The Safe Explosives Act: A New World of Permits, Fingerprints, Photos and Background Checks

1. The Safe Explosives Act The Safe Explosives Act: A New World of Permits, Fingerprints, Photos and Background Checks presented by Timothy M. Biddle, Esquire Bridget E. Littlefield, Esquire Crowell & Moring LLP Washington, D.C. (202) 624-2500

2. Overview of the SEA The Safe Explosives Act • Congress enacted the Safe Explosives Act (“SEA”) on November 25, 2002 as part of the Homeland Security Act. • The purpose of the SEA is to prevent terrorists and criminals from obtaining explosives. • The SEA imposes a permitting, licensing and background clearance requirement on all users, manufacturers, dealers and importers of explosives. • ATF is the agency responsible for enforcement of the SEA.

3. The Safe Explosives Act Who is prohibited? Effective January 24, 2003: The SEA expanded the categories of persons prohibited from using explosives to include: • Illegal aliens • Nonimmigrant aliens (with exceptions) • Persons dishonorably discharged from the U.S. armed forces • Persons who have renounced their U.S. citizenship

4. Aliens The Safe Explosives Act • Any person who is not a citizen of the U.S. • An alien who is a legal permanent resident (i.e., has a green card) is not prohibited from possessing or using explosives • A lawful non-immigrant alien (i.e., in the U.S. on a temporary visa) is also allowed to possess explosives, BUT ONLY if he or she is a “responsible person”

5. Others prohibited from possessing explosives The Safe Explosives Act • Other categories of persons prohibited from possessing explosives include those who: • have been convicted of, or are under indictment for, a felony • are fugitives from justice • are unlawful users of, or are addicted to, any controlled substance • have been adjudicated as mentally defective or committed to a mental institution

6. The Safe Explosives Act Other Requirements Effective January 24, 2003: • Sampling for Manufacturers • Theft Reporting

7. The Safe Explosives Act Sampling Requirement for Manufacturers • ATF-licensed manufacturers, including those who manufacture explosives for on-site use only, must furnish samples of explosive materials or ammonium nitrate to ATF, upon request, as well as information on chemical composition of products • Regulations provide for reimbursement

8. The Safe Explosives Act Theft Reporting Requirements • Licensee/permittee who discovers that explosive materials have been stolen must report theft to the ATF and local authorities within 24 hours of discovery • Penalties for failure to report: fine of up to 250K and imprisonment for up to 5 yrs

9. The Safe Explosives Act Requirements Effective May 24, 2003: • Identification, background checks and clearances • Licenses/Permits

10. The Safe Explosives Act Users of Explosives Must Have Permits • Permit authorizes use, transporting and shipping of explosives • Intrastate users of explosives no longer exempt from permitting requirements • Limited permit available for users who infrequently purchase explosives • allows user to make no more than 6 purchases within 12-month period from in-state seller • Must post permit at mine

11. The Safe Explosives Act Manufacturers of Explosives • Must have a license from ATF • License also authorizes transporting, shipping, receiving and use of explosive materials • License required for manufacturing of explosives even if for on-site or company use only • Must post license at mine

12. The Safe Explosives Act Independent Contractors? • If you use an IC to handle ALL blasting at your site, you DO NOT need a permit and your employees will not be subject to background checks - BUT • you are only exempt from the SEA if you or your employees have NO contact with or control over explosives

13. The Safe Explosives Act Use of IC: Key Questions • Do your employees have access to explosives or keys to an explosives magazine/storage facility used by an IC? • Do they receive or unload explosives delivered to your site? • Do they inventory explosives? • IF YES, YOU NEED A PERMIT

14. The Safe Explosives Act The Permit/License Process • To apply, company must: • submit appropriate application form • Form 5400.13/16 • submit required info about responsible persons • photos and fingerprints • submit Employee Possessor Questionnaire

15. The Safe Explosives Act Identification, background checks and clearance requirements As part of permit/license application, companies must: • identify, fingerprint, and photograph each “responsible person” • identify all employees authorized “to possess explosive materials” (no fingerprints/photos) All identified employees will be subject to a background check

16. The Safe Explosives Act A “responsible person” is: “an individual who has the power to direct the management and policies of the applicant pertaining to explosive materials.”

17. The Safe Explosives Act • Congress intended the term “Responsible Person” to be construed broadly. • The term can include: • corporate officers and directors • stockholders who have the power to direct management and policies • senior managers • It is best to err on the side of over-inclusiveness.

18. The Safe Explosives Act Responsible Persons Manage the Use of Explosive Materials The “responsible person” - • determines the type and quantity of explosive materials to be procured, manufactured, stored, transported, or used • determines when and where explosive materials will be procured, manufactured, stored, transported, or used • assigns company employees to duties involving explosive materials • supervises activities of company employees involving use of explosive materials

19. The Safe Explosives Act Employee Possessor Questionnaire: The SEA requires applicants for a license or permit to identify individuals authorized “to possess explosive materials.”

20. The Safe Explosives Act What is “Possession” of an Explosive? Term encompasses “actual” and “constructive” possession • “actual” possession includes the physical handling of explosive materials as part of the production process, the shipping, transporting or selling of explosives, and the detonation of explosives • “constructive” possession exists when an employee lacks direct physical control over explosive materials, but knowingly has the power and intention to exercise dominion and control over the explosive materials, either directly or indirectly through others

21. The Safe Explosives Act Practical test for employee possessor: Does the employee have sufficient contact with explosive materials to have the opportunity to take or use them for unlawful purposes?

22. The Safe Explosives Act After background check, ATF will: • provide employee with either a letter of clearance or explanation of grounds for determination that he is a prohibited person, how to apply for a waiver, and applicable appeal procedures • notify employer in writing of its determination that an employee is a prohibited person (but not specifics) Pending resolution of appeal, employee may not possess explosives.

23. The Safe Explosives Act • What if we already have a license or permit? • Pre-SEA licenses/permits are valid until renewal time • Pre-SEA license or permit will remain valid until ATF acts upon TIMELY renewal application

24. The Safe Explosives Act Processing Time • ATF must approve or deny an application for a license or permit within 90 days of receipt • ATF recommends submitting renewal applications at least 90 days before expiration of existing permit to ensure renewal prior to expiration

25. The Safe Explosives Act Inspection • ATF must verify “by inspection” that applicants for permits/licenses have storage facilities for explosive materials that meet the standards for safety and security set forth in regulations. • Inspection requirement also applies to renewals • ATF officer may enter during business hours to inspect or examine records required to be kept under SEA

26. The Safe Explosives Act Penalties • It is a FELONY to manufacture or use explosive materials without a license or permit. • It is also a FELONY to knowingly allow a prohibited person to possess or use explosive materials.

27. The Safe Explosives Act Compliance Tips • Identify and list “responsible persons” and persons authorized to “possess explosives” at each site • Keep this list current • Use certification form to confirm eligibility • Train employees about SEA requirements • Consider an amendment to the company by-laws expressly limiting “responsible persons”

28. The Safe Explosives Act Resources • For Forms • Contact the National Explosives Licensing Center (NELC) at (404) 417-2750; or • Download forms at www.atf.gov. • For Questions • Consult: • ATF • Your lawyer

29. The Safe Explosives Act Now it’s up to you . . . .