Breaking: Latest ATF Surprise Could Drive Ammo Prices Through the Roof [Updated] Jon Stokes 08.30.16



Update: Bob Owens has the news that the ATF has issued an addendum clarifying that the status quo pertains with respect to wetted nitrocellulose. So, it looks like we’re ok, for now.

Update 2: Guns.com has more detail with a little extra analysis and reporting. It’s hard to tell if this was a genuine mistake or if they pulled back as a result of everyone flipping out, but it looks like this still may be on the table at some point in the future because they’ve rescinded the determination pending “further industry outreach”.

As reported on Ammoland, a sudden ATF rule change promulgated entirely without warning in a newsletter has reclassified a critical component of smokeless powder as a “high explosive.”

The problem is that there are very strict rules governing the storage and transport of high explosives, and the ammunition supply chain is totally unprepared to suddenly comply with those rules.

Overhauling the ammunition supply chain to accommodate those rules will be a long and expensive process, which would be bad enough news for ammo prices. But the knockout blow is the fact that the industry was given no warning and zero grace period, so they’re just screwed, because as of yesterday they’re now in sudden violation of federal law.

Manufacturers and importers of smokeless propellant have relied on ATF private letter rulings issued prior to 2016 stating that nitrocellulose wetted with water not less than 25 percent by mass is not subject to regulation under the federal explosives laws. Accordingly, the manufacturers have set up their logistics, storage and operations consistent with nitrocellulose not being regulated as an explosive. Manufacturers and importers may not have adequate storage facilities or record keeping systems to comply with the law. Licensed manufacturers also rely on private, unlicensed vendors to store wetted nitrocellulose in facilities that do not comply with storage requirements. A number of manufacturers also report an adverse impact on their contracts to supply smokeless propellant and finished rounds of ammunition to the Department of Defense. Publication of the change in classification in an industry newsletter without advance notice has left manufacturers scrambling to determine what standards ATF will allow for alternate storage and record keeping and to obtain permits for unlicensed storage vendors. In the meantime, manufacturers and importers are violating federal law, as ATF allowed no grace period for coming into compliance. We note that ATF has authorized such periods in the past when changing agency positions. For example, see ATF’s November 12, 2010 Open Letter regarding explosive pest control devices. ATF’s sudden and unexpected change in policy on wetted nitrocellulose will likely have a significant impact on industry’s ability to deliver products to the military and commercial markets. Industry members have relied on the exemption for wetted nitrocellulose for many years and are aware of no accidental detonations or diversion of this product into illicit channels. Consequently, it is unclear why ATF believed it necessary to change its policy and, more importantly, why ATF announced the change in a newsletter article with no advance notice to industry.

Given that this ruling will result in a drastic shortage of smokeless powder, it’s going to bite reloaders just as hard as everyone else.

This stunt is also going to hurt the DoD as well as civilians. Given the collateral damage to military ammo supplies, I don’t expect this ruling to stand. Something will have to be done or else the troops will run out of ammo.

Whether it actually stands or not, the new ATF ruling does provide a nasty preview of what’s to come in a future Democratic administration, so prepare yourselves accordingly. Indeed, I wouldn’t be surprised to see an ATF rule change that basically kills the reloading scene by reclassifying smokeless powder and “ammo manufacturing” in a way that makes reloading either very expensive–as with gunsmithing and the recent ITAR ruling–or outright illegal.

As with the Massachusetts Attorney General’s recent “clarification” (i.e. massive, unlegislated expansion) of that state’s assault weapons ban, what we’re seeing here is a wholesale trend at the local and state levels towards using executive fiat to restrict gun rights by reinterpreting existing laws.

Given the deadlock in congress–a deadlock that, if it does end on this election cycle, will probably end with the Democrats taking control of both houses as the Trumptanic sinks and takes the down-ballot races with it–do not expect any legislative relief. The only way to fight these kinds of executive overreaches will be through the courts.