Exploding
Ammunition Requirements

ATF was recently asked if .50 caliber or smaller
exploding rifle ammunition is exempt as “small
arms ammunition” under the Federal explosives
laws and regulations.

In general, firearms ammunition is an “explosive”
because it typically contains smokeless powder and other
explosive materials. However, 18 U.S.C. §845 generally
exempts small arms ammunition and components thereof
from the provisions of 18 U.S.C., Chapter 40.

ATF has long held that the term “small arms ammunition” pertains
to .50 caliber or smaller rifle or handgun ammunition,
as well as certain shotgun ammunition.

Further, under 27 CFR 555.11, ATF has defined “ammunition” in part,
as “small arms ammunition or cartridge cases, primers,
bullets, or smokeless propellants designed for use in
small arms…”

Accordingly, .50 caliber or smaller rifle
ammunition containing only smokeless powder, primers,
and other items specifically listed as components of small
arms ammunition, is exempt from the Federal explosives
laws and regulations.

In contrast, bullets containing other pyrotechnic mixtures or high explosives (e.g., exploding
ammunition, tracer ammunition, and “spotter” ammunition),
do not meet the definition of “ammunition” under
27 CFR 555.11, and therefore are not exempt as small
arms ammunition.

Persons engaged in the business of manufacturing .50
caliber or smaller ammunition containing explosive
materials other than smokeless propellants or other listed
components designed for use in small arms must have a
license to manufacture explosive materials and abide by
all other requirements imposed on licensed explosives
manufacturers, unless subject to a separate exemption
identified under 18 U.S.C. §845 (e.g., manufacture by
the U.S. military).

Likewise, persons acquiring such
ammunition must have a license or permit unless otherwise
exempt (e.g., a government entity).

Further, such ammunition would be considered “ammunition” under
the Federal firearms laws, 18 U.S.C. 921(a)(17)(A), and
any such projectiles with more than ¼ oz. of explosive
or incendiary charge would be subject to the National
Firearms Act as “missiles,” 26 U.S.C. 5845(f)(1)(D).

Quoted:
It's amazing how the ATF thinks they can just write a letter and make something illegal without having actually passed a law. This is basically what happened with the m855 ban only the flak they took was so intense they had to back down. This letter doesn't seem to align with the actual law which allows for 1/4 oz or less if HE in rounds 50 cal or smaller and without and justification they have decided that tracers and spotter rounds are not ammo... This is the only defends i know and feel like it would be hard to enforce, especially considering you can still purchase new Manufacturered tracer ammo. Not sure about spotter, incendiary or HE round, can't seem to find new production, not sure if that's something the ATF has cracked down on, there is no demand if companies and just choosing not to sell to the civilian market. Either way people, buy, sell, possess and shoot the stuff everyday and the ATF doesn't have the man power to track down millions of rounds of the stuff. Just cross your fingers for a trump victory which should help keep the ATF in check.