News from Reeves & Dola, LLP 
*** R|D ALERT ***


On August 5, 2016, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) published a ruling authorizing the marking of certain destructive devices manufactured for the United States with sequential lot numbers, if the conditions of the ruling are met.

I.   Background
The Gun Control Act of 1968 (GCA) imposes licensing requirements on persons who engage in the business of manufacturing, importing, or dealing in firearms. The term "firearm" is defined to include "destructive devices." The term "destructive device" is defined to include any explosive, incendiary, or poison gas bomb, grenade, rocket having a propellant charge of more than four ounces, missile having a charge of more than one-quarter ounce, or mine. The GCA also requires that licensed manufacturers and licensed importers mark the firearms they manufacture and import with an individual serial number and other information specified in the regulations. ATF has the authority to approve variances authorizing alternate means of marking firearms, including destructive devices.
The National Firearms Act (NFA) imposes registration requirements on certain firearms, including short barrel rifles, short barrel shotguns, machineguns, silencers, destructive devices, and other concealable firearms known as "any other weapon."  All firearms within the scope of the NFA, except those under the custody and control of the United States, must be registered by their manufacturer, importer, or maker, and transfers of such firearms must be approved in advance by ATF. The NFA also requires marking of firearms by their manufacturer, importer, or maker, and the marking requirements are virtually identical to those under the GCA.
Destructive devices with explosive components are also subject to the federal explosives laws in 18 U.S.C. Chapter 40. Persons who manufacture or import destructive devices made with explosive materials must obtain a license under the federal explosives laws, store the explosive materials in accordance with the law and regulations, and distribute the devices only to persons who hold a federal license or permit. Regulations implementing the federal explosives laws also impose marking requirements on licensed manufacturers and licensed importers. The federal explosives laws provide exceptions for explosive materials manufactured under the regulation of the U.S. military. Accordingly, explosive materials, including destructive devices, manufactured under a Department of Defense ("DoD") contract are exempt from the marking, record keeping, and storage requirements of the federal explosives laws. 
ATF recently met with industry members who manufacture destructive devices for DoD.  The purpose of the meetings was for ATF officials to learn about the government contracts between the industry members and DoD, the production process, and the challenges of marking such devices in accordance with the regulations.  ATF officials learned that virtually all DoD contracts require industry members to mark certain destructive devices, including grenades and explosive bombs, with lot numbers rather than individual serial numbers. DoD contracts also require that the markings be applied with ink stamping, rather than being engraved or stamped as required by the GCA and NFA regulations. Industry members have encountered delays in delivering products to DoD because they are required to obtain marking variances from ATF's Firearms and Ammunition Technology Division, a process that takes 90 days or more.
II.   ATF Rul. 2016-5

ATF announced issuance of Rul. 2016-5 at a meeting held with industry members on August 5, 2016. ATF officials advised the ruling is intended to streamline the process of manufacturing destructive devices under a valid United States Government ("USG") contract by authorizing alternate markings without obtaining an approved variance from ATF. The ruling held that licensed manufacturers of certain destructive devices who make them under a USG contract may mark them with sequential lot numbers, provided all of the following conditions are met:
  1. The certain destructive device munitions include only explosive, incendiary, or poison gas, bombs, grenades, rockets having a propellant charge of more than 4 ounces, missiles having an explosive or incendiary charge of more than one-quarter ounce, or mines. 
  2. The destructive device munitions are being manufactured to fulfill a current USG contract. 
  3. The licensed manufacturer is currently a party to that existing USG contract. 
  4. The alternate markings comply with the requirements of the existing USG contract including:
    • Lot number sequences comply with MIL-STD-130 (marking and identification of government property) and MIL-STD-1168C; and
    • Lot numbers are comprised of only Roman letters and Arabic numerals, or solely Arabic numerals (cannot contain special characters other than a hyphen); and
    • Only one lot number is used for each production run unless the contract specifies otherwise.
  5.  The markings shall be:
    • Applied with permanent ink or paint utilizing stenciling and/or stamping techniques per current USG or DoD standard; and
    • Placed on labels that are permanently affixed (this requirement applies only in instances when labels are utilized).
  6. If the destructive device is enclosed/covered by a container, the outermost container must be marked as set out above. 
  7. Prior to engaging in the manufacturing process, the licensed manufacturer must submit to ATF the manufacturer's name, address, and license number; the contract number of the existing USG contract under which the destructive device munitions will be manufactured; and the sequential lot numbers that will be used for the destructive device munitions manufactured under the USG contract. 
  8. The licensed manufacturer must maintain copies of its submission to ATF of the information required by this ruling with its permanent records of manufacture. The licensed manufacturer must retain proof of its submission to ATF (e.g., certified return receipt mail or tracking number). This proof of submission should show that it was sent to ATF's National Tracing Center, or any other office that ATF may designate as the proper recipient of such information. Additionally, the manufacturer must allow ATF representatives to inspect such documents upon request at any time during business hours without a warrant. 
The ruling held that if all the above conditions are met, licensed manufacturers are not required to submit marking variances to alternately mark the specified destructive devices intended for the USG.

III.   Clarifying ATF Rul. 2016-5
At the August 5 industry meeting, se veral members expressed concern about paragraph 3 (the licensed manufacturer is currently a party to the existing USG contract) and asked for clarification whether subcontractors may mark with lot numbers and ink stamping if all other requirements of the ruling are satisfied. ATF agreed that subcontractors are eligible to mark destructive devices in accordance with the ruling if all requirements are met. ATF will post clarification of this fact and others on its website in the near future.

Regarding the notice requirement under Paragraph 7 of the ruling, ATF requests industry members use the [email protected] email. Members may also send notifications by mail to: 

Marking Variances - 2016-5
244 Needy Road
Suite 1600
Martinsburg, WV 25405

The above alert is for informational purposes only and is not intended to be construed or used as legal advice. Receipt of this alert does not establish, in and of itself, an attorney-client relationship. 

Questions about this alert can be directed to: 

Johanna Reeves: 202.715.9941  | [email protected]
Teresa Ficaretta:    202.715.9183  [email protected]
About Reeves & Dola

Reeves & Dola is a Washington, DC law firm that specializes in helping clients navigate the highly regulated and complex world of manufacturing, sales and international trade of defense and commercial products. We have a deep understanding of the Federal regulatory process, and use our expertise in working with a variety of Federal agencies to assist our clients with their transactional and regulatory needs.

Reeves & Dola, LLP
1775 Eye Street, NW, Suite 1150
Washington, DC 20006