Manufacturing or not manufacturing?

[ugimports]

I'm asking the below what if's because I know there's a number of FFL01s that sell bullet buttoned rifles. Not sure if they import them that way or do it themselves with an AW permit. Here's some scenarios:

1) Order a Browning shotgun. It arrives in 2 pieces. Logged in as a receiver. I put the 2 pieces together and then list it for sale as shotgun. Have I manufactured?

2) Order a CMMG Lower and CMMG upper. I put the 2 pieces together, add a bullet button, and sell as a rifle. Have I manufactured?

3) Order a complete Noveske AR w/pistol grip and all. I have an AW permit. I install a bullet button and log it out as no longer an AW with my paperwork. Have I manufactured?

I've also noticed a vendor that has added their mark to a Stag AR which I know is part of the manufacturing process/requirements, but the particular vendor I saw markings for seems to only have an FFL01 according to the paperwork I've received from them. Not sure why they did that unless they built up the rifle from parts or perhaps as #2 above.

While I hold an FFL07 right now I haven't done any of the manufacturing steps, but figured I was planning ahead if I were to start selling my own reloads. In any case, I was hoping to get some clarification since my understanding was that for any FFL (even those out of CA) that if they routinely put bullet buttons on firearms, they are indeed manufacturers, but many of them are not from what I can tell from license paperwork. I don't want to deal with ITAR and all the excise tax BS if I ever get an AW permit and am just putting bullet buttons on firearms if I can help it.

Thoughts?

[tenpercentfirearms]

I'm asking the below what if's because I know there's a number of FFL01s that sell bullet buttoned rifles. Not sure if they import them that way or do it themselves with an AW permit. Here's some scenarios:

1) Order a Browning shotgun. It arrives in 2 pieces. Logged in as a receiver. I put the 2 pieces together and then list it for sale as shotgun. Have I manufactured?

2) Order a CMMG Lower and CMMG upper. I put the 2 pieces together, add a bullet button, and sell as a rifle. Have I manufactured?

3) Order a complete Noveske AR w/pistol grip and all. I have an AW permit. I install a bullet button and log it out as no longer an AW with my paperwork. Have I manufactured?

I've also noticed a vendor that has added their mark to a Stag AR which I know is part of the manufacturing process/requirements, but the particular vendor I saw markings for seems to only have an FFL01 according to the paperwork I've received from them. Not sure why they did that unless they built up the rifle from parts or perhaps as #2 above.

While I hold an FFL07 right now I haven't done any of the manufacturing steps, but figured I was planning ahead if I were to start selling my own reloads. In any case, I was hoping to get some clarification since my understanding was that for any FFL (even those out of CA) that if they routinely put bullet buttons on firearms, they are indeed manufacturers, but many of them are not from what I can tell from license paperwork. I don't want to deal with ITAR and all the excise tax BS if I ever get an AW permit and am just putting bullet buttons on firearms if I can help it.

Thoughts?

I am not an expert, but yes to 1 and 2 and no to 3. Keep asking and doing research though.

[OCArmory]

I would say no to No. 1 Many rifles come separated in the packaging but they are sold as a complete rifle and the FET has been paid.
No. 2 Yes. If you purchase a separate lower and upper then assemble them I would think that would constitute manufacturing.

When I asked the ATF field rep if installing a bullet button was considered manufacturing they said no.
Might want to check with the DOJ about logging guns in and out as AW's. I was going to apply for my permit but was told that, that would be prohibited.
Mike

[ugimports]

I'm emailing an ATF Operations Investigator I had contact info for and see if they an provide any clarification on the federal level. I'll then email the CA DOJ and see what kind of response I get.

[ke6guj]

I would say no to #1 as well, since it was sold as a complete firearm and the FET would have already been paid.

with regard to #2, it depends. IIRC, if you buy a parts kit and a lower from Bushmaster at the same time, they will charge you FET. In that case, it would already be considered a completely manufactured firearm, and just assembling it should not constitute additional manufacturing. But buy the same parts at different times, there probably wouldn't be any FET paid on it, so it could be considered manufacturing to combine the parts into one firearm.

[freakshow10mm]

I'm asking the below what if's because I know there's a number of FFL01s that sell bullet buttoned rifles. Not sure if they import them that way or do it themselves with an AW permit. Here's some scenarios:

1) Order a Browning shotgun. It arrives in 2 pieces. Logged in as a receiver. I put the 2 pieces together and then list it for sale as shotgun. Have I manufactured?

Yes, no, maybe. Some O/U shotguns are shipped in a small case with barrels and receivers separated. Technically assembling the halves is an act of manufacturing if done before 4473 transfer. I asked my local office about this and they said for broken down O/U shotguns log it in as a shotgun.

2) Order a CMMG Lower and CMMG upper. I put the 2 pieces together, add a bullet button, and sell as a rifle. Have I manufactured?

Yes.

3) Order a complete Noveske AR w/pistol grip and all. I have an AW permit. I install a bullet button and log it out as no longer an AW with my paperwork. Have I manufactured?

No, see the "drop in parts" letter (ATF Ruling 2009-2).

I've also noticed a vendor that has added their mark to a Stag AR which I know is part of the manufacturing process/requirements, but the particular vendor I saw markings for seems to only have an FFL01 according to the paperwork I've received from them. Not sure why they did that unless they built up the rifle from parts or perhaps as #2 above.

Some will have both an 01 FFL and 07 FFL and sell strictly off their 01 FFL. The way their books would work (if buying and building an aggregate of parts) is the A&D book has the receiver being acquired from a source and disposed to the manufacturing log book where the manufacturing is recorded. It would be logged into the A&D book as a receiver, out to the manufacturing book as a rifle. The standard "importer" format for the mfg log book is for disposition to other FFLs. If they are manufacturing for 4473 customers, they use the A&D format (ie run 3 books total).

In this case it seems as though they are logging into their A&D book, disposing to the mfg book, making it, then disposing back to their A&D book and logging it out there as a sale. That is another way of doing it but your A&D book might be confusing to the investigator with so much back and forth stuff.

While I hold an FFL07 right now I haven't done any of the manufacturing steps,

but figured I was planning ahead if I were to start selling my own reloads.

ATF doesn't require any records for ammunition manufacturers, except armor piercing, which you can't do with an 07, only an 06 can make AP.

In any case, I was hoping to get some clarification since my understanding was that for any FFL (even those out of CA) that if they routinely put bullet buttons on firearms, they are indeed manufacturers, but many of them are not from what I can tell from license paperwork.

See ATF Ruling 2009-2:

A replacement part, whether factory original or otherwise, has the same design, function, substantially the same dimensions, and does not otherwise affect the manner in which the weapon expels a projectile by the action of an explosive.

I don't want to deal with ITAR and all the excise tax BS if I ever get an AW permit and am just putting bullet buttons on firearms if I can help it.

Thoughts?

Unfortunately, you are required, as a manufacturer of firearms to register with ITAR. It doesn't matter if you are actually physically manufacturing or not, you are a manufacturing FFL and need to pay up.

A BB is a drop in part and you need to be licensed as a dealer; since your 07 allows all operations of an 01 FFL, you are a "dealer-manufacturer" in a sense. Installing a BB is not an act of manufacturing as it does not require fitting, machining, or drilling. Technically, adding a Raddlock or JJPearl AK mag lock, which requires drilling, is an act of manufacturing, which is also one of the reasons why I refuse to install them for transfers.

If you need help or advice setting up your A&D and mfg books, call me. It's easier to explain over the phone that type here on the forum.

[ugimports]

Thanks for that ATF 2009-2 info. Very helpful.

Unfortunately, you are required, as a manufacturer of firearms to register with ITAR. It doesn't matter if you are actually physically manufacturing or not, you are a manufacturing FFL and need to pay up.

A BB is a drop in part and you need to be licensed as a dealer; since your 07 allows all operations of an 01 FFL, you are a "dealer-manufacturer" in a sense. Installing a BB is not an act of manufacturing as it does not require fitting, machining, or drilling. Technically, adding a Raddlock or JJPearl AK mag lock, which requires drilling, is an act of manufacturing, which is also one of the reasons why I refuse to install them for transfers.

If you need help or advice setting up your A&D and mfg books, call me. It's easier to explain over the phone that type here on the forum.

In regards to this section...a BB is only a drop in part if you are using one that does not require you to drill... so some of the AK bullet buttons that require a drill to mount the BB to the receiver look like they are considered manufacturing. THe Solar Tactical style which doesn't require any mods to th receiver look like they are "drop in" parts.

As for ITAR, I contacted them and they said as long as I haven't done any manufacturing (regardless of the class of my FFL) I am not required to register. Here's the email contents:

You are not required to register unless you are manufacturing or
exporting.

Stephen M. Geis
DDTC Response Team
Contractor, Lionel Henderson & Co., Inc.

NOTE: Information in this message generally discusses controls and
information contained in the Arms Export Control Act and International
Traffic in Arms Regulations (ITAR), both of which are authoritative on
this matter. The Response Team fields basic process and status
questions, and assists exporters in identifying how to get answers to
more complex questions handled by the Directorate of Defense Trade
Control's licensing and compliance offices. The Response Team's
services are not a substitute or replacement for the advisory opinion,
general correspondence, and commodity jurisdiction processes delineated
in the ITAR, which should be used to obtain authoritative guidance on
export control issues, and do not in any way relieve exporters from
their responsibilities to comply fully with the law and regulations.

-----Original Message-----
From: UG Imports [mailto:sales@ugimports.com]
Sent: Thursday, December 10, 2009 2:05 AM
To: PM-DDTC-Response-Team-DL
Subject: ITAR Registration Required?

Hello,

I am a new firearms dealer with a FFL 07 license (manufacturing). We
have not yet registered for ITAR as our business operations have just
begun. However, we have not conducted any manufacturing operations at
this point. Our business plans have changed after receiving our FFL
paperwork and we do not have plans to do any manufacturing, but have not
had our license changed yet. Are we still required to register for ITAR
if we will not be doing any manufacturing activities?

So based on the response from ITAR as official/not official as email is I'm assuming I'm ok.

[ke6guj]

ATF doesn't require any records for ammunition manufacturers, except armor piercing, which you can't do with an 07, only an 06 can make AP.

I thought that only a Type 10 could manufacture AP ammo, which is defined as handgun AP ammo. An 06 or 07 can make rifle ammo that is armor piercing, because only handgun armor piercing ammo is considered AP per federal law.

A BB is a drop in part and you need to be licensed as a dealer; since your 07 allows all operations of an 01 FFL, you are a "dealer-manufacturer" in a sense. Installing a BB is not an act of manufacturing as it does not require fitting, machining, or drilling. Technically, adding a Raddlock or JJPearl AK mag lock, which requires drilling, is an act of manufacturing, which is also one of the reasons why I refuse to install them for transfers.

but since you are an 07, that is is considered a manufacturing act shouldn't be an issue, right? Expecially now that ATF put out that ruling about not needing to get a variance regarding markings.

[ke6guj]

As for ITAR, I contacted them and they said as long as I haven't done any manufacturing (regardless of the class of my FFL) I am not required to register. Here's the email contents:



So based on the response from ITAR as official/not official as email is I'm assuming I'm ok.

Interesing, so it looks like ITAR may allow for it, but how long would ATF allow one to keep an 07FFL if they have no intention to manufacture?

[freakshow10mm]

Thanks for that ATF 2009-2 info. Very helpful.

In regards to this section...a BB is only a drop in part if you are using one that does not require you to drill... so some of the AK bullet buttons that require a drill to mount the BB to the receiver look like they are considered manufacturing. THe Solar Tactical style which doesn't require any mods to th receiver look like they are "drop in" parts.

Correct.

As for ITAR, I contacted them and they said as long as I haven't done any manufacturing (regardless of the class of my FFL) I am not required to register. Here's the email contents:
SNIP
So based on the response from ITAR as official/not official as email is I'm assuming I'm ok.

Interesting. I received a different response when I inquired about ITAR. Didn't keep the email as it was over a year ago. I was told regardless of any actual manufacturing of a defensive article actually taking place or not, the fact that I was a manufacturer was reason enough to qualify my company for ITAR.

I thought that only a Type 10 could manufacture AP ammo, which is defined as handgun AP ammo. An 06 or 07 can make rifle ammo that is armor piercing, because only handgun armor piercing ammo is considered AP per federal law.

A manufacturer can sell handgun AP to LE/gov but not to anyone else, records must be kept. Rifle AP can only be manufactured by an 06 or 10. ATF states the SS109 and the 7.62 equivalent are not considered AP, so an 07 may manufacture them. It gets confusing with a single FFL that covers two different types of manufacturing. The 06 is only $10/yr but it's another license to maintain, another license they can use for the one/year inspection, and the extra BS associated with dual FFLs is not worth it, IMO. That's why I deactivated my 06 and operate under my 07 only, but can only load SS109 and 7.62 AP, which I choose not to load anyway.

but since you are an 07, that is is considered a manufacturing act shouldn't be an issue, right? Expecially now that ATF put out that ruling about not needing to get a variance regarding markings.

I would still have to engrave my information and pay FET. The marking variance doesn't apply in this situation because I'm not manufacturing for another manufacturer.

Interesing, so it looks like ITAR may allow for it, but how long would ATF allow one to keep an 07FFL if they have no intention to manufacture?

Depends on your intent with the 07. For myself, paperwork is easier being an 07 as it covers all of what I do (manufacturing of firearms and ammunition, dealer sales, gunsmithing, and NFA weapons with the Class 2 SOT). I have one FFL that I can do everything I want with. One fee, one expiration date. Clean, concise, efficient.

The local ATF office had no problems with me obtaining an 07 so I could do 01 and 06 operations under one license. They also encourage an 07 for gunsmiths as it will cover your butt in case a mfg issue comes up.

[freakshow10mm]

Oh, as an aside, the ATF and US State Department do NOT get along especially about the AECA and ITAR. Think Hatfield and McCoy only with government agencies and no bloodshed.

[ugimports]

Interesing, so it looks like ITAR may allow for it, but how long would ATF allow one to keep an 07FFL if they have no intention to manufacture?

If they make me drop to an 01FFL I wouldn't complain. Like I said, my original intent when I applied was to get the app that would allow me to do everything so I wouldn't have to re-apply. I also had dreams of reloading ammo and selling the loads, but that quickly went away when I factored the work/costs involved and later found how crazy my local city would get with me having that much powder around .

Now things may change before I renew and I may actually decide to start to manufacture something. That being the case, ITAR, FET, and all that crap would apply, but if I do not end up going that route, dropping to an 01 dealer only wouldn't be an issue for me. Especially with that clarification about the drop in replacement parts. When I first talked to my ATF agent during application process she said adding a scope would be considered manufacturing. According to the quoted section by freakshow that wouldn't apply in cases where I didn't have to drill/tap for the optic mount.

[freakshow10mm]

However, adding a scope is an act of manufacturing. The scope is not a drop in replacement part, it's an addition, thus manufacturing.

Let's say you bought one of those Remington 710 with Bushnell 3-9x40 scope packages. You can replace the scope without being considered manufacturing. You cannot take a Remington 710 and add a scope to it as that's manufacturing.

The new manufacturing interpretation by the ATF effectively eliminated the "gunsmith special" of the week/month as was customary in the industry. Also if it something adds value to a firearm it's considered manufacturing by another interpretation. This doctrine would state if you replaced the factory scope package with one scope (and/or rings/bases) of equal or lesser value, that's fine, but if you take off the Bushnell and put on a Nightforce, that's increasing the value and it's manufacturing.

See what I mean about it's best to be an 07 FFL? Ooops, but I'm covered and it's less than 50 so no FET is a lot easier than the crap and hell BSP went through with the single shot pistol manufacturing.

[ugimports]

However, adding a scope is an act of manufacturing. The scope is not a drop in replacement part, it's an addition, thus manufacturing.
...

So confusing...

So doesn't that make adding a Solar Tactical mag lock to an AK variant manufacturing as well? There is no "replacing" there either as would be the case with AR variants where the maglock is replacing the standard mag release mechanism.

[freakshow10mm]

Gray area again. It's not internal so it's not a "drop-in" part by standard definition, it's not a replacement part, but there's no drilling, machining, or fitting. The ATF might say mag locks by and large are not manufacturing, but will always (and have) stood their ground that adding a scope to a firearm is manufacturing. My personal opinion is the ATF would cut slack and state mag locks are generally not manufacturing and are considered a "drop-in" part even though they are not a replacement.