Extent and Nature of Declines in the Number of Dealer Licenses

Since reaching a high point in April 1993, the number of licensed firearms dealers declined steadily and sharply by approximately 35 percent as of September 30, 1995. The decline occurred in every state. Figures 4 and 5 show the number of abandonments and withdrawals, respectively, for both new and renewal applications in fiscal years 1990 through 1995. Several Factors Contributed to the Decline in the Number of Dealers

The following factors contributed to the recent decline in the number of federally licensed firearms dealers: In January 1993, ATF initiated a National Firearms Program, which consisted of several regulatory enforcement strategies, including efforts to increase the number of inspections of applicants for federal firearms dealer licenses and the operations of licensees to ensure strict compliance with the GCA. We found no evidence that ATF had a policy, or sought, to reduce the number of licensed dealers by some targeted number. Handgun Control and VPC believed other reasons for the decline were (1) ATF’s increased enforcement of already existing laws, particularly the “engaged in the business” provision of GCA; and (2) the Violent Crime Control and Law Enforcement Act of 1994 provision requiring applicant certification of compliance with state and local laws as a condition for federal licensing. We agreed to (1) determine the extent and nature of recent declines in the number of licensed firearms dealers; (2) determine what factors were likely to have affected recent declines in the number of licensed firearms dealers, including whether ATF had a policy to reduce the number of licensed dealers; and (3) obtain the views of pertinent organizations on the advantages and disadvantages of reducing the number of licensed firearms dealers. We also reviewed related materials that may have affected ATF’s policies and procedures.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Bureau of Alcohol, Tobacco, and Firearms' (ATF) policies and procedures for licensing and inspecting firearms dealers, focusing on: (1) the extent and nature of the decline in the number of firearms dealers since 1993; (2) factors that may have affected the decline, including whether ATF had a policy to reduce the number of dealers; and (3) the views of interested organizations on the advantages and disadvantages of reducing the number of federal firearms dealers.

What GAO Found

GAO found that: (1) as of September 30, 1995, the number of federally licensed firearms dealers had declined by about 35 percent nationwide from its high point in April 1993; (2) the decline occurred in every state and in applications for both new licenses and renewals; (3) more applications were abandoned or withdrawn and licenses voluntarily surrendered than were denied or revoked by ATF; (4) the reasons for the decline included new ATF efforts to increase enforcement of existing laws through increased inspections, revised application requirements and forms requiring more information, and new legislation that increased license fees and licensing requirements; (5) increased state and local enforcement of their laws may have also contributed to the decline; (6) there was no evidence that ATF had a policy or deliberately sought to reduce the number of licensed firearms dealers, although ATF realized that its strict enforcement of the Gun Control Act of 1968 and the new legislation would likely reduce the number of licensed dealers; (7) officials of 7 organizations representing firearms interests concurred with GAO-identified factors that led to the decline in dealers; (8) a survey of former dealers found various reasons for their not renewing their licenses; and (9) some organizations believed that reducing the number of firearms dealers would lead to a reduction in crime and better monitoring of dealers and guns, while other organizations believed that the decrease would curb competition, raise prices, and limit the lawful availability of firearms.