HaCKeRz Kr0nlcKLeZ 1/HaCKeRz Kr0nlcKLeZ.iso/drugs/60.fr.32447

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<ARTICLE>
Date="06/22/95"
Citation="60 FR 32447"
Group="legal"
Type="RULE"
Department="DEPARTMENT OF JUSTICE"
Agency="DRUG ENFORCEMENT ADMINISTRATION (DEA), JUSTICE"
Subject="Implementation of the Domestic Chemical Diversion Control Act of 1993 (PL 103-200)"
<HEADER>
DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1307, 1309, 1310, 1313 and 1316

[DEA No. 112F]

RIN 1117-AA23

Implementation of the Domestic Chemical Diversion Control Act
of 1993 (PL 103-200)

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.
</HEADER>
DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1307, 1309, 1310, 1313 and 1316

[DEA No. 112F]

RIN 1117-AA23

Implementation of the Domestic Chemical Diversion Control Act
of 1993 (PL 103-200)

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.
+
------------------------------------------------------------
SUMMARY: This final rule establishes regulations to implement
the Domestic Chemical Diversion Control Act of 1993 (DCDCA or
Act). These regulations provide additional safeguards to prevent
and detect the diversion of listed chemicals by illicit drug
manufacturers.

EFFECTIVE DATE: August 21, 1995. Persons seeking registration
must apply on or before October 5, 1995 in order to continue
their business pending final action by DEA on their application.

FOR FURTHER INFORMATION CONTACT: G. Thomas Gitchel, Chief, Liaison
and Policy Section, Office of Diversion Control, Drug Enforcement
Administration, Washington, D.C. 20537, Telephone (202) 307-
7297.

SUPPLEMENTARY INFORMATION: On October 13, 1994, DEA published
a notice of proposed rulemaking (NPRM) entitled Implementation
of the Domestic Chemical Diversion Control Act of 1993 (Pub.
L. 103-200) in the Federal Register (59 FR 51887). The NPRM
proposed to amend Title 21, Code of Federal Regulations (21
CFR) by adding a new Part 1309, relating to the registration
of List I chemical manufacturers, distributors, retail distributors,
importers and exporters; revising Parts 1310 and 1313 to amend
the recordkeeping and reporting requirements for domestic as
well as import/export activities; adding new procedures with
respect to the exemption of regulated chemicals, including chemical
mixtures and certain drug products that are marketed under the
Food, Drug and Cosmetic Act; adding new procedures regarding
``brokers'', ``traders'' and ``international transactions'';
and revising Part 1316 with respect of DEA's administrative
inspection authority.

   There are two additional notices that DEA has published in
the Federal Register that relate to these regulations. On March
24, 1994 an Interim Rule notice entitled Provisional Exemption
From Registration for Certain List I Chemical Handlers was published
in the Federal Register (59 FR 13881). This rule grants a temporary
exemption from the registration requirements of the DCDCA. The
exemption will remain in effect for any person who files with
DEA a properly completed application for registration on or
before October 5, 1995, until such a time as DEA takes final
action on their application.
   DEA published the second notice in the Federal Register on
December 9, 1994, (59 FR 63738) withdrawing, for further study,
Sections 1310.05(d) and 1310.06(h), which relate to manufacturer
reports, and Sections 1310.12 and 1310.13, which relate to the
exemption of chemical mixtures. The regulations regarding manufacturer
reports and the exemption of chemical mixtures will be re-proposed
at a later date following additional consultations with the
affected chemical industry. Formal comments that were received
in response to the NPRM regarding the withdrawn sections will
be given consideration in the redrafting of a new proposal for
these sections.

Regulatory Flexibility and Small Business Impact

   As required under the Regulatory Flexibility Act (5 U.S.C.
601, et seq.), DEA addressed in detail regulatory flexibility
and small business impact as part of the NPRM. The NPRM discussed
the difficulty in determining with certainty how many persons
would continue to handle regulated ephedrine drug products,
and thus be subject to the regulations. This is due to the rapidly
changing market affected by state laws restricting the availability
of ephedrine, the availability of alternative products that
are not regulated, and the intent of the DCDCA to eliminate
sales to clandestine laboratories.
   No comments were received on this topic or on DEA's estimate
of the number of persons that will seek registration to handle
regulated ephedrine drug products. Since publication of the
NPRM, the number of states taking restrictive actions has increased.
DEA is now aware of twelve states that have enacted laws controlling
regulated ephedrine drug products, eleven by making them either
prescription only or a controlled substance, and one by setting
state licensure and reporting requirements. An additional four
states have recently introduced legislation to control the products,
three by making them a controlled substance and one by setting
age restrictions and requiring reports of all transactions.
In addition, DEA has documented that several wholesalers of
regulated ephedrine drug products, the primary source of supply
for retail distributors, have changed their product line to
combination products that are not subject to regulation. Finally,
recent reports that the Food and Drug Administration (FDA) is
considering moving ephedrine into the prescription drug category
may further influence persons handling ephedrine drug products.
Under the circumstances, the number of retail distributor applicants
under the DCDCA remains uncertain.
   In the NPRM, DEA was able to provide relief from the chemical
registration requirement for persons handling regulated ephedrine
drug products who are already registered with DEA to engage
in similar activities with controlled substances. In addition,
manufacturers of List I chemicals for internal use, with no
subsequent distribution or exportation of the chemical, were
also exempted from the registration requirement. Both of these
proposals have been retained in the final rule. Consideration
was also given to exempting retail distributors from the registration,
recordkeeping and reporting requirements. However, such an action
would negate the purpose of the DCDCA by leaving a significant
portion of the sales of regulated ephedrine drug products unregulated.
   Following submission and review of the comments concerning
the proposed regulations, two requirements were identified which
DEA determined could be removed from the final regulations to
reduce the impact of compliance without compromising the control
goals of the DCDCA. The proposals were the reporting requirement
for sales of 375 dosage units or more of regulated ephedrine
drug products (proposed

---- page 32448 ----

Section 1310.05(a)(2)) and the restrictions regarding employment
of certain persons (proposed Section 1309.72). These proposals
have been removed from this final rule.
   Further, DEA also determined that the proposed regulations
regarding manufacturer reporting (proposed Sections 1310.05(d)
and 1310.06(h)) and the exemption of chemical mixtures (proposed
Sections 1310.12 and 1310.13) could result in a greater than
anticipated burden and, possibly, a duplicative reporting requirement,
for the industry. The requirements were withdrawn by notice
published in the Federal Register on December 9, 1994, (59 FR
63738) for reassessment and redrafting following consultation
with the affected industry.
   DEA has endeavored, within the requirements and goals of
the DCDCA, to limit the impact of these regulations on the affected
industry. In some instances, as discussed below in the responses
to specific comments (e.g., separate registration for separate
locations) the specific language of the DCDCA established the
parameters of control. However, in other areas, DEA has been
able to take additional steps in these final regulations to
lessen the impact of the DCDCA's requirements on the affected
industry, while simultaneously carrying out the chemical control
mandate of the DCDCA.

Public Comments

   A total of 22 comments were submitted regarding the proposed
rulemaking. While the general tone of the comments was supportive
of efforts to prevent the flow of listed chemicals to clandestine
laboratories, the commentors raised a number of concerns regarding
certain provisions of the proposed regulation, as follows:

Registration

   1. Six comments objected to the requirement in Section 1309.23
that a separate registration be obtained for each location at
which List I chemical activities are carried out. The comments
suggested that DEA allow companies to obtain a single registration,
with attendant fee, for multiple locations or activities.
   The law is specific on this point. The DCDCA requires that
a separate registration be obtained at each location at which
List I chemicals are distributed, imported or exported (21 U.S.C.
822(e) and 958(h)). In accordance with the requirements of the
Office of Management and Budget (OMB) Circular A-25, the costs
associated with each preregistration investigation must be recovered
through the fees.
   2. Four comments noted the chemical industry's practice of
storing and distributing chemicals from independently operated
warehouses. These commentors questioned how the requirement
for separate registrations for separate locations would apply
to these warehouses.
   In reviewing these comments, there appeared to be some confusion
regarding whether the commentors were addressing warehouse activities
that involved List I chemicals or List II chemicals. In subsequent
contacts with commentors for clarification, DEA was able to
specifically identify only two comments involving warehouses
that handle List I chemicals. DEA wishes to clarify that the
registration requirement applies only to the distribution, importation
or exportation of List I chemicals. Activities involving List
II chemicals are not subject to the registration requirement.
   With respect to the use of independently owned warehouses,
the Controlled Substances Act (CSA), as amended, exempts warehousemen
from the registration requirement (21 U.S.C. 802(39), 822(c)(2),
and 957(b)(1)(B)) for activities carried out in the normal course
of their business. Instead, the person who distributes List
I chemicals from independently owned warehouses must register
at each location and ensure that the other chemical control
requirements, including security, record keeping, reporting,
etc., for their products are met while under the supervision
of the non-registered warehouseman.
   3. One comment questioned what procedures would apply if
more than one chemical company stored and distributed chemicals
from a single warehouse, and whether separate registrations,
if required, would result in duplicative fees.
   Each person who distributes, imports or exports a List I
chemical must register with DEA for each separate location at
which such activities are carried out. If more than one person
independently carries out such activities at the same location,
then each person must obtain a registration for their activities
at that location. Each application would be subject to a separate
pre-registration investigation that would require, among other
things, a visit to the applicant's business offices (which in
this circumstance would be separate from the warehouse). Therefore,
the fees would not be duplicative. The fees for registration
are based on the costs associated with the registration, as
set forth in the NPRM. DEA's experience in working with the
chemical industry indicates this is a rare business practice
with respect to List I chemicals.
   4. Two comments questioned the impact that registration would
have on research and development (R&D) activities that were
described by the commentors as involving ``very small quantities''
of chemicals in mixtures that may be sent to laboratories for
physical property or performance testing.
   The DCDCA does not require registration for research or development
activities, only distributing, importing or exporting. Thus
laboratories performing such testing would not be subject to
the registration requirement for research and development activities.
Further, the products referenced by the commentors are chemical
mixtures, therefore, they will be subject to the chemical mixture
exemption regulations that are being developed. It is DEA's
intent, to the extent possible, that the distribution of such
mixtures to laboratories for testing be exempted from the registration
requirement.
   5. Two comments expressed concern that manufacturers would
be forced to suspend their activities due to delays in the approval
of their registrations.
   Early in the regulatory development process, DEA recognized
that the demands of establishing a new registration program
would require a transitional procedure that did not disrupt
ongoing legitimate business activities. As a consequence, DEA
published a notice in the Federal Register on March 24, 1994
(59 FR 13881), that provides a temporary exemption from the
registration requirement. Any person who submits a proper application
for registration on or before October 5, 1995 will remain exempt
from the registration requirement until DEA takes final action
regarding their application. There is no cause for current legitimate
manufacturers to be concerned that they will have to suspend
their activities pending issuance of their registrations.
   6. Two comments questioned how the registration requirement
would apply to manufacturers of non-regulated chemicals that
contain List I chemicals as either unintentional by-products
or impurities.
   This concern has been raised with respect to the application
of chemical diversion control requirements on a number of occasions
in the past. The manufacture of a List I chemical as an unintentional
by-product during the manufacture of another chemical does not
require registration, so long as the List I chemical is not
distributed or exported. As to the presence of List I

---- page 32449 ----

chemicals as impurities in non-regulated products, it is DEA's
understanding that the impurities are present only in trace
amounts. It is not DEA's intent that the distribution of non-
regulated chemicals that contain trace amounts of List I chemicals
as unintentional by-products of the manufacturing process be
subject to the registration requirement.
   7. One comment suggested that if the Food and Drug Administration
(FDA) removes ephedrine from over-the-counter status, the primary
reason for, and economic foundation of, the registration program
would be removed through the elimination of the need to register
and collect fees from the estimated 10,000 retail distributors
that handle ephedrine drug products that are regulated as List
I chemicals. The comment urged that if such a circumstance occurs,
DEA should withdraw the registration requirement.
   The DCDCA requires registration of any person who distributes,
imports or exports any List I chemical and was not intended
solely to control the distribution of regulated ephedrine drug
products. DEA's chemical control program, including registration,
applies to all List I chemicals. The potential elimination of
the need to register retail distributors of ephedrine drug products
would not change the purpose of the program. Secondly, the FDA
action is only speculative at this time, and its subsequent
impact, if passed, is even more uncertain. However, OMB Circular
A-25 requires the review of all fees every two years. Under
this review, any major change in the registration population
would require reassessment of the fees for other registrants.
Any change to the fees would be subject to notice and comment.
   8. One comment characterized the registration of sites that
manufacture List I chemicals as unnecessary, since it duplicates
existing site reporting requirements under other Federal laws.
A second comment questioned the need for a pre-registrant investigation
and fee for high volume manufacturers.
   The DCDCA requires persons who distribute, import or export
a List I chemical to obtain a registration and requires that
DEA determine if such registration would be in the public interest
pursuant to the criteria set forth in Section 823(h) of the
Act. The pre-registrant investigation must be conducted to determine
whether the criteria regarding the public interest are met.
The required fee is assessed to cover the costs of that investigation.
   9. One comment requested clarification of the exemption from
chemical registration found in Section 1309.25, for companies
that are registered with DEA to handle controlled substances.
   A controlled substance registrant that distributes, imports
or exports a List I chemical, other than a regulated drug product
that may be marketed or distributed under the Food, Drug, and
Cosmetic Act (FDCA), must obtain a chemical registration for
such activities. The exemption in Section 1309.25 applies only
to controlled substance registrants who engage in similar activities
with a regulated drug product that may be marketed or distributed
under the FDCA. The exemption is directed at the approximately
65,000 pharmacies and others who are already registered with
DEA under the CSA, so as to avoid a duplicative registration
requirement on these registrants. In response to this comment
and to help clarify the provisions of the exemption, Section
1309.25 has been amended to specify that the exemption applies
only to activities involving drug products that may be marketed
or distributed under the Food, Drug and Cosmetic Act, that are
regulated as List I chemicals pursuant to Section 1310.01(f)(1)(iv).
   10. One comment expressed concerns that the regulations will
require persons who handle exempt chemical mixtures containing
List I chemicals to register.
   The proposed Section 1310.13, which was withdrawn for re-
publication at a later date, established that the chemical mixtures
exempted by the Administrator would not be subject to the registration,
recordkeeping, reporting, and import/export provisions of the
Act. It is DEA's intention that the same provision will be included
in the new chemical mixture exemption regulations. In the interim,
chemical mixtures will be exempt until the exemption regulations
are promulgated. However, creation of a chemical mixture for
the purpose of evading the requirements of the CSA is a violation
of CSA (21 U.S.C. 843(a)(8), subject to a penalty of imprisonment
for not more than four years, a fine of $30,000, or both.

Brokers and Traders

   11. Three comments found the definition of ``broker'' and
``trader'' in Sections 1310.01(k) and 1313.02(m) to be overly
broad. Specifically, subparagraph (3) of each section may be
read as covering any action, whether deliberate or inadvertent,
that results in an international transaction taking place, i.e.,
a chemical distributor provides a foreign customer with a list
of possible sources for a chemical that the distributor does
not carry, thus ``bringing together a buyer and a seller.''
   DEA agrees that the definition is not intended to cover such
circumstances. DEA has amended the wording of subparagraph (3)
of the definition to read ``Fulfilling a formal obligation to
effect the transaction by bringing together a buyer and seller,
a buyer and transporter, or a seller and transporter; or by
receiving any form of compensation for so doing.''
   12. One comment requested clarification of whether import
brokers and freight forwarders would be considered brokers or
traders.
   Brokers and traders are defined as U.S. based persons who
assist in arranging international transactions in listed chemicals;
the definition does not apply to domestic transactions, including
imports into or exports from the United States. Further, brokers
and traders, as defined, do not take possession of listed chemicals.
Under the circumstances, U.S. based import brokers and freight
forwarders would not be considered brokers or traders, as defined,
while acting in the normal course of their business. However,
it must be understood that imports, exports and distributions
of listed chemicals are subject to other provisions of the CDTA
and DCDCA and a regulated person is responsible for those transactions.

Security Provisions

   13. Two comments questioned the appropriateness of the proposed
Section 1309.72, which concerns employment of persons who have
been convicted of a felony relating to controlled substances
or listed chemicals or have been subject to a denial, suspension
or revocation of a DEA registration. One comment raised the
issue of whether the requirements violate occupational safety
and health, privacy, and non-discrimination laws. The other
pointed out that in the absence of the stringent security and
storage requirements applied to controlled substances, a far
greater number of personnel would have access to List I chemicals,
such as ephedrine, thus increasing the burden required to satisfy
the requirements of this section.
   DEA agrees that the lack of restrictions regarding possession
of List I chemicals makes it difficult to employ comprehensive
screen practices for all potential employees as proposed in
Section 1309.72. However, registrants must employ safeguards
to prevent List I chemicals from being diverted from their businesses
into the illicit traffic. DEA is, therefore, withdrawing the
proposal prohibiting such employment, and in its place establishing
that registrants must exercise caution in their employment practices
regarding

---- page 32450 ----

persons who have been convicted of a felony relating to controlled
substances or listed chemicals, or have been subject to denial,
suspension or revocation of a DEA registration. The registrant
must understand that if an employee diverts a listed chemical,
the registrant may be subject to a revocation action. The registrant
must assess the risks involved in employing such a person and,
in the event of employment, institute procedures to limit the
potential for diversion of List I chemicals by such an employee.
   14. One comment requested that DEA provide comprehensive
guidance regarding assessment of security measures as outlined
in Section 1309.71(b).
   List I chemical handlers vary greatly in size, type of business
and volume handled. Under such circumstances, it would not be
desirable to establish specific, inflexible security controls
and procedures. The factors outlined in Section 1309.71(b) provide
a general framework of elements that allow potential registrants
flexibility in assessing the potential threat of diversion and
to determine measures necessary to prevent diversion. DEA has
made and will continue to make available additional suggestions
regarding security in separate publications for the chemical
industry. In addition, as set forth in Section 1309.71(c), an
applicant or registrant may, following development of a proposed
system of controls and procedures, submit materials and plans
regarding the system to DEA for assessment.
   15. One comment opposed the proposal that retailers stock
ephedrine drug products that are regulated as List I chemicals
behind a counter on the basis that this requirement creates
a third class of drugs (Section 1309.71(a)(2)).
   DEA is regulating a List I chemical, not a drug. Section
1309.71(a)(2) provides a basic security measure for a List I
chemical that is known to have been diverted from both the retail
and wholesale levels for the purposes of manufacturing illicit
controlled substances. The section does not prohibit any person
from purchasing the product or establish any restrictive requirements,
such as sale by prescription only, that must be met by the purchaser.
The requirement simply provides an additional means of controlling
diversion without restricting public access to the product.

Section 1313.12 Requirement of 486 for Imports

   16. One comment questioned the need for advance notice of
importation in cases of a return of a previously exported listed
chemical and suggested that manufacturers be exempted from this
requirement for the return of chemicals which they exported.
   DEA previously recognized, under the 1988 Chemical Diversion
and Trafficking Act, that exports of listed chemicals might
be rejected or otherwise undeliverable, requiring that they
be returned to the U.S. exporter. Existing Section 1313.22(e)
provides that exports of listed chemicals that are refused,
rejected, or otherwise deemed undeliverable may be returned
to the U.S. exporter of record without advance notice or a 486
form. That section requires that a written notification be submitted
to DEA within a reasonable time following the return.
   However, an export that has cleared foreign customs and been
accepted by the foreign consignee is not subject to this exception.
Any such shipments subsequently returned to the U.S. are imports,
subject to all applicable requirements.
   17. Two comments questioned the provisions of Section 1313.12(e).
One objected that the summary reports of imports required by
Section 1313.12(e) are duplicative, since DEA would already
have the information available from previously filed 486 forms.
The second questioned whether waiver of the advance notice requirement
in Section 1313.21(f) would also mean waiver of the quarterly
report in Section 1313.21(e), and suggested that DEA publish
in Section 1313.21(f) a list of countries with waivers when
the final rule is published.
   DEA agrees that the wording of this section needed clarification.
Section 1313.12(e) proposed minimized reporting procedures for
export transactions in circumstances where the Administrator
has waived the advance notice requirements as unnecessary for
effective chemical diversion control. The comments point out
that the proposed section did not specify that a 486 form need
not be filed for such transactions. The section has been amended
to clarify that a 486 form does not have to be submitted for
exports under this section; the regulated person need only file
a quarterly summary of such exports. There are presently no
waivers established under Section 1313.21(f). This is a new
authority granted to the Administrator by the DCDCA. Countries
to which this new provision will apply will be determined after
implementation of these regulations.
   18. One comment raised concerns regarding the need to file
an Import 486 form when foreign customers return containers
that have not been completely emptied.
   DEA has long recognized the standard industry practice to
allow a certain level of `overage' in the amount of chemicals
actually shipped in very large tank car/cargo ship type exports
due to the difficulty to full recovery and, therefore, that
containers that still contain some of the chemicals may be returned.
DEA has not required that a 486 form be filed for the return
of containers with such ``leavings'', when the amount of chemical
is within normal or standard residue levels.

Exports

   19. One comment noted the provisions of the DCDCA allowing
the Administrator to withdraw the waiver of the advance notice
requirement for all exports of listed chemical to a specified
country. The commentor asked if, in the future, existing waivers
might be withdrawn. The comment also questioned whether other
countries have agreed to comply with the same rules.
   The DCDCA allows DEA to require, by regulation, that all
exports of a listed chemical to a specified country be subject
to the advance notice requirement, regardless of regular customer
status, if it is determined that advance notification of export
is necessary for compliance with international agreements regarding
chemical controls or is necessary to support chemical control
programs in other countries. It is possible that the waiver
of the advance notice requirement for exports of a listed chemical
to a specified country may be withdrawn. However, DEA would
be required to publish a notice in the Federal Register regarding
the withdrawal of the waiver and provide an opportunity for
public comment. With respect to the question of compliance with
these rules by other countries, all parties to the United Nations
Convention Against Illicit Traffic in Narcotic Drugs and Psychotrophic
Substances of 1988 are required to be able to provide advance
notice of exports of List I chemicals, if requested by the importing
country.
   20. One comment requested clarification of the term ``reasonable
cause'' as used in Section 1313.21(g) and of the responsibilities
of exporters to know the laws of the countries to which chemicals
are exported.

---- page 32451 ----

   The term ``reasonable cause'' applies to transactions that,
due to circumstances such as an unusual method of payment or
shipping or quantities inconsistent with stated uses, raise
concerns that a customer or a transaction is not what it is
represented to be. Exporters should understand the nature of
their legitimate transactions and should make informed decisions
as to whether the circumstances surrounding a specific transaction
give rise to questions regarding the legitimacy of the transaction.
As to the laws of other countries, the exporter is expected
to make a reasonable effort to determine the validity of a transaction
prior to exporting a listed chemical to a country. DEA has published
information regarding foreign import restrictions in the Federal
Register. If further restrictions become known to DEA, they
also will be published in the Federal Register.
   21. One comment objected to the general export reporting
requirements as burdensome and unnecessary.
   The general export reporting requirements were established
by the CDTA in 1988, and have been in continuous use for over
five years without presenting any significant obstacles to legitimate
chemical exports. As noted in the preamble to the NPRM, the
export controls have been successful in significantly reducing
the availability of U.S. chemicals to clandestine laboratories
in foreign countries.

Definition of Therapeutically Insignificant

   22. Two comments argued that the U.S. Food and Drug Administration
(FDA) is the appropriate authority for determining whether a
product contains therapeutically significant quantities of a
medicinal ingredient and that FDA's tentative final monograph
for ephedrine combination products should be used as the standard
for making such determinations.
   At this time, the monograph is a proposed rule. FDA acknowledges
that it must publish a final rule in order to actually establish
a monograph. When FDA publishes the final monograph, DEA will
consider use of the monograph as the determinative standard
for therapeutically significant quantities of a medicinal ingredient
under the DCDCA. Until such a time, the compendiums set forth
in Section 1310.01(f)(1)(iv)(A) provide additional flexibility
and will be the primary standard for determining if therapeutically
significant quantities of a medicinal ingredient are present
in a product.
   23. Two comments objected to the provision that a person
applying for exemption of a product, the formulation of which
is not listed in the compendiums, must submit verification from
FDA that the product may be lawfully marketed under the Food,
Drug and Cosmetic Act. The commentor noted that FDA does not
provide such verifications.
   DEA agrees and has removed that language. In its place, the
person applying for the exemption must certify to DEA that the
product may be lawfully marketed under the Food, Drug and Cosmetic
Act.
   24. One comment questioned the lack of justification for
the choices of compendiums and suggested that the regulation
be expanded to include any recognized authority, such as textbooks,
treatises, compendia, statements of qualified experts, medical/scientific
journals or clinical studies conducted by outside researchers
or by a drug company.
   The listed compendiums were chosen because they are readily
available and are widely recognized as reliable, scientifically
accurate and comprehensive listings of products that are commercially
available. With respect to the additional sources of information
suggested, if a product does not appear in the named compendiums,
DEA has provided manufacturers an additional avenue for product
exemption. A person requesting a determination from the Administrator
that a product does contain therapeutically significant amounts
of a certain medicinal ingredient may submit any such information
that the person believes supports their request.
   25. One comment suggested that wholesalers do not have the
expertise to determine whether a drug meets the therapeutically
significant standard. Manufacturers should be responsible for
making the determination and providing notification to wholesalers
that the product meets the requirements.
   DEA agrees that manufacturers are responsible for determining
whether a product meets the therapeutically significant standard
and for notifying their customers of whether the product is,
therefore, exempt from List I chemical controls. However, if
a distributor has any reason to question a product, then the
distributor has an obligation to attempt to determine whether
the product meets the standard. If any person, wholesaler or
otherwise, is unable to determine from the listed compendiums
that a product meets the therapeutically significant criteria,
then that person may contact the DEA for assistance in making
such a determination.

Contents of Records and Reports

   26. One comment acknowledged that most of the information
required by the regulations is already maintained in general
business records for all transactions. The exception is the
registration number of the purchaser. The comment objected that
manufacturers should not be required to inquire about the registration
number of the customer so long as the legitimacy of the customer
is known.
   DEA attempted to design the DCDCA recordkeeping requirements
to be consistent with existing business records to the extent
possible, as recognized by this commentor. One step in establishing
the legitimacy of a customer is determining the customer's activity
with the regulated chemical and, if that activity requires registration,
that the customer is registered to engage in the activity. A
record of the customer's registration number confirms that the
supplier has taken one of the appropriate steps to determine
the legitimacy of the customer and the transaction.
   27. One comment noted that the disparity between the requirements
for maintenance of records for controlled substances (2 years)
and List I chemicals (4 years) would compel the maintenance
of separate recordkeeping systems for chemical and pharmaceutical
records.
   Although both laws are enforced by DEA, the chemical control
requirements of the CDTA and DCDCA are entirely separate from
the pharmaceutical requirements under the CSA. Each law establishes
different recordkeeping standards (21 U.S.C. 827 for controlled
substances and 21 U.S.C. 830 for listed chemicals), and with
the exception of one List I chemical (regulated ephedrine products)
there is little overlap between firms required to keep records
under the two laws.
   28. One comment objected to the reporting requirement in
Section 1310.05(a)(2) as inappropriate. The commentor suggested
that establishing a specific level for what constitutes an extraordinary
quantity and subjecting a registrant to civil and criminal penalties
for failing to file such reports should not be a role for DEA.
DEA has not set specific levels for what constitutes extraordinary
quantities for controlled substances, and should not do so for
OTC drug products. Further, the pharmacist counseling provision
would create a third class of drugs and would limit availability
of the drugs to the public, since there are many more retailers
that sell the regulated

---- page 32452 ----

ephedrine products than there are pharmacies.
   This reporting requirement was proposed with the intent of
providing a clear standard with respect to reportable transactions
involving regulated ephedrine drug products. However, the comments
demonstrate that industry would prefer flexibility and discretion
based on the circumstances of the transaction rather than a
specific standard. Therefore, the proposed section 1310.05(a)(2)
and related language in Section 1310.05(b) have been removed.
   However, removal of the specific standard for reporting does
not relieve regulated persons and registrants of the responsibility
to report transactions involving an extraordinary quantity of
a listed chemical. Registrants must review transactions involving
the sale of regulated ephedrine drug products to individuals
for personal use within the context of the established FDA guideline
regarding the manner in which the products should be used and
the appropriate dosing levels. In this regard, 375 dosage units
of regulated ephedrine drug products within a calendar month
for individual use provides a valid reference for registrants
in determining whether additional efforts should be made to
confirm the validity of a transaction.

Miscellaneous

   29. Two comments were received questioning the use of the
DEA Chemical Code Numbers set forth in Section 1310.02, rather
than the familiar Chemical Abstract Services (CAS) or Harmonized
Tariff System, (HTS) Numbers.
   DEA has reviewed these numbering systems and determined that
they were designed for other purposes and that their use could
lead to confusion and jeopardize the accuracy of the information
reported to DEA. In the HTS numbering system there are multiple
chemicals that are assigned the same number and in the CAS numbering
system that are chemicals that are assigned multiple codes.
DEA has produced and made available a chemical reference guide
that provides a cross reference to the CAS and HTS numbers,
which will be updated to include the new Chemical Code Numbers.
   With respect to the chemical codes, DEA discovered, following
publication of the NPRM, that the Chemical Code Numbers assigned
to Benzyl Chloride (8568) and Benzyl Cyanide (8570) were incorrect.
The correct Chemical Code Number for Benzyl Chloride is 8570
and for Benzly Cyanide is 8735. These corrections have been
made in this final order.
   30. Three comments were submitted regarding the addition
of new chemicals to List I or List II. The first comment questioned
the addition of hydrochloric and sulfuric acid to List II without
any justification. The second questioned the addition of benzaldehyde
and nitroethane without specific justification of the addition
or the thresholds. The third recommended that DEA continue to
publish the proposed addition of any new chemicals for notice
and comment and suggested that DEA hold public hearings on the
proposed addition of new chemicals.
   With respect to the hydrochloric and sulfuric acid, these
chemicals were added to List II by final order published in
the Federal Register on September 22, 1992 (57 FR 43615). The
justification for the action was provided in the Federal Register
notice regarding the addition of the two chemicals. With respect
to nitroethane and benzaldehyde, Section 8 of the DCDCA amended
Section 802(34) of the CSA to add the chemicals to List I; there
addition to Section 1310.02 is simply a conforming amendment.
Regarding the thresholds, benzaldehyde and nitroethane are diverted
and used in clandestine laboratories for the illicit manufacture
of controlled stimulants in a manner similar to other List I
chemicals. These other chemicals, with the exception of ephedrine,
have established threshold levels that were based on a review
of data regarding the quantities distributed and used licitly,
the quantities diverted and used illicitly, and the amount of
each chemical necessary to synthesize a certain amount of controlled
substance. DEA has reviewed the same type of data for benzaldehyde
and nitroethane and found that the data supported the establishment
of similar thresholds for the two chemicals. The specific thresholds
of 4 kilograms for benzaldehyde and 2.5 kilograms for nitroethane
were based on the licit and illicit uses of the two chemicals,
and are consistent with the thresholds set for other List I
chemicals used in the illicit production of controlled stimulants.
Regarding the third comment, Section 1310.02 already clearly
establishes that any proposed addition or deletion of chemicals
from List I or List II must be published in the Federal Register
with opportunity for public comment. It has been DEA's experience
that the notice and comment procedure provides a satisfactory
opportunity for affected persons to provide important information
and advice regarding the proposed action. The comment period
also satisfies the compelling need for quick response while
providing DEA the option to extend the comment period, should
the need for additional comment arise.
   31. Two comments argued that DEA cannot regulate ``herb-containing
dietary supplements and herbs containing Ephedra and its alkaloids''
on the grounds that the products are dietary or nutritional
supplements and not drugs.
   The CDTA and DCDCA define and establish controls over List
I and List II chemicals. Under these acts, the only exceptions
to the application of regulatory controls over products containing
listed chemicals are for certain drug products that are lawfully
marketed under the Food, Drug and Cosmetic Act (21 U.S.C. 802(39)(A)(iv))
and for chemical mixtures. Within this context, DEA has reviewed
the issue of ephedra, e.g., the entire plant or the overground
portion the ephedra plant and determined that the unprocessed
plant material ephedra and products containing the unprocessed
plant material ephedra are not subject to the regulatory provisions
of the CDTA and DCDCA. However, preparations of the ephedra
plant, such as extracts and concentrates, that contain ephedrine,
do fall within the definition of chemical mixture (21 C.F.R.
1310.01(g)), thus, they are subject to the regulations as they
apply to chemical mixtures. Chemical mixtures are currently
exempt from the regulatory provisions of the CDTA and DCDCA,
pending promulgation of regulations concerning the exemption
of chemical mixtures.
   32. One comment requested clarification of what constitutes
``unusual or excessive loss or disappearance of a listed chemical.''
   This term applies to circumstances that appear to be outside
the framework of normal business occurrences. Regulated persons
and registrants understand the nature of their chemical activities
and should be able to make informed decisions as to whether
the above term applies to conditions they may encounter and
to be able to explain their decision sufficiently to convince
a ``reasonable person.''
   33. One comment requested clarification of the term transshipments.
   For purposes of DEA's regulations, a transshipment is an
exportation of a listed chemical from one foreign country to
another foreign country, which exportation transits the jurisdiction
of the United States.
   34. Two comments questioned the format of paragraphs (f)(1)(iv)(B)
and (f)(1)(iv)(C) of Section 1310.01. The first noted that while
the present format suggests independent subjects, the use

---- page 32453 ----

of ``and'' at the end of (B) implies that (C) is a subpart of
(B). A second comment suggested that paragraph (f)(1)(iv)(B)
should contain a reference to Section 1310.10, which sets the
criteria for removal of the exemption.
   DEA agrees. The two paragraphs have been redesignated as
paragraphs (f)(1)(iv)(B)(1) and (f)(1)(iv)(B)(2) of Section
1310.01, and the appropriate citation to Section 1310.10 will
be included. Further, in order to keep the language of the section
consistent with the language of the DCDCA, the period at the
end of Section 1310.01(f)(1)(iv)(A)(4) will be deleted and ``;
or '' will be inserted in its place.
   35. One comment requested clarification of the term ``imminent
danger'' as used in the revocation provisions as uses in Section
1309.44.
   The term ``imminent danger'', as used in Section 1309.44,
refers to actions by a registrant that demonstrate a flagrant
indifference to and disregard for the law and the health and
safety of the public. There are no specific criteria for determining
what constitutes ``imminent danger''. However, interested persons
may wish to review the Federal Register for past notices of
suspension of controlled substance registrations. In any action
under this section related to the activities of a specific registrant,
DEA will list the facts that are considered to present an imminent
danger.
   36. One comment requested clarification of Section 1310.01(f)(1)(ii),
with specific emphasis on whether a common or contract carrier
would be required to register with DEA for activities involving
the delivery of a listed chemical either to or by the carrier.
   Section 1310.01(f)(1)(ii) specifically excludes the delivery
of a listed chemical by a common or contract carrier for carriage
in the lawful and usual course of business from the definition
of a regulated transaction. The common or contract carrier is
not subject to the registration requirement when transporting
chemicals on a registrant's behalf. The registrant remains responsible
for the listed chemicals until they are delivered to and accepted
by the consignee. In this regard, it is important that a registrant
take reasonable measures to insure that any common or contract
carrier used to ship listed chemicals to customers will provide
adequate security against in-transit losses or thefts.
   37. Two comments questioned the provisions in Sections 1310.11(b)
and 1310.15(b), which establish recordkeeping and reporting
requirements for regulated persons who manufacture exempted
drug products, on the grounds that a person who manufactures
an exempted drug product is not a regulated person.
   The referenced sections as well as Section 1310.13(b), were
written with respect to a regulated person who also manufactures
an exempted drug product. Upon further consideration, DEA has
determined that regulated persons should not be required, solely
because of their status as a regulated person, to keep records
and make reports of transactions that would otherwise be exempted
from those requirements. Sections 1310.11(b), 1310.13(b) and
1310.15(b) have been removed.
   38. One comment requested clarification of Section 1309.45
and raised questions regarding procedures to be followed if
an application for registration renewal form (DEA Form 510a)
is not received in a timely manner.
   Section 1309.45 applies only to a registrant who is subject
to action by the Administrator to revoke or suspend his or her
registration. If the registrant submits a renewal application
within the prescribed time period and the Administrator has
not issued a final order suspending or revoking the registration,
then the registration is deemed to continue in effect until
the Administrator issues his final order. As to renewal in circumstances
other than those set out in Section 1309.45, Section 1309.32(c)
establishes the procedures. DEA will mail out renewal notices
to registrants approximately 60 days prior to the date of expiration.
If a registrant has not received their renewal notice within
45 days of their expiration date, then a written request for
a replacement form must be provided to DEA. A properly completed
renewal application and fee must be received by DEA prior to
the registrant's expiration date if registration is to be continued
without interruption. If a registration is allowed to expire,
the registrant is no longer authorized to distribute, import
or export a List I chemical. DEA will mail delinquency notices
to expired registrants approximately 90 days after the expiration
date.
   39. One comment questioned the DEA's placing priority on
the completion of pre-registration investigations of non-retail
firms while DEA's Federal Register notice of March 17, 1994
(59 FR 12562, Elimination of Threshold for Ephedrine) focused
on the diversion of ephedrine tablets at the retail level. The
comment also questioned why DEA has proposed steps to lessen
the impact on retail distributors and yet has not specifically
proposed steps to lessen the impact on non-retail distributors.
   By directing its focus at the non-retail level during the
initial registration phase, DEA will identify those firms that
have failed to adequately identify their customers or have been
shipping to questionable retail firms. With this information,
DEA can focus its initial retail investigations on the most
likely sources of diversion. With respect to the second question,
DEA has taken steps to limit the impact of the chemical controls
on all persons. The exemption from the registration requirement
in Section 1309.25 applies to any person, either retail or non-
retail, registered with DEA to handle controlled substances,
who also engages in activities with regulated ephedrine drug
products. Further, DEA has attempted to design the chemical
control requirements to be consistent with existing business
practices, as noted in comment number 26 with respect to the
recordkeeping requirements.
   40. One comment objected to the exclusion of mail order activities
from the definition of retail distribution.
   As noted in the supplemental information to the NPRM, retail
distributors engage in a limited activity as regulated by the
DCDCA. The amounts of product distributed per transaction are
generally small and sales are to individuals only. By contrast,
it has been DEA's experience that mail order distributors of
ephedrine drug products that are regulated deal with both individuals
and businesses and the volume of sales and product can be quite
large. Additionally, such firms are often less readily able
to positively identify their customers. Investigations will
be significantly more complex and time consuming for a mail
order distributor than for a retail distributor. It is appropriate
that mail order activities remain classified as distributors
rather than retail distributors.

Protection of Confidential Business Information

   41. Four comments expressed concern regarding the safeguarding
of confidential business information (CBI) that will be collected
by DEA in connection with chemical control activities. Two of
the comments suggested that DEA establish specific and strong
provisions regarding protection of CBI.
   DEA operates national diversion control programs related
to controlled substances and listed chemicals. The controlled
substance program has been in effect since the early 1970's
and the chemical program since the late 1980's.

---- page 32454 ----

In each program, DEA collects CBI in the course of investigations
and required reporting. With respect to the chemical program,
the release of CBI that is protected from disclosure under Exemption
4 of the Freedom of Information Act, 5 U.S.C. 552(b)(4) (FOIA),
is governed by Section 830(c) of the CSA (21 U.S.C. 830(c))
and the Department of Justice procedures set forth in 28 CFR
16.7.
   Section 830(c) provides that information collected under
Section 830 that is protected from disclosure under Exemption
4 may only be released in circumstances related to the enforcement
of controlled substance or chemical laws, customs laws, or for
compliance with U.S. obligations under treaty or international
agreements. The Department of Justice procedures establish that
if a FOIA request is received for release of information that
is protected under Exemption 4, the submitter of the protected
information must be notified of such a request, given an opportunity
to object to the disclosure and allowed to provide justification
as to why the information should not be disclosed.
   In addition to the statutory and regulatory requirements,
DEA has established internal guidelines governing the handling
of CBI, including provisions that the material be maintained
in locked containers, that access to the information be on a
need-to-know basis, and that any disclosure under Section 830
be made only pursuant to a non-disclosure agreement by the receiving
party.
   This regulation has been drafted and reviewed in accordance
with Executive Order 12866, Section 1(b), Principals of Regulation.
The DEA has determined that this rule is a significant regulatory
action under Executive Order 12866, Section 3(f), Regulatory
Planning and Review, and accordingly this rule has been reviewed
by the Office of Management and Budget.
   This action has been analyzed in accordance with the principles
and criteria in Executive Order 12612, and it has been determined
that the proposed rule does not have sufficient federalism implications
to warrant the preparation of a Federalism Assessment.

List of Subjects


21 CFR Part 1307

   Drug traffic control.

21 CFR Part 1309

   Administrative practice and procedure, Drug Traffic Control,
Security measures, List I and List II chemicals.

21 CFR Part 1310

   Drug Traffic Control, Reporting Requirements, List I and
List II chemicals.

21 CFR Part 1313

   Drug Traffic Control, Imports, Exports, Transshipment and
in-transit shipments, List I and List II Chemicals.

21 CFR Part 1316

   Administrative practice and procedure, Drug Traffic Control,
Research, Seizures and forfeitures.
   For the reasons set out above, 21 CFR Parts 1307, 1309, 1310,
1313 and 1316 are amended as follows:

PART 1307-[AMENDED]

   1. The authority citation for part 1307 continues to read
as follows:

   Authority: 21 U.S.C. 821, 822(d), 871(b), unless otherwise
noted.

   2. Section 1307.03 is revised to read as follows:

sec 1307.03  Exceptions to regulations.

   Any person may apply for an exception to the application
of any provision of parts 1301-1313, or 1316 of this chapter
by filing a written request stating the reasons for such exception.
Requests shall be filed with the Administrator, Drug Enforcement
Administration, Department of Justice, Washington, D.C. 20537.
The Administrator may grant an exception in his discretion,
but in no case shall he be required to grant an exception to
any person which is not otherwise required by law or the regulations
cited in this section.
   1. 21 CFR Part 1309 is added to read as follows:

PART 1309-REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, IMPORTERS
AND EXPORTERS OF LIST I CHEMICALS

General Information
Sec.
1309.01 Scope of part 1309.
1309.02 Definitions.
1309.03 Information; special instructions.

Fees for Registration and Reregistration
1309.11 Fee amounts.
1309.12 Time and method of payment; refund.

Requirements for Registration
1309.21 Persons required to register.
1309.22 Separate registration for independent activities.
1309.23 Separate registration for separate locations.
1309.24 Exemption of agents and employees.
1309.25 Exemption of certain controlled substance registrants.
1309.26 Exemption of law enforcement officials.
1309.27 Exemption of certain manufacturers.

Application for Registration
1309.31 Time for application for registration; expiration date.
1309.32 Application forms; contents, signature.
1309.33 Filing of application; joint filings.
1309.34 Acceptance for filing; defective applications.
1309.35 Additional information.
1309.36 Amendments to and withdrawals of applications.

Action on Applications for Registration: Revocation or Suspension
of Registration
1309.41 Administrative review generally.
1309.42 Certificate of registration; denial of registration.
1309.43 Suspension or revocation of registration.
1309.44 Suspension of registration pending final order.
1309.45 Extension of registration pending final order.
1309.46 Order to show cause.

Hearings
1309.51 Hearings generally.
1309.52 Purpose of hearing.
1309.53 Waiver or modification of rules.
1309.54 Request for hearing or appearance; waiver.
1309.55 Burden of proof.
1309.56 Time and place of hearing.
1309.57 Final order.

Modification, Transfer and Termination of Registration
1309.61 Modification in registration.
1309.62 Termination of registration.
1309.63 Transfer of registration.

Security Requirements
1309.71 General security requirements.
1309.72 Felony conviction; employer responsibilities.
1309.73 Employee responsibility to report diversion.

   Authority: 21 U.S.C. 821, 822, 823, 824, 830, 871(b), 875,
877, 958.

General Information


sec 1309.01

  Scope of Part 1309.

   Procedures governing the registration of manufacturers, distributors,
importers and exporters of List I chemicals pursuant to Sections
102, 302, 303, 1007 and 1008 of the Act (21 U.S.C. 802, 822,
823, 957 and 958) are set forth generally by those sections
and specifically by the sections of this part.

sec 1309.02   Definitions.

   (a) The term Act means the Controlled Substances Act (84
Stat. 1242; 21 U.S.C. 801) and/or the Controlled Substances
Import and Export Act (84 Stat. 1285; 21 U.S.C. 951).
   (b) The term hearing means any hearing held pursuant to the
part for the

---- page 32455 ----

granting, denial, revocation, or suspension of a registration
pursuant to sections 303 and 304 of the Act (21 U.S.C. 823-824).
   (c) The term person includes any individual, corporation,
government or governmental subdivision or agency, business trust,
partnership, association, or other legal entity.
   (d) The term register and registration refer only to registration
required and permitted by sections 302 and 1007 of the Act (21
U.S.C. 822 and 957).
   (f) The term registrant means any person who is registered
pursuant to either section 303 or section 1008 of the Act (21
U.S.C. 823 and 958).
   (g) The term retail distributor means a distributor whose
List I chemical activities are restricted to the sale of drug
products that are regulated as List I chemicals pursuant to
Section 1310.01(f)(1)(iv), directly to walk-in customers for
personal use.
   (h) Any term not defined in this section shall have the definition
set forth in section 102 of the Act (21 U.S.C. 802) or in Sections
1310.01 and 1313.02 of this chapter.

sec 1309.03  Information; special instructions.

   Information regarding procedures under these rules and instructions
supplementing these rules will be furnished upon request by
writing to the Drug Enforcement Administration, Chemical Operations
Section, Office of Diversion Control, Washington, D.C. 20537.

Fees for Registration and Reregistration


sec 1309.11   Fee amounts.

   (a) For each initial registration to manufacture for distribution,
distribute, import, or export, the applicant shall pay a fee
of $595 for a annual registration.
   (b) For each reregistration to manufacture for distribution,
distribute, import, or export, the registrant shall pay a fee
of $477 for an annual registration.
   (c) For each initial registration to conduct business as
a retail distributor the applicant shall pay an application
processing fee of $7 and an investigation fee of $248, for an
annual registration.
   (d) For each reregistration to conduct business as a retail
distributor the registrant shall pay a fee of $116.

sec 1309.12   Time and method of payment; refund.

   (a) For each application for registration or reregistration
to manufacture for distribution, distribute, import, or export,
the applicant shall pay the fee when the application for registration
or reregistration is submitted for filing.
   (b) For retail the distributor initial applications, the
applicant shall pay the application processing fee when the
application for registration is submitted for filing. The investigation
fee shall be paid within 30 days DEA notifies the applicant
that the preregistration investigation has been scheduled.
   (c) For retail distributor reregistration applications, the
registrant shall pay the fee when the application for reregistration
is submitted for filing.
   (d) Payments should be made in the form of a personal, certified,
or cashier's check or money order made payable to ``Drug Enforcement
Administration.'' Payments made in the form of stamps, foreign
currency, or third party endorsed checks will not be accepted.
These application fees are not refundable.

Requirements for Registration


sec 1309.21   Persons required to register.

   (a) Every person who distributes, imports, or exports any
List I chemical, other than those List I chemicals contained
in a product exempted under sec 1310.01(f)(1)(iv), or who proposes
to engage in the distribution, importation, or exportation of
any List I chemical, shall obtain annually a registration specific
to the List I chemicals to be handled, unless exempted by law
or pursuant to secsec 1309.24 through 1309.27. Only persons actually
engaged in such activities are required to obtain a registration;
related or affiliated persons who are not engaged in such activities
are not required to be registered. (For example, a stockholder
or parent corporation of a corporation distributing List I chemicals
is not required to obtain a registration.)
   (b) Every person who distributes or exports a List I chemical
they have manufactured, other than a List I chemical contained
in a product exempted under sec 1310.01(f)(1)(iv), or proposes
to distribute or export a List I chemical they have manufactured,
shall obtain annually a registration specific to the List I
chemicals to be handled, unless exempted by law or pursuant
to secsec 1309.24 through 1309.27.

sec 1309.22   Separate registration for independent activities.

   (a) The following groups of activities are deemed to be independent
of each other:
   (1) Retail distributing of List I chemicals;
   (2) Non-Retail distributing of List I chemicals;
   (3) Importing List I chemicals; and
   (4) Exporting List I chemicals.
   (b) Every person who engages in more than one group of independent
activities shall obtain a separate registration for each group
of activities, unless otherwise exempted by the Act or secsec 1309.24
through 1309.26, except that a person registered to import any
List I chemical shall be authorized to distribute that List
I chemical after importation, but no other chemical that the
person is not registered to import.

sec 1309.23   Separate registration for separate locations.

   (a) A separate registration is required for each principal
place of business at one general physical location where List
I chemicals are distributed, imported, or exported by a person.
   (b) The following locations shall be deemed to be places
not subject to the registration requirement:
   (1) A warehouse where List I chemicals are stored by or on
behalf of a registered person, unless such chemicals are distributed
directly from such warehouse to locations other than the registered
location from which the chemicals were originally delivered;
and
   (2) An office used by agents of a registrant where sales
of List I chemicals are solicited, made, or supervised but which
neither contains such chemicals (other than chemicals for display
purposes) nor serves as a distribution point for filling sales
orders.

sec 1309.24  Exemption of agents and employees.

   The requirement of registration is waived for any agent or
employee of a person who is registered to engage in any group
of independent activities, if such agent or employee is acting
in the usual course of his or her business or employment.

sec 1309.25  Exemption of certain controlled substance registrants.

   (a) The requirement of registration is waived for any person
who distributes a product containing a List I chemical that
is regulated pursuant to sec 1310.01(f)(1)(iv), if that person
is registered with the Administration to manufacture, distribute
or dispense a controlled substance.
   (b) The requirement of registration is waived for any person
who imports or exports a product containing a List I chemical
that is regulated pursuant to sec 1310.01(f)(1)(iv), if that person
is registered with the Administration to engage in the same
activity with a controlled substance.
   (c) The Administrator may, upon finding that continuation
of the waiver would not be in the public interest, suspend or
revoke a person's waiver

---- page 32456 ----

pursuant to the procedures set forth in secsec 1309.43 through 1309.46
and 1309.51 through 1309.57. In considering the revocation or
suspension of a person's waiver, the Administrator shall also
consider whether action to revoke or suspend the person's controlled
substance registration pursuant to 21 U.S.C. 824 is warranted.
   (d) Any person exempted from the registration requirement
under this section shall comply with the security requirements
set forth in Sections 1309.71-1309.73 and the recordkeeping
and reporting requirements set forth under Parts 1310 and 1313
of this chapter.

sec 1309.26  Exemption of law enforcement officials.

   (a) The requirement of registration is waived for the following
persons in the circumstances described in this section:
   (1) Any officer or employee of the Administration, any officer
of the U.S. Customs Service, any officer or employee of the
United States Food and Drug Administration, any other Federal
officer who is lawfully engaged in the enforcement of any Federal
law relating to listed chemicals, controlled substances, drugs
or customs, and is duly authorized to possess and distribute
List I chemicals in the course of official duties; and
   (2) Any officer or employee of any State, or any political
subdivision or agency thereof, who is engaged in the enforcement
of any State or local law relating to listed chemicals and controlled
substances and is duly authorized to possess and distribute
List I chemicals in the course of his official duties.
   (b) Any official exempted by this section may, when acting
in the course of official duties, possess any List I chemical
and distribute any such chemical to any other official who is
also exempted by this section and acting in the course of official
duties.

sec 1309.27  Exemption of certain manufacturers.

   The requirement of registration is waived for any manufacturer
of a List I chemical, if that chemical is produced solely for
internal consumption by the manufacturer and there is no subsequent
distribution or exportation of the List I chemical.

Application for Registration


sec 1309.31  Time for application for registration; expiration
date.

   (a) Any person who is required to be registered and who is
not so registered may apply for registration at any time. No
person required to be registered shall engage in any activity
for which registration is required until the application for
registration is approved and a Certificate of Registration is
issued by the Administrator to such person.
   (b) Any person who is registered may apply to be reregistered
not more than 60 days before the expiration date of his registration.
   (c) At the time a person is first registered, that person
shall be assigned to one of twelve groups, which shall correspond
to the months of the year. The expiration date of the registrations
of all registrants within any group will be the last day of
the month designated for that group. In assigning any of the
above persons to a group, the Administration may select a group
the expiration date of which is less than one year from the
date such business activity was registered. If the person is
assigned to a group which has an expiration date less than eleven
months from the date of which the person is registered, the
registration shall not expire until one year from that expiration
date; in all other cases, the registration shall expire on the
expiration date following the date on which the person is registered.

sec 1309.32  Application forms; contents; signature.

   (a) Any person who is required to be registered pursuant
to Section 1309.21 and is not so registered, shall apply on
DEA Form 510.
   (b) Any person who is registered pursuant to Section 1309.21,
shall apply for reregistration on DEA Form 510a.
   (c) DEA Form 510 may be obtained at any divisional office
of the Administration or by writing to the Registration Unit,
Drug Enforcement Administration, Department of Justice, Post
Office Box 28083, Central Station, Washington, DC 20005. DEA
Form 510a will be mailed to each List I chemical registrant
approximately 60 days before the expiration date of his or her
registration; if any registered person does not receive such
forms within 45 days before the expiration date of the registration,
notice must be promptly given of such fact and DEA Form 510a
must be requested by writing to the Registration Unit of the
Administration at the foregoing address.
   (d) Each application for registration shall include the Administration
Chemical Code Number, as set forth in Section 1310.02 of this
chapter, for each List I chemical to be distributed, imported,
or exported.
   (e) Registration shall not entitle a person to engage in
any activity with any List I chemical not specified in his or
her application.
   (f) Each application shall include all information called
for in the form, unless the item is not applicable, in which
case this fact shall be indicated.
   (g) Each application, attachment, or other document filed
as part of an application, shall be signed by the applicant,
if an individual; by a partner of the applicant, if a partnership;
or by an officer of the applicant, if a corporation, corporate
division, association, trust or other entity. An applicant may
authorize one or more individuals, who would not otherwise be
authorized to do so, to sign applications for the applicant
by filing with the application or other document a power of
attorney for each such individual. The power of attorney shall
be signed by a person who is authorized to sign applications
under this paragraph and shall contain the signature of the
individual being authorized to sign the application or other
document. The power of attorney shall be valid until revoked
by the applicant.

sec 1309.33   Filing of application; joint filings.

   (a) All applications for registration shall be submitted
for filing to the Registration Unit, Drug Enforcement Administration,
Chemical Registration/ODC, Post Office Box 2427, Arlington,
Virginia 22202-2427. The appropriate registration fee and any
required attachments must accompany the application.
   (b) Any person required to obtain more than one registration
may submit all applications in one package. Each application
must be complete and must not refer to any accompanying application
for required information.

sec 1309.34   Acceptance for filing; defective applications.

   (a) Applications submitted for filing are dated upon receipt.
If found to be complete, the application will be accepted for
filing. Applications failing to comply with the requirements
of this part will not generally be accepted for filing. In the
case of minor defects as to completeness, the Administrator
may accept the application for filing with a request to the
applicant for additional information. A defective application
will be returned to the applicant within 10 days of receipt
with a statement of the reason for not accepting the application
for filing. A defective application may be corrected and resubmitted
for filing at any time.
   (b) Accepting an application for filing does not preclude
any subsequent request for additional information

---- page 32457 ----

pursuant to Section 1309.35 and has no bearing on whether the
application will be granted.

sec 1309.35   Additional information.

   The Administrator may require an applicant to submit such
documents or written statements of fact relevant to the application
as he deems necessary to determine whether the application should
be granted. The failure of the applicant to provide such documents
or statements within a reasonable time after being requested
to do so shall be deemed to be a waiver by the applicant of
an opportunity to present such documents or facts for consideration
by the Administrator in granting or denying the application.

sec 1309.36   Amendments to and withdrawals of applications.

   (a) An application may be amended or withdrawn without permission
of the Administration at any time before the date on which the
applicant receives an order to show cause pursuant to sec 1309.46.
An application may be amended or withdrawn with permission of
the Administrator at any time where good cause is shown by the
applicant or where the amendment or withdrawal is in the public
interest.
   (b) After an application has been accepted for filing, the
request by the applicant that it be returned or the failure
of the applicant to respond to official correspondence regarding
the application, including a request that the applicant submit
the required fee, when sent by registered or certified mail,
return receipt requested, shall be deemed to be a withdrawal
of the application.

Action on Applications for Registration: Revocation or Suspension
of Registration


sec 1309.41   Administrative review generally.

   The Administrator may inspect, or cause to be inspected,
the establishment of an applicant or registrant, pursuant to
subpart A of Part 1316 of this chapter. The Administrator shall
review the application for registration and other information
gathered by the Administrator regarding an applicant in order
to determine whether the applicable standards of Section 303
of the Act (21 U.S.C. 823) have been met by the applicant.

sec 1309.42   Certificate of registration; denial of registration.

   (a) The Administrator shall issue a Certificate of Registration
(DEA Form 511) to an applicant if the issuance of registration
or reregistration is required under the applicable provisions
of section 303 of the Act (21 U.S.C. 823). In the event that
the issuance of registration or reregistration is not required,
the Administrator shall deny the application. Before denying
any application, the Administrator shall issue an order to show
cause pursuant to Section 1309.46 and, if requested by the applicant,
shall hold a hearing on the application pursuant to sec 1309.51.
   (b) The Certificate of Registration (DEA Form 511) shall
contain the name, address, and registration number of the registrant,
the activity authorized by the registration, the amount of fee
paid, and the expiration date of the registration. The registrant
shall maintain the certificate of registration at the registered
location in a readily retrievable manner and shall permit inspection
of the certificate by any official, agent or employee of the
Administration or of any Federal, State, or local agency engaged
in enforcement of laws relating to List I chemicals or controlled
substances.

sec 1309.43   Suspension or revocation of registration.

   (a) The Administrator may suspend any registration pursuant
to section 304(a) of the Act (21 U.S.C. 824(a)) for any period
of time he determines.
   (b) The Administrator may revoke any registration pursuant
to section 304(a) of the Act (21 U.S.C. 824(a)).
   (c) Before revoking or suspending any registration, the Administrator
shall issue an order to show cause pursuant to Section 1309.46
and, if requested by the registrant, shall hold a hearing pursuant
to Section 1309.51. Notwithstanding the requirements of this
Section, however, the Administrator may suspend any registration
pending a final order pursuant to sec 1309.44.
   (d) Upon service of the order of the Administrator suspending
or revoking registration, the registrant shall immediately deliver
his or her Certificate of Registration to the nearest office
of the Administration.

sec 1309.44   Suspension of registration pending final order.

   (a) The Administrator may suspend any registration simultaneously
with or at any time subsequent to the service upon the registrant
of an order to show cause why such registration should not be
revoked or suspended, in any case where he finds that there
is an imminent danger to the public health or safety. If the
Administrator so suspends, he shall serve with the order to
show cause pursuant to sec 1309.46 an order of immediate suspension
that shall contain a statement of his findings regarding the
danger to public health or safety.
   (b) Upon service of the order of immediate suspension, the
registrant shall promptly return his Certificate of Registration
to the nearest office of the Administration.
   (c) Any suspension shall continue in effect until the conclusion
of all proceedings upon the revocation or suspension, including
any judicial review thereof, unless sooner withdrawn by the
Administrator or dissolved by a court of competent jurisdiction.
Any registrant whose registration is suspended under this section
may request a hearing on the revocation or suspension of his
registration at a time earlier than specified in the order to
show cause pursuant to Section 1309.46, which request shall
be granted by the Administrator, who shall fix a date for such
hearing as early as reasonably possible.

sec 1309.45   Extension of registration pending final order.

   In the event that an applicant for reregistration (who is
doing business under a registration previously granted and not
revoked or suspended) has applied for reregistration at least
45 days before the date on which the existing registration is
due to expire, and the Administrator has issued no order on
the application on the date on which the existing registration
is due to expire, the existing registration of the applicant
shall automatically be extended and continue in effect until
the date on which the Administrator so issues his order. The
Administrator may extend any other existing registration under
the circumstances contemplated in this section even though the
registrant failed to apply for reregistration at least 45 days
before expiration of the existing registration, with or without
request by the registrant, if the Administrator finds that such
extension is not inconsistent with the public health and safety.

sec 1309.46   Order to show cause.

   (a) If, upon examination of the application for registration
from any applicant and other information gathered by the Administration
regarding the applicant, the Administrator is unable to make
the determinations required by the applicable provisions of
section 303 of the Act (21 U.S.C. 823) to register the applicant,
the Administrator shall serve upon the applicant an order to
show cause why the application for registration should not be
denied.

---- page 32458 ----

   (b) If, upon information gathered by the Administration regarding
any registrant, the Administrator determines that the registration
of such registrant is subject to suspension or revocation pursuant
to section 304 of the Act (21 U.S.C. 824), the Administrator
shall serve upon the registrant an order to show cause why the
registration should not be revoked or suspended.
   (c) The order to show cause shall call upon the applicant
or registrant to appear before the Administrator at a time and
place stated in the order, which shall not be less than 30 days
after the date of receipt of the order. The order to show cause
shall also contain a statement of the legal basis for such hearing
and for the denial, revocation, or suspension of registration
and a summary of the matters of fact and law asserted.
   (d) Upon Receipt of an order to show cause, the applicant
or registrant must, if he desires a hearing, file a request
for a hearing pursuant to sec 1309.54. If a hearing is requested,
the Administrator shall hold a hearing at the time and place
stated in the order, pursuant to sec 1309.51.
   (e) When authorized by the Administrator, any agent of the
Administration may serve the order to show cause.

Hearings


sec 1309.51   Hearings generally.

   (a) In any case where the Administrator shall hold a hearing
on any registration or application therefore, the procedures
for such hearing shall be governed generally by the adjudication
procedures set forth in the Administrative Procedure Act (5
U.S.C. 551-559) and specifically by sections 303 and 304 of
the Act (21 U.S.C. 823-824), by secsec 1309.52 through 1309.57,
and by the procedures for administrative hearings under the
Act set forth in secsec 1316.41 through 1316.67 of this chapter.
   (b) Any hearing under this part shall be independent of,
and not in lieu of, criminal prosecutions or other proceedings
under the Act or any other law of the United States.

sec 1309.52   Purpose of hearing.

   If requested by a person entitled to a hearing, the Administrator
shall hold a hearing for the purpose of receiving factual evidence
regarding the issues involved in the denial, revocation, or
suspension of any registration. Extensive argument should not
be offered into evidence but rather presented in opening or
closing statements of counsel or in memoranda or proposed findings
of fact and conclusions of law.

sec 1309.53  Waiver or modification of rules.

   The Administrator or the presiding officer (with respect
to matters pending before him) may modify or waive any rule
in this part by notice in advance of the hearing, if he determines
that no party in the hearing will be unduly prejudiced and the
ends of justice will thereby be served. Such notice of modification
or waiver shall be made a part of the record of the hearing.

sec 1309.54  Request for hearing or appearance; waiver.

   (a) Any person entitled to a hearing pursuant to secsec 1309.42
and 1309.43 and desiring a hearing shall, within 30 days after
the date of receipt of the order to show cause, file with the
Administrator a written request for a hearing in the form prescribed
in sec 1316.47 of this chapter.
   (b) Any person entitled to a hearing pursuant to secsec 1309.42
and 1309.43 may, within the period permitted for filing a request
for a hearing, file with the Administrator a waiver of an opportunity
for a hearing, together with a written statement regarding his
position on the matters of fact and law involved in such hearing.
Such statement, if admissible, shall be made a part of the record
and shall be considered in light of the lack of opportunity
for cross-examination in determining the weight to be attached
to matters of fact asserted therein.
   (c) If any person entitled to a hearing pursuant to secsec 1309.42
and 1309.43 fails to file a request for a hearing, or if he
so files and fails to appear at the hearing, he shall be deemed
to have waived his opportunity for the hearing, unless he shows
good cause for such failure.
   (d) If any person entitled to a hearing waives or is deemed
to waive his or her opportunity for the hearing, the Administrator
may cancel the hearing, if scheduled, and issue his final order
pursuant to sec 1309.57 without a hearing.

sec 1309.55  Burden of proof.

   (a) At any hearing for the denial of a registration, the
Administration shall have the burden of proving that the requirements
for such registration pursuant to section 303 of the Act (21
U.S.C. 823) are not satisfied.
   (b) At any hearing for the revocation or suspension of a
registration, the Administration shall have the burden of proving
that the requirements for such revocation or suspension pursuant
to section 304(a) of the Act (21 U.S.C. 824(a)) are satisfied.

sec 1309.56  Time and place of hearing.

   The hearing will commence at the place and time designated
in the order to show cause or notice of hearing published in
the Federal Register (unless expedited pursuant to Section 1309.44(c))
but thereafter it may be moved to a different place and may
be continued from day to day or recessed to a later day without
notice other than announcement thereof by the presiding officer
at the hearing.

sec 1309.57  Final order.

   As soon as practicable after the presiding officer has certified
the record to the Administrator, the Administrator shall cause
to be published in the Federal Register his final order in the
proceeding, which shall set forth the final rule and the findings
of fact and conclusions of law upon which the rule is based.
This order shall specify the date on which it shall take effect,
which date shall not be less than 30 days from the date of publication
in the Federal Register unless the Administrator finds that
the public interest in the matter necessitates an earlier effective
date, in which case the Administrator shall specify in the order
his findings as to the conditions which led him to conclude
that an earlier effective date was required.

Modification, Transfer and Termination of Registration


sec 1309.61  Modification in registration.

   Any registrant may apply to modify his or her registration
to authorize the handling of additional List I chemicals or
to change his or her name or address, by submitting a letter
of request to the Drug Enforcement Administration, Chemical
Registration/ODC, Post Office Box 2427, Arlington, Virginia
22202-2427. The letter shall contain the registrant's name,
address, and registration number as printed on the certificate
of registration, and the List I chemicals to be added to his
registration or the new name or address and shall be signed
in accordance with sec 1309.32(g). No fee shall be required to
be paid for the modification. The request for modification shall
be handled in the same manner as an application for registration.
If the modification in registration is approved, the Administrator
shall issue a new certificate of registration (DEA Form 511)
to the registrant, who shall maintain it with the old certificate
of registration until expiration.

sec 1309.62  Termination of registration.

   The registration of any person shall terminate if and when
such person dies, ceases legal existence, or discontinues

---- page 32459 ----

business or professional practice. Any registrant who ceases
legal existence or discontinues business or professional practice
shall notify the Administrator promptly of such fact.

sec 1309.63  Transfer of registration.

   No registration or any authority conferred thereby shall
be assigned or otherwise transferred except upon such conditions
as the Administrator may specifically designate and then only
pursuant to his written consent.

Security Requirements


sec 1309.71  General security requirements.

   (a) All applicants and registrants shall provide effective
controls and procedures to guard against theft and diversion
of List I chemicals. Specific attention shall be paid to storage
of and controlling access to List I chemicals as follows:
   (1) Chemicals shall be stored in containers sealed in such
a manner as to indicate any attempts at tampering with the container.
Where chemicals cannot be stored in sealed containers, access
to the chemicals should be controlled through physical means
or through human or electronic monitoring.
   (2) In retail settings open to the public where drugs containing
List I chemicals that are regulated pursuant to sec 1310.01(f)(1)(iv)
are distributed, such drugs will be stocked behind a counter
where only employees have access.
   (b) In evaluating the effectiveness of security controls
and procedures, the Administrator shall consider the following
factors:
   (1) The type, form, and quantity of List I chemicals handled;
   (2) The location of the premises and the relationship such
location bears on the security needs;
   (3) The type of building construction comprising the facility
and the general characteristics of the building or buildings;
   (4) The availability of electronic detection and alarm systems;
   (5) the extent of unsupervised public access to the facility;
   (6) The adequacy of supervision over employees having access
to List I chemicals;
   (7) The procedures for handling business guests, visitors,
maintenance personnel, and nonemployee service personnel in
areas where List I chemicals are processed or stored;
   (8) The adequacy of the registrant's or applicant's systems
for monitoring the receipt, distribution, and disposition of
List I chemicals in its operations.
   (c) Any registrant or applicant desiring to determine whether
a proposed system of security controls and procedures is adequate
may submit materials and plans regarding the proposed security
controls and procedures either to the Special Agent in Charge
in the region in which the security controls and procedures
will be used, or to the Chemical Operations Section Office of
Diversion Control, Drug Enforcement Administration, Washington,
D.C. 20537.

sec 1309.72  Felony conviction; employer responsibilities.

   (a) The registrant shall exercise caution in the consideration
of employment of persons who will have access to listed chemicals,
who have been convicted of a felony offense relating to controlled
substances or listed chemicals, or who have, at any time, had
an application for registration with the DEA denied, had a DEA
registration revoked, or surrendered a DEA registration for
cause. (For purposes of this subsection, the term ``for cause''
means a surrender in lieu of, or as a consequence of, any Federal
or State administrative, civil or criminal action resulting
from an investigation of the individual's handling of controlled
substances or listed chemicals.) The registrant should be aware
of the circumstances regarding the action against the potential
employee and the rehabilitative efforts following the action.
The registrant shall assess the risks involved in employing
such persons, including the potential for action against the
registrant pursuant to sec 1309.43, If such person is found to
have diverted listed chemicals, and, in the event of employment,
shall institute procedures to limit the potential for diversion
of List I chemicals.
   (b) It is the position of DEA that employees who possess,
sell, use or divert listed chemicals or controlled substances
will subject themselves not only to State or Federal prosecution
for any illicit activity, but shall also immediately become
the subject of independent action regarding their continued
employment. The employer will assess the seriousness of the
employee's violation, the position of responsibility held by
the employee, past record of employment, etc., in determining
whether to suspend, transfer, terminate or take other action
against the employee.

sec 1309.73  Employee responsibility to report diversion.

   Reports of listed chemical diversion by fellow employees
is not only a necessary part of an overall employee security
program but also serves the public interest at large. It is,
therefore, the position of DEA that an employee who has knowledge
of diversion from his employer by a fellow employee has an obligation
to report such information to a responsible security official
of the employer. The employer shall treat such information as
confidential and shall take all reasonable steps to protect
the confidentiality of the information and the identity of the
employee furnishing information. A failure to report information
of chemical diversion will be considered in determining the
feasibility of continuing to allow an employee to work in an
area with access to chemicals. The employer shall inform all
employees concerning this policy.

PART 1310-[AMENDED]

   1. The authority citation for part 1310 continues to read
as follows:

   Authority: 21 U.S.C. 802, 830, 871(b).

   2. Section 1310.01 is amended by revising paragraphs (b),
(c), (d), (e), (f)(1) and (g), redesignating paragraph (k) as
paragraph (m) and inserting new paragraphs (k) and (l) as follows:

sec 1310.01  Definitions.
*     *     *     *     *
   (b) The term listed chemical means any List I chemical or
List II chemical.
   (c) The term List I chemical means a chemical specifically
designated by the Administrator in sec 1310.02(a) that, in addition
to legitimate uses, is used in manufacturing a controlled substance
in violation of the Act and is important to the manufacture
of a controlled substance.
   (d) The term List II chemical means a chemical, other than
a List I chemical, specifically designated by the Administrator
in Section 1310.02(b) that, in addition to legitimate uses,
is used in manufacturing a controlled substance in violation
of the Act.
   (e) The term regulated person means any individual, corporation,
partnership, association, or other legal entity who manufactures,
distributes, imports, or exports a listed chemical, a tableting
machine, or an encapsulating machine, or who acts as a broker
or trader for an international transaction involving a listed
chemical, tableting machine, or encapsulating machine.
   (f) The term regulated transaction means:
   (1) A distribution, receipt, sale, importation, or exportation
of a listed chemical, or an international transaction involving
shipment of a listed chemical, or if the Administrator establishes
a threshold amount for a specific listed chemical, a threshold
amount as determined by the Administrator, which includes a
cumulative threshold amount

---- page 32460 ----

for multiple transactions, of a listed chemical, except that
such terms does not include:
   (i) A domestic lawful distribution in the usual course of
business between agents or employees of a single regulated person;
in this context, agents or employees means individuals under
the direct management and control of the regulated person;
   (ii) A delivery of a listed chemical to or by a common or
contract carrier for carriage in the lawful and usual course
of the business of the common or contract carrier, or to or
by a warehouseman for storage in the lawful and usual course
of the business of the warehouseman, except that if the carriage
or storage is in connection with the distribution, importation,
or exportation of a listed chemical to a third person, this
paragraph does not relieve a distributor, importer, or exporter
from compliance with this part or parts 1309 and 1313 of this
chapter;
   (iii) Any category of transaction or any category of transaction
for a specific listed chemical or chemicals specified by regulation
of the Administrator as excluded from this definition as unnecessary
for enforcement of the Act;
   (iv) Any transaction in a listed chemical that is contained
in a drug that may be marketed or distributed lawfully in the
United States under the Federal Food, Drug, and Cosmetic Act
unless-
   (A) The drug contains ephedrine or its salts, optical isomers,
or salts of optical isomers as the only active medicinal ingredient
or contains ephedrine or its salts, optical isomers or salts
of optical isomers and therapeutically insignificant quantities
of another active medicinal ingredient. For purposes of this
paragraph, the term ``therapeutically insignificant quantities''
shall apply if the product formulation (i.e., the qualitative
and quantitative composition of active ingredients within the
product) is not listed in American Pharmaceutical Association
(Apha) Handbook of Nonprescription Drugs; Drug Facts and Comparisons
(published by Wolters Kluwer Company); or USP DI (published
by authority of the United States Pharmacopeial Convention,
Inc.); or the product is not listed in sec 1310.15 as an exempt
drug product. For drug products having formulations not found
in the above compendiums, the Administrator shall determine,
pursuant to a written request as specified in sec 1310.14, whether
the active medicinal ingredients are present in quantities considered
therapeutically significant for purposes of this paragraph;
or
   (B) The Administrator has determined pursuant to the criteria
in sec 1310.10 that:
   (1) The drug or group of drugs is being diverted to obtain
the listed chemical for use in the illicit production of a controlled
substance; and
   (2) The quantity of ephedrine or other listed chemical contained
in the drug included in the transaction or multiple transactions
equals or exceeds the threshold established for that chemical
by the Administrator;
   (v) Any transaction in a chemical mixture listed in sec 1310.13.
*     *     *     *     *
   (g) The term chemical mixture means a combination of two
or more chemical substances, at least one of which is not a
listed chemical, except that such term does not include any
combination of a listed chemical with another chemical that
is present solely as an impurity or which has been created to
evade the requirements of the act.
*     *     *     *     *
   (k) The terms broker and trader mean any individual, corporation,
corporate division, partnership, association, or other legal
entity which assists in arranging an international transaction
in a listed chemical by-
   (1) negotiating contracts;
   (2) serving as an agent or intermediary; or
   (3) fulfilling a formal obligation to complete the transaction
by bringing together a buyer and seller, a buyer and transporter,
or a seller and transporter, or by receiving any form of compensation
for so doing.
   (1) The term international transaction means a transaction
involving the shipment of a listed chemical across an international
border (other than a United States border) in which a broker
or trader located in the United States participates.
*     *     *     *     *
   3. Section 1310.02 is amended by revising the introductory
text and paragraphs (a) and (b) to read as follows:

sec 1310.02   Substances Covered.

   The following chemicals have been specifically designated
by the Administrator of the Drug Enforcement Administration
as the listed chemicals subject to the provisions of this part
and parts 1309 and 1313 of this chapter. Each chemical has been
assigned the DEA Chemical Code Number set forth opposite it.
   (a) List I chemicals

(1) Anthranilic acid, its esters, and its salts ........8530
(2) Benzyl cyanide .....................................8735
(3) Ephedrine, its salts, optical isomers, and salts of optical
    isomers ............................................8113
(4) Ergonovine and its salts ...........................8675
(5) Ergotamine and its salts ...........................8676
(6) N-Acetylanthranilic acid, its esters, and its salts
    ....................................................8522
(7) Norpseudoephedrine, its salts, optical isomers, and salts
    of optical isomers .................................8317
(8) Phenylacetic acid, its esters, and its salts .......8791
(9) Phenylpropanolamine, its salts, optical isomers, and salts
    of optical isomers .................................1225
(10) Piperidine and its salts ..........................2704
(11) Pseudoephedrine, its salts, optical isomers, and salts
    of optical isomers .................................8112
(12) 3,4-Methylenedioxyphenyl-2-propanone ..............8502
(13) Methylamine and its salts .........................8520
(14) Ethylamine and its salts ..........................8678
(15) Propionic anhydride ...............................8328
(16) Insosafrole (Isosafrole) ..........................8704
(17) Safrole ...........................................8323
(18) Piperonal .........................................8750
(19) N-Methylephedrine, its salts, optical isomers, and salts
    of optical isomers (N-Methylephedrine) .............8115
(20) N-Methylpseudoephedrine, its salts, optical isomers, and
    salts of optical isomers ...........................8119
(21) Hydriotic acid (Hydriodic ╨Acid) ..................6695
(22) Benzaldehyde ......................................8256
(23) Nitroethane .......................................6724
(1) Acetic anhydride ...................................8519
(2) Acetone ............................................6532
(3) Benzyl chloride ....................................8570
(4) Ethyl ether ........................................6584
(5) Potassium permanganate .............................6579
(6) 2-Butanone (or Methyl Ethyl Ketone or MEK) .........6714
(7) Toluene ............................................6594
(8) Hydrochloric acid ..................................6545
(9) Sulfuric acid ......................................6552
(10) Methyl Isobutyl Ketone ╨(MIBK) ....................6715
*     *     *     *     *
   4. Section 1310.04 is amended by revising paragraphs (a),
(b), (f)(1) introductory, and (f)(2) introductory text and (iv),
by removing paragraphs (f)(1)(xiv), (f)(1)(xx), and (f)(1)(xxii);
redesignating paragraphs (f)(1)(xv) through (xix) as (f)(1)(xiv)
through (xviii), paragraph (f)(1)(xxi) as (f)(1)(xix) and paragraph
(f)(1)(xxiii) as (f)(1)(xx); and adding new paragraphs (f)(1)(xxi)
and (xxii) to read as follows:

sec 1310.04   Maintenance of records.

   (a) Every record required to be kept subject to Section 1310.03
for a List I chemical, a tableting machine, or an encapsulating
machine shall be kept by the regulated person for four years
after the date of the transaction.
   (b) Every record required to be kept subject to Section 1310.03
for List II chemical shall be kept by the regulated

---- page 32461 ----

person for two years after the date of the transaction.
*     *     *     *     *
   (f) * * *
   (1) List I Chemicals:




-------------------------------------------+---------------------------------
                 Chemical                  |    Threshold by base weight
-------------------------------------------+---------------------------------
                                           |
(i) * * * ................................ |
(xxii) Benzaldehyde ...................... | 4 Kilograms.
(xxiii) Nitroethane ...................... | 2.5 Kilograms.
-------------------------------------------+---------------------------------

   (2) List II chemicals:
   (i) * * *
   (iv) Exports, transshipments and international transactions
to Designated Countries set forth in sec 1310.08(b)
*     *     *     *     *
   5. Section 1310.06 is amended by revising paragraphs (a)
introductory text, (a)(1), (c), and (d) to read as follows:

sec 1310.06   Content of records and reports.

   (a) Each record required by sec 1310.03 shall include the following:
   (1) The name, address, and, if required, DEA registration
number of each party to the regulated transaction.
*     *     *     *     *
   (c) Each report required by Section 1310.05(a) shall include
the information as specified by Section 1310.06(a) and, where
obtainable, the registration number of the other party, if such
party is registered. A report submitted pursuant to sec 1310.05(a)(1)
or (a)(4) must also include a description of the circumstances
leading the regulated person to make the report, such as the
reason that the method of payment was uncommon or the loss unusual.
If the report is for a loss or disappearance under sec 1310.05(a)(4),
the circumstances of such loss must be provided (in-transit,
theft from premises, etc.)
   (d) A suggested format for the reports is provided below:


Supplier:

Registration Number

Name

Business Address

City

State

Zip

Business Phone

Purchaser:

Registration Number

Name

Business Address

City

State

Zip

Business Phone

Identification

Shipping Address (if different than purchaser Address):

Street

City

State

Zip

Date of Shipment

Name of Listed Chemical(s)

Quantity and Form of Packaging

Description of Machine:

Make

Model

Serial #

Method of Transfer

If Loss or Disappearance:

Date of Loss

Type of Loss

Description of Circumstances

Public reporting burden for this collection of information is
estimated to average ten minutes per response, including the
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and
reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection
of information, including suggestions for reducing this burden
to the Drug Enforcement Administration, Records Management Section,
Washington, D.C. 20537; and to the Office of Management and
Budget, Paperwork Reduction Project No. 1117-0024, Washington,
D.C. 20503.
*     *     *     *     *
   6. Section 1310.07 is amended by revising paragraphs (a)
and (b) to read as follows:

sec 1310.07  Proof of identity.

   (a) Each regulated person who engages in a regulated transaction
must identify the other party to the transaction. For domestic
transaction, this shall be accomplished by having the other
party present documents which would verify the identity, or
registration status if a registrant, of the other party to the
regulated person at the time the order is placed. For export
transactions, this shall be accomplished by good faith inquiry
through reasonably available research documents or publicly
available information which would indicate the existence of
the foreign customer. No proof of identity is required for foreign
suppliers.
   (b) The regulated person must verify the existence and apparent
validity of a business entity ordering a listed chemical, tableting
machine or encapsulating machine. For domestic transactions,
this may be accomplished by such methods as checking the telephone
directory, the local credit bureau, the local Chamber of Commerce
or the local Better Business Bureau, or, if the business entity
is a registrant, by verification of the registration. For export
transactions, a good faith inquiry to verify the existence and
apparent validity of a foreign business entity may be accomplished
by such methods as verifying the business telephone listing
through international telephone information, the firm's listing
in international or foreign national chemical directories or
other commerce directories or trade publications, confirmation
through foreign subsidiaries of the U.S. regulated person, verification
through the country of destination's embassy Commercial Attache,
or official documents provided by the purchaser which confirm
the existence and apparent validity of the business entity.
*     *     *     *     *
   7. Section 1310.08 is amended by revising paragraph (b) introductory
text to read as follows:

sec 1310.08   Excluded transactions.
*     *     *     *     *
   (b) Exports, transshipments, and international transactions
of hydrochloric and sulfuric acids, except for exports, transshipments
and international transactions to the following countries:
*     *     *     *     *
   8. Sections 1310.10 and 1310.11 are added to read as follows:

sec 1310.10   Removal of the exemption of drugs distributed under
the Food, Drug and Cosmetic Act.

   (a) The Administrator may remove from exemption under 1310.01(f)(1)(iv)
any drug or group of drugs that the Administrator finds is being
diverted to obtain a listed chemical for use in the illicit
production of a controlled substance. In removing a drug or
group of drugs from the exemption the Administrator shall consider:
   (1) the scope, duration, and significance of the diversion;
   (2) whether the drug or group of drugs is formulated in such
a way that it cannot be easily used in the illicit production
of a controlled substance; and
   (3) whether the listed chemical can be readily recovered
from the drug or group of drugs.
   (b) Upon determining that a drug or group of drugs should
be removed from the exemption under paragraph (a) of this section,
the Administrator shall issue and publish in the Federal Register
his proposal to remove the drug or group of drugs from the exemption,
which shall include a reference to the legal authority under
which the proposal is based. The Administrator shall permit
any interested person to file written comments on or objections
to

---- page 32462 ----

the proposal. After considering any comments or objections filed,
the Administrator shall publish in the Federal Register his
final order.
   (c) The Administrator shall limit the removal of a drug or
group of drugs from exemption under paragraph (a) of this section
to the most identifiable type of the drug or group of drugs
for which evidence of diversion exists unless there is evidence,
based on the pattern of diversion and other relevant factors,
that the diversion will not be limited to that particular drug
or group of drugs.
   (d) Any manufacturer seeking reinstatement of a particular
drug product that has been removed from an exemption under paragraph
(a) of this section, may apply to the Administrator for reinstatement
of the exemption for that particular drug product on the grounds
that the particular drug product is manufactured and distributed
in a manner that prevents diversion. In determining whether
the exemption should be reinstated the Administrator shall consider:
   (1) the package sizes and manner of packaging of the drug
product;
   (2) the manner of distribution and advertising of the drug
product;
   (3) evidence of diversion of the drug product;
   (4) any actions taken by the manufacturer to prevent diversion
of the drug product; and
   (5) such other factors as are relevant to and consistent
with the public health and safety, including the factors described
in paragraph (a) of this section as applied to the drug product.
   (e) Within a reasonable period of time after receipt of the
application for reinstatement of the exemption, the Administrator
shall notify the applicant of his acceptance or non-acceptance
of his application, and if not accepted, the reason therefor.
If the application is accepted for filing, the Administrator
shall issue and publish in the Federal Register his order on
the reinstatement of the exemption for the particular drug product,
which shall include a reference to the legal authority under
which the order is based. This order shall specify the date
on which it shall take effect. The Administrator shall permit
any interested person to file written comments on or objections
to the order. If any such comments raise significant issues
regarding any finding of fact or conclusion of law upon which
the order is based, the Administrator shall immediately suspend
the effectiveness of the order until he may reconsider the application
in light of the comments and objections filed. Thereafter, the
Administrator shall reinstate, revoke, or amend his original
order as he determines appropriate.
   (f) Unless the Administrator has evidence that the drug product
is being diverted, as determined by applying the factors set
forth in paragraph (a) of this section, and the Administrator
so notifies the applicant, transactions involving a specific
drug product will not be considered regulated transactions during
the following periods:
   (1) while a bonafide application for reinstatement of exemption
under paragraph (d) of this section for the specific drug product
is pending resolution, provided that the application for reinstatement
is filed not later than 60 days after the publication of the
final order removing the exemption; and
   (2) for a period of 60 days following the Administrator's
denial of an application for reinstatement.
   (g) An order published by the Administrator in the Federal
Register, pursuant to paragraph (e) of this section, to reinstate
an exemption may be modified or revoked with respect to a particular
drug product upon a finding that:
   (1) applying the factors set forth in paragraph (a) of this
section to the particular drug product, the drug product is
being diverted; or
   (2) there is a significant change in the data that led to
the issuance of the final rule.

sec 1310.11   Reinstatement of exemption for drug products distributed
under the Food, Drug and Cosmetic Act.

   (a) The Administrator has reinstated the exemption for the
drug products listed in paragraph (e) of this section from application
of sections 302, 303, 310, 1007, and 1008 of the Act (21 U.S.C.
822-823, 830, and 957-958), to the extent described in paragraphs
(b), (c), and (d) of this section.
   (b) No reinstated exemption granted pursuant to 1310.10 affects
the criminal liability for illegal possession or distribution
of listed chemicals contained in the exempt drug product.
   (c) Changes in exempt drug product compositions: Any change
in the quantitative or qualitative composition, trade name or
other designation of an exempt drug product listed in paragraph
(d) requires a new application for reinstatement of the exemption.
   (d) The following drug products, in the form and quantity
listed in the application submitted (indicated as the ``date'')
are designated as reinstated exempt drug products for the purposes
set forth in this section:


                             Exempt Drug Products

------------------+-------------------+------------------+--------------------
     Supplier     |    Product name   |       Form       |       Date
------------------+-------------------+------------------+--------------------
                  |                   |                  |
[Reserved]....... | ................. | ................ | ................
------------------+-------------------+------------------+--------------------

   9. Section 1310.14 and 1310.15. are added to read as follows:

sec 1310.14  Exemption of drug products containing ephedrine and
therapeutically significant quantities of another active medicinal
ingredient.

   (a) Any manufacturer of a drug product containing ephedrine
in combination with another active medicinal ingredient, the
product formulation of which is not listed in the compendiums
set forth in section 1310.01(f)(1)(iv)(A), may request that
the Administrator exempt the product as one which contains ephedrine
together with a therapeutically significant quantity of another
active medicinal ingredient.
   (b) An application for an exemption under this section shall
contain the following information:
   (1) The name and address of the applicant;
   (2) The exact trade name of the drug product for which exemption
is sought;
   (3) The complete quantitative and qualitative composition
of the drug product;
   (4) A brief statement of the facts which the applicant believes
justify the granting of an exemption under this section; and
   (5) Certification by the applicant that the product may be
lawfully marketed or distributed under the Food, Drug, and Cosmetic
Act.
   (6) The identification of any information on the application
which is considered by the applicant to be a trade secret or
confidential and entitled to protection under U.S. laws restricting
the public disclosure of such information by government employees.
   (c) The Administrator may require the applicant to submit
such additional documents or written statements of fact relevant
to the application which he deems necessary for determining
if the application should be granted.
   (d) Within a reasonable period of time after the receipt
of a completed application for an exemption under this section,
the Administrator shall notify the applicant of acceptance or
non-acceptance of the application. If the application is not
accepted, an explanation will be provided. The Administrator
is not required to accept an application if any of the information
required in paragraph (b) of this section or requested pursuant
to paragraph (c) of this section is lacking or not readily

---- page 32463 ----

understood. The applicant may, however, amend the application
to meet the requirements of paragraphs (b) and (c) of this section.
If the application is accepted for filing, the Administrator
shall issue and publish in the Federal Register an order on
the application, which shall include a reference to the legal
authority under which the order is based. This order shall specify
the date on which it shall take effect. The Administrator shall
permit any interested person to file written comments on or
objections to the order. If any comments or objections raise
significant issues regarding any findings of fact or law upon
which the order is based, the Administrator shall immediately
suspend the effectiveness of the order until he may reconsider
the application in light of the comments and objections filed.
Thereafter, the Administrator shall reinstate, revoke, or amend
the original order as deemed appropriate.

sec 1310.15  Exempt drug products containing ephedrine and therapeutically
significant quantities of another active medicinal ingredient.

   (a) The drug products containing ephedrine and therapeutically
significant quantities of another active medicinal ingredient
listed in paragraph (e) of this section have been exempted by
the Administrator from application of sections 302, 303, 310,
1007, and 1008 of the Act (21 U.S.C. 822-3, 830, and 957-8)
to the extent described in paragraphs (b), (c), and (d) of this
section.
   (b) No exemption granted pursuant to 1310.14 affects the
criminal liability for illegal possession or distribution of
listed chemicals contained in the exempt drug product.
   (c) Changes in drug product compositions: Any change in the
quantitative or qualitative composition of an exempt drug product
listed in paragraph (d) requires a new application for exemption.
   (d) In addition to the drug products listed in the compendium
set forth in sec 1310.01(f)(1)(iv)(A), the following drug products,
in the form and quantity listed in the application submitted
(indicated as the ``date'') are designated as exempt drug products
for the purposes set forth in this section:


   Exempt Drug Products Containing Ephedrine and Therapeutically Significant
               Quantities of Another Active Medicinal Ingredient

------------------+-------------------+------------------+--------------------
     Supplier     |    Product name   |       Form       |       Date
------------------+-------------------+------------------+--------------------
                  |                   |                  |
[Reserved]....... | ................. | ................ | ................
------------------+-------------------+------------------+--------------------


PART 1313-[AMENDED]

   1. The authority citation for part 1313 continues to read
as follows:

   Authority: 21 U.S.C. 802, 830, 871(b), 971.

   2. Section 1313.02 is amended by revising paragraphs (c),
(d) introductory text, (d)(1), (h) and (i); redesignating paragraph
(m) as paragraph (o) and adding new paragraphs (m) and (n) to
read as follows:

sec 1313.02  Definitions.
*     *     *     *     *
   (c) The term regulated person means any individual, corporation,
partnership, association, or other legal entity who manufactures,
distributes, imports, or exports a listed chemical, a tableting
machine, or an encapsulating machine, or who acts as a broker
or trader for an international transaction involving a listed
chemical, a tableting machine, or an encapsulating machine.
   (d) The term regulated transaction means:
   (1) A distribution, receipt, sale, importation, exportation,
or international transaction of a listed chemical, or if the
Administrator establishes a threshold amount for a specific
listed chemical, a threshold amount as determined by the Administrator,
which includes a cumulative threshold amount for multiple transactions,
of a listed chemical, except that such term does not include:
   (i) A domestic lawful distribution in the usual course of
business between agents or employees of a single regulated person;
in this context, agents or employees means individuals under
the direct management and control of the regulated person;
   (ii) A delivery of a listed chemical to or by a common or
contract carrier for carriage in the lawful and usual course
of the business of the common or contract carrier, or to or
by a warehouseman for storage in the lawful and usual course
of the business of the warehouseman, except that if the carriage
or storage is in connection with the distribution, importation,
or exportation of a listed chemical to a third person, this
paragraph does not relieve a distributor, importer, or exporter
from compliance with this part or parts 1309 and 1310 of this
chapter;
   (iii) Any category of transaction or any category of transaction
for a specific listed chemical or chemicals specified by regulation
of the Administrator as excluded from this definition as unnecessary
for enforcement of the Act;
   (iv) Any transaction in a listed chemical that is contained
in a drug that may be marketed or distributed lawfully in the
United States under the Federal Food, Drug, and Cosmetic Act
unless)-
   (A) The drug contains ephedrine or its salts, optical isomers,
or salts of optical isomers as the only active medicinal ingredient
or contains ephedrine or its salts, optical isomers or salts
of optical isomers and therapeutically insignificant quantities
of another active medicinal ingredient (for purposes of this
paragraph, the term ``therapeutically insignificant quantities''
shall apply if the product formulation (i.e., the qualitative
and quantitative composition of active ingredients within the
product) is not listed in American Pharmaceutical Association
(Apha) Handbook of Nonprescription Drugs; Drug Facts and Comparisons
(published by Wolters Kluwer Company); or USP DI (published
by authority of the United States Pharmacopeial Convention,
Inc.); or the product is not listed in Section 1310.15 as an
exempt drug product. For drug products having formulations not
found in the above compendiums, the Administrator shall determine,
pursuant to a written request as specified in Section 1310.14,
whether the active medicinal ingredients are present in quantities
considered therapeutically significant for purposes of this
paragraph; or
   (B) The Administrator has determined pursuant to the criteria
in Section 1310.10 that:
   (1) The drug or group of drugs is being diverted to obtain
the listed chemical for use in the illicit production of a controlled
substance; and
   (2) The quantity of ephedrine or other listed chemical contained
in the drug included in the transaction or multiple transactions
equals or exceeds the threshold established for that chemical
by the Administrator;
   (v) Any transaction in a chemical mixture listed in Section
1310.13.
*     *     *     *     *
   (h) The term regular importer means, with respect to a listed
chemical, a person that has an established record as an importer
of that listed chemical that is reported to the Administrator.
   (i) The term established record as an importer means that
the regulated

---- page 32464 ----

person has imported a listed chemical at least once within the
past six months, or twice within the past twelve months from
a foreign supplier. The term also means that the regulated person
has provided the Administration with the following information
in accordance with the waiver of the 15-day advance notice requirements
of Section 1313.15:
   (1) the name, DEA registration number (where applicable),
street address, telephone number, telex number, and, where available,
the facsimile number of the regulated person and of each foreign
supplier; and
   (2) the frequency and number of transactions occurring during
the preceding 12-month period.
*     *     *     *     *
   (m) The terms broker and trader mean any individual, corporation,
corporate division, partnership, association, or other legal
entity which assists in arranging an international transaction
in a listed chemical by-
   (1) negotiating contracts;
   (2) serving as an agent or intermediary; or
   (3) fulfilling a formal obligation to complete the transaction
by bringing together a buyer and seller, a buyer and transporter,
or a seller and transporter, or by receiving any form of compensation
for so doing.
   (n) The term international transaction means a transaction
involving the shipment of a listed chemical across an international
border (other than a United States border) in which a broker
or trader located in the United States participates.
*     *     *     *     *
   3. Section 1313.12 is amended by revising paragraph (c) and
adding new paragraphs (d), (e) and (f) to read as follows:

sec 1313.12   Requirement of authorization to import.
*     *     *     *     *
   (c) The 15-day advance notification requirement for listed
chemical imports may be waived for:
   (1) Any regulated person who has satisfied the requirements
for reporting to the Administration as a regular importer of
such listed chemicals; or
   (2) A specific listed chemical, as set forth in paragraph
(f) of this section, for which the Administrator determines
that advance notification is not necessary for effective chemical
diversion control.
   (d) For imports where advance notification is waived pursuant
to paragraph (c)(1) of this section, the DEA Form 486 must be
received by the Drug Enforcement Administration, Chemical Operations
Section, on or before the date of importation through use of
the mailing address listed in sec 1313.12(b) or through use of
electronic facsimile media.
   (e) For importations where advance notification is waived
pursuant to paragraph (c)(2) of this section no DEA Form 486
is required, however, the regulated person shall submit quarterly
reports to the Drug Enforcement Administration, Chemical Operations
Section, P.O. Box 28346, Washington, DC 20038, by no later than
the 15th day of the month following the end of each quarter.
The report shall contain the following information regarding
each individual importation:
   (1) The name of the listed chemical;
   (2) The quantity and date imported;
   (3) The name and full business address of the supplier;
   (4) The foreign port of embarkation; and
   (5) The port of entry.
   (f) The 15 day advance notification requirement set forth
in paragraph (a) has been waived for imports of the following
listed chemicals:
   (1) [Reserved]
   4. Section 1313.15 is revised to read as follows:

sec 1313.15   Waiver of 15-day advance notice for regular importers.

   (a) Each regulated person seeking designation as a ``regular
importer'' shall provide, by certified mail return receipt requested,
to the Administration such information as is required under
sec 1313.02(i), documenting their status as a regular importer.
   (b) Each regulated person making application under paragraph
(a) of this section shall be considered a ``regular importer''
for purposes of waiving the 15-day advance notice, 30 days after
receipt of the application by the Administration, as indicated
on the return receipt, unless the regulated person is otherwise
notified in writing by the Administration.
   (c) The Administrator, may, at any time, disqualify a regulated
person's status as a regular importer on the grounds that the
chemical being imported may be diverted to the clandestine manufacture
of a controlled substance.
   (d) Unless the Administration notifies the chemical importer
to the contrary, the qualification of a regular importer of
any one of these three chemicals, acetone, 2-Butanone (MEK),
or toluene, qualifies that importer as a regular importer of
all three of these chemicals.
   (e) All chemical importers shall be required to file a DEA
Form 486 as required by Section 1313.12.
   5. Section 1313.21 is amended by redesignating paragraph
(d) as paragraph (g) by revising paragraph (c) and newly designated
paragraph (g) and by adding new paragraphs (d), (e), and (f)
to read as follows:

sec 1313.21   Requirement of authorization to export.
*     *     *     *     *
   (c) The 15-day advance notification requirement for listed
chemical exports may be waived for:
   (1) any regulated person who has satisfied the requirements
of Section 1313.24 for reporting to the Administration an established
business relationship with a foreign customer as defined in
sec 1313.02(j).
   (2) A specific listed chemical to a specified country, as
set forth in paragraph (f) of this section, for which the Administrator
determines that advance notification is not necessary for effective
chemical diversion control.
   (d) For exports where advance notification is waived pursuant
to paragraph (c)(1) of this section, the DEA Form 486 must be
received by the Drug Enforcement Administration, Chemical Operations
Section, on or before the date of exportation through use of
the mailing address listed in Section 1313.12(b) or through
use of electronic facsimile media.
   (e) For exportations where advance notification is waived
pursuant to paragraph (c)(2) of this section, the regulated
person shall file quarterly reports to the Drug Enforcement
Administration, Chemical Operations Section, P.O. Box 28346,
Washington, DC 20038, by no later than the 15th day of the month
following the end of each quarter. The report shall contain
the following information regarding each individual importation:
   (1) The name of the listed chemical;
   (2) The quantity and date exported;
   (3) The name and full business address of the foreign customer;
   (4) The port of embarkation; and
   (5) The foreign port of entry.
   (f) The 15 day advance notification requirement set forth
in paragraph (a) of this section has been waived for exports
of the following listed chemicals to the following countries:




-------------------------------------+----------------------------------------
          Name of Chemical           |                Country
-------------------------------------+----------------------------------------
                                     |
[Reserved].......................... | ....................................
-------------------------------------+----------------------------------------

   (g) No person shall export or cause to be exported any listed
chemical, knowing or having reasonable cause to believe the
export is in violation of the laws of the country to which the
chemical is exported or the chemical will be used to manufacture
a controlled substance in violation of the Act or the

---- page 32465 ----

laws of the country to which the chemical is exported. The Administration
will publish a notice of foreign import restrictions for listed
chemicals of which DEA has knowledge as provided in sec 1313.25.
   6. A new undesignated center heading is added preceding sec
1313.31 to read as follows:

Transshipments, In-Transit Shipments and International Transactions
Involving Listed Chemicals

   7. Sections 1313.32, 1313.33, and 1313,34 are added to read
as follows:

1313.32 Requirement of authorization for international transactions.
1313.33 Contents of an international transaction declaration.
1313.34 Distribution of the international transaction declaration.

sec 1312.32  Requirement of authorization for international transactions.

   (a) A broker or trader shall notify the Administrator prior
to an international transaction involving a listed chemical
which meets or exceeds the threshold amount identified in Section
1310.04 of this chapter, in which the broker or trader participates.
Notification must be made no later than 15 days before the transaction
is to take place. In order to facilitate an international transaction
involving listed chemicals and implement the purpose of the
Act, regulated persons may wish to provide advance notification
to the Administration as far in advance of the 15 days as possible.
   (b) (1) A completed DEA Form 486 must be received at the
following address not later than 15 days prior to the international
transaction:

   Drug Enforcement Administration, P.O. Box 28346, Washington,
D.C. 20038

   (2) A copy of the DEA Form 486 may be transmitted directly
to the Drug Enforcement Administration, Chemical Operations
Section, through electronic facsimile media not later than 15
days prior to the exportation.
   (c) No person shall serve as a broker or trader for an international
transaction involving a listed chemical knowing or having reasonable
cause to believe that the transaction is in violation of the
laws of the country to which the chemical is exported or the
chemical will be used to manufacture a controlled substance
in violation of the laws of the country to which the chemical
is exported. The Administration will publish a notice of foreign
import restrictions for listed chemicals of which DEA has knowledge
as provided in Section 1313.25.

sec 1313.33  Contents of an international transaction declaration.

   (a) An international transaction involving a chemical listed
in sec 1310.02 of this chapter which meets the threshold criteria
established in sec 1310.04 of this chapter may be arranged by
a broker or trader if the chemical is needed for medical, commercial,
scientific, or other legitimate uses.
   (b) Any broker or trader who desires to arrange an international
transaction involving a listed chemical which meets the criteria
set forth in Section 1310.04 shall notify the Administration
through the procedures outlined in Section 1313.32(b).
   (c) The DEA Form 486 must be executed in triplicate and must
include all the following information:
   (1) The name, address, telephone number, telex number, and,
where available, the facsimile number of the chemical exporter;
the name, address, telephone number, telex number, and, where
available, the facsimile number of the chemical importer;
   (2) The name and description of each listed chemical as it
appears on the label or container, the name of each listed chemical
as it is designated in Section 1310.02 of this chapter, the
size or weight of container, the number of containers, the net
weight of each listed chemical given in kilograms or parts thereof,
and the gross weight of the shipment given in kilograms or parts
thereof;
   (3) The proposed export date, the port of exportation, and
the port of importation; and
   (4) The name, address, telephone, telex, and where available,
the facsimile number, of the consignee in the country where
the chemical shipment is destined; the name(s) and address(es)
of any intermediate consignee(s).

sec 1313.34  Distribution of the international transaction declaration.

   The required three copies of the DEA Form 486 will be distributed
as follows:
   (a) Copies 1 and 3 shall be retained on file by the broker
or trader as the official record of the international transaction.
Declaration forms involving List I chemicals shall be retained
for List II chemicals shall be retained for two years.
   (b) Copy 2 is the Drug Enforcement Administration copy used
to fulfill the notification requirements of Section 1313.32.
*     *     *     *     *
   7. In the heading of part 1313, the undesignated center heading
preceding section 1313.12, and the undesignated center heading
preceding section 1313.21 remove the words ``Precursors and
Essential Chemicals'' and add, in their place, the words ``Listed
Chemicals'';

sec 1313.01   [Amended]

   8. In Section 1313.01 remove the words ``precursors and essential
chemicals'' and add, in their place, the words ``listed chemicals'';

sec 1313.14   [Amended]

   9. In Section 1313.14 introductory text, and in Section 1313.23
introductory text, remove the words ``precursor and essential
chemical'' and add, in their place, ``listed chemical''.

sec 1313.13   [Amended]

   10. In Sections 1313.13(a) and 1313.22(a) DEA is removing
the words ``precursor or essential chemical'' and adding, in
their place, the words ``List I or List II chemical''.

sec 1313.14   [Amended]

   11. In Sections 1313.14(a) and 1313.23(a) DEA is removing
the words ``listed precursor chemical'' and ``listed essential
chemical'' and adding, in their place, the words ``List I chemical''
and ``List II chemical'' respectively.

PART 1316-[AMENDED]

   1. The authority citation for part 1316 is amended to read
as follows:

   Authority: 21 U.S.C. 822(f), 830(a), 871(b), 880, 958(f),
965.

   2. Section 1316.02 is amended by revising paragraph (c)(2)
to read as follows:

sec 1316.02   Definitions.
*     *     *     *     *
   (c) * * *
   (2) Places, including factors, warehouses, or other establishments
and conveyances, where persons registered under the Act or exempted
from registration under the Act, or regulated persons may lawfully
hold, manufacture, or distribute, dispense, administer, or otherwise
dispose of controlled substances or listed chemicals or where
records relating to those activities are maintained.
*     *     *     *     *
   3. Section 1316.03 is amended by revising paragraphs (b),
(c), (d) and (e) to read as follows:

sec 1316.03   Authority to make inspections.
*     *     *     *     *
   (b) Inspecting within reasonable limits and to a reasonable
manner all pertinent equipment, finished and unfinished controlled
substances, listed chemicals, and other substances or materials,
containers, and labeling

---- page 32466 ----

found at the controlled premises relating to this Act;
   (c) Making a physical inventory of all controlled substances
and listed chemicals on-hand at the premises;
   (d) Collecting samples of controlled substances or listed
chemicals (in the event any samples are collected during an
inspection, the inspector shall issue a receipt for such samples
on DEA Form 84 to the owner, operator, or agent in charge of
the premises);
   (e) Checking of records and information on distribution of
controlled substances or listed chemicals by the registrant
or regulated person (i.e., has the distribution of controlled
substances or listed chemicals increased markedly within the
past year, and if so why);
*     *     *     *     *
   4. Section 1316.09 is amended by revising paragraph (a)(3)
to read as follows:

sec 1316.09   Application for administrative inspection warrant.

   (a) * * *
   (3) A statement relating to the nature and extent of the
administrative inspection, including, where necessary, a request
to seize specified items and/or to collect samples of finished
or unfinished controlled substances or listed chemicals;
*     *     *     *     *
   Dated: May 1, 1995.

Stephen H. Greene,
Deputy Administrator, Drug Enforcement Administration.

[FR Doc. 95-14978 Filed 6-21-95; 8:45 am]
BILLING CODE 4410-09-M


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The Contents entry for this article reads as follows:

Domestic Chemical Diversion Control Act of 1993; implementation
  List I chemicals; manufacturers, distributors, importers, and
    exporters; registration, 32447
</ARTICLE>

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