Review of the Bureau of Alcohol, Tobacco, Firearms and Explosives’
Implementation of the Safe Explosives Act
Evaluation and Inspections Report I-2005-005
March 2005
Office of the Inspector General
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On March 11, 2005, the Office of the Inspector General (OIG) sent copies of a draft of this report to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) with a request for written comments. We requested that the ATF indicate its concurrence or nonconcurrence with each recommendation, describe actions taken or planned in response to the recommendations, and provide the completion dates of the actions. The ATF responded to us in a memorandum dated March 25, 2005. The ATF concurred with six of our ten recommendations, did not concur with three recommendations, and partially concurred with one recommendation. Several of the ATF’s responses to our recommendations failed to provide the ATF’s planned actions for correcting the serious deficiencies documented in the report. Prior to responding to the report’s recommendations, the ATF commented that it successfully implemented the Safe Explosives Act (SEA), which it called the most significant change to federal explosives laws in over 30 years, within the required 6 months by realigning existing resources. While acknowledging the OIG’s positive statements in the report regarding the ATF’s efforts to inform explosives industry members of SEA regulations and conduct initial compliance inspections, the ATF stated that these statements contradicted other portions of the report that expressed serious concern about ATF’s implementation of the SEA. The ATF’s claim that it was successful at implementing the SEA because it qualified all companies that needed permits under the SEA to continue receiving explosives necessary for their businesses without disruption is not fully accurate. While we found that the ATF issued licenses to new applicants timely, many applicants seeking renewal of their explosives licenses received Letters of Continuing Authority instead. These Letters allowed the companies to continue operations until the ATF could carry out renewal inspections required by the SEA. According to the ATF, in the 17 months prior to May 24, 2003, the ATF issued 254 Letters. In the 17 months after the Employee Possessor provisions of the SEA took effect, the ATF issued 1,301 Letters, a 512 percent increase. As a consequence, the background checks on the Employee Possessors of these companies were not conducted timely but were delayed until the companies were inspected. In addition, as our report also documents, the ATF has experienced significant difficulties in ensuring that Employee Possessors associated with both new and existing licensees have background checks, and that Employee Possessors determined to be prohibited persons do not have access to explosives. We disagree with the ATF’s statement that our positive comments regarding actions the ATF took to implement the SEA “directly contradicts” other portions of the report that describe serious problems we found in the ATF’s operations. Each OIG report seeks to provide a balanced examination of the issues reviewed. Accordingly, we note positive actions taken by an organization whenever appropriate. However, it is not contradictory for us also to note shortcomings in those same operations. Further, as the ATF stated on page 2 of its response, its mission includes both “facilitating the lawful use of explosives while ensuring the safety of all Americans.” Actions that contribute to fulfilling the first part of that mission (i.e., issuing explosives licenses without causing disruptions to businesses) can be viewed as successful while at the same time ATF’s actions to prevent prohibited persons from having access to explosives) can fall short. Our analysis of the ATF’s response to the report’s recommendations follows. THE ATF’S RESPONSE TO THE OIG’S RECOMMENDATIONS Recommendation 1: Implement procedures to ensure that all Employee Possessor applicants receive a thorough background check. Status: Resolved – Open Summary of the ATF’s Response: The ATF did not specifically state that it concurred with this recommendation, although it indicated concurrence by identifying the steps it is taking to implement the recommendation. In its response, the ATF provided additional comments regarding the background check process. The ATF reiterated that it was given two to six months to implement the provisions of the SEA, including conducting background checks of Employee Possessors and Responsible Persons, and noted that the Federal Licensing System (FLS) and National Instant Background Check System (NICS) used to conduct background checks “are simply not designed to accommodate SEA requirements.” The ATF stated that despite the obstacles it “has implemented appropriate procedures to ensure that [Employee Possessors] receive the required background checks.” The ATF then stated that it is in the process of establishing additional procedures to ensure that background checks are completed as expeditiously as possible, including procedures for referring cases of individuals for whom the Federal Bureau of Investigation (FBI) could not conclude background checks to ATF field offices. The OIG’s Analysis: The ATF’s proposed actions are partially responsive to the recommendation. We accept the ATF’s statement that it is in the process of establishing controls to ensure that background checks are accomplished as expeditiously as possible. By June 15, 2005, please provide copies of the additional procedures established and status reports on the accomplishment of background checks on Employee Possessors. In addition, please provide a copy of the procedures established for referring cases of incomplete background investigations to ATF field offices and a listing of the cases referred, by Field Division, including the status or final outcome of the 297 outstanding cases identified on page 30 of this report. Finally, please provide the roster of individuals who attend the planned FBI training in May 2005. Although the ATF response addresses its efforts to improve future background checks, the response fails to address how it intends to identify and correct the case files of applicants who did not receive background checks. As described on page 23 of this report, our sample found that about 9 percent (59 of 683) of SEA applicants processed by the ATF had no corresponding background check in the FBI’s NICS system. The ATF response indicates that this may have occurred because the 59 Employee Possessors may not have had a background check, because the background check was not conducted using the FBI’s NICS system, or because of incomplete or inaccurate data entry. The ATF stated that it “will follow up on these 59 [Employee Possessors] to ensure that appropriate checks were in fact completed and resolved.” The ATF’s response fails to fully address the problem we reported. The individuals we identified were part of a sample of Employee Possessor applicants in the ATF’s FLS system. Extrapolating from the 9 percent rate of missing background checks in our sample, we estimate that there may be more than 3,400 individuals in the FLS who have not received a NICS background check. All of these individuals must be identified and checked, not just the 59 in our sample. By May 1, 2005, please provide us with ATF’s planned actions to identify all Employee Possessors who have no FBI NICS E-Check recorded in FLS to ensure that all of these individuals receive a NICS background check. These actions should be consistent with the actions that the ATF takes in response to Recommendation 3. In its response to this recommendation, the ATF commented that “the OIG also concludes that ATF failed to complete the background checks for 655 of 1,157 [Employee Possessor] records reviewed and identified by the FBI as possible prohibited persons, or 57 percent of OIG sample.” The ATF response indicates that the ATF believes these persons to be “delayed” Employee Possessors. The ATF described a scenario in which the FBI reports an unresolved arrest record. The ATF stated that it cannot render a decision based solely on an arrest, but must resolve the disposition prior to rendering a final determination to deny the individual. The ATF concluded this section of its response by stating that it will ensure resolution of each of the 655 “delayed” Employee Possessors. The ATF’s comments regarding the 655 individuals contain significant errors. Most significantly, the 655 individuals we identified were not “delayed” Employee Possessors for whom the FBI was unable to complete the background check and provide a “proceed” or “deny” response to ATF. To the contrary, all of these 655 individuals had been identified by the FBI as possible prohibited persons and had been recommended for denial (see page 28 of the report). These possibly prohibited persons are different from the 297 individuals that we identified (see discussion beginning on page 29) for whom the FBI had been unable to complete a background check, but for whom the ATF had not referred to ATF Field Divisions for further review. The ATF response also stated it issued denial letters to four Employee Possessors identified by NICS as convicted felons (see page 29 of the report). This response is inadequate. The four individuals identified in the report were only examples of a much larger group of potentially prohibited persons identified by the FBI for whom the ATF had failed to take action. That group includes the 655 individuals that the FBI had identified as potential prohibited persons as well as the 297 individuals for whom the FBI had identified possibly prohibiting factors but could not complete the background checks. Further, the ATF may identify additional prohibited persons once it identifies all individuals for whom no background check has been conducted (which we estimate to be more than 3,400 individuals) and completes the required checks. By May 1, 2005, please provide the ATF’s planned actions to complete its adjudication process for the 655 individuals identified by the FBI as possible prohibited persons, as well as the planned actions to complete the background checks on the 297 outstanding cases of individuals for whom the FBI could not complete background checks. These actions should be consistent with the actions that the ATF reports in response to Recommendation 3. Recommendation 2: Establish milestones and controls to ensure that Employee Possessor applicants do not remain in a “pending” status in the FLS for extended periods. As an immediate action, NLC management should regularly generate an aging report for pending cases, setting priorities for resolving those cases that have been in a pending status for more than 45 days. Status: Resolved – Open Summary of the ATF’s Response: The ATF concurred with this recommendation and stated that it plans to develop “a system-generated monthly report” for all active applicant and renewal Federal Explosives Licensees of each Responsible Person or Employee Possessor who remains pending beyond 60 days. The Federal Explosives Licensing Center will ensure that a final determination is completed for these pending Responsible Persons or Employee Possessors. The OIG’s Analysis: The ATF’s proposed action is responsive to the recommendation. We accept the ATF’s proposed alternative of generating a report on Employee Possessors remaining in pending status longer than 60 days rather than 45 days. By June 15, 2005, please provide us with copies of the system‑generated monthly reports on Employee Possessors remaining in pending status and documentation demonstrating that a final determination has been completed and entered for those Employee Possessors. Recommendation 3: Implement procedures to ensure the integrity, completeness, and accuracy of the Employee Possessor information in the FLS. To correct the current data problems, the ATF should conduct a 100 percent cross-match of the names of individuals issued licenses and permits by the ATF with the names of individuals on whom the FBI conducted NICS checks, and then: — Conduct background checks on any individuals contained in the ATF licensing system but not confirmed as having been checked by the FBI. — Immediately recheck the license status of all individuals determined by the FBI to be prohibited persons and ensure those individuals are denied access to explosives. — For any individual that the FBI has recorded a NICS background check under the NLC’s NICS user identification number, but for whom the ATF has no record in its licensing system, determine whether the person is involved in the explosives industry. If the person is, enter the individual into the ATF’s licensing system, and, if not, conduct an investigation to determine who may have performed the background check and why. Status: Unresolved – Open Summary of the ATF’s Response: The ATF did not concur with this recommendation. While stating that it is constantly reevaluating the FLS system to identify new methods to improve FLS data and has instituted new methods to ensure data accuracy, the ATF said it disagrees with the report’s “underlying assumption that the ATF FLS and the FBI NICS systems must be mirror images of one another.” The ATF indicated that reconciliation of its FLS database and the FBI NICS database is not critical, but stated that “it would be extremely helpful for ATF to be able to access the FBI audit log and any FBI research.” However, FBI regulations preclude ATF access to the FBI audit log. The OIG’s Analysis: The ATF’s comments are not responsive to the recommendation. The ATF’s nonconcurrence is based on its characterization of the OIG report as having an “underlying assumption” that the ATF’s FLS and the FBI’s NICS systems must be mirror images. That is incorrect. We recognize that there are legitimate reasons for differences in the FBI and ATF systems. However, the differences should be the result of specific decisions made on each case, and not caused by errors. We maintain that the information in the ATF’s FLS should be complete and accurate. As detailed beginning on page 37 of this report, that currently is not the case. Our review identified significant discrepancies in the data contained in the ATF’s FLS regarding the status of Employee Possessors that undermined its utility for effectively managing the implementation of the SEA. Further, the FLS did not accurately reflect that a thorough background check had been conducted or provide a completed clearance status for each Employee Possessor. As documented in the report, we found that 9 percent of Employee Possessor records did not contain evidence that a background check had been requested, 30 percent of Employee Possessor records had not been updated to accurately reflect the results of background checks, and 2 percent of the individuals for whom the FBI conducted background checks did not appear in the FLS. We also found that the FLS contained numerous spelling errors and illogical data. To correct the existing deficiencies and ensure the integrity, completeness, and accuracy of Employee Possessor information in the FLS, we recommended that the ATF compare its records with the most accurate records available – the FBI’s NICS records. Although it did not concur with this recommendation, the ATF offered no alternative approach for correcting the unacceptable level of discrepancies we found in FLS data. Regarding the ATF’s comments that ATF final determinations may or may not mirror the FBI determinations, we asked the ATF to identify cases where that occurred. Out of the more than 55,000 Employee Possessor records in the FLS, the ATF identified only 2 cases in which the FBI recommended that an applicant be approved but the ATF denied the applicant, and 12 cases in which the FBI recommended denial but the ATF ultimately approved the applicant. By May 1, 2005, please provide documentation of the new methods implemented by the ATF to ensure accuracy of FLS data. In addition, please inform us of how the ATF intends to identify and correct the existing data errors in the FLS, specifically including actions to ensure that all Employee Possessors received a NICS background check and that the results of the NICS background check and the ATF’s final determination are completely and accurately reflected in the FLS database for all Employee Possessors. Also by May 1, 2005, please respond to the recommendation that the ATF identify the source of explosives-related NICS checks for individuals who do not appear in the FLS database and take action to either enter the individuals in the FLS database or take action to ensure that the FBI NICS E-Check system is not being misused. In addition, please inform us of the actions the ATF has taken to complete its adjudications, and the determinations made, for all individuals identified as potentially prohibited persons by the FBI. By June 15, 2005, please provide a status report on the ATF’s efforts to identify Employee Possessors who had no record of having received an FBI NICS E-Check in the FLS, including the number of records checked, the number of Employee Possessors that did not have a NICS E-Check recorded in the FLS, and the action taken to ensure that a background check was conducted on each of these individuals. Recommendation 4: Implement quality control procedures, data entry protocols, and system modifications to ensure FLS data accuracy, including:
— Modification of the FLS to prevent the entry of illogical or incomplete data. — Modification of the FLS to preclude the entry of Employee Possessor information into the FLS without a NICS background check having been completed. Status: Resolved – Open Summary of the ATF’s Response: The ATF partially concurred with this recommendation, stating that “To the extent that existing information systems and resources allow, ATF concurs that it will implement quality control procedures and data entry protocols in FLS to: (a) ensure an individual [Employee Possessor’s] current status is reflected in all FLS records; and, (b) prevent the entry of inaccurate data.” The ATF did not concur with the recommendation to preclude entry of Employee Possessor information into the FLS unless the NICS background check has been completed because it was revising the data entry process. The OIG’s Analysis: The ATF’s proposed actions for the first two parts of this recommendation are responsive. By June 15, 2005, please provide us with documentation of all FLS quality control procedures and data entry protocols as well as copies of reports of quality control checks that demonstrate the procedures and protocols are being enforced. Regarding the third part of this recommendation, the ATF response indicated that it has implemented other changes that make unnecessary the recommended controls over entry of information into the FLS to ensure NICS E-Checks are conducted. Specifically, at the time of our review, the submission of the NICS E-Check and the entry of information on Employee Possessors into the FLS were carried out by different individuals at different times. The ATF response indicated that new procedures call for these entries to be made simultaneously by the same data entry clerk. Further, under the new procedures as described in the ATF’s response, the FLS entry is required in order to identify the explosives licensee that the Employee Possessor is associated with on the NICS E‑Check. We accept that the changes described by the ATF will reduce the likelihood that individuals without NICS E-Checks will be entered into the FLS. Therefore, we have removed the third part of this recommendation from the report. Recommendation 5: Use existing NLC Employee Possessor information to provide a monthly listing to each Field Division of the licensees in their jurisdiction, the number of Employee Possessors, and the date the company last reported an Employee Possessor to determine the most egregious cases of licensees who have failed to notify the ATF of new hires. Status: Unresolved – Open Summary of the ATF’s Response: The ATF did not concur with the recommendation, stating that “It is not necessary nor is it legally required to conduct monthly inspections of all [Federal Explosives Licensees] employee possessor information.” The ATF stated that devoting resources to such a task would divert Inspectors from conducting routine but critical firearms and explosives inspections. The OIG Analysis: The ATF’s comment misstates the OIG’s recommendation and fails to address the problem that the recommendation was intended to address. The OIG did not recommend that the ATF conduct monthly inspections of explosives licensees. As described on page 37 of this report, we found that most explosives licensees, including many of the largest explosives companies in the country, had reported no new employees since they submitted their initial applications under the SEA, beginning in May 2003. Although the companies had not reported hiring any new workers, we found that some of these same companies were advertising to hire explosives workers. The SEA required that new employees with access to explosives must be reported to the ATF within 30 days of their being hired so that the ATF could conduct the required background checks. It is incumbent on the ATF to exercise due diligence by taking reasonable steps to identify companies that are not complying with the SEA’s reporting requirements. To fulfill that responsibility, we recommended that the ATF use its existing FLS database to generate monthly reports listing the companies in each ATF Field Division according to the number of Employee Possessors previously reported and the date these companies last reported hiring a new employee. Because ATF Inspectors and Area Supervisors are most knowledgeable of explosives operations and activities within their Division, we recommended providing these individuals with information to help identify potential instances of noncompliance and ensure that all persons having access to explosives receive timely background checks. By May 1, 2005, please address this recommendation by providing us with a plan for issuing reports on explosives licensees (according to Field Division, number of Employee Possessors, and date of last reported new hire) so that the Field Divisions can ensure that explosives licensees are complying with SEA reporting requirements. By June 15, 2005, please provide us with revised data identifying, by month, the number of explosives licensees that have reported new employees and received amended Notices of Clearance through May 30, 2005. Please segregate and identify separately any amended Notices of Clearance that were issued for reasons other than to report clearance determinations on new employees. Recommendation 6: Take action to ensure that there is no unauthorized or inappropriate use of the FBI NICS E-Check system. As an immediate action, the ATF should cancel the NLC’s NICS user identification number and assign unique user identification numbers to each individual responsible for conducting the checks. Status: Unresolved – Open Summary of the ATF’s Response: The ATF did not concur with our recommendation to assign unique user identification numbers to each individual responsible for conducting NICS E-Checks. The ATF stated that the NICS E-Check system is designed to capture the name of each ATF employee conducting a background check, and therefore individual identification numbers are not needed. The ATF acknowledged that in the past there may have been instances where Employee Possessors received a NICS check but were not entered in the FLS but stated that it is taking corrective actions such as implementing quality control procedures and data protocols to remedy these problems. The OIG’s Analysis: The ATF’s comments do not address the core issue raised by our recommendation because it does not indicate whether the ATF it intends to take any action to identify the source of the 2 percent of checks we found that did not appear in the ATF’s database. At this rate, about 700 of the 35,017 checks conducted by the FBI would not appear in the FLS. The ATF identified one of these individuals when it examined a sample of 52 individuals identified as potential prohibited persons by the FBI (see page 28). However, as of March 2005 the ATF had yet to locate any records in the FLS related to that individual. By May 1, 2005, please describe how the ATF intends to identify individuals recorded in the FBI’s NICS system as having been checked using the NLC’s certificate but who do not appear in the ATF’s FLS. Further, please provide the ATF’s plan for identifying the source of these checks and determining the appropriate authorization status of the individuals beginning with those individuals listed in the FBI’s system as having been potentially prohibited persons. Recommendation 7: Improve the consistency of regulatory determinations by designating a single point of contact at ATF Headquarters for Inspectors and explosives industry members. The point of contact should maintain a history of regulatory inquiries and post frequently requested information on the ATF’s website. Status: Unresolved – Open Summary of the ATF’s Response: The ATF did not indicate concurrence or nonconcurrence with the recommendation. However, the ATF’s response described the activities of its Explosives Industry Programs Branch as evidence that it is meeting the recommendation’s intent. The OIG’s Analysis: While the ATF stated that it is already in compliance, we are not resolving the recommendation because the activities described are not fully responsive to the recommendation. The intent of our recommendation was to improve the consistency of regulatory determinations by designating a single point of contact for specific regulatory areas, making those individuals responsible for maintaining a history of inquiries, and disseminating regulatory determinations widely through the ATF’s website. The activities of the Explosives Industry Programs Branch described by the ATF in its response indicated that it maintains a history of regulatory inquiries and responds individually to “hundreds of letters, facsimiles, phone calls, and other inquiries from industry and from ATF personnel” regarding explosives issues. However, the only wide dissemination of information identified by the ATF is the twice yearly newsletters sent to industry members. Further, the ATF response does not address our recommendation that it post frequently requested information on its website. By May 1, 2005, please provide the following: copies of any evaluations of how information is processed and communicated to ATF Field personnel and the explosives industry and a copy of any log of inquiries received by the Explosives Industry Programs Branch and the responses provided since May 2003. Also, please provide a list of the industry events, seminars, and conferences attended by Branch staff and copies of any presentations given by those individuals during FY 2005. Finally, please respond specifically to the recommendation to post answers to frequently asked questions on the ATF’s website. Recommendation 8: Examine alternatives for speeding the delivery of the ATF’s Advanced Explosives Training course to all Inspectors, and develop a curriculum to build explosives expertise within the ATF’s Inspector workforce. Status: Resolved – Open Summary of the ATF’s Response: The ATF response did not indicate concurrence or nonconcurrence, but described the actions it is taking to improve training provided to ATF Inspectors on SEA implementation. Among other things, the ATF said it will provide the advanced explosives training course three times in fiscal year (FY) 2005 and four times in FY 2006. In addition, the ATF stated that it has “designed and developed the advanced explosive training curriculum to build upon the expertise of the Inspector workforce obtained through previous training classes and on-the-job training.” The training cited by the ATF included the Advanced Explosives Training for Inspectors, Chemistry of Pyrotechnics, and the Mine Safety and Health Administration seminars. The ATF also plans to provide each Field Division with a variety of explosives training materials and training aids to be utilized during mandatory roll-call training at the Area Office level, including table of distance reviews and exercises, a multimedia database of explosive product identification, and training on other topics. Accordingly, the ATF concludes that it is already implementing this recommendation. The OIG’s Analysis: The OIG considers this recommendation resolved as the actions described are responsive to our recommendation. By June 15, 2005, please provide copies of the training materials and training aids provided to Field Divisions for use during roll-call training; a copy of the Explosives Multimedia Database; and the dates of delivery and attendance rosters for classes in Advanced Explosives Training for Inspectors and the Chemistry of Pyrotechnics. Recommendation 9: Develop a detailed timeline for accomplishing the actions necessary to complete the implementation the National Explosives Licensing Center in Martinsburg, West Virginia, including the implementation of changes to the licensing and background check processes, the adjudication process for Employee Possessors, and the data systems that will support these processes. Status: Resolved – Open Summary of the ATF’s Response: The ATF’s response stated that it is already implementing this recommendation, which we accept as concurrence. The ATF stated that “a detailed timeline has been prepared for the completion of the FELC [ Federal Explosives Licensing Center] in West Virginia.” The ATF further stated that it expects to transition all activities related to explosives licensing to the FELC by the end of FY 2005. The OIG’s Analysis: The ATF’s proposed action is responsive to the recommendation. By May 1, 2005, please provide us with a copy of the detailed timeline described, and a status report on the transition of explosive licensing activities to the FELC. Recommendation 10: Develop comprehensive plans, funding requests, industry notices, proposed regulations, and other necessary documents to implement the authority granted under the SEA to collect and catalog samples of explosives at the ATF National Laboratory. Status: Unresolved – Open Summary of the ATF’s Response: The ATF’s response stated that it is already implementing this recommendation, which we accept as concurrence. However, the ATF response does not indicate that the ATF is planning to act to correct the deficiencies we found. Therefore, this recommendation is not resolved. In its response, the ATF stated that collecting and cataloging explosive samples as allowed by the SEA requires “personnel, appropriate databases, and suitable storage facilities for collected samples.” The ATF stated that its implementation plan, described in its Laboratory Services’ FY 2005 Operating Plan, included action items such as completing development of the ATF Explosive Materials Database, proposing contracts for development of the Database of U.S. Commercial Explosives, formalizing explosive sample collection protocols, and advising industry of collection protocols as necessary. The ATF concludes by disagreeing with the OIG’s statement that the ATF is making little progress on its efforts to implement the collection of samples as authorized by the SEA. The OIG’s Analysis: We have reviewed copies of the ATF’s agreement with an engineering consultant to develop preliminary design drawings for a storage facility and a project plan for a contractor “to identify and produce the functional requirements for a data set that characterizes the formulation of explosives and smokeless powder and develop a database working prototype.” These documents, which are basically “plans to plan,” are a start. However, they are far from a comprehensive plan for implementing the authority authorized by the SEA to collect and analyze explosives samples. The ATF was granted this authority in November 2002. As of January 2005, the ATF had not created any databases, had not built any storage facilities to house samples, had not hired any new scientists to conduct analyses of explosives sample, and had collected only one sample. By June 15, 2005, please provide a copy of a comprehensive plan that identifies the specific steps needed to fully implement the sample collection program, including funding requests, industry notices, proposed regulations, and other documents necessary to implement the authority granted under the SEA to collect and catalog samples of explosives at the ATF National Laboratory. THE ATF’S COMMENTS ON THE NARRATIVE OF THE REPORT In addition to addressing the report’s recommendations, the ATF response contained commentary regarding various findings in the draft report. In this section, we summarize and provide our analysis of these ATF comments. 1. ATF information systems are ineffective for managing the explosives licensing functions mandated by the SEA. The ATF’s Comment: The ATF stated that it has invested approximately $1.5 million on modifications to the FLS, the core application for the FELC, and other ATF systems to accommodate the provisions of the SEA. The ATF response listed five specific modifications made to the FLS. The OIG’s Analysis: The ATF comments accurately report the modifications it made to the FLS. However, notwithstanding those modifications, the FLS still cannot be used by ATF officials to effectively manage the explosives licensing functions mandated by the SEA. Among other things, the FLS cannot easily identify individuals who have not had background checks conducted by the FBI, cannot easily identify individuals with a different status in different records, does not automatically identify individuals whose status is pending for excessive periods of time, and is not designed with data correction protocols to identify and prevent the entry of illogical or obviously incorrect data. 2. The ATF does not timely adjudicate appeals from individuals seeking reconsideration of prohibited person status. The ATF’s Comment: The ATF noted that contrary to terminology used in the draft report, “appeals” apply to individuals who have been found to be “prohibited” and wish to dispute that finding, while Relief of Disability (ROD) “applications” are submitted by persons who admit to being prohibited but wish to apply for relief. In addition, the ATF stated that ROD applications trigger an “exhaustive field investigation” that can take 60 days to complete, according to ATF guidelines. The ATF further stated that the OIG failed to recognize that ATF Special Agents may request an extension of an additional 60 days “where necessary.” The ATF stated it does not dispute that the average investigation time to adjudicate these applications could take up to 120 days. It also agreed that the 13 applications cited in our report on page 41 took more than 6 months to complete, but stated that this is not an unreasonable amount of time to thoroughly investigate a person’s background before granting someone relief from explosives disabilities. The ATF further comments that a more balanced appraisal of the timeliness of ROD decisions would treat “granted” applications differently than “denied” applications because, according to ATF analyses, denials take longer in part to ensure applicants are provided “due process” protections through additional review procedures. The ATF stated that it will update the “Office Procedures” to include a more appropriate length of time to adjudicate applications. The OIG’s Analysis: To address the ATF’s concerns over the potential confusion between the terms “appeal” and “application,” we substituted the word “request” for the word “appeal” in the body of the report. The ATF also objected in a footnote to the OIG’s characterization of grants of relief as overturning the original decision. To address this concern, we clarified that the ATF action granted relief from the initial decision. We also note that in response to the report we issued in July 2004 on our Review of the ATF’s Enforcement of Brady Act Violations Identified Through NICS and in subsequent communications, the ATF has agreed that it would use staff other than Special Agents to gather documents and carry out other routine aspects of the investigation process in cases of denials for firearms purchasers. We believe that a similar approach would be appropriate in explosives Relief of Disability cases. Regarding the ATF’s statements that it would not be unreasonable for adjudications to take six months or more to process, we note that the draft order the ATF gave us during our review only provided 60 days for the field investigation. If the ATF believes that a longer time is necessary, then it should revise the draft order before it is finalized. We disagree with the ATF’s concern that the OIG’s report may “mislead readers into thinking that the industry and relief applicants are experiencing undue delays in relief determinations.” As we describe in our report, most applicants are granted relief. Further, some applicants are found not to have merited denial in the first place. In order for these individuals to resume their work activities, the ATF adjudication process should be carried out as expeditiously as possible, while exercising all due care to identify and deny relief to individuals who pose a threat to public safety. 3. ATF does not plan to conduct background checks on all Employee Possessors until 2006. The ATF’s Comment: The ATF stated that a better way to state the above concept is: “The law does not require background checks on all [Employee Possessors] until all existing businesses qualify under [the] SEA in 2006.” The OIG’s Analysis: To address the ATF’s concern, we changed the sentence to read: “Due to the phased implementation required by the SEA, the ATF will not conduct background checks on all Employee Possessors until 2006.…” 4. Inadequate training for ATF Inspectors has resulted in a lack of explosives product knowledge and inconsistent regulatory enforcement; and, it will take up to seven years for all ATF Inspectors to complete the ATF’s revised training course. The ATF’s Comment: The ATF stated that it believes it has improved its training courses, expanded its focus on on-the-job training, and successfully strengthened its expertise throughout the ATF. After extensively describing improvements to various training programs, the ATF went on to say that, “ATF is aware that Inspectors from different field divisions are sometimes inconsistent in their advice to industry.” However, the ATF concluded this comment by suggesting that the number of instances in which incorrect information has been received may be overstated. The OIG’s Analysis: We accept the ATF’s descriptions of improvements to its training programs. However, as we documented in this report, ATF Inspectors and industry members told us of problems with Inspector training and inconsistent regulatory interpretations. We encourage the ATF to consider the problems reported to us as it seeks further to develop the expertise of its workforce and improve the consistency of its oversight of the explosives industry. 5. ATF attempted to increase its oversight of explosives transportation in the beginning of 2003. The ATF’s Comment: The ATF stated that the OIG report incorrectly suggests that the Department of Justice’s Office of Legal Counsel limited ATF jurisdiction to enforce section 842(i) to the SEA’s three new prohibited person categories. The ATF further commented that the report incorrectly suggests that the ATF regulated explosives transportation. Instead, the ATF stated that it enforced section 842(i) against all persons transporting explosives since 1970. Finally, the ATF stated that the report suggests that the ATF improperly imposed an unnecessary burden on industry when it began requiring that all drivers hired to transport explosive materials complete a form certifying that they were the individuals who would transport the explosive materials from a seller to a buyer. The OIG’s Analysis: We made two minor edits on pages 10 and 11 in the Background section of the report to address the ATF’s concerns. The edits did not substantively change the report. 6. If ATF had issued a Notice of Proposed Rulemaking, rather than an Interim Rule, “…explosives industry member[s] would have been afforded the opportunity to comment on ATF’s plans prior to implementation.” The ATF’s Comment: The ATF cited two inaccuracies in the draft report. In the first, the report states that the ATF issued interim regulations before the provisions of the SEA took effect. In the second, the report incorrectly states the order in which “proposed rules” and “interim regulations” are issued. The ATF also stated that “it is apparent that the OIG believes that ATF should have issued a notice of proposed rulemaking rather than an interim rule.” The ATF went on to explain why it invoked the “good cause” exception authorized by the Administrative Procedures Act which governs notice and comment procedures for federal rulemaking. The ATF further commented that the report “implies that a proposed rule was not issued because of ATF’s inability to act in a timely manner, rather than the lengthy time involved in the usual notice-and-comment rulemaking process.” Finally, the ATF provided a revised date of “in or about October 2006” for issuance of final SEA rules. The OIG’s Analysis: To address the ATF’s comments, we changed the text on page 8 of our report to read “shortly before the Employee Possessor provisions of the SEA took effect on May 24, 2003.” To address additional ATF concerns, we revised the description of the process to read “ATF Headquarters officials stated that, due to time constraints and the lengthy time involved in the usual notice and comment rulemaking process, the agency decided to issue interim regulations.” Our description of the general process for conducting rulemakings was accurate and was not changed. On page 24 of its response, the ATF stated that it was “technically true that ATF was unable to issue a proposed rule due to time constraints.” However, the ATF stated that it finds the OIG’s description of the rulemaking process to be misleading because, according to the ATF, the OIG “implies that a proposed rule was not issued because of ATF’s inability to act in a timely manner, rather than the lengthy time involved in the usual notice-and-comment rulemaking process.” We disagree. The OIG’s description of the ATF rulemaking process is a factual presentation and contains no implied commentary on the timeliness of the ATF. Finally, we updated the report to include the ATF’s revised timeline by which it intends to issue final rules. 7. Miscellaneous comments on OIG inaccuracies. The ATF offered a series of minor corrections to dates and citations referenced in the draft report. Where appropriate, the OIG made the corrections. THE ATF’S RESPONSE TO ADDITIONAL ISSUES SECTION AND APPENDIX I The ATF’s Comment: The ATF stated that the “Additional Issues” section should be removed from the report because the section appears “to cast responsibility on ATF for matters not under its control.” The ATF further requested that we remove a reference to ongoing policy decisions related to explosives regulation. In addition, the ATF requested that we remove Appendix I or clarify that the analysis contained in this section was conducted by the OIG review team and not the ATF’s National Repository. The OIG’s Analysis: In response to the ATF’s comments, we removed one sentence from the Executive Digest related to an ongoing policy discussion on explosives regulation. Regarding the ATF’s request that we delete the “Additional Issues” section of the report, we decline the request. This information is provided to inform the reader on other issues pertinent to explosives regulation and public safety. The discussion is segregated from the discussion of ATF’s implementation of the SEA, and the presentation makes it clear that the section addresses matters that are not the responsibility of the ATF. In fact, a central point of the section is highlighting issues that are currently beyond the ATF’s control. Appendix I was included to provide readers with information on the number and types of bombing incidents that have occurred in recent years. In response to the ATF’s comments, we made changes to Appendix I to clarify the categorization of explosive incidents and incorporate updated data provided by the ATF. |