Legally Armed: V21N3

By Teresa G. Ficaretta, Esq. & Johanna Reeves, Esq.

The Hazards of “80-percent Receivers”—Manufacturer, Importer, and Distributor Beware!

The so-called 80-percent receiver has been the topic of many discussion circles and has attracted the attention of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) as well as certain state legislators. Vendors often sell these allegedly unregulated items with fixture systems and instructions for completing the unfinished items so they are frames or receivers for firearms regulated under the Gun Control Act of 1968. Purchasers of the items may then machine the items so they are complete firearm frames or receivers and assemble them with all other parts necessary to make a functional firearm. Some purchasers acquire the items from importers or manufacturers and then distribute the items to consumers for finishing. Purchasers, including federal firearms licensees (“FFLS”), often rely on representations from the seller that these items are unregulated by ATF.

The abundance in the marketplace of so-called “80-percent” receivers or frames is clear from a simple search on the Internet. Entering “80-percent receiver” into the search engine results in a significant number of hits for AR-15 type “80-percent receivers.” Similarly, entering “80-percent pistol frames” results in hits for vendors of “blanks” for a number of popular pistols. There can be no doubt there is a significant amount of confusion regarding the controls that attach to partially machined bodies. This article addresses the confusion and the potential hazards of manufacturing, importing, and distributing these allegedly unregulated items. However, we must first comment on terminology. The terms “80-percent receiver” or “80-percent frame,” do not appear anywhere in the law or regulations. In addition, these terms are misleading because an item that is 99 percent finished may be unregulated under the statute, while something marketed as 80 percent complete may be classified by the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) as a “firearm.” Accordingly, throughout this article we will use the term “blank,” to refer to items that have not yet reached a stage of manufacture where they are regulated as “firearms” under the Gun Control Act.

Authors’ Note: This article will be limited to our analysis under the Gun Control Act and ATF implementing regulations. The manufacture or export of receiver/frame blanks, and the export of technical data related to receiver/frame blanks, has legal implications under the Arms Export Control Act and the implementing regulations of the U.S. Department of State known as the International Traffic in Arms Regulations. We will address these issues in a separate article.

Background

The Gun Control Act of 1968 (GCA), 18 U.S.C. Chapter 44, defines the term “firearm” to mean (A) any weapon (including a starter gun) which will or is designed to or may readily be converted to expel a projectile by the action of an explosives; (B) the frame or receiver of any such weapon; (C) any firearm muffler or firearm silencer; or (D) any destructive device. ATF defines the term “frame or receiver” in its regulations as follows:

Firearm frame or receiver. That part of a firearm which provides housing for the hammer, bolt or breechblock, and firing mechanism, and which is usually threaded at its forward portion to receive the barrel.

The GCA requires persons engaged in the business of manufacturing firearms to do all of the following: (1) obtain a license as a manufacturer; (2) mark firearms they manufacture with their name, city, state, serial number, and other information; (3) keep records of acquisition and disposition of firearms; and (4) transfer firearms in accordance with GCA requirements and restrictions. Persons engaged in the business of importing firearms similarly must do all of the following: (1) obtain a license as an importer; (2) register as an importer under the Arms Export Control Act; (3) mark firearms with their name, city, state, serial number, name and location of the foreign manufacturer, and other information; (4) keep records of importation, acquisition, and disposition; and (5) transfer firearms in accordance with GCA requirements and restrictions. Persons engaged in the business of dealing in firearms must also obtain a license as a dealer and keep records of their acquisition and disposition of firearms.

Conversely, persons who manufacture firearms for personal use and not for distribution are not required to obtain a license from ATF, nor are they required to mark firearms or keep records.

ATF has published “Q&As” on its website concerning frame or receiver blanks and whether they are regulated as “firearms” under the GCA. These Q&As are available at www.atf.gov/qa-category/receiver-blanks (last visited Nov. 21, 2016). The guidance provides photos of what appear to be AR-15 type blanks with solid fire-control cavities and no holes or dimples for the selector, trigger, or hammer pin. These items are marked as not firearms. There is also a photo of an AR-15 type item with the fire control cavity partially machined marked as a firearm.

In these Q&As, ATF takes the “long-standing” position that receiver blanks, castings, or machined bodies in which the fire control cavity area is completely solid and un-machined are not firearms because they have not reached a stage of manufacture so as to trigger the GCA regulation. However, ATF points out that certain items being marketed as 80-percent receivers in fact do meet the GCA definition of a “firearm” and are therefore subject to all licensing, marking, recordkeeping and transfer requirements in the statute and ATF regulations. Persons unsure about whether an alleged blank they are planning to purchase or sell is or is not a firearm subject to the GCA should contact ATF’s Firearms and Ammunition Technology Division (FATD) for assistance. FATD was formerly known as Firearms Technology Branch.

In January 2015, ATF published a ruling addressing persons who finish blanks on behalf of unlicensed consumers or who allow consumers to use their machines and equipment for this purpose. The ruling held that licensed dealers and unlicensed machine shops who complete blanks on behalf of consumers or who allow consumers to use their machinery must obtain a license as a manufacturer and mark the completed frames or receivers in accordance with regulations. Issuance of the ruling indicates ATF’s concern over the number of unmarked firearms entering commerce through manufacture and distribution of firearms made with unmarked blanks. Please refer to our article published in SAR Vol. 19, #5 (April 2015), for more information on this ruling.

ATF’s Enforcement of the Law

ATF is actively enforcing the law against FFLs who are distributing items ATF believes have reached a stage of manufacturer where they are identifiable as frame or receivers. ATF field divisions have executed criminal search warrants at the premises of FFLs, seized items the agency believes are firearms, and conducted criminal investigations of the manufacturers, importers, and distributors of the items.

ATF’s philosophy behind this enforcement is made clear in its receiver blank Q&As. According to ATF, it has recovered firearms that began as receiver blanks at crime scenes. ATF explains that because such firearms do not have the GCA-required markings, its ability to successfully trace the firearm hinders crime gun investigations and jeopardizes public safety.

ATF successfully traces crime guns to the first retail purchaser in most instances. ATF starts with the manufacturer and goes through the entire chain of distribution to find who first bought the firearm from a licensed dealer. Because receiver blanks do not have markings or serial numbers, when firearms made from such receiver blanks are found at a crime scene, it is usually not possible to trace the firearm or determine its history, which hinders crime gun investigations jeopardizing public safety. https://www.atf.gov/firearms/qa/can-functioning-firearms-made-receiver-blanks-be-traced.

There is also civil litigation pending where manufacturers and importers of blanks are challenging ATF’s classification of the items as “firearms.” Although the outcome of such challenges is uncertain, the government generally prevails in firearms classification cases because of the deference courts give to the agency charged with administration and enforcement of the statute.

Challenges for the Firearms Industry Relating to Importation, Manufacture and Distribution of Blanks

A number of ATF determination letters on AR-15 blanks and pistol blanks are available on the Internet. The letters, issued by ATF’s FATD, address the machining operations performed on the sample submitted and then advise the submitter whether the sample has reached a point where it is classified as a “firearm” under the GCA.

It is essential for members of the firearms industry to understand that private letter rulings issued by ATF are dependent on the facts presented and the sample examined and apply only to the items and industry member to whom they are addressed. Such correspondence is not precedential and may not be relied upon by any other person. This is the case even if another person is manufacturing, importing, or distributing an item that is identical or virtually identical to the sample described in the ATF correspondence. Only published ATF rulings, which are signed by ATF’s Director and not limited to a particular entity, may be relied upon by all industry members as evidence of the agency’s position on a particular topic. Most ATF rulings are available on ATF’s website at www.atf.gov/rules-and-regulations/rulings; the only ATF ruling that addresses blanks is ATF Rul. 2015-1, available at www.atf.gov/firearms/docs/ruling/2015-1-manufacturing-and-gunsmithing/download.

FFLs who rely upon a private ATF classification letter issued to another industry member are taking a tremendous risk. First, the item described in the letter may not be identical to the item the FFL wishes to import, manufacture, or distribute. Second, as stated above, third parties may not rely upon guidance issued to someone else. Finally, ATF can change its positions and the law does not prohibit ATF from doing so. Thus, a classification issued on a particular item in 2012, for example, may not reflect the position of the agency on the same item in 2016.

The only way a particular FFL can know for sure that the blanks a company wishes to import, manufacture, or distribute are not regulated as “firearms” is to submit a sample to ATF for classification. A letter issued in the name of that FFL will evidence ATF’s classification of the item unless and until ATF withdraws or modifies the letter ruling or publishes an ATF ruling specifically overruling prior inconsistent rulings. It would be difficult for ATF to impose a penalty on a licensee who relies in good faith on written guidance issued to that FFL by an agency official.

The fact that other FFLs are distributing the same type of blanks is also not evidence the items are free from regulation. There is no way to determine whether a particular blank is or is not the same as an article being distributed by another FFL. Even if it is the same, protesting to ATF that other licensees are doing the same thing will likely make no difference in an investigation. It may appear to be unfair, but federal agencies are free to determine how to use their investigative resources and may not investigate other FFLs marketing the same item.

Now let’s shift gears and discuss what can go wrong for FFLs who take steps to get a written classification from ATF that a particular blank is not regulated as a “firearm.” Let’s assume the FFL is an importer who, in reliance on the ATF classification, imports a significant number of the blanks and distributes them in the U.S. The overseas supplier then advises the FFL that changes in material and equipment necessitate a change in the machining operations for a number of the essential fire control components. At that point the determination letter previously issued by ATF is not valid for the new blank. Before the FFL imports and distributes any more of the items, a new sample should be submitted to ATF for examination and classification. Further imports based on the first classification letter would place the importer and his or her distributors at risk of enforcement action.

One point worth noting is that permanent importation of blanks into the United States requires an ATF-approved Form 6 import permit. This is because ATF, the agency charged with jurisdiction over permanent imports under the Arms Export Control Act (AECA), requires an import permit for “forgings, castings, and machined bodies” (see 27 C.F.R. § 447.22). ATF interprets these terms to include blanks from which frames and receivers may be manufactured. Accordingly, persons who permanently import blanks must register as an importer with ATF and obtain an approved Form 6 to lawfully import the blanks.

A best practice for importers to follow before importing blanks is to go through the conditional importation process to obtain a classification from FATD.Indeed, the ATF Firearms and Ammunition Imports Branch may require such a classification before approving a Form 6 import permit for commercial sale of such items.

The conditional import process is outlined in ATF regulations in 27 C.F.R. § 478.116. Importers submit an application on ATF Form 6 seeking authorization to import one sample for classification. The Form 6 should be clearly marked “conditional importation for ATF evaluation.” A cover letter requesting classification of the sample by ATF is also helpful. When the import permit is approved, the importer should direct their customs broker or freight forwarder to deliver the sample directly to ATF’s FATD after release from Customs custody. After evaluation, ATF will send a letter and the sample to the importer with the written classification. If the classification results in a finding the item is not a firearm, the classification letter may be sent to ATF’s Imports Branch with a Form 6 import application for the same item. This procedure should avoid delays in approval of import permits and questions from U.S. Customs and Border Protection officials about identity of items sought for entry into the United States.

The same procedure should be followed for blanks manufactured in the United States. Samples should be submitted to ATF’s FATD for evaluation and a written classification. If ATF agrees the items are not regulated as “firearms,” the written determination may be distributed with shipments of the items to distributors. However, as stated above, classification letters issued to another industry member provide no protection to a different FFL.

Conclusion

Caution should be used when engaging in transactions involving so-called 80-percent receivers. FFLs who import, manufacture, or distribute these items should take all possible precautions to learn how they are regulated by ATF under the GCA. Persons who are unsure about an alleged blank they are planning to purchase or sell should contact ATF’s FATD for assistance, as reliance upon private letter rulings and allegations from other industry members will not protect one from potential enforcement.

Violations of the GCA may result in criminal penalties (imprisonment and fines) and forfeiture of involved property plus license revocation, license suspension, and/or civil monetary fines. Companies who are on the receiving end of enforcement action by ATF or the Department of Homeland Security in relation to blanks should immediately contact qualified counsel for assistance.

The information contained in this article is for general informational and educational purposes only and is not intended to be construed or used as legal advice or as legal opinion. You should not rely or act on any information contained in this article without first seeking the advice of an attorney. Receipt of this article does not establish an attorney-client relationship.

About the Authors

Johanna Reeves is the founding partner of the law firm Reeves & Dola, LLP in Washington, DC (www.reevesdola.com). For more than 10 years she has dedicated her practice to advising and representing U.S. companies on compliance matters arising under the federal firearms laws and U.S. export controls. Since 2011, Johanna also has served as Executive Director for the FireArms Import/Export Roundtable (F.A.I.R.) Trade Group (http://fairtradegroup.org). In 2016, Johanna was appointed by the U.S. Department of State, Bureau of Political-Military Affairs to serve on the 2016-18 Defense Trade Advisory Group (DTAG).

Teresa Ficaretta is an expert on ATF regulations under the Gun Control Act, the National Firearms Act, the Arms Export Control Act and Federal explosives laws. Before joining Reeves & Dola in 2013, Teresa served as legal counsel to ATF for 26 years, followed by 2 years as Deputy Assistant Director in Enforcement Programs and Services. Teresa was elected partner to Reeves & Dola in January 2016.

Both Johanna and Teresa can be reached at 202-683-4200, or at info@reevesdola.com.