The White House, facing fierce criticism from the gun lobby, has delayed approval of a proposed rule that federal law enforcement officials say could help them stanch the flow of U.S. assault rifles and other high-powered weapons to Mexico’s drug cartels.

The proposed rule, announced by Alcohol, Tobacco and Firearms acting director Kenneth Melson on Dec. 20,  would require U.S. firearms dealers in four southwest border states to report multiple sales of long guns, such as semi-automatic assault rifles which are frequently purchased by so-called “straw buyers” for the cartels. Melson had said he expected the proposed “emergency rule” would receive approval in early January 2011.

But the announced deadline date for White House approval, Jan. 5, has come and gone, leaving ATF officials bewildered and keenly disappointed. Some officials had expressed hopes  that President Barack Obama might even address the issue during his State of the Union speech Tuesday night as a positive step the administration was taking to address the issue of gun violence.

Instead, Obama failed to discuss guns in his speech, and now some ATF officials are wondering whether the proposed emergency rule will take effect at all.  One official with knowledge of the issue said the delay may relate to questions raised by critics about ATF's legal authority to issue such a proposed rule on an emergency basis.

“This is hugely demoralizing and embarrassing for ATF,” said one former agency official who has followed the debate over the rule closely, speaking on condition of anonymity.

U.S.: Gun raids show cartels at work in Ariz.

Reid Cherlin, a White House spokesman said the proposed rule is still “under review” by the Office of Management and Budget and declined to offer any guidance on when it might take effect, if at all. An ATF spokesman declined comment.

U.S. law enforcement officials said the need for the rule was dramatically highlighted this week by federal indictments in Arizona alleging that networks of “straw buyers” – many of them working for the Sinoloa Cartel and other Mexican drug trafficking organizations -- had illegally bought hundreds of firearms from U.S. gun stores. Out of 700 firearms allegedly illegally purchased by one network between September 2009 and December 2010, more than 640 were bought at a single gun store, the Lone Wolf Trading Co., in Glendale, Ariz., according to one indictment.  Most of the weapons were AK-47s, purchased in bulk quantities of 20 to 40, often by the same buyer within days of a previous purchase. In each case, the buyers filled out federal firearms affirming they were buying the guns for themselves and underwent standard federal background checks.  In fact, according  to  federal authorities, they were buying the guns in order to smuggle them to Mexico, where many were later recovered from drug cartel operatives.

 ATF officials say the proposed rule would be an invaluable “intelligence” tool that would allow them to at least identify suspicious activity at gun stores along the southwest border. Currently, firearms dealers such as Lone Wolf Trading are required to report to ATF whenever somebody buys two or more handguns within a five day period. But they are not required to file such reports in the case of long guns, such as AK-47s, even though such assault rifles are now the “weapons of choice” for the Mexican cartels, officials say.  In this case, the Lone Wolf gun store “did nothing wrong” by selling the AK-47s in bulk quantities, although from a law enforcement perspective, the multiple purchases "kind of hit you on the smell test,” said one U.S. law enforcement official, also speaking on condition of anonymity. 

The proposed rule has drawn strong e criticism from the National Rifle Association and gun industry groups, which have publicly urged members and supporters to file public comments expressing opposition to the White House Office of Management and Budget. (OMB, an arm of the White House executive office, must sign off on all proposed federal rules.)

Larry Keane, senior vice president of the National Shooting Sports Foundation, which represents the gun industry, said his group believes the proposed rule “won't assist law enforcement” and “will make it harder for firearms dealers to cooperate with ATF.”

“The cartels that are using straw purchasers will simply modify their behavior,” he said. “Instead of sending one purchaser to buy five firearms, they’ll send straw purchasers  to five different stores — or they’ll simply recruit five straw purchasers to buy one gun at a time.”

In addition, Keane said, “If ATF can ask for  this in these four states, they can ask for that nationwide and there’s no piece of information they can’t ask for.” 

The uncertainty about the rule has fueled the disappointment of gun control groups that Obama has failed to take any action to press for tighter gun control measures, even after the recent shooting rampage in Tucson that seriously wounded Rep. Gabrielle Giffords of Arizona. Many gun control advocates, such as New York Mayor Michael Bloomberg, had called on Obama to seize the opportunity to forcefully address the issue Tuesday night, pointing out that the president during the 2008 campaign had backed tougher measures, including reinstatement of the federal assault weapons ban.

Obama’s failure to say anything on the subject drew criticism from Bloomberg and other gun control advocates Wednesday.

“It’s depressing, but not surprising,” said Kristen Rand, legislative director of the Violence Policy Center, a group that advocates for gun control.

Responding to the criticism, White House Press Secretary Robert Gibbs suggested Wednesday that Obama may address the gun issue in the future. 

"I wouldn't rule out that at some point the president talks about the issues surrounding gun violence," Press Secretary Gibbs said aboard Air Force One on the way to an event with Obama in Wisconsin, according to the Washington Post. “I don't have a timetable or, obviously, what he would say."

More reporting by Michael Isikoff