Since 2003, the Firearms and Explosives Licensing Center will not approve an application for a permit unless it is submitted together with an Employee Possessor Questionnaire, ATFE Form 5400.28 (the “Form”). The ATFE regulations demand that a separate Form be completed (in accordance with the stated instructions) by each and every employee that has either actual or constructive possession of explosives, or meets the ATFE’s definition of a ‘responsible person’; and, if approved, the ATFE will issue a letter of clearance to both the individual and the employer, if any.
The Safe Explosives Act (SEA) broadly defines ‘responsible person’ to mean “an individual with the power to direct the management and policies of the applicant pertaining to the explosive materials.” Although the definition may, theoretically, apply to all corporate officers, directors and stockholders, in practice, the ATFE has rarely, if ever, required a corporate applicant to report each and every officer or director as a responsible person. Presumably, the ATFE realizes that not every individual related to the corporation may be vested with the “power to direct management and policies”. For example, the company bookkeeper is not likely to possess the requisite power.
While the company bookkeeper may not be required to submit fingerprints and photographs to the ATFE on the basis that the individual lacks responsibility or authority in connection with the company’s explosives business, there may be advantages to having as many company employees as possible receive letters of clearance as a responsible person.
Seemingly lurking in the background of the ATFE regulations is the unstated rule that a responsible person is required to be associated with any applicant. The ATFE argument that at least one employee should be designated as a responsible person is both reasonable and sensible. Consequently, in those instances where only one individual presently has responsibility or authority in connection with the company’s explosives business, such as a sole proprietorship and small businesses, consideration should be given to having more than one responsible person. That way the business can continue to successfully operate in the event that a responsible person is subsequently disqualified.
ATFE proceedings to disqualify an employee’s status as a responsible person generally move quickly. The regulations require the ATFE to notify both the responsible person and the employer, stating the reasons for disqualification and advising them of the process for appealing the determination. The appeal will be heard by an Administrative Law Judge who, in turn, provides a report and recommendation to the Director of Industry Operations (DIO). Since the DIO may have been the source of the notice of disqualification in the first place, the fact that the matter circles back to that office for a final determination does not bode well for the grievant. The defense costs to complete the circle, thereby exhausting all administrative remedies, can be substantial. Not all is lost since you may still seek relief in the federal courts by appealing the DIO determination and, in the process, incur the costs of litigation. Due to the defense costs, in the final analysis it may be more cost effective to not defend against the notice of disqualification and, instead, rely upon the fact that other employees also possess a letter of clearance of as a responsible person.
In conclusion, by having additional employees obtain letters of clearance as a responsible person, an informal type of insurance has been self-created by the business, to the extent that there is always a responsible person available to readily assume the power to direct the management and policies of the company with respect to explosive materials.
