has certified in writing that he is familiar 
with and understands all published State laws and local ordinances 
relating to explosive materials for the location in which he intends to 
do business;
    (vii) The applicant for a license has submitted the certificate 
required by section 21 of the Federal Water Pollution Control Act, as 
amended (33 U.S.C. 1341);
    (viii) None of the employees of the applicant who will be 
authorized by the applicant to possess explosive materials is a person 
described in any paragraph of section 842(i) of the Act; and
    (ix) In the case of an applicant for a limited permit, the 
applicant has certified in writing that the applicant will not receive 
explosive materials on more than 6 separate occasions during the 12-
month period for which the limited permit is valid.
    (3) The Chief, Firearms and Explosives Licensing Center, will 
approve or the regional director (compliance) will deny any application 
for a license or permit within the 90-day period beginning on the date 
a properly executed application was received. However, when an 
applicant for license or permit renewal is a person who is, under the 
provisions of Sec.  555.83 or Sec.  555.142, conducting business or 
operations under a previously issued license or permit, action 
regarding the application will be held in abeyance pending the 
completion of the proceedings against the applicant's existing license 
or permit, or renewal application, or final action by the Director on 
an application for relief submitted under Sec.  555.142, as the case 
may be.
    (4) The license or permit and one copy will be forwarded to the 
applicant, except that in the case of a user-limited permit, the 
original only will be issued.
    (5) Each license or permit will bear a serial number and this 
number may be assigned to the licensee or permittee to whom issued for 
as long as he maintains continuity of renewal in the same region.


(Approved by the Office of Management and Budget under control 
number 1140-0082)

    Par. 13. Section 555.51 is revised to read as follows:


Sec.  555.51  Duration of license or permit.

    (a) Prior to May 24, 2003. An original license or permit is issued 
for a period of three years. A renewal license or permit is issued for 
a period of three years. However, a user-limited permit is valid only 
for a single purchase transaction.
    (b) On and after May 24, 2003. (1) An original license or user 
permit is issued for a period of three years. A renewal license or user 
permit is also issued for a period of three years. However, a user-
limited permit is valid only for a single purchase transaction.
    (2) A limited permit is issued for a period of one year. A renewal 
limited permit is also issued for a period of one year.

    Par. 14. Section 555.54 is amended by designating the introductory 
text as paragraph (a); by redesignating paragraphs (a) and (b) as 
paragraphs (a)(1) and (a)(2), respectively; by adding a new paragraph 
(b); and by adding a parenthetical text at the end of the section to 
read as follows:


Sec.  555.54  Change of address.

* * * * *
    (b) Licensees and permittees whose mailing address will change must 
notify the Chief, Firearms and Explosives Licensing Center, at least 10 
days before the change.


(Paragraph (b) approved by the Office of Management and Budget under 
control number 1140-0080)

    Par. 15. Section 555.57 is amended by revising the section heading; 
by redesignating the existing paragraph as paragraph (a); by adding new 
paragraphs (b), (c), and (d); and by adding a parenthetical text at the 
end of the section to read as follows:


Sec.  555.57  Change of control, change in responsible persons, and 
change of employees.

* * * * *
    (b) For all licenses or permits issued on and after May 24, 2003, 
each person holding the license or permit must report to the Chief, 
Firearms and Explosives Licensing Center, any change in responsible 
persons or employees authorized to possess explosive materials. Such 
report must be submitted within 30 days of the change and must include 
appropriate identifying information for each responsible person. 
Reports relating to newly hired employees authorized to possess 
explosive materials must be submitted on ATF F 5400.28 for each 
employee.
    (c) Upon receipt of a report, the Chief, Firearms and Explosives 
Licensing Center, will conduct a background check, if appropriate, in 
accordance with Sec.  555.33.
    (d) The reports required by paragraph (b) of this section must be 
retained as part of a licensee's or permittee's permanent records for 
the period specified in Sec.  555.121.


(Approved by the Office of Management and Budget under control 
number 1140-0074)

    Par. 16. Section 555.101 is amended by adding the word ``user'' 
before the

[[Page 13787]]

word ``permit'' in the section heading and wherever else it appears.

    Par. 17. Section 555.102 is amended by revising paragraph (b) to 
read as follows:


Sec.  555.102  Authorized operations by permittees.

* * * * *
    (b) Distributions of surplus stocks. (1) Distributions of surplus 
stocks prior to May 24, 2003. Permittees are not authorized to engage 
in the business of sale or distribution of explosive materials. 
However, permittees may dispose of surplus stocks of explosive 
materials to other licensees or permittees in accordance with Sec.  
555.103, and to nonlicensees or to nonpermittees in accordance with 
Sec.  555.105(a)(4).
    (2) Distributions of surplus stocks on and after May 24, 2003. 
Permittees are not authorized to engage in the business of sale or 
distribution of explosive materials. However, permittees may dispose of 
surplus stocks of explosive materials to other licensees or permittees 
in accordance with Sec.  555.103 and Sec.  555.105.

    Par. 18. Section 555.103 is revised to read as follows:


Sec.  555.103  Transactions among licensees/permittees and transactions 
among licensees and holders of user permits.

    (a) Transactions among licensees/permittees prior to May 24, 2003. 
(1) General. (i) A licensed importer, licensed manufacturer or licensed 
dealer selling or otherwise distributing explosive materials (or a 
permittee disposing of surplus stock to a licensee or another 
permittee) who has the certified information required by this section 
may sell or distribute explosive materials to a licensee or permittee 
for not more than 45 days following the expiration date of the 
distributee's license or permit, unless the distributor knows or has 
reason to believe that the distributee's authority to continue business 
or operations under this part has been terminated.
    (ii) A licensed importer, licensed manufacturer or licensed dealer 
selling or otherwise distributing explosive materials (or a permittee 
disposing of surplus stock to another licensee or permittee) must 
verify the license or permit status of the distributee prior to the 
release of explosive materials ordered, as required by this section.
    (iii) Licensees or permittees desiring to return explosive 
materials to a licensed manufacturer may do so without obtaining a 
certified copy of the manufacturer's license.
    (iv) Where possession of explosive materials is transferred at the 
distributor's premises, the distributor must in all instances verify 
the identity of the person accepting possession on behalf of the 
distributee before relinquishing possession. Before the delivery at the 
distributor's premises of explosive materials to an employee of a 
licensee or permittee, or to an employee of a common or contract 
carrier transporting explosive materials to a licensee or permittee, 
the distributor delivering explosive materials must obtain an executed 
ATF F 5400.8, Explosives Delivery Record, from the employee before 
releasing the explosive materials. The ATF F 5400.8 must contain all of 
the information required on the form and required by this part.

    Example 1. An ATF F 5400.8 is required when:
    a. An employee of the purchaser takes possession at the 
distributor's premises.
    b. An employee of a common or contract carrier hired by the 
purchaser takes possession at the distributor's premises.
    Example 2. An ATF F 5400.8 is not required when:
    a. An employee of the distributor takes possession of the 
explosives for the purpose of transport to the purchaser.
    b. An employee of a common or contract carrier hired by the 
distributor takes possession of the explosives for the purpose of 
transport to the purchaser.

    (2) License/permit verification of individuals. (i) The distributee 
must furnish a certified copy (or, in the case of a user-limited, the 
original) of the license or permit. The certified copy need be 
furnished only once during the current term of the license or permit. 
Also, a licensee need not furnish certified copies of licenses to other 
licensed locations operated by such licensee.
    (ii) The distributor may obtain any additional verification as the 
distributor deems necessary.
    (3) License/permit verification of business organizations. (i) A 
business organization may (in lieu of furnishing a certified copy of a 
license) furnish the distributor a certified list which contains the 
name, address, license number and date of license expiration of each 
licensed location. The certified list need be furnished only once 
during the current term of the license or permit. Also, a business 
organization need not furnish a certified list to other licensed 
locations operated by such business organization.
    (ii) A business organization must, prior to ordering explosive 
materials, furnish the licensee or permittee a current certified list 
of the representatives or agents authorized to order explosive 
materials on behalf of the business organization showing the name, 
address, and date and place of birth of each representative or agent. A 
licensee or permittee may not distribute explosive materials to a 
business organization on the order of a person who does not appear on 
the certified list of representatives or agents and, if the person does 
appear on the certified list, the licensee or permittee must verify the 
identity of such person.
    (4) Licensee/permittee certified statement. (i) A licensee or 
permittee ordering explosive materials from another licensee or 
permittee must furnish a current, certified statement of the intended 
use of the explosive materials, e.g., resale, mining, quarrying, 
agriculture, construction, sport rocketry, road building, oil well 
drilling, seismographic research, to the distributor.
    (ii) For individuals, the certified statement of intended use must 
specify the name, address, date and place of birth, and social security 
number of the distributee.
    (iii) For business organizations, the certified statement of 
intended use must specify the taxpayer identification number, the 
identity and the principal and local places of business.
    (iv) The licensee or permittee purchasing explosive materials must 
revise the furnished copy of the certified statement only when the 
information is no longer current.
    (5) User-limited permit transactions. A user-limited permit issued 
under the provisions of this part is valid for only a single purchase 
transaction and is not renewable (see Sec.  555.51). Accordingly, at 
the time a user-limited permittee orders explosive materials, the 
licensed distributor must write on the front of the user-limited permit 
the transaction date, his signature, and the distributor's license 
number prior to returning the permit to the user-limited permittee.
    (b) Transactions among licensees/permittees on and after May 24, 
2003. (1) General. (i) A licensed importer, licensed manufacturer or 
licensed dealer selling or otherwise distributing explosive materials 
(or a holder of a user permit disposing of surplus stock to a licensee; 
a holder of a user permit; or a holder of a limited permit who is 
within the same State as the distributor) who has the certified 
information required by this section may sell or distribute explosive 
materials to a licensee or permittee for not more than 45 days 
following the expiration date of the distributee's license or permit, 
unless the distributor knows or has reason to believe that the 
distributee's authority to

[[Page 13788]]

continue business or operations under this part has been terminated.
    (ii) A licensed importer, licensed manufacturer or licensed dealer 
selling or otherwise distributing explosive materials (or a holder of a 
user permit disposing of surplus stock to another licensee or 
permittee) must verify the license or permit status of the distributee 
prior to the release of explosive materials ordered, as required by 
this section.
    (iii) Licensees or permittees desiring to return explosive 
materials to a licensed manufacturer may do so without obtaining a 
certified copy of the manufacturer's license.
    (2) Verification of license/user permit. (i) Prior to or with the 
first order of explosive materials, the distributee must provide the 
distributor a certified copy (or, in the case of a user-limited, the 
original) of the distributee's license or user permit. However, 
licensees or holders of user permits that are business organizations 
may (in lieu of a certified copy of a license or user permit) provide 
the distributor with a certified list that contains the name, address, 
license or user permit number, and date of the license or user permit 
expiration of each location.
    (ii) The distributee must also provide the distributor with a 
current list of the names of persons authorized to accept delivery of 
explosive materials on behalf of the distributee. The distributee 
ordering explosive materials must keep the list current and provide 
updated lists to licensees and holders of user permits on a timely 
basis. A distributor may not transfer possession of explosive materials 
to any person whose name does not appear on the current list of names 
of persons authorized to accept delivery of explosive materials on 
behalf of the distributee. In all instances, the distributor must 
verify the identity of the person accepting possession of explosive 
materials on behalf of the distributee by examining an identification 
document (as defined in Sec.  555.11) before relinquishing possession.
    (iii) A licensee or holder of a user permit ordering explosive 
materials from another licensee or permittee must provide to the 
distributor a current, certified statement of the intended use of the 
explosive materials, e.g., resale, mining, quarrying, agriculture, 
construction, sport rocketry, road building, oil well drilling, 
seismographic research, etc.
    (A) For individuals, the certified statement of intended use must 
specify the name, address, date and place of birth, and social security 
number of the distributee.
    (B) For business organizations, the certified statement of intended 
use must specify the taxpayer identification number, the identity and 
the principal and local places of business.
    (C) The licensee or holder of a user permit purchasing explosive 
materials must revise the furnished copy of the certified statement 
only when the information is no longer current.
    (3) Delivery of explosive materials by a common or contract 
carrier. When a common or contract carrier will transport explosive 
materials from a distributor to a distributee who is a licensee or 
holder of a user permit, the distributor must obtain an executed ATF F 
5400.8, Explosives Delivery Record, from the common or contract carrier 
before relinquishing possession of the explosive materials.
    (i) The common or contract carrier must complete Section A of Form 
5400.8.
    (ii) The distributor must verify the identity of the person 
accepting possession for the common or contract carrier by examining an 
identification document (as defined in Sec.  555.11) and noting in 
Section B of Form 5400.8 the type of document presented. The 
distributor must complete all other information required on Form 
5400.8.
    (iii) The distributor must maintain Form 5400.8 in his permanent 
records in accordance with Sec.  555.121.
    (4) User-limited permit transactions. A user-limited permit issued 
under the provisions of this part is valid for only a single purchase 
transaction and is not renewable (see Sec.  555.51). Accordingly, at 
the time a user-limited permittee orders explosive materials, the 
licensed distributor must write on the front of the user-limited permit 
the transaction date, his signature, and the distributor's license 
number prior to returning the permit to the user-limited permittee.


(Approved by the Office of Management and Budget under control number 
1140-0079)

    Par. 19. Section 555.105 is revised to read as follows:


Sec.  555.105  Distributions to nonlicensees, nonpermittees, and 
limited permittees.

    (a) Distributions to nonlicensees and nonpermittees prior to May 
24, 2003. (1) This section will apply in any case where distribution of 
explosive materials to the distributee is not otherwise prohibited by 
the Act or this part.
    (2) Except as provided in paragraph (a)(3) of this section, a 
licensed importer, licensed manufacturer, or licensed dealer may 
distribute explosive materials to a nonlicensee or nonpermittee if the 
nonlicensee or nonpermittee is a resident of the same State in which 
the licensee's business premises are located, and the nonlicensee or 
nonpermittee furnishes to the licensee the explosives transaction 
record, ATF F 5400.4, required by Sec.  555.126. Disposition of ATF F 
5400.4 will be made in accordance with Sec.  555.126.
    (3) A licensed importer, licensed manufacturer, or licensed dealer 
may sell or distribute explosive materials to a resident of a State 
contiguous to the State in which the licensee's place of business is 
located if the purchaser's State of residence has enacted legislation, 
currently in force, specifically authorizing a resident of that State 
to purchase explosive materials in a contiguous State and the purchaser 
and the licensee have, prior to the distribution of the explosive 
materials, complied with all the requirements of paragraphs (a)(2), 
(a)(5), and (a)(6) of this section applicable to intrastate 
transactions occurring on the licensee's business premises.
    (4) A permittee may dispose of surplus stocks of explosive 
materials to a nonlicensee or nonpermittee if the nonlicensee or 
nonpermittee is a resident of the same State in which the permittee's 
business premises or operations are located, or is a resident of a 
State contiguous to the State in which the permittee's place of 
business or operations are located, and if the requirements of 
paragraphs (a)(2), (a)(3), (a)(5), and (a)(6) of this section are fully 
met.
    (5) A licensed importer, licensed manufacturer, or licensed dealer 
selling or otherwise distributing explosive materials to a business 
entity must verify the identity of the representative or agent of the 
business entity who is authorized to order explosive materials on 
behalf of the business entity. Each business entity ordering explosive 
materials must furnish the distributing licensee prior to or with the 
first order of explosive materials a current certified list of the 
names of representatives or agents authorized to order explosive 
materials on behalf of the business entity. The business entity 
ordering explosive materials is responsible for keeping the certified 
list current. A licensee may not distribute explosive materials to a 
business entity on the order of a person whose name does not appear on 
the certified list.
    (6) Where the possession of explosive materials is transferred at 
the distributor's premises, the distributor must in all instances 
verify the identity of the person accepting possession on behalf of the 
distributee before

[[Page 13789]]

relinquishing possession. Before the delivery at the distributor's 
premises of explosive materials to an employee of a nonlicensee or 
nonpermittee, or to an employee of a common or contract carrier 
transporting explosive materials to a nonlicensee or nonpermittee, the 
distributor delivering explosive materials must obtain an executed ATF 
F 5400.8 from the employee before releasing the explosive materials. 
The ATF F 5400.8 must contain all of the information required on the 
form and by this part. (See examples in Sec.  555.103(a)).
    (7) A licensee or permittee disposing of surplus stock may sell or 
distribute commercially manufactured black powder in quantities of 50 
pounds or less to a nonlicensee or nonpermittee if the black powder is 
intended to be used solely for sporting, recreational, or cultural 
purposes in antique firearms as defined in 18 U.S.C. 921(a)(16), or in 
antique devices as exempted from the term ``destructive device'' in 18 
U.S.C. 921(a)(4).
    (b) Distributions to holders of limited permits on and after May 
24, 2003. (1) This section will apply in any case where distribution of 
explosive materials to the distributee is not otherwise prohibited by 
the Act or this part.
    (2) A licensed importer, licensed manufacturer or a licensed dealer 
may distribute explosive materials to a holder of a limited permit if 
such permittee is a resident of the same State in which the licensee's 
business premises are located, the holder of the limited permit 
presents in person or by mail ATF Form 5400.4, Limited Permittee 
Transaction Report (LPTR), and the licensee completes Form 5400.4 in 
accordance with Sec.  555.126(b). In no event will a licensee 
distribute explosive materials to a holder of a limited permit unless 
the holder presents a Form 5400.4 with an original unaltered and 
unexpired Intrastate Purchase of Explosives Coupon (IPEC), ATF Form 
5400.30, affixed. The coupon must bear the name, address, permit 
number, and the coupon number of the limited permittee seeking 
distribution of the explosives.
    (3) A holder of a limited permit is authorized to receive explosive 
materials from a licensee or permittee whose premises are located in 
the same State of residence in which the premises of the holder of the 
limited permit are located on no more than 6 separate occasions during 
the one-year period of the permit. For purposes of this section, the 
term ``6 separate occasions'' means six deliveries of explosive 
materials. Each delivery must--
    (i) Relate to a single purchase transaction made on one ATF F 
5400.4;
    (ii) Be referenced on one commercial invoice or purchase order; and
    (iii) Be delivered to the holder of the limited permit in one 
shipment delivered at the same time.
    (4) A holder of a user permit may dispose of surplus stocks of 
explosive materials to a licensee or holder of a user permit, or a 
holder of a limited permit who is a resident of the same State in which 
the premises of the holder of the user permit are located. A holder of 
a limited permit may dispose of surplus stocks of explosive materials 
to another holder of a limited permit who is a resident of the same 
State in which the premises of the distributor are located, if the 
transaction complies with the requirements of paragraph (b)(2) of this 
section and Sec.  555.126(b). A holder of a limited permit may also 
dispose of surplus stocks of explosive materials to a licensee or 
holder of a user permit if the disposition occurs in the State of 
residence of the holder of the limited permit. (See Sec.  555.103.)
    (5) Each holder of a limited permit ordering explosive materials 
must furnish the distributing licensee prior to or with the first order 
of the explosive materials a current list of the names of employees 
authorized to accept delivery of explosive materials on behalf of the 
limited permittee. The distributee ordering explosive materials must 
keep the list current and provide updated lists to licensees and 
holders of user permits on a timely basis. A licensed importer, 
licensed manufacturer, licensed dealer, or permittee, selling or 
otherwise distributing explosive materials to a holder of a limited 
permit must, prior to delivering the explosive materials, obtain from 
the limited permittee a current list of persons who are authorized to 
accept deliveries of explosive materials on behalf of the limited 
permittee. A licensee or permittee may not deliver explosive materials 
to a person whose name does not appear on the list.
    (6)(i) Delivery at the distributor's premises. Where possession of 
explosive materials is transferred directly to the distributee at the 
distributor's premises, the distributor must obtain an executed Form 
5400.4 in accordance with Sec.  555.126(b) and must in all instances 
verify the identity of the person accepting possession on behalf of the 
distributee by examining an identification document (as defined in 
Sec.  555.11) before relinquishing possession.
    (ii) Delivery by distributor. Where possession of explosive 
materials is transferred by the distributor to the distributee away 
from the distributor's premises, the distributor must obtain an 
executed Form 5400.4 in accordance with Sec.  555.126(b) and must in 
all instances verify the identity of the person accepting possession on 
behalf of the distributee by examining an identification document (as 
defined in Sec.  555.11) before relinquishing possession.
    (iii) Delivery by common or contract carrier hired by the 
distributor. Where a common or contract carrier hired by the 
distributor will transport explosive materials from the distributor to 
a holder of a limited permit, the limited permittee will, prior to 
delivery of the explosive materials, complete the appropriate section 
on Form 5400.4, affix to the Form 5400.4 one of the six IPECs he has 
been issued, and provide the form to the distributor in person or by 
mail. Before the delivery at the distributor's premises of explosive 
materials to the common or contract carrier who will transport 
explosive materials to a limited permittee, the distributor must obtain 
an executed ATF Form 5400.8, Explosives Delivery Record, from the 
common or contract carrier before releasing the explosive materials. 
Form 5400.8 must contain all of the information required on the form 
and by this part. At the time of delivery the common or contract 
carrier, as agent for the distributor, must verify the identity of the 
person accepting delivery on behalf of the distributee, note the type 
and number of the identification document and provide this information 
to the distributor. The distributor will enter this information in the 
appropriate section on Form 5400.4. Form 5400.8 must be attached to the 
distributor's copy of the Form 5400.4 and retained in his permanent 
records in accordance with Sec.  555.121.
    (iv) Delivery by common or contract carrier hired by the 
distributee. Where a common or contract carrier hired by the 
distributee will transport explosive materials from the distributor to 
the holder of a limited permit, the holder of the limited permit will, 
prior to delivery of the explosive materials, complete the appropriate 
section on Form 5400.4, affix to the Form 5400.4 one of the six IPECs 
he has been issued, and provide the form to the distributor in person 
or by mail. Before the delivery at the distributor's premises to the 
common or contract carrier who will transport explosive materials to 
the holder of a limited permit, the distributor must obtain an executed 
ATF Form 5400.8, Explosives Delivery Record, from the common or 
contract carrier before releasing the explosive materials. Form 5400.8 
must contain all of the

[[Page 13790]]

information required on the form and by this part. Form 5400.8 must be 
attached to the distributor's copy of the Form 5400.4 and retained in 
his permanent records in accordance with Sec.  555.121.
    (7) A licensee or permittee disposing of surplus stock may sell or 
distribute commercially manufactured black powder in quantities of 50 
pounds or less to a holder of a limited permit, nonlicensee, or 
nonpermittee if the black powder is intended to be used solely for 
sporting, recreational, or cultural purposes in antique firearms as 
defined in 18 U.S.C. 921(a)(16), or in antique devices as exempted from 
the term ``destructive device'' in 18 U.S.C. 921(a)(4).


(Approved by the Office of Management and Budget under control 
number 1140-0075)

    Par. 20. Section 555.106 is amended by:
    a. Revising paragraph (a);
    b. Removing the word ``or'' at the end of paragraph (c)(3);
    c. Removing the period at the end of paragraph (c)(4) and adding in 
its place a semicolon;
    d. Adding new paragraphs (c)(5), (c)(6), and (c)(7); and by 
removing ``Sec.  555.105(g)'' in paragraph (d) and adding in its place 
``Sec.  555.105(a)(7) or (b)(7)'' to read as follows:


Sec.  555.106  Certain prohibited distributions.

    (a) A licensee or permittee may not distribute explosive materials 
to any person except--
    (1) A licensee;
    (2) A holder of a user permit; or
    (3) A holder of a limited permit who is a resident of the State 
where distribution is made and in which the premises of the transferor 
are located.
* * * * *
    (c) * * *
    (5) Is an alien, other than an alien who--
    (i) Is lawfully admitted for permanent residence (as that term is 
defined in section 101(a)(20) of the Immigration and Nationality Act (8 
U.S.C. 1101));
    (ii) Is in lawful nonimmigrant status, is a refugee admitted under 
section 207 of the Immigration and Nationality Act (8 U.S.C. 1157), or 
is in asylum status under section 208 of the Immigration and 
Nationality Act (8 U.S.C. 1158), and--
    (A) Is a foreign law enforcement officer of a friendly foreign 
government, as determined by the Attorney General in consultation with 
the Secretary of State, entering the United States on official law 
enforcement business, and the shipping, transporting, possession, or 
receipt of explosive materials is in furtherance of this official law 
enforcement business;
    (B) Is a person having the power to direct or cause the direction 
of the management and policies of a corporation, partnership, or 
association licensed pursuant to section 843(a), and the shipping, 
transporting, possession, or receipt of explosive materials is in 
furtherance of such power;
    (C) Is a member of a North Atlantic Treaty Organization (NATO) or 
other friendly foreign military force, as determined by the Attorney 
General in consultation with the Secretary of Defense, (whether or not 
admitted in a nonimmigrant status) who is present in the United States 
under military orders for training or other military purpose authorized 
by the United States, and the shipping, transporting, possession, or 
receipt of explosive materials is in furtherance of the military 
purpose; or
    (D) Is lawfully present in the United States in cooperation with 
the Director of Central Intelligence, and the shipment, transportation, 
receipt, or possession of the explosive materials is in furtherance of 
such cooperation;
    (6) Has been discharged from the armed forces under dishonorable 
conditions; or
    (7) Having been a citizen of the United States, has renounced 
citizenship.
* * * * *

    Par. 21. Section 555.108 is amended by removing the word 
``permittee'' wherever it appears in paragraph (a) and adding in its 
place the phrase ``holder of a user permit.''

    Par. 22. Section 555.110 is added to subpart F to read as follows:


Sec.  555.110  Furnishing of samples (Effective on and after January 
24, 2003).

    (a) In general. Licensed manufacturers and licensed importers and 
persons who manufacture or import explosive materials or ammonium 
nitrate must, when required by letter issued by the Director, furnish--
    (1) Samples of such explosive materials or ammonium nitrate;
    (2) Information on chemical composition of those products; and
    (3) Any other information that the Director determines is relevant 
to the identification of the explosive materials or to identification 
of the ammonium nitrate.
    (b) Reimbursement. The Director will reimburse the fair market 
value of samples furnished pursuant to paragraph (a) of this section, 
as well as reasonable costs of shipment.


(Approved by the Office of Management and Budget under control number 
1140-0073)

    Par. 23. Section 555.121 is amended by removing the word 
``subpart'' in paragraph (a)(2) and adding in its place the word 
``part'' and by revising paragraph (b) to read as follows:


Sec.  555.121  General.

* * * * *
    (b) ATF officers may enter the premises of any licensee or holder 
of a user permit for the purpose of examining or inspecting any record 
or document required by or obtained under this part (see Sec.  555.24). 
Section 843(f) of the Act requires licensees and holders of user 
permits to make all required records available for examination or 
inspection at all reasonable times. Section 843(f) of the Act also 
requires licensees and permittees (including holders of limited 
permits) to submit all reports and information relating to all required 
records and their contents, as the regulations in this part prescribe.
* * * * *

    Par. 24. Section 555.125 is revised to read as follows:


Sec.  555.125  Records maintained by permittees.

    (a) Records maintained by permittees prior to May 24, 2003. (1) 
Each permittee must take true and accurate physical inventories that 
will include all explosive materials on hand required to be accounted 
for in the records kept under this part. The permittee must take a 
special inventory--
    (i) At the time of commencing business, which is the effective date 
of the permit issued upon original qualification under this part;
    (ii) At the time of changing the location of his premises to 
another region;
    (iii) At the time of discontinuing business; and
    (iv) At any other time the regional director (compliance) may in 
writing require. Each special inventory is to be prepared in duplicate, 
the original of which is submitted to the regional director 
(compliance) and the duplicate retained by the permittee. If a special 
inventory required by paragraphs (a)(1)(i) through (iv) of this section 
has not been taken during the calendar year, a permittee is required to 
take at least one physical inventory. However, the record of the yearly 
inventory, other than a special inventory required by paragraphs 
(a)(1)(i) through (iv) of this section, will remain on file for 
inspection instead of being sent to the regional director (compliance). 
(See also Sec.  555.127.)
    (2) Each permittee must, not later than the close of the next 
business day following the date of acquisition of

[[Page 13791]]

explosive materials, enter the following information in a separate 
record:
    (i) Date of acquisition;
    (ii) Name or brand name of manufacturer;
    (iii) Manufacturer's marks of identification;
    (iv) Quantity (applicable quantity units, such as pounds of 
explosives, number of detonators, number of display fireworks, etc.);
    (v) Description (dynamite (dyn), blasting agents (ba), detonators 
(det), display fireworks (df), etc., and size (length and diameter or 
diameter only of display fireworks)); and
    (vi) Name, address, and license number of the persons from whom the 
explosive materials are received.
    (3) Each permittee must, not later than the close of the next 
business day following the date of disposition of surplus explosive 
materials to another permittee or a licensee, enter in a separate 
record the information prescribed in Sec.  555.124(c).
    (4) Each permittee must maintain separate records of disposition of 
surplus stocks of explosive materials to nonlicensees or nonpermittees 
as prescribed in Sec.  555.126.
    (5) The regional director (compliance) may authorize alternate 
records to be maintained by a permittee to record his acquisition of 
explosive materials, when it is shown by the permittee that alternate 
records will accurately and readily disclose the required information. 
A permittee who proposes to use alternate records must submit a letter 
application to the regional director (compliance) and must describe the 
proposed alternate records and the need for them. Alternate records are 
not to be employed by the permittee until approval is received from the 
regional director (compliance).
    (b) Records maintained by permittees on and after May 24, 2003. (1) 
Each holder of a user permit must take true and accurate physical 
inventories that will include all explosive materials on hand required 
to be accounted for in the records kept under this part. The permittee 
must take a special inventory--
    (i) At the time of commencing business, which is the effective date 
of the permit issued upon original qualification under this part;
    (ii) At the time of changing the location of his premises;
    (iii) At the time of discontinuing business; and
    (iv) At any other time the regional director (compliance) may in 
writing require. Each special inventory is to be prepared in duplicate, 
the original of which is submitted to the regional director 
(compliance) and the duplicate retained by the permittee. If a special 
inventory required by paragraphs (b)(1)(i) through (iv) of this section 
has not been taken during the calendar year, a permittee is required to 
take at least one physical inventory. The record of the yearly 
inventory, other than a special inventory required by paragraphs 
(b)(1)(i) through (iv) of this section, will remain on file for 
inspection instead of being sent to the regional director (compliance). 
(See also Sec.  555.127.)
    (2) Each holder of a limited permit must take true and accurate 
physical inventories, at least annually, that will include all 
explosive materials on hand required to be accounted for in the records 
kept under this part.
    (3) Each holder of a user permit or a limited permit must, not 
later than the close of the next business day following the date of 
acquisition of explosive materials, enter the following information in 
a separate record:
    (i) Date of acquisition;
    (ii) Name or brand name of manufacturer;
    (iii) Manufacturer's marks of identification;
    (iv) Quantity (applicable quantity units, such as pounds of 
explosives, number of detonators, number of display fireworks, etc.);
    (v) Description (dynamite (dyn), blasting agents (ba), detonators 
(det), display fireworks (df), etc., and size (length and diameter or 
diameter only of display fireworks)); and
    (vi) Name, address, and license number of the persons from whom the 
explosive materials are received.
    (4) Each holder of a user permit or a limited permit must, not 
later than the close of the next business day following the date of 
disposition of surplus explosive materials to another permittee or a 
licensee, enter in a separate record the information prescribed in 
Sec.  555.124(c).
    (5) When a record book is used as a permittee's permanent record 
the permittee may delay entry of the required information for a period 
not to exceed seven days if the commercial record contains all of the 
required information prescribed by paragraphs (b)(3) and (b)(4) of this 
section. However, the commercial record may be used instead of a record 
book as a permanent record provided that the record contains all of the 
required information prescribed by paragraphs (b)(3) and (b)(4) of this 
section.
    (6) Each holder of a user permit or a limited permit must maintain 
separate records of disposition of surplus stocks of explosive 
materials to holders of a limited permit as prescribed in Sec.  
555.126.
    (7) The regional director (compliance) may authorize alternate 
records to be maintained by a holder of a user permit or a limited 
permit to record his acquisition of explosive materials, when it is 
shown by the permittee that alternate records will accurately and 
readily disclose the required information. A permittee who proposes to 
use alternate records must submit a letter application to the regional 
director (compliance) and must describe the proposed alternate records 
and the need for them. Alternate records are not to be employed by the 
permittee until approval is received from the regional director 
(compliance).


(Approved by the Office of Management and Budget under control 
number 1140-0030)

    Par. 25. Section 555.126 is amended by:
    a. Revising the section heading;
    b. Adding a new heading to paragraph (a);
    c. Redesignating paragraphs (a) through (f) as (a)(1) through 
(a)(6);
    d. Removing ``Sec.  555.105(c)'' in redesignated paragraph (a)(2) 
and adding in its place ``Sec.  555.105(a)(3)'';
    e. Removing ``paragraph (d)'' in redesignated paragraph (a)(3) and 
adding in its place ``paragraph (a)(4)'';
    f. Adding a new paragraph (b); and
    g. Revising the parenthetical text at the end of the section to 
read as follows:


Sec.  555.126  Explosives transaction record for distribution of 
explosive materials prior to May 24, 2003 and Limited Permittee 
Transaction Report for distribution of explosive materials on and after 
May 24, 2003.

    (a) Explosives transaction record for distribution of explosive 
materials prior to May 24, 2003.
* * * * *
    (b) Limited Permittee Transaction Report for distribution of 
explosive materials on and after May 24, 2003. (1) A licensee or 
permittee may not distribute explosive materials to any person who is 
not a licensee or permittee. A licensee or permittee may not distribute 
explosive materials to a limited permittee unless the distributor 
records the transaction on ATF Form 5400.4, Limited Permittee 
Transaction Report.
    (2) Before distributing explosive materials to a limited permittee, 
the licensee or permittee must obtain an executed Form 5400.4 from the 
limited permittee with an original unaltered and unexpired Intrastate 
Purchase of Explosives Coupon (IPEC) affixed. Except when delivery of 
explosive materials is made by a common or

[[Page 13792]]

contract carrier who is an agent of the limited permittee, the 
licensee, permittee, or an agent of the licensee or permittee, must 
verify the identity of the of the holder of the limited permit by 
examining an identification document (as defined in Sec.  555.11) and 
noting on the Form 5400.4 the type of document presented. The licensee 
or permittee must complete the appropriate section on Form 5400.4 to 
indicate the type and quantity of explosive materials distributed, the 
license or permit number of the seller, and the date of the 
transaction. The licensee or permittee must sign and date the form and 
include any other information required by the instructions on the form 
and the regulations in this part.
    (3) One copy of Form 5400.4 must be retained by the distributor as 
part of his permanent records in accordance with paragraph (b)(4) of 
this section and for the period specified in Sec.  555.121. The 
distributor must mail the other copy of Form 5400.4 to the Bureau of 
Alcohol, Tobacco, Firearms and Explosives in accordance with the 
instructions on the form.
    (4) Each Form 5400.4 must be retained in chronological order by 
date of disposition, or in alphabetical order by name of limited 
permittee. A licensee may not, however, use both methods in a single 
recordkeeping system. Where there is a change in proprietorship by a 
limited permittee, the forms may continue to be filed together after 
such change.
    (5) The requirements of this section are in addition to any other 
recordkeeping requirement contained in this part.


(Approved by the Office of Management and Budget under control 
number 1140-0078)

    Par. 26. Section 555.128 is amended by adding the phrase ``or new 
permittee'' after the phrase ``new licensee'' in the first sentence.

    Par. 27. Section 555.141 is amended by adding two new sentences at 
the end of paragraph (a)(1) to read as follows:


Sec.  555.141  Exemptions.

    (a) * * *
    (1) * * * For example, regulations issued by the Department of 
Transportation addressing the security risk of aliens transporting 
explosives by commercial motor or railroad carrier from Canada preclude 
the enforcement of 18 U.S.C. 842(i)(5) against persons shipping, 
transporting, receiving, or possessing explosives incident to and in 
connection with the commercial transportation of explosives by truck or 
rail from Canada into the United States. Questions concerning this 
exception should be directed to ATF's Public Safety Branch in 
Washington, DC.
* * * * *

    Par. 28. Section 555.142 is amended by revising the section 
heading; by revising paragraphs (a) through (d); by adding a new 
paragraph (f); and by adding a parenthetical text at the end of the 
section to read as follows:


Sec.  555.142  Relief from disabilities (effective January 24, 2003).

    (a) Any person prohibited from shipping or transporting any 
explosive in or affecting interstate or foreign commerce or from 
receiving or possessing any explosive which has been shipped or 
transported in or affecting interstate or foreign commerce may make 
application for relief from disabilities under section 845(b) of the 
Act .
    (b) An application for relief from disabilities must be filed with 
the Director by submitting ATF Form 5400.29, Application for 
Restoration of Explosives Privileges, in accordance with the 
instructions on the form. The application must be supported by 
appropriate data, including the information specified in paragraph (f) 
of this section. Upon receipt of an incomplete or improperly executed 
application for relief, the applicant will be notified of the 
deficiency in the application. If the application is not corrected and 
returned within 30 days following the date of notification, the 
application will be considered abandoned.
    (c)(1) The Director may grant relief to an applicant if it is 
established to the satisfaction of the Director that the circumstances 
regarding the disability and the applicant's record and reputation are 
such that the applicant will not be likely to act in a manner dangerous 
to public safety and that the granting of such relief is not contrary 
to the public interest.
    (2) Except as provided in paragraph (c)(3) of this section, the 
Director will not grant relief if the applicant--
    (i) Has not been discharged from parole or probation for a period 
of at least 2 years;
    (ii) Is a fugitive from justice;
    (iii) Is a prohibited alien;
    (iv) Is an unlawful user of or addicted to any controlled 
substance;
    (v) Has been adjudicated a mental defective or committed to a 
mental institution, unless the applicant was subsequently determined by 
a court, board, commission, or other lawful authority to have been 
restored to mental competency, to be no longer suffering from a mental 
disorder, and to have had all rights restored; or
    (vi) Is prohibited by the law of the State where the applicant 
resides from receiving or possessing explosive materials.
    (3)(i) 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 2 years if 
he determines that the applicant has a compelling need to possess 
explosives, such as for purposes of employment.
    (ii) The Director may grant relief to the persons identified in 
paragraph (c)(2) of this section in extraordinary circumstances where 
the granting of such relief is consistent with the public interest.
    (d) A person who has been granted relief under this section is 
relieved of all disabilities imposed by the Act for the disabilities 
disclosed in the application. The granting of relief will not affect 
any disabilities incurred subsequent to the date the application was 
filed. Relief from disabilities granted to aliens will be effective 
only so long as the alien retains his or her lawful immigration status.
* * * * *
    (f)(1) Applications for relief from disabilities must include the 
following information:
    (i) In the case of a corporation, or of any person having the power 
to direct or control the management of the corporation, information as 
to the absence of culpability in the offense for which the corporation, 
or any such person, was indicted, formally accused or convicted;
    (ii) In the case of an applicant who is an individual, two properly 
completed FBI Forms FD-258 (fingerprint card), and a written statement 
from each of three references who are not related to the applicant by 
blood or marriage and have known the applicant for at least 3 years, 
recommending the granting of relief;
    (iii) Written consent to examine and obtain copies of records and 
to receive statements and information regarding the applicant's 
background, including records, statements and other information 
concerning employment, medical history, military service, immigration 
status, and criminal record;
    (iv) In the case of an applicant having been convicted of a crime 
punishable by imprisonment for a term exceeding one year, a copy of the 
indictment or information on which the applicant was convicted, the 
judgment of conviction or record of any plea of nolo contendere or plea 
of guilty or finding of guilt by the court;

[[Page 13793]]

    (v) In the case of an applicant under indictment, a copy of the 
indictment or information;
    (vi) In the case of an applicant who has been adjudicated a mental 
defective or committed to a mental institution, a copy of the order of 
a court, board, commission, or other lawful authority that made the 
adjudication or ordered the commitment, any petition that sought to 
have the applicant so adjudicated or committed, any medical records 
reflecting the reasons for commitment and diagnoses of the applicant, 
and any court order or finding of a court, board, commission, or other 
lawful authority showing the applicant's discharge from commitment, 
restoration of mental competency and the restoration of rights;
    (vii) In the case of an applicant who has been discharged from the 
Armed Forces under dishonorable conditions, a copy of the applicant's 
Certificate of Release or Discharge from Active Duty (Department of 
Defense Form 214), Charge Sheet (Department of Defense Form 458), and 
final court martial order;
    (viii) In the case of an applicant who, having been a citizen of 
the United States, has renounced his or her citizenship, a copy of the 
formal renunciation of nationality before a diplomatic or consular 
officer of the United States in a foreign state or before an officer 
designated by the Attorney General when the United States was in a 
state of war (see 8 U.S.C. 1481(a)(5) and (6)); and
    (ix) In the case of an applicant who is an alien, documentation 
that the applicant is an alien who has been lawfully admitted to the 
United States; certification from the applicant including the 
applicant's INS-issued alien number or admission number, country/
countries of citizenship, and immigration status, and certifying that 
the applicant is legally authorized to work in the United States, or 
other purposes for which possession of explosives is required; 
certification from an appropriate law enforcement agency of 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 or permittee or other employer stating that 
the applicant is employed by the employer and must possess explosive 
materials for purposes of employment. These certifications must be 
submitted in English.
    (2) Any record or document of a court or other government entity or 
official required by paragraph (f)(1) of this section must be certified 
by the court or other government entity or official as a true copy.


(Approved by the Office of Management and Budget under control number 
1140-0076)

    Par. 29. Section 555.165 is amended by designating the existing 
paragraph as paragraph (a) and by adding new paragraph (b) to read as 
follows:


Sec.  555.165  Failure to report theft or loss.

* * * * *
    (b) On and after January 24, 2003, any licensee or permittee who 
fails to report a theft of explosive materials in accordance with Sec.  
555.30 will be fined under title 18 U.S.C., imprisoned not more than 5 
years, or both.

    Signed: March 14, 2003.
Bradley A. Buckles,
Director.
[FR Doc. 03-6573 Filed 3-19-03; 8:45 am]
BILLING CODE 4410-FB-P




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