Why gun dealers have dwindled

The United States has more gas stations than gun dealers. "News flash?" you might think. But a decade ago, businesses licensed to sell firearms outnumbered gas stations 245,000 to 210,000. Since then, the number of licensed firearms dealers has declined almost 80 percent, according to a recent study of federal data.

The reason: changes in regulations in the 1990s that, among other things, required federally licensed gun dealers to comply with zoning laws and report certain information to local police.

Gun-control advocates contend that this dramatic reduction is a victory for "sensible" gun-control policy that has made it harder for criminals to get guns. They believe the reduced number of dealers makes it easier for the Bureau of Alcohol, Tobacco, Firearms and Explosives (known commonly as ATF) to police the "bad apple" dealers who divert guns onto the illegal market. ATF studies have shown that a disproportionately large number of those bad apple dealers were small businesses. And while gun-control advocates acknowledge there's no empirical evidence, they believe the reduction was one element that added to the dramatic decline in crime during the past decade.

"This is a major policy success of the Clinton administration, because the gun distribution system has been out of control for a long time," says Dennis Henigan, director of the Brady Center, a gun-control advocacy group in Washington.

The National Rifle Association has a very different response: "So what?" says Andrew Arulanandam, a spokesman for the NRA in Fairfax, Va. He contends the changes only drove out individuals who may have gotten a license so they could buy guns at wholesale prices for their personal use.

His explanation for crime being at an all-time low is very different, but also anecdotal: During the past decade NRA membership has almost doubled, the number of firearms sold has increased, and a majority of states now have laws allowing individuals to carry concealed weapons.

"It's a stretch to make the claim that this reduction in dealers had any impact on the reduction in crime," Mr. Arulanandam says.

These two dramatically different takes on what was clearly an effective social policy - like it or not, it did decrease the number of gun dealers - illustrate the hot- button nature of the gun-control debate. They also show widely different perceptions of the nation's current gun laws: While one side says the regulations are inadequate, the other says they're already too onerous.

But there are a few things that both sides in the debate can agree on, such as the reasons for the decline in gun dealers. During the Clinton administration, three major changes took place: ATF tightened up regulations, the Brady Handgun Violence Protection Act passed in 1993, and the next year the 1994 crime bill passed, which also tightened gun regulations. As a result, the cost of a federal firearms license jumped from $30 for three years to $200 for the same duration. In addition, dealers were required to be photographed and fingerprinted, and they had to provide that information to the local police. They also had to comply with local zoning laws and prove they were engaged in "the business" of selling firearms.

"If there are fewer licensees to monitor, then the workload may be more manageable, but the question still remains: Does the ATF have the power and resources to find the bad apples and then go after them?" says James Alan Fox, a criminologist at Northeastern University in Boston. "You still have a small percentage of dealers linked to a high percentage of guns traced to crime."

While the ATF does not release the number of inspectors it employees to monitor gun-dealer compliance, sources within the agency say there are "only hundreds of them" to inspect an estimated 54,000 dealers nationwide. As a result, less than 5 percent of gun dealers are inspected each year. A July 2004 inspector general's report estimated that with the ATF's current resources, it would take 22 years to inspect every licensed gun dealer in the country. It recommended a series of reforms to streamline the inspection process. The bureau has already implemented many of those changes, but an agency source says that more inspectors are what's really needed, as well as increased authority to fine and penalize dealers that are out of compliance - something recommended by the inspector general. But ATF officials will not publicly comment on any of these issues, because whatever is said "can be taken out of context" by one side or the other in the gun-control debate.

"We're like the punching bag in the middle," says the source. "Whatever we say, one side or the other will bash us, so we just focus on enforcing the gun laws, whatever they are."

Gun-control advocates are concerned that some of the progress made in reining in the number of gun dealers will be lost because Congress has been quietly attempting to roll back some of the reforms implemented in the 1990s. For instance, in an amendment attached to the ATF appropriations bill at the behest of the NRA late last year, Congress forbid the ATF from suspending a firearms license because of lack of legitimate "business activity."

"What we really don't want to see is a return to the early '90s, when there was just horror story after horror story of people who were using their license to buy huge numbers of guns and then traffic them illegally into urban areas with strict gun-control laws," says Kristen Rand, legislative director of the Violence Policy Center, a nonprofit gun-violence prevention organization that conducted the study of the decline in gun dealers.

The NRA says it supported the amendment limiting the ATF's enforcement abilities because some individuals don't sell guns in a regular retail manner, and it believes they shouldn't be penalized for that. The organization also argues that the gun distribution system is not out of control. In fact, it believes the current ATF regulations are already too onerous.

"The [ATF] can conduct annual checks on any [federal firearms licensee (FFL)], and if in the course of one of these audits, ATF finds any discrepancy, it can literally move in to the place of business and set up shop and go over their records with a fine-toothed comb," says Arulanandam. "You add to that the regulation that any FFL is required to maintain a record of any transaction for 20 years. That's a requirement that even surpasses IRS standards."