The Dairy Donations Program (DDP) was implemented on September 1, 2021, through an interim final rule (86 FR 48887). The final rule of August 25, 2023 (88 FR 57861), finalized and made minor changes to the provisions of the DDP codified at 7 CFR part 1147. The final rule of August 25, 2023, also further amended the provisions of the Milk Donation Reimbursement Program (MDRP), which was established in 2021 (84 FR 46658), and amended in 2021 (86 FR 48897) to better coordinate with the DDP. Both donation programs provide for reimbursement of certain costs for donations of milk and dairy products and help reduce food waste.

The DDP and the 2021 amendments to MDRP were set to expire September 1, 2023. However, AMS determined to retain both programs as established and amended and to further amend certain provisions of both parts. The final rule of August 25, 2023, made further amendments to both parts and removed expiration of the DDP provisions, but failed to remove expiration of the 2021 amendments to the MDRP. This document corrects that oversight.

I. Authority

The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”), 1 authorizes DOE to issue a direct final rule establishing an energy conservation standard for a product on receipt of a statement submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary, that contains recommendations with respect to an energy or water conservation standard that are in accordance with the provisions of 42 U.S.C. 6295(o) or 42 U.S.C. 6316, as applicable. (42 U.S.C. 6295(p)(4))

The direct final rule must be published simultaneously with a notice of proposed rulemaking (“NOPR”) that proposes an energy or water conservation standard that is identical to the standard established in the direct final rule, and DOE must provide a public comment period of at least 110 days on this proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) Not later than 120 days after issuance of the direct final rule, DOE shall withdraw the direct final rule if (1) DOE receives one or more adverse public comments relating to the direct final rule or any alternative joint recommendation; and (2) based on the rulemaking record relating to the direct final rule, DOE determines that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule. (42 U.S.C. 6295(p)(4)(C)) If DOE makes such a determination, DOE must proceed with the NOPR published simultaneously with the direct final rule and publish in the Federal Register the reasons why the direct final rule was withdrawn. Id.

DOE determined that it did not receive any adverse comments providing a basis for withdrawal described above for the direct final rule that is the subject of this document—air cleaners. As such, DOE did not withdraw this direct final rule and allowed it to become effective. Although not required under EPCA, DOE customarily publishes a summary of the comments received during the 110-day comment period and its responses to those comments. This document contains such a summary, as well as DOE's responses, for air cleaners.

Air cleaners are not currently subject to Federal energy conservation standards. On January 25, 2022, DOE published a request for information (“January 2022 RFI”), seeking comments on potential test procedure and energy conservation standards for air cleaners. 87 FR 3702. In the January 2022 RFI, DOE requested information to aid in the development of the technical and economic analyses to support energy conservation standards for air cleaners, should they be warranted. Id.

In a final determination published on July 15, 2022 (“July 2022 Final Determination”), DOE determined that coverage of air cleaners is necessary or appropriate to carry out the purposes of EPCA; the average U.S. household energy use for air cleaners is likely to exceed 100 kilowatt-hours per year (“kWh/yr”); and thus, air cleaners qualify as a “covered product” under EPCA. 87 FR 42297.

On August 23, 2022, DOE received a proposal jointly submitted by groups representing manufacturers, energy and environmental advocates, and consumer groups, hereinafter referred to as “the Joint Stakeholders.”  2 This proposal, titled “Joint Statement of Joint Stakeholder Proposal On Recommended Energy Conservation Standards And Test Procedure For Consumer Room Air Cleaners” (hereafter, the “Joint Proposal”  3 ), recommended specific energy conservation standards for air cleaners that, in the commenters' view, would satisfy the EPCA requirements in 42 U.S.C. 6295(o). The Joint Proposal urged DOE to publish final rules adopting the consumer room air cleaner test procedure and standards and compliance dates contained in the Joint Proposal, as soon as possible, but not later than December 31, 2022. (Joint Stakeholders, No. 16 at p. 1) The Joint Proposal also recommended that DOE adopt industry standard AHAM AC-7-2022  4 as the DOE test procedure. ( Id. at p. 6) In regard to energy conservation standards, the Joint Proposal specified two-tiered ( i.e., Tier 1 and Tier 2) standard levels, as shown in Table II.1, for conventional room air cleaners with proposed compliance dates of December 31, 2023, and December 31, 2025, respectively. ( Id. at p. 9).

After carefully considering the consensus recommendations for establishing energy conservation standards for air cleaners submitted by the Joint Stakeholders, DOE determined that these recommendations were in accordance with the statutory requirements of 42 U.S.C. 6295(p)(4) for the issuance of a direct final rule and published a direct final rule on April 11, 2023 (“April 2023 Direct Final Rule”). 88 FR 21752, 21760. DOE also evaluated whether the recommendation satisfies 42 U.S.C. 6295(o), as applicable, and found that the Joint Proposal recommended standard levels would result in significant energy savings and are technologically feasible and economically justified. 88 FR 21752, 21753. Accordingly, the consensus-recommended efficiency levels for air cleaners were adopted as the new standard levels in the April 2023 Direct Final Rule. 5 88 FR 21752, 21807-21810.

These standards, which are expressed as an integrated energy factor (“IEF”) in terms of PM 2.5   6 clean air delivery rate per watt (“PM 2.5 CADR/W”), based on the product's measured PM 2.5 CADR. These standards apply to all products listed in Table II.2 and manufactured in, or imported into, the United States starting on December 31, 2023, for Tier 1 standards and on December 31, 2025, for Tier 2 standards. The April 2023 Direct Final Rule provides a detailed discussion of DOE's analysis of the benefits and burdens of the new standards pursuant to the criteria set forth in EPCA. 88 FR 21752.

As required by EPCA, DOE also simultaneously published a NOPR proposing the identical standard levels contained in the April 2023 Direct Final Rule. 88 FR 21512. DOE considered whether any comment received during the 110-day comment period following the direct final rule was sufficiently “adverse” as to provide a reasonable basis for withdrawal of the direct final rule and continuation of this rulemaking under the NOPR. When making a determination whether to withdraw a direct final rule, it is the substance, rather than the quantity, of comments that will ultimately determine whether a direct final rule will be withdrawn. To this end, DOE weighs the substance of any adverse comment(s) received against the anticipated benefits of the consensus recommendations and the likelihood that further consideration of the comment(s) would change the results of the rulemaking. DOE notes that to the extent an adverse comment had been previously raised and addressed in the rulemaking proceeding, such a submission will not typically provide a basis for withdrawal of a direct final rule.

As discussed in section I of this document, not later than 120 days after publication of a direct final rule, DOE shall withdraw the direct final rule if (1) DOE receives one or more adverse public comments relating to the direct final rule or any alternative joint recommendation; and (2) based on the rulemaking record relating to the direct final rule, DOE determines that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule. (42 U.S.C. 6295(p)(4)(C)(i))

DOE received comments in response to the April 2023 Direct Final Rule from the interested parties listed in Table III.1.

A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record. 8 The following sections discuss the substantive comments DOE received on the April 2023 Direct Final Rule as well as DOE's responses.

In comments submitted in response to the April 2023 Direct Final Rule, the Joint Stakeholders and AHAM expressed support for the standard levels specified in the April 2023 Direct Final Rule as well as the process used to develop those standards. (Joint Stakeholders, No. 31 at pp. 1-2; AHAM. No. 30 at p. 1) The Joint Stakeholders noted their appreciation for DOE's swift action in publishing the DFR and stated their belief that the standards are economically justified and technologically feasible and will achieve significant savings. (Joint Stakeholders, No. 31 at pp. 1-2) DOE appreciates the Joint Stakeholder's comments and agrees that the standards are economically justified and technologically feasible and will result in significant energy savings.

The Joint Stakeholders urged DOE to propose and finalize reporting criteria for air cleaners, especially because compliance with Tier 1 standards would be required beginning December 31, 2023. The Joint Stakeholders stated that manufacturers would need to know the reporting criteria to begin completing their compliance reporting efforts. (Joint Stakeholders, No. 31 at p. 2) DOE acknowledges that certification data will be required for air cleaners; however, DOE did not adopt certification or reporting requirements for air cleaners in the April 2023 Direct Final Rule. Instead, DOE may consider proposals to establish certification requirements and reporting for air cleaners under a separate rulemaking regarding certification for covered products and equipment.

AHAM commented that vacuum cleaners with a secondary air cleaning function should not be included in the scope of the air cleaners standards or test procedure at 10 CFR part 430, subpart B, appendix FF (“appendix FF”). AHAM noted that there are currently vacuum cleaners available on the market that clean the air as a secondary function simultaneously with the primary vacuuming function. (AHAM, No. 30 at pp. 1-2) AHAM commented that the air filter function for these products is not an independent function of the vacuum cleaner and that the product is not intended to be plugged in on an ongoing basis. For these reasons, AHAM commented that it understands that vacuum cleaners that also clean the air, while vacuuming are not under the scope of this rule or appendix FF. (AHAM, No. 30 at p. 2) AHAM commented that such vacuum cleaners would not meet the proposed standards, and asserted that the Joint Stakeholders had not considered such products in the scope when developing the standards that they presented to DOE in the Joint Proposal. AHAM also noted that it had examined these products as part of the AHAM AC-7-2022 task force and these products would not be in the scope of the AHAM AC-7-2022 standard. ( Id. ) AHAM suggested that DOE clarify that these products are not in the scope of the air cleaner standards via a guidance document. AHAM additionally stated that if these vacuum cleaners are included under the scope, then DOE could amend section 2.2.2 of appendix FF to indicate that if a product has air cleaning as a secondary function and one of the secondary listed functions is a primary function as defined by the product safety certification listing, then the test method would not apply to such products. ( Id. )

Air cleaners are defined as a product for improving indoor air quality, other than a central air conditioner, room air conditioner, portable air conditioner, dehumidifier, and furnace, that is an electrically-powered, self-contained, mechanically encased assembly that contains means to remove, destroy, or deactivate particulates, VOC [volatile organic compounds], and/or microorganisms from the air. It excludes products that operate solely by means of ultraviolet light without a far for air circulation. 10 CFR 430.2. In the July 2022 Final Determination, DOE noted that the reason for explicitly stating that “air cleaners are a product for improving indoor air quality” was to clarify that the term “air cleaners” does not include products that may provide some air cleaning as an ancillary function ( e.g., a vacuum cleaner). 87 FR 42297, 42302. Accordingly, vacuum cleaners that provide air cleaning as an ancillary function do not meet the definition of an air cleaner.

IQAir North America, Inc. together with Swiss affiliate IQAir AG (collectively “IQAir”), commented that the standards established in the April 2023 Direct Final Rule would have a permanent negative effect on some of its products and would eliminate an entire class of air purification products. (IQAir, No. 28 at pp. 1, 5) IQAir commented that it makes products for gaseous and odor filtration, including filtration of VOCs. ( Id. at pp. 1-2) IQAir asserted that gas-phase filtration inherently requires greater energy than simple particulate/HEPA  9 filtration, and that due to the increased energy usage of gas-phase filtration, these products will not meet the IEF levels specified in the direct final rule and therefore will no longer be able to be sold in the United States. ( Id. at pp. 2-3) IQAir stated that its gas-phase air cleaners have played a vital role for specific segments of the population, such as those effected by natural gas exposure, which contains toxic VOCs and odorous gases. ( Id. at p. 4) IQAir stated that gas-phase air cleaners are critical to its product lineup and being unable to sell them in the United States would be devastating to its business operations there. ( Id. at p. 5)

IQAir stated that one of the most effective ways to filter gases and odors is with granular sorbent media such as activated charcoal, and chemisorbant pellets. IQAir noted that its gas-filtration-based products include a proprietary blend of activated carbon and alumina, impregnated with potassium permanganate. ( Id. at p. 2) IQAir noted that of the three of its products that offer this functionality, the top gas-filtration model is GCX, which includes cartridge-based granular filters containing over 20 pounds of media. IQAir noted that all three of these products meet the definition of an air cleaner as specified in the April 2023 Direct Final Rule, would be subject to the standards established in that direct final rule, and would be tested in the same way as air cleaners that do not offer gas-phase filtration. ( Id. )

In explaining how gas-phase filtration inherently requires greater energy than simple particulate/HEPA filtration, IQAir stated that pushing air through the pre-filter and varying types and amounts of granular media requires electric motors of a certain power level. IQAir commented that its models have already achieved the best possible energy efficiency at given levels of gas-phase reductions, capacity, and price. IQAir stated that the gas-phase filtration technology contained in its products performs a valuable, sought-after function, and that standard particulate/HEPA systems are physically incapable of performing this same function. IQAir also stated that there is no feasible combination of currently available components or technology that could allow their air cleaners to meet the standards established in the April 2023 Direct Final Rule without going into a price range that is far out of reach of its customers. IQAir requested that DOE consider the importance of the entire class of gas-phase products that it believes will be effectively banned by the standards established in the April 2023 Direct Final Rule. ( Id. at p. 5) IQAir also asserted that the large capacity of its air cleaners enables more contaminates to be absorbed over a longer period of time before needing filter replacements. ( Id. at p. 4)

DOE has conducted an extensive review of products that provide gaseous and odor filtration through the use of carbon filter media, including those models referenced in IQAir's comments. Based on this review, DOE has concluded that it is technologically feasible to implement design options to achieve higher levels of efficiency in air cleaners that employ the key design characteristics observed in those models referenced in IQAir's comments. Specifically, DOE observed that the HEPA-type filter included in IQAir's products is up to 6 inches thick and that the units have an inlet/outlet air flow design that restricts airflow by drawing in air over a smaller surface area (compared to the size of the unit) at the base of the model and only allows air to exit over a small surface area at the topmost section of the cabinet. Further, DOE observed that IQAir's products use a permanent split capacitor (“PSC”) fan motor, rather than more efficient brushless direct current (“BLDC”) fan motors that are used in other products. In chapter 5 of the technical support document (“TSD”) that accompanied the April 2023 Direct Final Rule (“2023 Direct Final Rule TSD”), DOE noted that at efficiency level 1 (“EL 1”), which corresponds to the Tier 1 standards established in the April 2023 Direct Final Rule, efficiency improvements are achievable through optimizing the motor-filter relationship, typically by reducing the restriction of airflow (and therefore, the pressure drop across the filter) by increasing the filter surface area, reducing filter thickness, and/or increasing air inlet/outlet size. 10 These design options improve airflow across the unit, enabling the use of a smaller motor and thereby reducing power consumption. Based on a detailed examination of air cleaner models from IQAir, DOE notes that IQAir could implement these design options by altering their case design to accommodate a thinner HEPA filter, while increasing the size of the air inlet at the base of the device. These changes would allow for a reduction in the size of the motor, while maintaining a similar airflow, which would decrease the power consumption of the unit. The case design could also be improved by expanding the size of the air outlet at the top of the device, which would further improve airflow. Additionally, IQAir could change to the more efficient BLDC motor.

IQAir expressed concern that the standards established in the April 2023 Direct Final Rule would eliminate an entire class of air cleaner products from the market. (See IQAir, No. 28 at p. 5) As discussed previously, DOE has reviewed the products using gas-filtration technology and determined that there are technology options available that would allow their products to meet the standards in the April 2023 Direct Final Rule. Given that there are technology options available for these products, DOE does not believe that this standard would cause the unavailability of air cleaner products with performance characteristics, features, sizes, capacities, or volumes that are substantially the same as those of the market at the time of the Secretary's findings. 42 U.S.C. 6295(o)(4).

Regarding cost, DOE's engineering analysis for the April 2023 Direct Final Rule considered the cost impacts of implementing the analyzed design options into air cleaners. See section 5.5.3 of the April 2023 Direct Final Rule TSD. DOE notes that EPCA does not require it to choose the standard level with the least consumer cost, or the least cost to manufacturers, but only to assess those, among other, costs and benefits (using the 7 factors articulated at 42 U.S.C. 6295(o)) and determine whether the burdens outweigh the benefits. Additionally, as discussed above, DOE has not found that this standard would result in the unavailability in air cleaners of performance characteristics, features, size, capacities, and volumes that are substantially the same as those on the market at the time of this finding. (See 42 U.S.C. 6295(o)(4)) In this case, the recommended standards met that standard, and DOE's analysis and conclusions would not change based on the comments received. Thus, DOE does not consider these comments to provide a basis to justify a withdrawal of this direct final rule under EPCA.

IQAir asserted that gas-phase air cleaners are unfairly measured by the DOE test procedure, and that their unique benefit is unrecognized. ( Id. at p. 5) IQAir stated that the standards established in the April 2023 Direct Final Rule encompass a broad range of devices including gas-phase air cleaners, but that they are based on a measure of only particulate performance. ( Id. ) IQAir noted that the standards are based on the measurement of CADR, which describes the initial cleaning performance of a filter and is expressed with respect to specific types of pollutants ( i.e., PM 2.5 CADR, pollen CADR, etc. ). ( Id. at p. 3) IQAir noted that while it is possible to determine CADR for gas-phase pollutants, it would still only measure initial air cleaning performance and would not account for degradation of performance over time. IQAir noted this is particularly relevant to gas-phase filtration, which relies on the capacity of granular media in order to maintain effective filtration, and without sufficient capacity, a granular filter might produce good initial gas-phase CADR and then degrade to little or no filtration. Therefore, IQAir stated, accurate measurement of gas-phase filtration must include capacity. ( Id. )

IQAir stated that the most advanced standardized testing protocol for consumer gas-phase filtration is China's GB/T 18801-2022, titled Air Cleaner, which measures both initial CADR and the amount of pollutant removed from the air until CADR drops to 50 percent of the initial value. IQAir stated that this methodology effectively measures the capacity of granular filters, enabling regulators and consumers to ensure that manufacturers do not game the system by achieving high CADR or high energy efficiency with unacceptable filter life. ( Id. ) IQAir suggested DOE include means of measuring gas-phase performance and capacity, and add a proportionate allowance in the calculation of IEF, which would recognize the value of gas-phase filtration and the practicality of implementing this technology without reducing the effectiveness of the air cleaner standards on non-gas-phase air cleaners. ( Id. at p. 6)

The Joint Stakeholders commented that it reviewed comments on the docket and observed a comment that suggested that certain products may have difficulty meeting the standards because the test procedure does not accurately measure the efficiency of the product. The Joint Stakeholders suggested test procedure waivers as a viable pathway for such products. (Joint Stakeholders, No. 31 at p. 2)

As these comments pertain to the test procedure and not the establishment of standards, DOE does not consider these comments to provide a basis to justify a withdrawal of this direct final rule under EPCA. DOE finalized its test procedure for Air Cleaners on March 06, 2023, noting that the air cleaner test procedure at appendix FF measures the PM 2.5 CADR and power consumption of air cleaners using an established industry standard, AHAM AC-7-2022. 88 FR 14014. DOE will consider any comments pertaining to test procedures, including comments suggesting additional tests for evaluating gas-filtration of air cleaners, in a future air cleaner test procedure rulemaking. In response to the comments from Joint Stakeholders, DOE notes that any interested person may submit a petition for test procedure waiver upon the grounds that the basic model contains one or more design characteristics which either prevent testing of the basic model according to the prescribed test procedures or cause the prescribed test procedures to evaluate the basic model in a manner so unrepresentative of its true energy and/or water consumption characteristics as to provide materially inaccurate comparative data. 10 CFR 430.27(a)(1)).

SENSIRON AG commented that there is significant potential for energy savings by using air quality sensors for controlling the level of operation of the air cleaner, depending on the level of pollution in the indoor space where the device is used. SENSIRON AG requested that DOE consider the adoption of air quality sensors for operation control. SENSIRON AG also commented that to ensure sensors of appropriate quality are used, DOE should utilize sensor performance requirements as defined in existing healthy building standards (such as WELL  11 and RESET  12 ). (SENSIRON AG, No. 27 at p. 1)

DOE addressed public comments received regarding the use of automatic mode in the air cleaner test procedure final rule published March 6, 2023 (“March 2023 TP Final Rule”). 88 FR 14014, 14032. DOE noted in the March 2023 TP Final Rule that industry-accepted test methods for other modes, such as automatic mode or low speed mode, do not currently exist. Id. at 88 FR 14032. As discussed in section 5.5.1.7 of the 2023 Direct Final Rule TSD, operation of air cleaners in automatic mode is not currently tested and, therefore, DOE determined that air quality sensors to improve automatic mode efficiency would not impact the efficiency levels analyzed for the direct final rule.

While SENSIRON AG included recommended standards, DOE notes that these standards are applicable to the sensors that monitor air quality, not to the air cleaner itself. As this comment pertains to the test procedure and not the establishment of standards, DOE does not consider this comment to provide a basis to justify a withdrawal of this direct final rule under EPCA. DOE is participating in the AHAM task force that is currently developing a test method for testing air cleaners with automatic mode. As stated previously, DOE would consider any updates to the test procedure in a future test procedure rulemaking.

EPCA directs DOE to consider any lessening of competition that is likely to result from new or amended standards. (42 U.S.C. 6295 (p)(4)(A)(i) and (C)(i)(II); 42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General of the United States (“Attorney General”) to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) To assist the Attorney General in making this determination, DOE provided the Department of Justice (“DOJ”) with copies of the April 2023 Direct Final Rule, the corresponding NOPR, and the 2023 Direct Final Rule TSD for review. DOE has published DOJ's comments at the end of this document.

In its letter responding to DOE, DOJ concluded that based on its review, it does not have an evidentiary basis to conclude that the proposed energy conservation standards for air cleaners are likely to substantially lessen competition. Although the rule may limit consumers' ability to purchase non-compliant products, DOJ stated that those impacts appear to result from the rule, itself. DOJ also stated that it is not aware of likely impacts on competition or the competitive process for air cleaners that will continue to be offered. DOJ acknowledged comments expressing concerns regarding whether the proposed standard is appropriate for certain products that may have functionality beyond air cleaning ( e.g., vacuums) or provide air cleaning functionality that requires additional energy consumption ( e.g., gas phase air cleaners). DOJ stated its understanding that DOE has discretion to grant waivers from a test procedure in certain circumstances (10 CFR 430.27(f)(2)). DOJ took no positions on these comments and concerns, but encouraged DOE, should it grant waivers in other product segments, to do so in a manner that preserves competition.

In response to the April 2023 Direct Final Rule, an individual commented that the April 2023 Direct Final Rule would not allow a free market. (Slaughter, No. 29 at p. 1)

DOE considered any lessening of competition that would be likely to result from new or amended standards. Based on the DOJ review, DOE has determined it does not have an evidentiary basis to conclude that the April 2023 Direct Final Rule energy conservation standards for air cleaners are likely to substantially lessen competition.

Pursuant to the National Environmental Policy Act of 1969 (“NEPA”), DOE had analyzed the direct final rule in accordance with NEPA and DOE's NEPA implementing regulations (10 CFR part 1021). DOE determined that the rule qualifies for categorical exclusion under 10 CFR part 1021, subpart D, appendix B5.1 because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, none of the exceptions identified in B5.1(b) apply, no extraordinary circumstances exist that require further environmental analysis, and it meets the requirements for application of a categorical exclusion. See 10 CFR 1021.410. Therefore, DOE determined that promulgation of the direct final rule is not a major Federal action significantly affecting the quality of the human environment within the meaning of NEPA, and does not require an environmental assessment or an environmental impact statement.

In summary, based on the previous discussion, DOE has determined that the comments received in response to the direct final rule for new energy conservation standards for air cleaners do not provide a reasonable basis for withdrawal of the direct final rule. As a result, the energy conservation standards set forth in the direct final rule became effective on August 9, 2023. Compliance with these standards is required on and after December 31, 2023.

This document of the Department of Energy was signed on August 28, 2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

The FAA issued AD 2022-18-11, Amendment 39-22162 (87 FR 58259, September 26, 2022) (AD 2022-18-11), for all The Boeing Company Model 777 airplanes. AD 2022-18-11 required repetitive inspections for cracking of the left- and right-side ring chords, repair angles, front spar lower chords, and front spar webs (depending on configuration) common to the underwing longeron located at station (STA) 1035; modification of the front spar lower chord for some airplanes; repetitive post-modification inspections; and applicable on-condition actions. AD 2022-18-11 was prompted by a report of a crack found in the front spar lower chord of a Model 777-300ER airplane undergoing an underwing longeron replacement. The FAA issued AD 2022-18-11 to address, detect, and correct such cracking, which in combination with cracking in the front spar web, could result in a fuel leak and fire hazard, or in the case of more severe cracking, could also affect the structural integrity of the airplane.

Since the FAA issued AD 2022-18-11, the manufacturer has discovered that Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021, which was mandated by AD 2022-18-11, contains errors relating to the application of cap seals to fasteners penetrating the center wing fuel tank which introduce a second, urgent unsafe condition. These errors necessitate superseding AD 2022-18-11 to add additional actions to correct this new unsafe condition.

Fastener cap seals interior to the airplane's fuel tanks are a critical lightning protection feature. This is particularly true for the center wing fuel tank, which typically contains flammable fuel vapors more frequently than the main wing fuel tanks. As part of the front spar lower chord and underwing longeron work described in the manufacturer's requirements bulletin and mandated by AD 2022-18-11, many cap seals are removed to accomplish the various modifications and inspections. If these seals are not replaced properly, and the associated fastener has poor electrical bonding to the airplane structure for any reason, the fastener may spark during a lightning strike and cause a fuel tank explosion.

The lack of fault-tolerance introduced by these cap sealing errors in the manufacturer's requirements bulletin places an airplane with compromised cap seals that has no flammability reduction or ignition mitigation means at a level of risk that requires urgent action to address. Airplanes equipped with flammability reduction or ignition mitigation means are also affected by this newly created unsafe condition, but at a lower level of risk. Paragraph (e) of this AD, Unsafe Condition, has been revised to reflect the second unsafe condition created by the errors in the manufacturer's requirements bulletin as described above. Paragraph (e) of this AD has also been revised to reflect the determination that existing structural inspections are expected to detect severe front spar lower chord cracking before the structural integrity of the airplane is put at risk, but are not expected to detect cracking before a possible fuel leak. The unsafe condition therefore now consists of two distinct aspects: structural cracking of the front spar lower chord leading to a fuel leak and possible fire, and failure of fastener cap seals to contain a possible spark following a lightning strike leading to a possible fuel tank explosion.

The manufacturer submitted an initial report of errors in the requirements bulletin affecting cap sealing instructions in late 2022. However, given the length and complexity of the requirements bulletin, detailed and complete documentation of these errors was not received until late July 2023. The manufacturer has stated its intent to revise the requirements bulletin; however, this work will take longer to accomplish than the risk to public safety allows. Therefore, the FAA has proceeded with this supersedure without additional service information as soon as possible following the manufacturer's delivery of the necessary information. The three categories of errors affecting cap sealing instructions in the manufacturer's requirements bulletin are described as follows.

First, certain groups and configurations of airplanes have no requirement to apply cap seals to fasteners associated with the underwing longeron. Without this requirement, a cap seal may fail to be applied following modification of the underwing longeron, compromising the required fault tolerance of the fuel tank lightning protection design. For those airplanes, this AD requires application of a cap seal of the correct sealant type to the minimum thickness or greater, if not already done.

Second, certain other groups and configurations have no thickness requirement for the applied cap seal, and the requirements bulletin mistakenly refers to the Boeing Standard Overhaul Practices Manual (SOPM) section 20-50-19 for procedures to apply the cap seal. The SOPM procedure specifies a thickness that is half the necessary thickness, while the Boeing Model 777 aircraft maintenance manual (AMM) procedure, which is also referred to in the requirements bulletin, specifies the correct thickness for cap seals. It is also possible that operators may have used an accepted method other than that specified in the SOPM and AMM, as no specific procedure was required by the requirements bulletin. A cap seal of insufficient thickness may fail to contain a spark resulting from a lightning strike, similarly compromising the fault tolerance of the fuel tank lightning protection. This AD specifies the minimum thickness and sealant type for an applied cap seal, and requires replacement of any seal that was previously applied using a procedure that specifies an inadequate thickness.

Third, some structural inspections described by the requirements bulletin may require the removal of certain fastener cap seals; however, the requirements bulletin either does not require that the cap seal be replaced, or does not provide a thickness requirement for the replaced seal. These errors affect the fuel tank lightning protection for the same reasons as already described. This AD requires that any seal removed for the inspections required by the requirements bulletin be replaced with a cap seal of correct sealant type and adequate thickness.

Therefore, for airplanes on which the actions of the requirements bulletin have not yet been accomplished, and for airplanes for which this AD requires rework of already applied cap seals, those cap sealing differences are defined in paragraph (h) of this AD as exceptions to the requirements bulletin. For airplanes on which the actions of the requirements bulletin have been accomplished but a maintenance records check cannot conclusively determine that an appropriate procedure was used to apply the cap seals, paragraph (i) of this AD requires rework of the applied cap seals.

This AD also corrects and clarifies other aspects of AD 2022-18-11 as follows.

Following the publication of AD 2022-18-11, the FAA and manufacturer discovered that Model 777-200 airplanes that do not have a fuel tank in the area affected by the unsafe condition were erroneously included in the applicability of AD 2022-18-11. As the design of these airplanes does not allow fuel to be present in the affected area (between the side-of-body ribs), the unsafe condition is not present on these airplanes. These airplanes are now identified in this AD by their maximum taxi weight of 547,000 pounds or less. Model 777-200 airplanes greater than 547,000 pounds maximum taxi weight, commonly referred to as “777-200ERs” (extended range), remain affected by the unsafe condition. Since the issuance of AD 2022-18-11, the manufacturer has also implemented a design change in production to address the unsafe condition. As a result, the unsafe condition does not exist on Model 777F airplanes having manufacturer line numbers 1743 and subsequent. Paragraph (c) of this AD, Applicability, has been revised accordingly.

In addition, the effectivity of the manufacturer's requirements bulletin also has the potential to cause confusion regarding the required actions for certain Model 777F airplanes. These airplanes, Model 777Fs having line numbers 1713, 1717, 1720, and 1724 through 1742 inclusive were not included in the effectivity of the requirements bulletin. While these airplanes were included in the applicability of AD 2022-18-11 and remain included in the applicability of this AD, the specific instructions applicable to them were not clearly identified in the requirements bulletin. Paragraph (h)(7) of this AD clarifies that Group 6 actions are the applicable actions for these airplanes.

The FAA is issuing this AD because the agency has determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021, which the Director of the Federal Register approved for incorporation by reference as of October 31, 2022 (87 FR 58259, dated September 26, 2022). This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This AD requires accomplishing the actions specified in the service information already described, except for any differences identified as exceptions in the regulatory text of this AD. This AD also requires reviewing the maintenance records of previously modified airplanes to determine the procedure used to apply cap seals, and applying and replacing certain cap seals using new specified thickness dimensions.

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq. ) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without providing notice and seeking comment prior to issuance. Further, section 553(d) of the APA authorizes agencies to make rules effective in less than thirty days, upon a finding of good cause.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies forgoing notice and comment prior to adoption of this rule because a cap seal below the minimum thickness may fail to contain arcing at a fastener penetrating the center wing fuel tank during a lightning strike, potentially creating an ignition source within the fuel tank and leading to a fuel tank explosion. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B).

In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forgo notice and comment.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2023-1814 and Project Identifier AD-2023-00773-T” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov , including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this final rule.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Kevin Nguyen, Aviation Safety Engineer, FAA, 2200 South 216th St., Des Moines, WA 98198; phone: 206-231-3555; email: Kevin.Nguyen@faa.gov. Any commentary that the FAA receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because the FAA has determined that it has good cause to adopt this rule without notice and comment, RFA analysis is not required.

The FAA estimates that this AD affects 291 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary cap sealing that would be required based on the results of the maintenance records review. The FAA has no way of determining the number of aircraft that might need the cap sealing:

The FAA has included all known costs in its cost estimate. According to the manufacturer, however, some or all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected operators.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866, and

(2) Will not affect intrastate aviation in Alaska.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

On July 25, 2023, USTR published an interim final rule that made a technical change to § 2004.6 of the USTR FOIA regulation to align it with the statute and Office of Information Policy guidance about the compelling circumstances under which an agency must grant expedited processing. See 88 FR 47772. Although the interim final rule was effective upon publication, USTR provided a 30-day comment period, which ended on August 24, 2023. USTR did not receive any comments and is adopting the interim final rule without any changes.

USTR considered the impact of this rule and determined that it will not have a significant economic impact on a substantial number of small business entities because it applies only to USTR's internal operations and legal obligations. 5 U.S.C. 605(b).

The final rule does not contain any information collection requirement that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ).

On July 25, 2023, USTR published an interim final rule (88 FR 47772) and determined that there was a basis under the Administrative Procedure Act for issuing the interim final rule with immediate effect. USTR provided a 30-day comment period, which ended on August 24, 2023. USTR did not receive any comments and is adopting the provisions of the interim final rule as a final rule with no changes.

The Controlled Substances Act (CSA) authorizes the Administrator of the Drug Enforcement Administration (DEA) (by delegation from the Attorney General) to promulgate rules and regulations that he deems necessary and appropriate for the efficient execution of his functions under subchapter I (Control and Enforcement) and subchapter II (Import and Export). 21 U.S.C. 871(b) and 958(f). Subchapter I includes provisions which require the Administrator to establish the aggregate production quota for each basic class of controlled substance listed in schedules I and II and the assessment of annual needs for the ephedrine, pseudoephedrine, and phenylpropanolamine to be manufactured in the United States each calendar year to provide for the estimated medical, scientific, research, and industrial needs of the United States, lawful export requirements, and the establishment and maintenance of reserve stocks. 21 U.S.C. 826. The Administrator shall take the following quota actions for a basic class of controlled substance listed in schedules I and II and ephedrine, pseudoephedrine, and phenylpropanolamine pursuant to stipulated conditions: limit or reduce individual production quotas for each registered manufacturer, 1 and fix individual manufacturing quotas for registrants. 2

On October 24, 2018, Congress revised the CSA through the Substance Use-Disorder Prevention that Promotes Opioid Recovery Treatment for Patients and Communities (SUPPORT) Act. These revisions will be noted and included in these proposed regulations, where applicable. Through this Act, the Administrator, by way of delegation from the Attorney General, may now set quota in terms of the pharmaceutical dosage-form.

DEA published a notice of proposed rulemaking (NPRM) in the Federal Register on October 23, 2019, which provided an opportunity for comments to be submitted. 84 FR 56712. The comment period closed on December 23, 2019. DEA invited comments from the public on all of the topics covered in the NPRM; however, DEA cannot change the implementation of amendments from the SUPPORT Act.

In the NPRM, DEA proposed the addition of new sections to introduce and define the types of quotas and proposed an update to the procedure for abandoning quota. The types of quotas are as follows:

• Aggregate production quota (APQ) (for controlled substances);

• Assessment of Annual Needs (AAN) (for list I chemicals);  3

• Individual Manufacturing Quota (for controlled substances and list I chemicals);

• Procurement Quota (for controlled substances and list I chemicals); and

• Import Quota (for list I chemicals).

Through this final rule, DEA will add these new sections to the regulations that will define the types of quotas for controlled substances in schedules I and II and the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. Also, DEA will change the regulations to stay up to date with modern technology by formalizing the current practice of filing to abandon quota with the United Nations (UN) Reporting and Quota Section in the online Quota Management System.

In the NPRM, DEA introduced the SUPPORT Act  4 and informed the public of the new legislation as it applies to DEA. With this final rule, DEA is updating the current regulations to comply with this new law. The SUPPORT Act now gives the Administrator, by way of delegation from the Attorney General, the authority to establish the APQ, individual manufacturing quotas, and procurement quotas in terms of pharmaceutical dosage-form prepared from or containing a controlled substance. The SUPPORT Act also changed the deadline for DEA to fix the individual manufacturing quota for schedules I and II controlled substances. The SUPPORT Act defines the phrase “covered controlled substance” and mandates that the amount of diversion of a covered controlled substance be estimated when establishing any quota. When estimating diversion, DEA must consult with the Department of Health and Human Services (HHS) on rates of overdose deaths, rates of abuse, and the impacts on overall public health related to the covered controlled substances. DEA may also take into consideration other sources of information deemed reliable. The SUPPORT Act requires that “appropriate quota reductions” be made after estimating diversion. The Act does not require quota increases.

DEA proposed to change the regulations to require certification of procurement quota in the NPRM. This final rule changes the regulations to provide that both manufacturers and distributors selling to a manufacturer will be required to obtain certification of the buyer's quota when an order is placed. This is implemented by changing the words “importer,” “manufacturer,” and “bulk manufacturer” to “registrant.”

In the NPRM, DEA proposed reductions to the acceptable inventory allowance, the amount of inventory at which quota would be suspended, and when DEA would grant a request for additional quota. DEA also proposed the establishment of inventory allowances for procurement quota for controlled substances. Due to comments and concerns received from the NPRM, DEA will be implementing different provisions in this final rule. Instead of the proposed amendments, DEA will:

• Decrease the inventory allowance issued by DEA for individual manufacturing quotas from 50 percent to 40 percent;

• Establish an inventory allowance issued by DEA for all procurement quotas, except liquid injectable products, at 35 percent, instead of the proposed 30 percent;

• Establish an inventory allowance issued by DEA for liquid injectable dosage-form procurement quotas at 50 percent, instead of the proposed 30 percent;

• Suspend individual manufacturing quota issued by DEA if a registrant's inventory exceeds 55 percent (reduced from 65 percent) of the registrant's estimated net disposal;

• Suspend procurement quota issued by DEA, except that for liquid injectable dosage-forms, if a registrant's inventory exceeds 50 percent of the registrant's estimated net disposal;

• Suspend liquid injectable dosage-form procurement quota issued by DEA if a registrant's inventory exceeds 65 percent of the registrant's estimated net disposal;

• Review request to determine if request for additional individual manufacturing quota by registrant should be granted when inventory is less than 30 percent (reduced from 40 percent) of the registrant's estimated net disposal;

• Review request to determine if request for additional procurement quota, except for liquid injectable dosage-forms, by registrant should be granted when inventory is less than 25 percent of the registrant's estimated net disposal;

and

• Review for request to determine if request for additional procurement quota for liquid injectable dosage-forms by registrant should be granted when inventory is less than 40 percent of the registrant's estimated net disposal.

DEA proposed the addition of use-specific subcategories for individual manufacturing and procurement quotas to formalize the current, on-going practice of the use of these subcategories by registrants. The use-specific subcategories are:

• Quota for Commercial Sales;

• Quota for Transfer;

• Quota for Product Development;

• Quota for Replacement; and

• Quota for Packaging/Repackaging and Labeling/Relabeling.

In the NPRM, DEA proposed changes to the deadlines for fixing or establishing the different types of quotas to allow more time for processing and communicating with applicants and to make the regulations consistent with the SUPPORT Act. This final rule will implement the following new deadlines:

• Deadline to establish the APQ and the AAN: change to September 1;

• Deadline to issue individual procurement, import, and manufacturing quotas: change to December 1; and

• Deadline to adjust individual manufacturing quota: change to July 1.

DEA received 258 comments. Many comments addressed multiple topics of the NPRM. Commenters also addressed the changes made to the CSA by the SUPPORT Act, which Congress put into effect.

Issue: DEA received nine comments regarding the definitions and types of quotas and three comments regarding the updates for the process of abandoning quota. Comments received from several organizations stated that they support DEA's changes to its regulations introducing and defining the types of quota. One company justified its support stating that DEA's change serves to educate and inform those not familiar with the quota process.

While one pharmaceutical company had no objections to the definitions of the types of quotas, they stated that DEA should consider creating a distinct sixth type of quota: procurement quota utilized to import concentrate of poppy straw (CPS) or raw opium that should remain independent of any inventory restraints. This company further suggested that the 30 percent inventory range would be too restrictive and would risk supply disruption from one year to the next as it believes a higher inventory range is necessary both to create a buffer in the first quarter of a new year and to avoid disruption in the event of delivery delays involving United States Customs and Border Protection.

Many commenters also fully supported the formalization of the quota abandonments with the UN Reporting and Quota Section in the online Quota Management System. One commenter explained its support by stating that these changes will allow for automation of the abandonment/surrender process. One pharmaceutical company recommended DEA take advantage of the opportunity provided by modifying the quota regulations to include the same provision in the section for procurement quota. This same company believes this will better reflect current practice as both manufacturing and procurement quota utilize the same mechanism for surrendering unnecessary quota.

DEA Response: DEA is committed to taking into consideration any changes in market dynamics that may require allocation of individual manufacturer's quotas or revisions to the APQ. DEA is also committed to ensuring that quotas are set in a way as to grant manufacturers the ability to provide controlled substances to meet the demands of the legitimate medical, scientific, and export needs of the United States. It has been DEA's long-standing intent to improve the process of setting the annual quota while ensuring an adequate supply of controlled substances is available for legitimate needs.

A sixth category of procurement quota for the acquisition of CPS or raw opium imported in compliance with DEA regulations for the purpose of removing restraints on inventory allowances whose aims are to ensure availability is unnecessary. First, there are a very small number of entities (<10) registered in the United States to procure narcotic raw materials (NRMs) for processing into schedule II controlled substances and these companies have a long history of obtaining the NRM necessary to meeting the estimated needs of the United States.

In addition, there are inventory allowances built into multiple quotas that DEA grants to those who produce active pharmaceutical ingredients (APIs) derived from NRM. Prior to implementing this rule, DEA granted a 50 percent inventory allowance to registered bulk manufacturers that procure NRM for the API they produce each year, pursuant to a DEA issued manufacturing quota. That total quantity ( i.e., 150 percent of estimated net disposals minus any existing inventory on hand) is then utilized to calculate the amount of procurement quota that the bulk manufacturer requires to make the API for which a manufacturing quota was granted. In those instances, DEA assesses the amount of NRM necessary to produce the above-mentioned API and then calculates an inventory allowance on the amount of NRM required. Both inventory allowances ensure that there are adequate amounts in the drug supply to meet legitimate needs. Finally, while appropriate safeguards are currently in place, the potential for diversion still exists for NRM from excessive stockpiling of NRM due to changes in legitimate need of the end products which may reduce the need to manufacture.

In addition, DEA appreciates the comments received in support of the process to formalize quota abandonments. Formalizing the procedure to abandon quota is simply a codification of existing DEA practice. While this formalization will have no economic costs or benefits, DEA believes there are benefits to accurately codifying existing practices. As such, this final rule will enhance efficiency and improve the process to abandon the right to manufacture all or any part of both individual manufacturing and procurement quotas.

DEA received nine comments about the changes imposed by the SUPPORT Act. As stated in the NPRM, these updates to DEA's regulations are being implemented to comply with the amendments made to the CSA by the SUPPORT Act. While DEA does not have the authority to change what has been established by Congress, DEA will still discuss the comments below.

Issue: By way of the SUPPORT Act, DEA's regulations were changed to allow quotas to be established in terms of pharmaceutical dosage-forms. In the NPRM, DEA explained that the discretionary authority granted to DEA to establish APQ, procurement, and individual manufacturing quotas in terms of pharmaceutical dosage-forms would not be used at this moment. The comments received addressed DEA's decision to delay the use of this discretionary authority, with some disagreeing with DEA's decision not to use the authority at this moment. Some suggested that DEA note the distinction between manufacturing injectables (which are given to in-patients) versus oral solid dosage-forms. These commenters opined that setting the quotas in terms of pharmaceutical dosage-forms will help address nationwide shortages of injectables.

DEA Response: In the matter of DEA's decision not to use the discretionary authority at this present time, DEA emphasizes that the SUPPORT Act states that DEA (by delegation from the Attorney General) may establish the quotas in terms of pharmaceutical dosage-forms prepared from or containing the controlled substance when it is determined that these such establishments will assist in avoiding the overproduction, shortages, or diversion of a controlled substance. This is not an express requirement to grant quotas in that manner, however it does grant the authority to do so. If DEA were to exercise its discretionary authority, it would be implemented at the procurement quota level, which would have a more direct impact on the availability of specific dosage-forms for legitimate medical need. During the analysis and review process for individual procurement quotas, DEA examines in detail the supporting documentation provided by dosage-form manufacturers to distinguish the type of product to be manufactured. This includes the type of formulation (solid, oral liquid, or liquid injectable) and dosage strengths, which become part of the factors considered in estimating an appropriate procurement quota accordingly.

Currently, all liquid injectable products receive 50 percent inventory allowance. DEA will continue issuing the inventory allowance for these dosage-forms at the same percentage because there are significantly fewer dosage-form manufacturers of injectable products. DEA is aware that quality or production problems related to sterility issues for injectable products have led to higher likelihood of recalls of such products. DEA believes that these products, when administered in controlled clinical and hospital settings, decrease the likelihood of diversion due to higher levels of oversight. Furthermore, the ongoing Coronavirus Disease of 2019 (COVID-19) public health emergency declared by the Secretary of Health and Human Services (HHS) on January 31, 2020, effective January 27, 2020, has made it necessary for DEA to consider both the potential for diversion, as well as the anticipated increase in demand for injectable products used to treat patients suffering from COVID-19. Due to COVID-19, DEA had to issue an adjustment to the established APQ for 2020  5 for selected controlled substances involved in manufacturing injectable drug products for COVID-19 treatment. The adjustment of APQ allowed DEA to adjust the individual procurement quotas and related inventory allowances for injectable products. While DEA declines to establish APQ in terms of pharmaceutical dosage-forms at this time, DEA has decided to implement a separate inventory allowance for liquid injectable dosage-forms. This will be discussed later in the document.

Issue: DEA also received a comment from an individual regarding the date change for fixing the individual manufacturing quota. The commenter asked, “how and why did DEA have Congress change the date to December?”

DEA Response: The SUPPORT Act revised the CSA by issuing a mandatory change to the date by which DEA must fix individual manufacturing quotas to “on or before December 1.” Because Congress issued this change, DEA must follow this law and implement the new date into DEA's regulations.

Issue: DEA received comments that were in support of DEA providing explanations for the increase in quotas but there was concern with the reliability of the data available for abuse (manufactured products vs. illicit substances). Commenters suggested DEA consider a broader range of data when calculating diversion by considering sources that are already available, pushing for even better data sources for future years, and adopting a uniform method of accounting for diversion. They stated that DEA should exhaust other means of curtailing illegitimate sales, abuse, and diversion before looking to quota as a prevention tool. Companies suggested that DEA differentiate among specific dosage-forms and target the dosage-forms that are subject to abuse to encourage the use of dosage-forms that are less prone to diversion. They stated that there needs to be an objective evaluation considering the exclusion of injectable dosage-forms from quota reductions. Commenters also suggested that DEA account for over-prescribing as a part of the diversion analysis by considering data and best practices of healthcare providers and by collecting information from the Prescription Drug Takeback Programs and similar sources. Further, they suggested that DEA use the medical professionals' “best practices” to help account for overprescribing at the physician level and incorporate data collection into the Prescription Drug Takeback Program to account for overprescribing at the patient level.

DEA Response: The Food and Drug Administration (FDA) is responsible for approving drug products and can require a manufacturer to submit a Risk Evaluation and Mitigation Strategy (commonly referred to by the industry as a REMS), which is a risk management plan that uses tools beyond the prescribing information to ensure that the benefits of certain drugs outweigh their risks. Certain REMS may include strategies to prevent, monitor, and manage specific risks resulting from inappropriate diversion and abuse of products. The information provided from a REMS informs DEA of potential abuse liability issues that may lead to diversion. If a manufacturer believes that its product is potentially being diverted or abused within the supply chain based on customer orders received that raise suspicion, it is responsible for notifying DEA by sending a report to the agency through DEA's Suspicious Orders Reporting System (SORS). See 21 U.S.C. 802(57), 21 CFR 1301.74(b). Once notified, DEA will alert the field office regarding the situation. The diverted amount will then become a factor when processing the quota for the current year and an adjustment to the amount of quota granted will be made indicating the diverted amount. DEA also acquires data from HHS, Centers for Disease Control and Prevention (CDC), Centers for Medicare & Medicaid Services (CMS), and the States to determine reliable rates of overdose deaths, abuse, and overall public health impact as a factor of diversion to make appropriate quota reductions for each of the covered controlled substances. DEA conducts diversion analysis for the five covered controlled substances and the remaining drugs not considered a “covered controlled substance” by the SUPPORT Act.

Issue: DEA received three comments from industry expressing concern about DEA's change to the regulations to ensure that both manufacturers and distributors selling to a manufacturer are required to obtain certification of a buyer's quota for the request of schedule I and II controlled substances, as well as list I chemicals when the buyer is a manufacturer.

One pharmaceutical company felt that the proposed changes seemed too broad. This company did not question the requirement to provide a certificate of quota when purchasing from a distributor or a manufacturer. However, the company stated that the specific wording of the proposed regulation may be overly broad. According to the company, as worded, the proposed regulation would require a certificate for orders from any registrant. The company believed this wording could be construed to apply to reference standards from analytical sites or complaint samples and certificates should not be required when manufacturers order from pharmacists, health care practitioners, or analytical laboratories.

DEA Response: By requiring that any manufacturing registrant provide a certification of quota before receiving any quantity of a schedule I or II controlled substance or list I chemical, DEA is better able to maintain the closed distribution system and provide a more accurate calculation of the APQ for the United States per 21 CFR 1303.12(f). While DEA is not averse to manufacturers fulfilling legitimate medical needs, DEA is required to ensure that enough quota is granted to meet legitimate medical, scientific, and research needs, while preventing diversion. To prevent diversion and to maintain a closed distribution system for schedule I and II controlled substances and list I chemicals, DEA requires any registrant to whom a procurement quota has been issued to follow the laws and regulations of the CSA and Code of Federal Regulations (CFR). One method of doing this is to require all registrants sending material to a manufacturer to verify proof of quota through certification, which ensures that purchases do not exceed the procurement quota set by DEA.

There were 23 in-scope comments that discussed the proposed reductions of inventory allowances. Many of the comments discussed each reduction separately. Furthermore, many of the comments from companies asked DEA to clarify which registrants the various reductions would be applicable to, due to the current placement of the regulations in the CFR. In general, commenters objected because of the economic impact to their business and the inability to ensure adequate supply. Commenters contend that DEA should not use a one-size fits all method for inventory and limiting additional quota because it will create a constant state of backorder and market shortage. A commenter proposed a grace period of at least one year before making the reductions effective.

Issue: Commenters objected to the reduction/establishment of inventory allowance stating that the lower amount of inventory allowance combined with the new date for individual manufacturing and procurement quotas may cause a shortage. A commenter stated that DEA's data on theft and loss at the manufacturing level show that the security of the products exceeds the security at the retail level. Commenters asked DEA to name studies showing that increased inventory at manufacturing facilities correlates to an increase in diversion or abuse. Further, many commenters allege that the proposed changes will create incentives that may increase opportunities for diversion and conveyed that DEA should assess whether reducing quotas would create shortages and jeopardize patient care. Commenters also emphasized that DEA needs to evaluate carefully the legitimate supply chain's full throughput time to bring medicines to market, so that patient care is not jeopardized.

Many commenters conveyed that the proposed 30 percent inventory allowance for procurement quota is overly restrictive and such a reduction would cause inefficiencies and shortages. Furthermore, it was commonly said that the reduction would hinder the ability to provide consistent care to patients, and it may result in potential shortages in hospitals and clinics and severely impact those patients managing an opioid dependence. They mentioned that there was already a shortage in acute care facilities.

Commenters suggested that DEA should give further consideration to the potential for supply disruptions that would result from decreasing the inventory allowance for API bulk manufacturers from 50 percent to 30 percent. It risks imposing significant costs and inefficiencies on the production of authorized bulk drug substances without corresponding benefits.

Commenters also stated that DEA's claim that the reductions will not increase the likelihood of shortages because there has been an increase in the number of manufacturers is too broad. Manufacturers of approved drug products can only use the approved suppliers that they named in their FDA-approved applications. Typically, manufacturers of approved drug products only have one or two suppliers that they can use. Commenters also said that DEA misstated data when claiming that the proposed reduction should not affect manufacturers. Three manufacturers supply over 90 percent of the API for codeine, hydrocodone, oxycodone, and morphine; therefore, there are fewer API producers in 2019 than 2007. API from one of the three primary manufacturers is not interchangeable across dosage-form manufacturers without FDA approval. In respect to procurement quotas, commenters alleged that the reduction to 30 percent would leave no margin for recovery. They also stated that the reduction to 30 percent will result in unnecessary restraints on API manufacturers.

Multiple commenters want DEA to keep the existing allowances of 50 percent for bulk manufacturers and state DEA should consider possible alternatives to reduce the additional cost burdens and risks of shortages and diversion. Commenters frequently claimed that DEA did not provide data to support its claim that the reduction for individual manufacturing quota inventory allowances would reduce the potential for diversion, especially because commenters believe that the material is not desirable at the bulk manufacturing level. They also mentioned that the reductions will substantially increase the cost of bulk manufacturing, will increase the risk of shortages of API supplies, and may increase the risk of diversion. In respect to bulk and dosage-form manufacturers, commenters assert the reduction could be harmful to patients and will potentially lead to market shortages of injectable medicines needed for critical medical care. Commenters also alleged that constricting inventories at pharmaceutical manufacturers or in institutional settings will have little impact on curbing diversion. Many commenters conveyed the want for DEA to publicly provide data that validates and supports the need for any reductions in inventory allowances.

Commenters asked for clarification on whether the 30 percent inventory allowance would be applicable to dosage-form manufacturers, due to its placement in the CFR. They suggested that if DEA applies the inventory allowance to dosage-form manufacturers, then it only be reduced for domestic consumption and not for exports. They also suggested that dosage-form manufacturers be allowed to calculate their allowance using the estimate of the current year's sales and bulk manufacturers calculate their allowance using the average of the preceding calendar year and the current calendar year. Several commenters mentioned that year-end inventory is not indicative of how much inventory they require throughout the year because a manufacturer's inventories are lowest at year-end as they have sold down their stock and await the granting of quota for the next calendar year. Commenters opined that the reduction of inventory from 50 to 30 percent is counter intuitive because more quota is needed due to the additional waste that would be caused from the increased number of manufacturing campaigns that would be required. Furthermore, they alleged that DEA will experience an increase in the amount of quota requests due to this reduction.

A few commenters worried that the reductions may not have a significant effect on a provider's decision to prescribe. They explained that if DEA limits production but providers continue to prescribe at the same rate, the issue will not have been addressed. Instead, costs may rise as supply decreases due to the reduction in production. One organization recommended that DEA pay greater attention to evidence-based research on appropriate prescribing and provide greater education for physicians and patients based on this research.

DEA Response: DEA has been working to prevent and to decrease diversion for years. DEA uses Composite Risk Management  6 to assess the risk of diversion at all levels of the supply chain. While diversion at the manufacturing level may be low, DEA emphasizes that there is still the potential for diversion to occur at that level. When setting quotas for the year, DEA assesses whether they would cause a shortage or jeopardize patient care. Also, DEA uses several sources of data to evaluate legitimate supply chains, such as Automated Reports and Consolidated Ordering System (ARCOS), IQVIA, and manufacturers' own data. The quotas granted are a composite of estimated requirements for legitimate medical, scientific, and export needs, manufacturing yields, and inventory allowance to begin to meet the next year's legitimate needs while reducing the risk of diversion.

While there may not be published studies showing that an increase in inventory at manufacturing facilities correlates to an increase in diversion or abuse, a fundamental principle governing policy discussions and DEA rulemaking, especially during the height of an opioid epidemic, is that DEA must strike a balance between ensuring an adequate and uninterrupted supply of controlled substances while preventing an oversupply which increases the risk of diversion. DEA does have internal information that it takes into consideration when granting individual quotas at that time. Review of internal actions of enforcement measures taken over the years have shown thefts at the manufacturing level and the public health impact in the surrounding communities as a result of those thefts. There have been occurrences of thefts of bulk API and thefts of finished dosage-forms from manufacturers' production facilities, and these products were sold into the community. Overproduction of API and finished dosage-forms can lead to high inventories and questionable high pressure marketing practices. DEA notes that manufacturers cannot sell more than their granted quotas plus previous year inventories but that high inventories could allow small thefts to go unnoticed from production facilities.

DEA understands the worries of commenters regarding the reduction of inventory allowances possibly jeopardizing patient care; however, DEA wants to stress that the management of patient care is not controlled by way of quotas. While DEA is aware of the opioid crisis, the issuance of quotas and accompanying inventory allowances are not directly involved with the management and care of patients. The issuance of quotas does not regulate the physician's practice of medicine. Therefore, inventory allowance reductions would not hinder a physician's ability to provide consistent care to patients, as voiced by commenters. DEA does not regulate a provider's prescription methods so long as there is a legitimate medical need. While the inventory allowance reductions apply to what manufacturers hold in inventory to begin dispositions for the next calendar year, they can utilize the inventory in the event that there is a shortage or there is an issue in the supply chain during manufacturing to prevent disruption to the legitimate supply chain. DEA does not control the way a company conducts business, as business decisions on production and supply chain management are done on the company level. DEA notes that it is HHS' area of responsibility to provide Evidence Based Medicine as guidance to providers and the public.

While there are a few commenters who have shared the concern that DEA's reduction of inventory will not have much of an effect on overprescribing, DEA believes that this is one of many factors being implemented at the federal level that will have an impact on decreasing overdoses due to prescription medications. DEA also notes that there has been a decline in the prescribing of schedule II opioid prescriptions since 2016 as many of those other factors have been implemented at Federal and state levels. As shown by IQVIA and demonstrated by a review of CMS' data, prescribing rates for opioids have decreased 44 percent since 2016 without a significant increase in price. 7

While commenters opined that DEA is being too broad in stating that the increase in manufacturers will offset the chances of a shortage, DEA did not generalize or understate the concept of there being enough dosage-form manufacturers so as not to increase the chances of shortages. Most dosage-form companies may have one main API supplier to ensure a continuous supply of product to meet patient need and mitigate the impact of potential shortage of the product. However, many dosage-form manufacturers have named a second supplier in FDA-approved applications and can request API from either supplier to meet legitimate patient need. While a secondary supplier is not required for New Drug Application or Abbreviated New Drug Application approval, DEA has noted that most requests for product development quota include a second supplier of API. DEA reviewed FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (hereinafter “Orange Book”) to determine the number of approved products and then matched those products to DEA registered manufacturers. In the event that there is an increase in a company's risk of shortage of supplies, the applicant may file for additional quota at any time during the calendar year. During that time, the application, along with its supporting documents, will be reviewed and if needed, an adjustment to the quota will be granted. Currently, DEA has already been applying the reduced inventory allowance of 30 percent to fentanyl, hydrocodone, hydromorphone, oxycodone, and oxymorphone.

DEA has decided to reduce the individual manufacturing inventory allowance for all controlled substances and list I chemicals to 40 percent and the procurement inventory allowance for controlled substances and list I chemicals to 35 percent, with the exception of liquid injectable dosage-forms. For liquid injectable dosage-forms, the procurement quota inventory allowance will be set at 50 percent. The inventory allowance requires that manufacturers maintain their inventory allowance based on estimated net disposals for the calendar year. It is based on what the manufacturer estimates their disposal to be and not the actual disposal at a specific point in time. DEA requires year-end reporting that demonstrates the manufacturer ended the year with the correct inventory allowance percentage. The inventory allowance does not affect the amount of a net-disposition quota granted to a manufacturer. DEA grants the quota necessary to be able to continue to meet legitimate patient needs based on the historical and estimated future data including changes in market share and FDA guidance. DEA grants an inventory allowance to the manufacturer to begin disposition for the next year; however, this may also be used to meet the unanticipated market changes in the current year. API and/or finished dosage-forms in reserve are usually held for unanticipated market changes, manufacturing issues, and to begin the next year. As such, DEA's lowering of the inventory allowance as written in the regulations should not affect a manufacturer's sales. While diversion may not occur with high frequency at the manufacturing level, it occurs and can impact public health in the surrounding community. Since 2004, DEA has sought to address risk of diversion at the apex of the distribution system ( i.e., manufacturing level). Granting higher inventory based on sales provides more incentive to push more material further downstream as no entities want to maintain higher levels of stocks than what they deem necessary due to storage and monetary constraints, the fact is that profit is only generated through sales of the product and not production. DEA previously demonstrated that bulk manufacturers were only holding 39 percent inventory. It is for these reasons, and the fact that historically manufacturers have not held 50 percent inventory levels, that a lower inventory at the manufacturer level should be implemented. Also, the lower inventory allowances can potentially reduce diversion throughout the supply chain.

DEA notes that bulk manufacturers have not always utilized all of their granted quota to manufacture API and have consistently held less than 50 percent inventory. The year-end sales and inventory provides information on how a registrant is doing in the market and provides a starting point when assessing requests for revisions to current quotas. If a bulk manufacturer's sales to customers are more robust than anticipated, inventories will be low and DEA will grant a quota adjustment to ensure that the customers can receive material up to their individually granted procurement quota. If inventories are high, it indicates that the company has not sold as much API to their customers as they forecasted, and therefore the higher inventory allowance is unnecessary.

Over the last decade, DEA has implemented a 30 percent inventory allowance for opioid related procurement quotas. This inventory level has not caused issues due to quota being set at the legitimate patient level. DEA notes that over the last four years, after reviewing the applicants' year-end reports and other data reporting sites, dosage-form manufacturers have reported higher than average inventories of opioids as prescriptions for opioids have declined significantly due to the implementation of CDC guidelines and DEA enforcement activities. The data show that manufacturers only acquired 72.7 percent of fentanyl, 73.9 percent of hydrocodone, 56.7 percent of hydromorphone, 79.3 percent of oxycodone, and 73 percent of oxymorphone from the quotas granted to them by DEA. As prescription rates have fallen, the data show that the material has not sold, but has been moved to their inventory, thereby significantly increasing inventory levels above that which are medically necessary on an annual basis. DEA has found that over the past years, inventory levels have averaged 72 percent for fentanyl, 36.9 percent for hydrocodone, 57 percent for hydromorphone, 36.3 percent for oxycodone, and 61.0 percent for oxymorphone, while companies have met legitimate medical needs. The inventory levels for fentanyl, hydromorphone, and oxymorphone include product development efforts as manufacturers seek FDA approval of abuse-deterrent formulations. DEA has considered the comments from manufacturers and will set the inventory allowance for procurement quotas at 35 percent for all dosage-forms, except liquid injectable dosage-forms. Liquid injectable dosage-forms will receive a 50 percent inventory allowance for procurement quotas.

To determine the amount for the procurement quota inventory allowance, DEA has reviewed the Orange Book and internal quota applications. These reviews led DEA to determine that, generally, there are more dosage-form manufacturers than bulk manufacturers, and as such, an individual dosage-form manufacturer does not need as great of an inventory as a bulk manufacturer. Therefore, the procurement quota inventory allowance should be lower than the manufacturing quota inventory allowance. DEA has considered new data from FDA on new approved drug applications and internal quota applications that showed that manufacturers are producing or seeking to produce more extended-release and/or abuse-deterrent dosage-form products that require additional manufacturing time compared to immediate-release drug products. Therefore, DEA has determined that a procurement quota inventory allowance of 35 percent provides the necessary manufacturing lead time to prevent shortages or gaps in the supply chain. DEA believes this increase in inventory allowance from the proposed amount will provide the necessary time for all manufacturers to complete their manufacturing activities and place their products in the supply chain for legitimate need.

However, DEA will not be reducing the inventory allowance for procurement quotas of the liquid injectable dosage-forms. After further review of comments, DEA acknowledges that for injectable products, there are significant manufacturing issues when manufacturers fail to comply with FDA's Current Good Manufacturing Practice (cGMP) regulations. Additionally, DEA has realized that the lower number of manufacturers, coupled with the higher likelihood of recalls due to cGMP violations, requires the higher inventory allowance for dosage-form manufacturers of injectable products. In light of COVID-19, DEA also acknowledges that declining to reduce inventory allowances for these liquid injectable dosage-forms ensures that manufacturers are able to address and endure potential circumstances of nationwide shortages. The liquid injectable dosage-form procurement quotas will be set at 50 percent.

DEA read the comments regarding the limited number of bulk manufacturers supplying the market. DEA and international drug control treaty obligations control the number of bulk manufacturers who supply the dosage-form manufacturers. While the number of bulk manufacturers may fluctuate, over the past 10 years there have been 10 bulk manufacturers that have supplied the opioid market, with three of them supplying the majority of the requirements. DEA analyzed the data and determined that the bulk manufacturers did not utilize the entire quota granted to them each year. On average, the companies manufactured only 85.2 percent of the fentanyl, 61.7 percent of the hydrocodone, 79.1 percent of the hydromorphone, 78.3 percent of the oxycodone, and 69 percent of the oxymorphone quota granted by DEA. These bulk manufacturers have maintained an average inventory of 39 percent and have continually met the legitimate medical need before and during the opioid crisis. DEA has noted that dosage-form manufacturers are now validating a second API supplier as a precautionary measure. As dosage-form manufacturers continue to seek FDA approval for new drug products containing controlled substances, DEA continues to grant product development quotas to allow for qualification of two suppliers and grants quota to bulk manufacturers to support this qualification effort.

DEA notes that the proposed regulations for procurement quota were added to the only regulation in the CFR for inventory allowance, which is located under the subheading of “Individual Manufacturing Quotas.” To lessen the chance of causing confusion to registrants, DEA has chosen to move the procurement quota inventory allowance regulations. As such, DEA will create new regulations to address the inventory allowance amounts for procurement quotas.

Issue: Many commenters explained that the reduction of the level at which quota will be suspended would require manufacturers to run smaller campaigns. They argue that this will increase the number of campaigns required to produce the same amount of product in a given year. Commenters also noted that the proposed reduced suspension amount would interfere with product supply. Commenters stated that the reduction in the suspension threshold would increase substantially the cost of bulk manufacturing and would increase the risk of shortages of API supplies and may increase the risk of diversion. They also conveyed that reducing the trigger for suspending bulk API manufacturing quota would decrease significantly the efficiency and increase the costs of bulk API manufacturers.

Commenters asked for clarification on whether the quota suspension will apply to dosage-form manufacturers and suggested that DEA clarify that it is not applicable to bulk manufacturers. They suggested that DEA apply the suspension threshold at year-end so that the inventory level is only above the trigger level briefly. Commenters conveyed that this would ensure that the suspension does not interrupt timely and efficient processing of bulk API. As an alternative option, commenters suggested that DEA clarify the definition of inventory so that it does not include material of a basic class that is not yet in finished form suitable or intended for sale or provide a more effective procedure for issuing exceptions to the quota suspension threshold.

Commenters explained that lowering the inventory ceiling to 45 percent would disrupt manufacturing operations and cause significant cost increases because this will require smaller, more frequent campaigns. They argue that these would generally decrease efficiency and potentially increase the amount of product wasted during the required cleaning of equipment between each additional campaign. Additionally, there may also be an increase in the generation of hazardous waste because of these additional campaigns. One commenter specifically stated that the reduction is too restrictive for lower volume APIs. Also, the reduction may potentially short the finished dosage-form markets by greatly impacting lead-times to get the material to customers, and it would force customers to wait an extra four to five months.

It was suggested that DEA evaluate the data throughout the year and not just the year-end data. Furthermore, DEA received suggestions that the ceiling should be set at 55 percent instead, so that drug shortages do not occur. Some commenters suggested the reduction in allowances should only apply to dosage-form manufacturers by lowering the inventory allowance for those manufacturers to 40 percent and that DEA specify that this does not apply to bulk API manufacturers.

DEA Response: DEA has been working to prevent and detect diversion for years. DEA grants the quota to companies, and they can use the quota for various purposes within the scope of their requested business activity. The companies and DEA calculate inventory allowance suspension is calculated based on the companies' estimated net-disposal for the calendar year. If the companies' dispositions are robust as estimated, the company will likely not meet the suspension percentage. If the companies' dispositions are not meeting the company's estimations as the calendar year progresses, the company will likely meet the suspension percentage and need to discontinue manufacturing until net disposition volume increases to the extent that the estimated inventory is below the inventory allowance suspension percentage. Companies can and do apply for quota revisions at any time during the calendar year. DEA grants quota to meet estimated legitimate patient need and provide an inventory allowance based for the next calendar year based on net dispositions. A company requesting quota in excess of their estimated market portion necessary to meet legitimate medical need and relevant inventory allowance, as determined by the company's supporting documentation, IQVIA data and FDA guidance, which are among the list of factors  8 DEA considers, will not receive the requested quota; however, the quota granted will be sufficient to meet legitimate need and inventory allowance. DEA has noted instances where (1) bulk manufacturers have not utilized all of their granted quota to manufacture API and have consistently held less than 50 percent in inventory; and (2) dosage-form manufacturers have requested additional quota while not distributing finished dosage-forms from their inventory to the market to cause an artificial drug shortage.

DEA wants to clarify that this final rule will be applicable to both bulk manufacturers and dosage-form manufacturers. The amount at which quota will be suspended will differ for individual manufacturing quota and procurement quota. In reviewing FDA's Orange Book by controlled substance, it is apparent the ratio of dosage-form manufacturers to bulk manufacturers is heavily weighted on dosage-form manufacturers many of whom make generic drug products that are therapeutically equivalent to other drug products for treating patients. Therefore, the dosage-form manufacturers' quota suspension level will be lower.

While DEA understands the concerns brought forth by the registrants, DEA will continue to grant quota based on legitimate need. The reduction of the suspension of quota remains based on estimated dispositions for the calendar year. This suspension does not interfere in normal campaign batches unless a company's net dispositions decrease markedly from the company's own estimated dispositions provided to DEA at the time of their quota application. A manufacturer may complete their campaigns for the calendar year based on estimated net dispositions. If dispositions are not as robust as the company predicted, then any unused quota will be suspended until dispositions are estimated to leave the company with the appropriate inventory levels at the end of the year. If the company is in the middle of a campaign batch when they realize they will exceed their estimated inventory allowance, the company can apply and request with good cause to complete the batch before suspending manufacturing activities until sales/dispositions bring the estimated inventory level to the correct percentage. See 1303.24(b). DEA does not control the way a company conducts business, as business decisions on production and supply chain management are done on the company level.

However, as this relates to finished dosage form manufacturers, a company who requests quota revisions because of poor business decisions, such as manufacturing unnecessary dosage-forms or strength based on estimated legitimate need for the substance, provides DEA an opportunity to grant quota based on specific FDA approved dosage-forms as authorized by the SUPPORT Act. For example, at the beginning of the COVID-19 pandemic, hospitals declared drug shortages of specific treatment drugs. DEA estimated that it granted sufficient quota to manufacturers for COVID-19 treatment drugs. DEA received additional detailed inventory information from the dosage-form manufacturers and determined that the manufacturers did not have the correct dosage forms and strengths available for hospitals to utilize immediately. Therefore, DEA granted additional quota specifically to meet the dosage forms and strengths hospitals required to treat COVID-19 patients.

Issue: Commenters requested clarification as to whether the 20 percent rule will apply to dosage-form manufacturers who use procurement quota due to its proposed placement within the CFR and because historically, DEA has said it does not apply. Many commenters opined that waiting until 20 percent to grant additional quota is too low of a threshold and would lead to supply disruption if applied to dosage-form manufacturers. The lower amount also would not allow manufacturers to be “flexible to address situations such as shortages, natural disasters, epidemics, medical demand, and other scenarios that would require an increase in production of critical medications.” Commenters went on to explain that 20 percent equals 10 weeks of inventory but production lead times are typically greater than 10 weeks. According to these commenters, waiting until there is less than 10 weeks of inventory will lead to market shortages and disrupt patient care.

The commenters went on to state that the time that it takes DEA to review quota applications is longer than six to eight weeks and granting more quota at the 20 percent mark would possibly mean depleting stock before DEA finishes reviewing. In particular, Teva stated that 15 of 36 (42 percent) of Teva's 2019 quota adjustment applications took nine weeks or longer for DEA to respond, and seven of 36 applications (19 percent) took 13-15 weeks for response. Response times of 10 or more weeks are unacceptable under normal circumstances and will exacerbate out of stock issues with reduced inventory allowances. All of this attributes to the increased potential for shortages and delays of medicine.

DEA Response: When establishing quota, DEA takes into account the current and previous year's sales and uses historical data to justify the need. DEA is not mandating that manufacturers need to have an inventory of less than 30 percent (for individual manufacturing quota) or 25 percent (for procurement quota) before applying for additional quota. A registrant may file for additional quota at any time during the calendar year. During that time, DEA will review the application and, if needed, will grant an adjustment to the quota. Registrants already apply for quota adjustments per their needs, and this will not change the current application process.

DEA acknowledges that quota processing times can vary throughout the year with some outliers. A quota processing time analysis was conducted for quota requests processed in 2019. The analysis showed a quota processing time range of four to eight weeks. When initial quotas were not factored into the calculation, the average time to process quotas was approximately 37 calendar days (estimate typical provided to registrants is four to six weeks). However, between October and December, when concomitant processing of initial and revised quota applications occur, it took an average of 57 calendar days (estimate provided to registrants is six to eight weeks). Quota processing delays can be caused by various circumstances such as, but not limited to, incomplete, poorly written, and mislabeled applications; pages of extraneous information; and extremely busy times of the year; however, inventory has historically been adequate to cover these delays and other situations.

Additionally, as previously stated, DEA has found that a portion of the procurement quota granted for some substances has not been utilized; therefore, formally establishing an inventory allowance five percent higher than that which had already been implemented should not cause more quota applications to be submitted or subsequent delays in processing. In fact, DEA showed that manufacturers have not been selling the material they have procured against their quota and instead have been adding it to their inventory to await changes in patient need.

DEA's actions in response to COVID-19 prove that even with lower inventory levels, DEA is able to be flexible to address situations such as shortages, natural disasters, epidemics, medical demand, and other scenarios that would require an increase in production of critical medications, despite the concerns of commenters. During the COVID-19 pandemic, DEA, FDA, other federal agencies, private partnerships, and others in the pharmaceutical industry—specifically the injectable dosage-form manufacturers—were in continuous dialogue regarding the availability of controlled substances to be used in the treatment of ventilator patients. Despite the injectable dosage-form manufacturers having almost a full year's worth of inventory, based on previous year's sales, plus current year quota on hand, hospitals reported shortages almost immediately as soon as the treatment protocols were determined. DEA soon determined that despite the sheer quantity of available inventory at the dosage-form manufacturing level, the specific formulations hospitals required were not available. In order for DEA to respond to hospitals reporting shortages of injectable products for treatment of ventilator patients during the COVID-19 pandemic, DEA and the injectable manufacturers entered into continuous dialogue to meet hospitals' demand for injectable products. With proper supporting documentation, DEA was able to process their quota requests in less than five business days, demonstrating DEA's flexibility to address situations such as shortages, natural disasters, epidemics, medical demand, and other scenarios that would require an increase in production of critical medications. Also, in these dialogues, injectable manufacturers stated that the manufacturing times from acceptance of API to release of the drug product took approximately 30 to 42 days. This manufacturing time further shows that manufacturers also have the flexibility to address those situations raised by the commenters.

The COVID-19 pandemic demonstrated that the issue was not the availability of large inventories on hand, but the flexibility to grant and utilize quotas to produce the formulations and dosage strengths demanded at the time of the crisis. While the inventory allowance for injectable products was not at issue, discussions with FDA and manufacturers during COVID-19 regarding cGMP issues allowed DEA to realize the importance of maintaining a separate inventory allowance for these types of products as mentioned in comments received regarding injectables.

Issue: DEA received seven comments concerning the formalization of the current practice of use-specific subcategories for individual manufacturing and procurement quotas. One company was concerned that the specificity may create an administrative burden on manufacturers who may need more product for one category versus another. This commenter also suggested that DEA allow registrants to transfer product between categories based on notice to DEA rather than requiring a formal reallocation of quota. Another organization emphasized that it did not object to the proposed addition of use-specific subcategories for individual manufacturing and procurement quotas and the use of subcategories by registrants. It recommends that DEA establish a new procurement quota or subcategory for CPS and opium.

An association representing manufacturers and distributors of over-the-counter medicines, dietary supplements, and consumer medical devices in the United States noted that although the subcategories for types of quotas seem workable, it would reduce flexibility. This association stated that subcategories could create inefficiencies or shortages in the supply chain if, for instance, a manufacturing batch required rework and thus required a change in which use-specific subcategory was used. The association further noted that introduction of new line extension of a medicine with a list I chemical can result in in-year shifts in the amount of material expected with little notice as development, validation or revalidation, or scale-up occur, with different sub-category quota impacts.

One commenter was concerned with how DEA defines replacement quota and whether replacement quota will be subtracted from the APQ. This same commenter questioned whether DEA intends to exceed the APQ by the issuance of additional quota to replace quota that was previously granted within the same calendar year. Additionally, the commenter suggested that DEA explain how replacement quota is factored into the APQ. As such, this commenter believes that granting replacement quota on a case-by-case can appear to be unfair when faced with identical circumstances submitted by two different manufacturers.

Another commenter requested that DEA provide clarification on whether DEA-registered manufacturers are materially impacted by the creation of new sub-categories for suppliers that will need to register for procurement quotas and would there be any additional impact to quota management and certification procedures for repackagers.

DEA Response: DEA is committed to ensuring that quotas are set in such a way as to grant manufacturers the ability to provide controlled substances to meet the demand of the legitimate medical, scientific, industrial, and research needs of the United States. DEA is required to understand what is available for legitimate patient need versus what is available for product development to calculate properly the APQ and individual quotas. Additionally, as the number of manufacturers continues to increase and industry practices and specializations change, the ability to track methodically movements of material between registrants at all stages of manufacturing becomes more critical. The specificity of quota is important. DEA is responsible for many reports that require the denotation of quantities by quota type, and it improves the efficiency of the application and reporting process for DEA-registered manufacturers. If categories are combined, there would be no way to calculate efficiently quota that was used for commercial sales, product development, packaging, etc. This would drastically inflate the quantity of commercial sales quota, as packaging/repackaging and labeling/relabeling quota, among other categories, could not be separated from commercial sales quota.

Replacement quota is intended to replace material that does not meet good manufacturing practice standards slated to meet patient needs during the current quota year and is not a means to replace disposed samples, analytical samples, product development material, and expired inventory acquired or manufactured under previous quota years. This subcategory of individual manufacturing quota and procurement quota includes quota granted to a registrant after the registrant obtained material that was initially intended for commercial sale, but is unable to be marketed. Examples include failed batches due to a contaminant, material that is out of specification and can no longer be used, lots that reached their expiration date in the supply chain, or unusable material received from a bulk manufacturer. Replacement quota is granted on a case-by-case basis. The specifics of the registrant's justification and situation determines the merit of the request.

HHS contemplates legitimate patient needs and DEA then estimates the APQ necessary to meet that need. While DEA may have granted an initial quota, changes instituted by HHS and/or market needs may demonstrate that the original quota is now higher than necessary to meet market demand. For example in November 2010, FDA asked the manufacturers of propoxyphene drug products to voluntarily withdraw their drug products due to cardiotoxicity issues. In response, DEA denied all quotas for 2011 to dosage-form manufacturers and bulk manufacturers who supplied the domestic market, and it granted substantially reduced quotas to allow manufacturers to meet the market demand of foreign countries and reference standards only. In this example, manufacturers providing just notice could exceed both agencies' estimations for legitimate need allowing for the possibility for misuse and abuse. To obtain quota, a manufacturer must submit a request to DEA for the quantity they wish to manufacture. 21 CFR 1303.12 and 130.22. DEA in turn performs a quota analysis based on the information submitted and provides a determination based on legitimate need.

Use-specific quota subcategories reflect the manufacturing activity of the applying DEA registrant and have facilitated the issuance of manufacturing and procurement quotas and provided a more accurate calculation of the APQ for the United States by preventing double counting of quota. They have been in place informally for well over a decade with no complaints from the registrants who have found the system beneficial in separating their product development and packaging efforts from their commercial manufacturing efforts when requesting adjustments to their quotas. Furthermore, packaging and repackaging are manufacturing activities as defined in the CSA and CFR and already require quota.

Issue: DEA received eight comments from the public regarding the deadline changes. Many comments were either silent on the new deadlines or either expressly stated that they had no objection for the deadline changes, with some going as far as to say they agree and understand the need to change the dates. Some desired clarification on how DEA will reconcile new deadlines for the supply chain where inconsistences have been noted. For instance, it was stated that extending the deadlines would potentially bring about supply disruptions when there are long lead times. There is also concern that changing the deadline to issue quota adjustments would represent a significant change because DEA normally issues them any time during the year, within six to eight weeks of a request. Pushing the procurement quota date to December 1 would make the manufacturing process harder with the reductions because DEA must issue procurement quota before it approves an import permit.

Response: DEA is changing the deadline for issuing initial quotas to December 1 as required in the SUPPORT Act. This new deadline will not affect the supply chain because the quota issued cannot be utilized until January 1 of the next calendar year. Initial quota applications are due to DEA by April 1 and May 1 of the preceding year to be considered in the APQ estimates which must be published before quotas are allotted. The December 1 deadline takes into account the considerable amount of information that must be collected from various sources, analyzed, and reviewed by multiple agencies prior to establishing the quota. Under the current regulations, DEA has less than two months to accomplish this task and it has proven unattainable as the controlled substance manufacturing business has grown larger and more complex. Manufacturers will still be able to apply for quota adjustments at any time throughout the calendar year. Registrants seeking an import permit need to take into account any possible delays when applying for them.

Issue: DEA received a letter from the Attorneys General of the States of West Virginia, Arkansas, Florida, Kentucky, Missouri, and Nebraska (hereinafter “letter from State Attorneys General”) concerning the process for setting annual production quotas for controlled substances.

The States applauded the significant improvements DEA has made in reducing opioid production quotas over the past several years. The States stated that DEA failed to tailor the quota-setting process to legitimate medical need, and urged DEA to consider additional sources to set quotas. They further commented that there is a lack of transparency in setting quotas. The States believe that DEA needs to explain the logic behind the different approaches to set quotas.

DEA Response: DEA is committed to ensuring an adequate and uninterrupted supply of controlled substances to meet legitimate medical, scientific, and export needs of the United States. DEA sets aggregate production quotas in a manner to ensure that all prescriptions that are authorized for legitimate medical purposes can be filled. For purposes of setting quotas, it should be noted that, as a result of new laws and regulations, DEA considers a number of factors, including, but not limited to, the extent of any diversion of the controlled substance in the class; relevant information obtained from HHS including FDA, CDC, CMS; and relevant information obtained from the States. 9

Issue: As previously stated, DEA received a letter from six State Attorneys General. West Virginia, along with five other states, urged DEA to expand the sources of data used to determine the amount of diversion that occurs. They mentioned that the SUPPORT Act and the “Controlled Substances Quotas” final rule (83 FR 32784) require the determination of the extent of diversion, but stated that they believe DEA takes different approaches in fulfilling this requirement. The commenters stated that DEA should estimate the diversion of all controlled substances the same way that DEA estimates the diversion of covered controlled substances. Furthermore, they want DEA to explain the logic of taking two separate approaches, as they feel that even though the wording of the two reforms slightly varies, DEA's approach should be the same.

As for the type of data DEA uses, the States suggest that DEA use national and state databases in the analysis. Specifically, they recommended three steps that DEA should take to incorporate information that is currently available: (1) Improve ARCOS and the SORS to allow greater insight into prescribing; (2) look at other national databases that track drug abuse patterns, poisonings, emergency room visits, and treatment patients; and (3) consider state databases that track drug overdoses and hospital visits.

DEA Response: As stated above, in its efforts to estimate the amount of diversion, DEA acquires data from other Federal agencies. While DEA currently utilizes multiple internal and external data sources, DEA remains open to additional sources of reliable and relevant data. Some of the sources the States suggested that DEA use are not reliable and precise and lack the required granular specificity within the data needed to estimate diversion. The data does not examine each controlled substance individually ( i.e., as a basic class and the quantity ingested), but groups them together chemically, making it difficult to determine which basic class was involved and to what extent its aggregate production quotas should be lowered. For example, patients that overdose from hydrocodone, oxycodone, or hydromorphone are grouped together under opioid-related overdose. DEA is unable to determine the basic class that led to the overdose from this information. Additionally, DEA cannot determine from the data if the patient overdosed on an illicit opioid or a legally marketed opioid product. For purposes of calculating the extent of diversion for each basic class of controlled substance, DEA would benefit more from the drug overdose and mortality data if it precisely identified the controlled substance(s) believed to be the cause of overdose or death and if it included the quantity of the substance ingested.

Modifications to the SORS and ARCOS reporting requirements are beyond the scope of this document. DEA did request state specific data on overdoses, death rates, and prescription data in August 2018 for consideration in setting the 2019 APQ. Only eight states provided data, none of which are represented in the comment letter; however, the data provided was not broken down by individual controlled substances, which would allow DEA to consider in determining the extent of diversion or estimating diversion.

Issue: As previously mentioned, DEA received a comment that was co-signed by six State Attorneys General, including West Virginia. The State Attorneys General conveyed that DEA should account for over-prescribing when analyzing diversion. The commenters contend that only relying on theft and seizure records does not give a complete view of diversion. Furthermore, they suggested using the “best practices” of medical professionals to help account for overprescribing at the physician level. These commenters stated that medical professionals are now crafting “best practices” for opioid prescribing, which the states believe can aid DEA in determining correct quantities of what is “medically necessary” for opioids. The letter also suggests that DEA expand the National Take Back Programs to capture more data on overprescribing rates.

DEA Response: For validly dispensed controlled substances, DEA relies on physicians to use their best judgment on how much to prescribe. DEA does not establish best practices for physicians, nor does it control how much of a prescription a patient ends up consuming. DEA has previously stated that “studies have found, with respect to a variety of medical procedures, that physicians prescribe more controlled substances for post-operative pain than the patients utilize. However, . . . DEA has concluded that while the referenced studies are concerning, they are insufficient to support a determination as to the level of overprescribing that occurs across the range of the medical procedures that are performed each year on a national basis.”  10 More recently, DEA has found that physicians are already prescribing at lower rates because of healthcare guidance.

As previously stated, there has been a decline in schedule II opioid prescriptions since 2014. Currently, there is no reliable method for quantifying the amount of prescription medications turned in to the Take-Back program. DEA found one study from 2015 that attempted to quantify the drugs received at one Take-Back location titled, “Analysis of Medications Returned During a Medication Take-Back Event.” However, DEA believes that this study is not useful because the methods drastically affect/limit the quantity of each substance that could be included in the analysis. To be included in the study, the medication had to have the following identifiers: drug name, strength, amount remaining, amount prescribed, generic or brand, and source (local pharmacy, mail-order pharmacy, or sample). The study also excluded medications unavailable in the United States, pet medications, medications in containers without a legible label, containers with remaining medication amounts larger than the amount dispensed, and medications not in tablet or capsule formulations. The study authors were able to demonstrate an average overprescribing rate for all medication types of 66 percent based on the total number of pills dispensed (obtained from labels) and the total number of pills remaining in the containers; however, substance specific information is not available because the medications (controlled and non-controlled) were grouped. The study does not mention the proportion of medicine excluded from the study or an estimate of diversion of particular substances. The study assumed that over prescribing was the cause of the remaining number of tablets in the bottle based on the written prescription. It also assumed that the remainder in the bottle was legitimate; however, neither of these assumptions may be the case. The bottle may have contained the remainder of multiple prescriptions of the same drug product dispensed over time and brought to the drug Take-Back event in a single container. This single study cannot be extrapolated to the national level for use in estimating diversion or overprescribing.

DEA received 194 comments are that are being considered out of scope in their entirety or partially. These comments were very general and mentioned personal medical issues, treatments, medication costs, and drug shortages. Included in these general out of scope comments were assertions that illicit drug use is the problem and that doctors are not treating patients due to fear of punishment from DEA.

DEA remains committed to ensuring that there is an adequate and uninterrupted supply of control substances to meet the legitimate medical, scientific, and export needs of the United States. DEA does not tell manufacturers how to manage their quota within the use-specific categories. For example, if a manufacturer holds an FDA-approved application for several different strengths of a dosage-form drug product, DEA will not dictate which strengths it should manufacture. Furthermore, as previously stated, DEA does not plan to set APQ in terms of pharmaceutical dosage-form. As such, the FDA-approved dosage-forms and strengths that a manufacturer produces are solely based on the manufacturers' decision. In the event of shortages of specific dosage-forms and/or strengths of a dosage-form, DEA has and will continue to implement actions based on quota to prevent or alleviate a drug shortage; however, DEA notes that the injectable shortage is not a quota issue, but instead due to manufacturers not complying with FDA's cGMP requirements. In fact, DEA has granted quota to manufacturers seeking to comply with FDA requirements. If DEA receives reliable information of a manufacturer refusing to manufacture a dosage-form or strength to alleviate a drug product shortage, DEA will implement its authority under the SUPPORT Act to issue the manufacturer's quota in terms of dosage-form and/or strength to ensure that manufacturers produce certain dosage-forms to assist in alleviating the drug shortage.

DEA is adding sections 21 CFR 1303.03, 1303.17, 1315.06, and 1315.37, and revising 1303.27 and 1315.27 to introduce and define the types of quotas in the current quota system and to clarify and update the method to abandon both individual manufacturing and procurement quotas. Section 21 CFR 1303.03 will define the three types of quota for schedule I and II controlled substances: APQ, individual manufacturing quotas, and procurement quotas. Section 21 CFR 1315.06 will define the four types of quotas available for list I chemicals: AAN, individual manufacturing quotas, procurement quotas, and import quotas.

To strengthen the quota management process, DEA has turned to managing many aspects of the quota system online. With this final rule, DEA will update 21 CFR 1303.27 and 1315.27 to require manufacturers submit a quota application to the UN Reporting and Quota Section in the online Quota Management System instead of submitting to the Drug and Chemical Evaluation Section a written notice to abandon any or all parts of the individual manufacturing quotas for schedule I and II controlled substances and list I chemicals.

Sections 1303.17 and 1315.37 will clarify that a manufacturer must also abandon procurement quota for schedule I and II controlled substances and list I chemicals using the online Quota Management System. Current regulations only refer to the abandonment of individual manufacturing quota. To further clarify the CFR, DEA will separate the current subsection within the controlled substance quota regulations entitled “Aggregate Production and Procurement Quotas” and will make a separate subsection for “Procurement Quotas.” In accordance with the creation of this new subsection, DEA will move 21 CFR 1303.12 to 1303.15 and reserve 1303.12 for future use. These additions and changes are also required due to the procurement quota inventory allowances that are being finalized with this rule.

As previously discussed in the NPRM, as well as above in Section II, DEA will be implementing in its regulations the amendments to the CSA made by the SUPPORT Act. These amendments include the authority to establish APQ, individual manufacturing quotas, and procurement quotas in terms of pharmaceutical dosage-forms, if it is determined that it will assist in avoiding the overproduction, shortages, or diversion of a controlled substance, which will be added to DEA's regulations at 21 CFR 1303.11(a), 1303.12(a) and 1303.21(a). DEA will also be revising 21 CFR 1303.21(a) and 1315.21 to change the date to on or before December 1 by which individual manufacturing quotas must be fixed.

DEA will be adding a new regulation regarding the requirement to estimate the amount of diversion of the five covered controlled substances in the United States when establishing quotas for these controlled substances and make appropriate reductions will be added to 21 CFR 1303.05. Furthermore, this regulation will codify the requirements of the SUPPORT Act regarding information to be considered when estimating diversion. The SUPPORT Act requires consultation with the Secretary of HHS in any year that the approved APQ for a covered controlled substance is higher than that of the previous year and an explanation from DEA in the APQ final order of why the public health benefits of increasing the quota clearly outweigh the consequences of having an increased volume of the covered controlled substance available for sale, and potential diversion, in the United States 21 U.S.C. 826(i)(2)(A). These requirements will also be included in 1303.05, along with the definition of a covered controlled substance.

Sections 1303.12(f) and 1315.32(h) currently require certificates of quota only when purchasing from a manufacturer. Currently, DEA manages the quota process by providing each manufacturer a letter stating the quantity of controlled substance(s) and/or list I chemical(s) the manufacturer may obtain during a calendar year. This letter provides legal documentation that the manufacturer is authorized to obtain a specified quantity of the controlled substance(s) and/or list I chemical(s). When the CSA and DEA's regulations were first promulgated, neither contemplated that distributors would be used to move controlled substances and list I chemicals between manufacturers.

When distributors provided schedule II controlled substances to this subset of manufacturers without verification of the manufacturers' quota authorization, it circumvented the quota process of verifying quota to the supplier. This prevents DEA from performing its oversight responsibilities and leads to unauthorized distribution of drug products. These unauthorized distributions are only noted as sales, which artificially inflates the estimation of legitimate medical need, a heavily weighted factor in the setting and revising of the APQ.

This final rule revises 21 CFR 1303.12(f) and 1315.32(h) by ensuring that both manufacturers and distributors are required to obtain certification of a buyer's quota for the requested schedule I and II controlled substances, as well as list I chemicals when the buyer is a manufacturer. By requiring that all manufacturers and distributors receive a certification of quota before providing any quantity of controlled substance or list I chemical to a DEA registered manufacturer, DEA is better able to maintain the closed distribution system.

DEA is revising 21 CFR 1303.24 and 1315.24 to reduce the overall inventory held by DEA-registered bulk and dosage-form manufacturers. In response to the comments received, DEA will create a new regulation to address the procurement quota changes. DEA had proposed to place the changes for procurement quotas in 21 CFR 1303.24 and 1315.24; however, it was pointed out that the proposed placements fall under the “Individual Manufacturing Quota” subsections. As such, DEA will create two new regulations, 21 CFR 1303.16 and 1315.31 and will place them within the appropriate procurement quota subsections.

DEA also acknowledges the concerns conveyed in the comments regarding the proposed percentages being too restrictive. In response to these concerns, DEA conducted further analyses on dosage-form manufacturer inventory data. As previously stated, the data showed that manufacturers only acquired 72.7 percent of fentanyl, 73.9 percent of hydrocodone, 56.7 percent of hydromorphone, 79.3 percent of oxycodone, and 73 percent of oxymorphone from the quotas granted to them by DEA. As prescription rates have fallen, DEA has issued lower quotas to match the estimated fallen rates. The data show that even with the reduced quotas, the material has not sold, but has been placed into inventory, thereby significantly increasing inventory levels above that which is medically necessary on an annual basis. DEA has found that over the past years, inventory levels have averaged 72 percent for fentanyl, 36.9 percent for hydrocodone, 57 percent for hydromorphone, 36.3 percent for oxycodone, and 61 percent for oxymorphone, while still meeting legitimate medical needs. The inventory levels for fentanyl, hydromorphone, and oxymorphone include product development efforts as manufacturers seek FDA approval of abuse-deterrent formulations. This data suggests that the current allowance of 30 percent was not too restrictive and has allowed manufacturers to acquire the quota they need for commercial sales. However, in light of the need for preparedness for any contingencies, DEA will establish the procurement quota inventory allowance at 35 percent.

DEA is also taking the time to clarify what changes will apply to bulk form manufacturers and dosage-form manufacturers. Bulk manufacturers receive individual manufacturing quotas and dosage-form manufacturers receive procurement quota. DEA acknowledges the concerns of manufacturers, but for reasons stated above, a lower inventory allowance for individual manufacturing quota needs to be implemented. As such, DEA has reviewed historical data from the companies and determined that 50 percent (six months) of inventory allowance is no longer necessary given the changes in prescribing guidelines to meet legitimate medical need and will be reducing individual manufacturing quota inventory allowances to 40 percent instead. The reduction to 40 percent allows for just under five months of inventory and takes into account the latest prescribing practices of the most prescribed substances as well as decreasing the likelihood of diversion of stocks. It still allows manufacturers the flexibility to accommodate market changes, FDA regulations, and unforeseen circumstances. As previously discussed for procurement quotas, there are more dosage-form manufacturers than bulk manufacturers; therefore, a lower inventory allowance for procurement quota is warranted. For procurement quotas, DEA will establish (for controlled substances) and will reduce (for list I chemicals) inventory allowances to 35 percent (instead of 30 percent), except in the circumstances of liquid injectable dosage-forms. Liquid injectable dosage-forms (injectable products, vials, solution bags, but not tablets, capsules, suppositories, patches, films, and oral solutions) will continue to receive a 50 percent inventory allowance due to DEA's acknowledgement that there are less dosage-form manufacturers for these liquids, as addressed above. Instead of suspending all quota when a registrant's inventory exceeds the proposed amount of 45 percent, DEA will be finalizing three different suspension amounts. The amount at which quota will be suspended for manufacturing quota is when the inventory reaches 55 percent and will remain suspended until the amount is lower than 50 percent. For all dosage-forms, except liquid injectable dosage-forms, individual procurement quota will be suspended at 50 percent and will be reinstated when the amount is less than 45 percent. As applied to liquid injectable dosage-forms, individual procurement quota will be suspended at 65 percent and will remain in suspension until the inventory amount is lower than 60 percent. Last, instead of DEA granting requests of additional quota if inventory is less than the proposed 20 percent, DEA again will be finalizing three different amounts based on type of quota. DEA may increase the amount of individual manufacturing quota once the inventory is less than 30 percent. For individual procurement quota, the amount of quota may be increased when the inventory is less than 25 percent; however, individual procurement quota for liquid injectable dosage-forms may be increased when the inventory is less than 40 percent.

The final changes are as follows:

• 21 CFR 1303.16(a)—establishes an inventory allowance issued by DEA for procurement quotas of 35 percent for all dosage-forms of schedules I and II controlled substances, except liquid injectable dosage-forms, which will receive an inventory allowance of 50 percent;

• 21 CFR 1303.16(b) and (c)—suspends procurement quota issued by DEA if inventory exceeds 50 percent for all dosage-forms of schedules I and II controlled substances, except liquid injectable dosage-forms, which will be suspended if inventory exceeds 65 percent;

• 21 CFR 1303.16(d) and (e)—may grant request for additional procurement quota by registrant if inventory is less than 25 percent for all dosage-forms of the registrant's estimated net disposal for schedules I and II controlled substances, except liquid injectable dosage-forms, which may be granted if inventory is less than 40 percent;

• 21 CFR 1303.24(a)—decreases the inventory allowance issued by DEA for individual manufacturing quotas from 50 to 40 percent for schedules I and II controlled substances;

• 21 CFR 1303.24(b)—suspends individual manufacturing quota issued by DEA if inventory exceeds 55 percent of the registrant's estimated net disposal for schedules I and II controlled substances;

• 21 CFR 1303.24(c)—may grant request for additional individual manufacturing quota by registrant if inventory is less than 30 percent of the registrant's estimated net disposal for schedules I and II controlled substances;

• 21 CFR 1315.24(a)—decreases the inventory allowance issued by DEA for individual manufacturing quotas from 50 to 40 percent for the list I chemicals;

• 21 CFR 1315.24(b)—suspends individual manufacturing quotas issued by DEA if inventory exceeds 55 percent of the registrant's estimated net disposal for the list I chemicals;

• 21 CFR 1315.24(c)—may grant request for additional individual manufacturing quotas by registrant if inventory is less than 30 percent of the registrant's estimated net disposal for the list I chemicals;

• 21 CFR 1315.31(a)—decreases the inventory allowance issued by DEA for procurement quotas from 50 to 35 percent for all dosage-forms of the list I chemicals, except liquid injectable dosage-forms, where an inventory allowance of 50 percent will be created;

• 21 CFR 1315.31(b) and (c)—suspends procurement quotas issued by DEA if inventory exceeds 50 percent for all dosage-forms of the registrant's estimated net disposal for the list I chemicals except liquid injectable dosage-forms, which will be suspended if inventory exceeds 65 percent; and

• 21 CFR 1315.31(d) and (e)—may grant request for additional procurement quotas by registrant if inventory is less than 25 percent for all dosage-forms of the registrant's estimated net disposal for the list I chemicals, except liquid injectable dosage-forms, which may be granted if inventory is less than 40 percent.

DEA is formalizing the addition of use-specific subcategories by adding 21 CFR 1303.04 and 1315.07. As a practical matter, DEA acknowledges that these subcategories are already in use through voluntary and cooperative efforts of DEA registrants. This final rule will codify DEA's current utilization of subcategories while facilitating the issuance of individual manufacturing and procurement quotas.

Additionally, the specification of subcategories for manufacturing and procurement quotas provides benefits to the registrant by allowing for a more detailed level of communication with DEA as to why a registrant requires specific controlled substances and list I chemicals and how the registrant will utilize those substances.

As the number of manufacturers continues to increase and industry practices and specializations continue to evolve, DEA's ability to track movement of material between registrants at all stages of manufacturing is critical.

DEA collects various data to administer the quota system and moving the deadlines will allow more time for processing the numerous applications that DEA receives and for responding to applications for quota, as there are more registrants now than there were when the regulations were first promulgated. The new deadlines will also allow DEA more time to obtain additional relevant data from multiple agencies. The changes are as follows:

• Establishment of the APQ and the AAN (21 CFR 1303.11(c) and 1315.11(c)): change from May 1 to September 1;

• Deadline to issue procurement quota (21 CFR 1303.12(c) and 1315.32(f)): change from July 1 to December 1;

• Deadline to issue import quota for list I chemicals (21 CFR 1315.34(f)): change from July 1 to December 1; and

• Deadline to adjust individual manufacturing quota (21 CFR 1303.23(c) and 1315.23(c)): change from March 1 to July 1.

This final rule has been developed in accordance with the principles of Executive Orders (E.O.) 12866 and 13563. E.O. 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, public health and safety, and environmental advantages, distributive impacts, and equity). E.O. 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review established in E.O. 12866. E.O. 12866 classifies a “significant regulatory action” requiring review by the Office of Management and Budget (OMB) as any regulatory action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

While this final rule is not economically significant, it is a significant regulatory action under E.O. 12866, section 3(f) subjecting it to review by OMB. DEA analyzed the economic impact of each provision of this final rule, including any changes made from the proposed rule, and estimated the annual cost to be $26.4 million. Certain provisions are estimated to have benefits; however, DEA does not have a basis to estimate those benefits due to many unknowns. Because of this, the benefits of this rule are discussed qualitatively. The rule contains clarification of regulatory language and the codification of existing DEA and registrant practices regarding subcategories for quotas, certification of procurement quota, reductions to inventory allowances, and additional considerations for revisions to the APQ. The results of the analysis of each provision are as follows:

These provisions simply codify existing DEA practices, and will result in no economic impact on registrants or DEA. The formal definition of quota types will have no economic impact on registrants or DEA, and formalizing the procedure to abandon quota is simply a codification of DEA's current procedure. While these provisions will have no quantifiable impact, DEA believes there is at least a minimal benefit to codifying existing practices accurately. Because these provisions codify existing practice, current registrants are, in most cases, already complying and will not change their behavior. Errors and misunderstandings on the part of registrants do happen, but are uncommon. Nevertheless, these provisions of the final rule are expected to enhance clarity, certainty, and efficiency.

As indicated above, the SUPPORT Act gives DEA discretionary authority to establish quotas in terms of pharmaceutical dosage-form. At the present time, DEA is not deviating from its current practice of establishing quotas necessary for the manufacture of finished dosage-forms in terms of kilograms and allowing manufacturers to determine how best to allocate those kilograms to different FDA-approved dosage-forms. While it is impossible to know all the circumstances in which this authority might be utilized in the future, it is DEA's current intention that any implementation of dosage-form quotas will be the exception rather than the rule and will coexist alongside kilogram quotas. DEA recognizes that dosage-form manufacturers are in the best position to understand the demand for their products, in dosage-form. Because, at the present time, DEA is likely to use this authority sparingly, and only adjust quotas for manufacturers producing the dosage-form, DEA anticipates that this provision of the proposed rule will have minimal impact.

The SUPPORT Act also requires DEA to estimate the amount of diversion when establishing quota for a covered controlled substance using all reliable information, including information from HHS and other agencies. DEA has considered information and data regarding the amount of diversion for covered controlled substances when applicable during the process of determining the APQ. This function is a regular part of DEA's operations, although in the past DEA has relied on its own internal data in the process of determining the APQ. DEA's view is that considering additional reliable information gathered from outside the agency to estimate the amount of diversion will result in minimal additional time or cost.

The SUPPORT Act updates also extend DEA's deadline to fix individual manufacturing quotas for schedules I and II controlled substances from October to December, and they formally define the phrase “covered controlled substance” to include fentanyl, oxycodone, hydrocodone, oxymorphone, or hydromorphone. The deadline extension will have minimal impact on registrants, as DEA currently does not meet the October deadline and has not met that deadline since before 1996. This extension will align the regulations with reality for registrants and DEA. Defining “covered controlled substance” will not change how those substances or the registrants that are authorized to handle those substances are regulated. Therefore, these provisions will have minimal impact on registrants or DEA.

While the benefits of the SUPPORT Act updates were not quantified due to many unknowns, it is possible to discuss some of these benefits in qualitative terms. With these conforming revisions related to the SUPPORT Act, DEA has the ability to respond to adverse market conditions with increased speed and flexibility to minimize public harm. DEA would use dosage-form quotas to alleviate the rare occurrence of a drug shortage in the market by targeting the specific dosage-forms that are in short supply instead of simply increasing the total amount of kilograms of a drug to be produced, resulting in a benefit to the public. Another benefit is that updating the deadlines for setting individual manufacturing quotas so they reflect DEA's current practice eliminates regulatory uncertainty for manufacturers. Regulations that realistically reflect current DEA and industry practice will benefit the planning processes of current and future market participants.

The final rule will require that all DEA registrants supplying schedules I and II controlled substances and list I chemicals to DEA manufacturers obtain certification of the manufacturer's quota before completing the transaction. In practice, this certification may be any written declaration issued by manufacturers to distributors. This provision prevents manufacturers from purchasing their API or finished dosage-forms from distributors without quota verification as currently required when manufacturers request API or finished dosage-forms from other manufacturers. Current regulations stipulate that only entities registered as “importer,” “manufacturer,” or “bulk manufacturer” must certify quota before a sale. 11

To estimate the cost of this provision, DEA utilized internal data tracking the sale of schedules I and II controlled substances and list I chemicals from distributors to manufacturers during the three year period of January 1, 2015 to December 31, 2017. DEA's analysis revealed that over this three year period, distributors filled an average of 3,000 orders to manufacturers per year. Using Bureau of Labor Statistics (BLS) wage data for Compliance Officers, 12 the type of registrant employee that would be tasked with certifying quota, DEA estimated the labor cost of quota certification to distributors and manufacturers. Based on its knowledge of registrant business operations, DEA estimates a manufacturer compliance officer requires 10 minutes to draft a quota certification letter after placing a purchase request to a distributor, while the distributor compliance officer requires five minutes to review and verify the manufacturer's certification letter. This results in a combined labor burden of 15 minutes (0.25 hours). Multiplying the loaded median hourly wage rate for compliance officers  13 by 0.25 and applying that to the estimated 3,000 certification letters per year yields a combined annual labor cost of $35,241 ($23,494 of which is incurred by manufacturers while the remaining $11,747 is incurred by distributors).

In response to public comments regarding the proposed inventory allowance reductions put forth in the NPRM, DEA is modifying the reductions that will become effective upon publication of this final rule, while also establishing new procurement quota inventory allowances for dosage forms. Comments received from manufacturers stressed that the proposed changes to the inventory allowance would increase production costs, product waste, and inefficiencies. Specifically, manufacturers stated that the proposed reductions would require smaller, more frequent manufacturing campaigns in order to produce the same amount of finished product in a given year, and that DEA's ability to respond to requests for quota adjustments throughout the year is not sufficient if market demand fluctuates. Additionally, commenters expressed concern that reducing inventory allowances for certain liquid injectable dosage-forms may cause a significant disruption in the supply of these life-saving drugs given the relatively limited number of manufacturers. As a result, DEA is adjusting the inventory allowance reductions in this final rule to minimize, to the extent possible, any supply disruptions or increases in manufacturing production costs. DEA is also clarifying which inventory allowances apply to individual manufacturing quota and which apply to procurement quota by establishing a procurement quota inventory allowance in 21 CFR 1303.16(a). While there may not be published studies showing that smaller inventories reduce diversion, DEA must provide for the estimated medical, scientific, research, and industrial needs of the United States, for lawful export requirements, and for the establishment and maintenance of reserve stocks, while also preventing an oversupply which increases the risk of diversion. DEA believes that these final inventory allowance reductions will help achieve its goal of reducing the risk of diversion at the manufacturer level.

Many of the comments received from manufacturers stated generally that the proposed inventory allowance reductions would increase the cost of API production, but only one commenter provided a detailed estimate for how much their costs are likely to increase in a given year. This commenter estimates that their incremental production costs would rise by approximately $600,000 per year, primarily due to the reduced inventory allowance necessitating an additional manufacturing campaign for their largest volume API products, decreasing efficiency and potentially increasing the amount of product wasted during the required cleaning of equipment between each additional campaign. While DEA recognizes this single cost estimate as legitimate, it is unlikely that production costs are uniform across manufacturers and depend largely on variables unique to each firm. However, given the absence of detailed monetary cost estimates from other commenters, and the fact that the required inputs to calculating an individual firm's manufacturing costs are proprietary and unknown to DEA, using this commenter's estimate as the basis for estimating the impact of this provision of the final rule is the most reasonable option available to DEA.

With this final rule, DEA will be reducing individual manufacturing quota inventory allowances to 40 percent (instead of the proposed 30 percent) and will be establishing (for controlled substances) and reducing (for list I chemicals) procurement quota inventory allowances for all dosage-forms (except liquid injectable dosage-forms) to 35 percent. Procurement quota inventory allowances for liquid injectable dosage-forms are being formally established at 50 percent, resulting in no change from the pre-rule baseline. The threshold at which individual manufacturing quota will be suspended is reached when inventories exceed 55 percent of estimated net disposal (instead of the proposed 45 percent) and will remain suspended until inventory falls below 50 percent. However, DEA will suspend individual procurement quota at 50 percent, and will reinstate it when inventories fall below 45 percent. DEA will suspend procurement quota for liquid injectable dosage-forms when inventories rise above 65 percent, and will reinstate it when inventories fall below 60 percent. Finally, DEA may increase the amount of individual manufacturing quota once the inventory is less than 30 percent (instead of the proposed 20 percent). For individual procurement quota, the amount of quota may be increased when the inventory is less than 25 percent or when inventories are less than 40 percent for liquid injectable dosage-forms.

Because the comments received from manufacturers focused primarily on their estimation of the increase in time and cost of manufacturing API products, DEA believes it is reasonable to assume that the costs imposed by this provision stem primarily from the inventory allowance reduction for individual manufacturing quotas, and this cost is borne by bulk manufacturers. There are currently 44 bulk manufacturers registered with DEA. Based on the only detailed monetary cost estimate received, DEA assumes that each of these registrants will incur an average annual cost of $600,000, equating to $26.4 million in total annual costs as a result of this provision of the final rule.

It is important to note that the estimated total annual costs from reducing inventory allowances could be higher than actual costs. The incremental cost increase of $600,000 presented by the commenter and being used in this analysis as representative of the average annual costs for each bulk manufacturer was based on the proposed individual manufacturing quota inventory allowance reduction from 50 percent to 30 percent, with suspension of quota at 45 percent. As stated above, based on public comments, DEA is choosing to implement a smaller reduction to inventory allowances with this final rule, settling on an individual manufacturing quota inventory allowance of 40 percent, with suspension of quota occurring if inventories rise above 55 percent. Additionally, the commenter that provided the monetary cost estimate is a large manufacturer; therefore, applying their estimated costs across all 44 bulk manufacturers, which includes many small manufacturers, likely overstates the total annual cost. Because of this, it may be the case that the average incremental costs incurred by bulk manufacturers are less than $600,000, especially if the revised inventory allowances prevent the need for some manufacturers to add production campaigns for certain products. However, DEA has no way of knowing if this is indeed the case; therefore, DEA assumes that an average annual cost estimate of $600,000 incurred by bulk manufacturers as a result of this provision is reasonably accurate.

Inventory allowances are a factor in DEA's determination of a registrant's quota for the coming year and provides inventory for sales at the beginning of a new quota year before quota is received. Registrants may also exceed their inventory allowance during the year. If at any time during the year, the inventory of a basic class held by a manufacturer exceeds 55 percent (or 50 percent for procurement quota of dosage-forms) of estimated net disposal, the quota for that class is automatically suspended and would remain suspended until inventory is less than 50 percent (or 45 percent for procurement quota of dosage-forms) of the estimated net disposal. Practically speaking, the changes to inventory allowances equate to a reduction from the current half of a year's sales supply (50 percent) allowed to be held as inventory to nearly five months (40 percent) for individual manufacturing and over four months (35 percent) for dosage-form manufacturing. Additionally, the 55 percent maximum inventory during the year would give manufacturers the flexibility to have over six months of sales supply inventoried to account for any unplanned fluctuations in demand or timing in orders for their product throughout the year. For dosage-form manufacturers, the maximum inventory of 50 percent provides exactly six months of sales supply. The inventory allowance for liquid injectable dosage-forms remains unchanged; thus, there is no impact on these products.

While DEA acknowledges that reducing inventory allowances will increase costs for bulk manufacturers, DEA concludes that these reductions are not likely to result in supply disruptions. Registrants routinely request adjustments to their quota throughout the year due to fluctuations in market conditions, and this is a normal part of a manufacturer's business operations. DEA quickly responds to these requests within six to eight weeks, ensuring legitimate business is not disrupted, and will continue to do so once this rule is promulgated. For example, in 2017 (the last year in which data are available), DEA processed 1,752 initial quota applications and 2,299 requests for adjustment to quota. Additionally, in response to the ongoing COVID-19 pandemic, DEA and manufacturers of injectable products for treatment of ventilator patients have entered into continuous dialogue to meet surging hospital demand. During this time, DEA was able to process manufacturer quota requests in less than five business days, demonstrating DEA's flexibility to address situations such as shortages, natural disasters, epidemics, medical demand, and other scenarios that would require an increase in production of critical medications. Also, in these dialogues, injectable manufacturers stated that the manufacturing times from acceptance of API to release of the drug product took approximately 30 to 42 days. The COVID-19 pandemic has demonstrated that the flexibility to grant and utilize quotas to produce the formulations and dosage strengths demanded in times of crisis is more important than the availability of large inventories on hand.

This provision of the final rule is a codification of existing voluntary and cooperative efforts between registrants and DEA that have been in place since 2001 and facilitates a more accurate calculation of APQ for the United States. The establishment of subcategories of: (1) Quota for Commercial Sales; (2) Quota for Transfer; (3) Quota for Product Development; (4) Quota for Replacement; and (5) Quota for Packaging/Repackaging and Labeling/Relabeling are already being utilized by DEA with full cooperation from all registrants. Therefore, this provision simply updates 21 CFR 1303.03, 1303.04, 1315.06, and 1315.07 to reflect current DEA procedure for the management of quota, and it will have no economic impact on registrants or DEA.

The final rule will modify the deadlines for establishing and publishing the APQ, AAN, import quotas, procurement quotas, manufacturing quotas, and any adjustments to manufacturing quotas. Due to the expansion of the market and the increase in the number of bulk and dosage-form manufacturers since that deadline was implemented almost 50 years ago, DEA frequently misses the current deadlines for the establishment of the APQ and the AAN of May 1 and the issuing of individual procurement, manufacturing and import quotas of July 1. Congress mandated quotas for importers of list I chemicals in 2007. 14 Applications for import and procurement quota are due April 1, giving DEA only 30 days before the May 1 deadline for publication of the APQ and AAN. Given that DEA has historically missed these deadlines since it must take adequate time to provide a thorough and careful assessment of each application, both DEA and industry have already become accustomed to a delayed publishing schedule. Therefore, this provision is expected to have minimal economic impact as it simply aligns the regulatory deadlines with the current practices of DEA and industry.

This rulemaking meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

This rulemaking does not preempt or modify any provision of State law, impose enforcement responsibilities on any State, or diminish the power of any State to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.

This rule does not have substantial direct effects on the states, on the relationship between the national government and the states, or the distribution of power and responsibilities between the Federal government and Indian tribes.

In accordance with the Regulatory Flexibility Act (RFA), DEA evaluated the impact of this rule on small entities. DEA's evaluation of economic impact by size category indicates that this final rule will not have a significant economic impact on a substantial number of these small entities.

The RFA requires agencies to analyze options for regulatory relief of small entities unless it can certify that the rule will not have a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. DEA evaluated the impact of this rule on small entities and discussions of its findings are below.

As discussed in the “Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review)” section above, this rule has six key components as described below.

This provision codifies existing DEA practices and will result in no economic impact on registrants or DEA. The formal definition of quota types will have no practical impact on registrants, and formalizing the procedure to abandon quota is simply a codification of DEA's current procedure. Therefore, this provision will have no costs.

While the SUPPORT Act gives DEA the authority to establish quotas in terms of pharmaceutical dosage-form, DEA will continue to use its current process of establishing quota in terms of kilograms. Therefore, this provision of the rule will have no impact.

Additionally, the SUPPORT Act defines the phrase “covered controlled substance” to include fentanyl, oxycodone, hydrocodone, oxymorphone, and hydromorphone. It requires DEA to estimate the amount of diversion when establishing quota for covered controlled substances by consulting with the Secretary of HHS and considering reliable information on the rates of overdose deaths and abuse and overall public health impact in the United States that is determined to be reliable. DEA has considered the amount of diversion when establishing quotas when data has been available and is a regular part of DEA's operations. Therefore, considering additional reliable information gathered from outside the agency to estimate the amount of diversion will result in minimal additional cost.

The SUPPORT Act updates also extend DEA's deadline to fix individual manufacturing quotas for schedules I and II controlled substances from October to December. The deadline extension will have minimal impact on registrants as DEA currently does not meet the October deadline. This extension will align the regulations with reality for registrants. Therefore, these provisions will have minimal impact on registrants or DEA.

The final rule will require that all DEA registrants supplying schedules I and II controlled substances and list I chemicals to DEA manufacturers to obtain certification of the manufacturer's quota before completing the transaction. In practice, this certification must be a written declaration issued by manufacturers to distributors containing the information as required in the regulations. 15 This provision prevents manufacturers from purchasing their API or finished dosage-forms from distributors without quota verification as currently required when manufacturers request API or finished dosage-forms from other manufacturers. Current regulations stipulate that only entities registered as “importer,” “manufacturer,” or “bulk manufacturer” must certify quota before a sale. 16

To estimate the cost of this provision, DEA utilized internal data tracking the sale of schedules I and II controlled substances and list I chemicals from distributors to manufacturers during the three year period of January 1, 2015 to December 31, 2017. DEA's analysis revealed that over this three year period, distributors filled an average of 3,000 orders to manufacturers per year. Using BLS wage data for Compliance Officers, the type of registrant employee that would be tasked with certifying quota, DEA estimated the labor cost of quota certification to distributors to be $11,747 and $23,494 to manufacturers, resulting in a combined annual labor cost of $35,241.

This final rule will reduce the inventory allowance for manufacturers of controlled substances and list I chemicals from 50 percent to 40 percent of the registrant's estimated net disposal, and it will establish a procurement quota inventory allowance for dosage-forms and list I chemicals at 35 percent of the registrant's estimated net disposal. Procurement quota inventory allowances for liquid injectable dosage-forms are also being formally established at 50 percent, resulting in no change. Inventory allowances are a factor in DEA's determination of a registrant's quota for the coming year and provide inventory for sales at the beginning of a new quota year before quota is received. Registrants may exceed their inventory allowance during the year. If at any time during the year the inventory of a basic class held by a manufacturer exceeds 55 percent (or 50 percent for procurement quota for dosage-forms) of estimated net disposal, the quota for that class is automatically suspended and would remain suspended until inventory is less than 50 percent (45 percent for procurement quota dosage-forms) of the estimated net disposal. Practically speaking, the changes to inventory allowances equate to a reduction from the current half of a year's sales supply (50 percent) allowed to be held as inventory to nearly five months (40 percent) for individual manufacturing and over four months (35 percent) for dosage-form manufacturing. Additionally, the 55 percent maximum inventory during the year gives manufacturers the flexibility to have over six months of sales supply inventoried to account for any unplanned fluctuations in demand or timing in orders for their product throughout the year. For dosage-form manufacturers, the maximum inventory of 50 percent provides exactly six months of sales supply. The inventory allowance for liquid injectable dosage-forms remains unchanged at 65 percent; thus, there is no impact on these products.

Because the comments received from manufacturers on this provision of the proposed rule focused primarily on their estimation of the increase in time and cost of manufacturing API products, DEA believes it is reasonable to assume that any costs imposed by this provision stem primarily from the inventory allowance reduction for individual manufacturing quotas, and this cost is borne by bulk manufacturers. The only commenter to provide a detailed monetary cost estimate for DEA to consider stated that its incremental production costs would rise by approximately $600,000 per year primarily due to the reduced inventory allowance necessitating an additional manufacturing campaign for their largest volume API products. While DEA recognizes this single cost estimate as legitimate, it is unlikely that production costs are uniform across manufacturers and depend largely on variables unique to each firm. However, given the absence of detailed monetary cost estimates from other commenters and the fact that the required inputs to calculating an individual firm's manufacturing costs are proprietary and unknown to DEA, using this commenter's estimate as the basis for estimating the impact of this provision of the final rule is the most reasonable option available to DEA.

There are currently 44 bulk manufacturers registered with DEA. DEA assumes that each of these registrants will incur an average annual cost of $600,000, equating to $26.4 million in total annual costs because of this provision of the final rule.

While DEA acknowledges that reducing inventory allowances will increase costs for bulk manufacturers, DEA concludes that these reductions are not likely to result in supply disruptions. Registrants also routinely request adjustments to their quota throughout the year due to fluctuations in market conditions. This is a normal part of a manufacturer's business operations. DEA quickly responds to these requests within six to eight weeks, ensuring legitimate business is not disrupted, and it will continue to do so once this rule is promulgated. For example, in 2017 (the last year in which data are available), DEA processed 1,752 initial quota applications and 2,299 requests for adjustment to quota. Additionally, in response to the ongoing COVID-19 pandemic, DEA and manufacturers of injectable products for treatment of ventilator patients entered into continuous dialogue to meet surging hospital demand. During this time, DEA was able to process manufacturer quota requests in less than five business days, demonstrating DEA's flexibility to address situations such as shortages, natural disasters, epidemics, medical demand, and other scenarios that could require an increase in production of critical medications. Also, in these dialogues, injectable manufacturers stated that the manufacturing times from acceptance of API to release of the drug product took approximately 30 to 42 days. The COVID-19 pandemic has demonstrated that the flexibility to grant and utilize quotas to produce the formulations and dosage strengths demanded in times of crisis is more important than the availability of large inventories on hand.

This provision of the final rule is a codification of existing voluntary and cooperative efforts between registrants and DEA that have been in place since 2001 and allows a more accurate calculation of APQ for the United States. The establishment of subcategories of: (1) Quota for Commercial Sales; (2) Quota for Transfer; (3) Quota for Product Development; (4) Quota for Replacement; and (5) Quota for Packaging/Repackaging and Labeling/Relabeling are already being utilized by DEA with full cooperation from all registrants. Therefore, this provision simply updates 21 CFR 1303.03, 1303.04, 1315.06, and 1315.07 to reflect current DEA procedure for the management of quota and will have no economic impact on registrants or DEA.

The final rule would modify the deadlines for establishing and publishing the APQ, AAN, and procurement and manufacturing quotas, and any adjustments to manufacturing quotas. Due to the expansion of the market and the increase in the number of manufacturers and importers since that deadline was implemented almost 50 years ago, DEA frequently misses the current publishing deadlines for the establishment of the APQ and the AAN of May 1 and the issuing of individual procurement, manufacturing and import quotas deadline of July 1. Applications for import and procurement quota are due April 1, giving DEA only 30 days before the May 1 deadline for publication of the APQ and AAN. Given that DEA has historically missed these deadlines since it must take adequate time to provide a thorough and careful assessment of each application, both DEA and industry have already become accustomed to a delayed publishing schedule. Therefore, this provision is expected to have minimal economic impact as it simply aligns the regulatory deadlines with the current business practices of DEA and industry.

In summary, only the procurement quota certification requirement and reduction to inventory allowances impose costs. The certification requirement results in a $23,494 annual cost to all manufacturers and an $11,747 annual cost to all distributors for a combined annual cost of $35,241. The reduction to inventory allowances imposes an estimated annual cost of $600,000 on each of the 44 bulk manufacturers registered with DEA, equating to $26.4 million in total annual costs.

This rule has the potential to affect entities registered with DEA as manufacturers, distributors, and importers of controlled substances and list I chemicals. Based on a review of respective representative North American Industry Classification System (NAICS) codes for manufacturers, 17 distributors, and importers, 18 there are the following number of firms:  19

The U.S. Small Business Administration (SBA) considers a size standard as the largest that a concern can be and still qualify as a small business for Federal government programs. For the most part, size standards are the average annual receipts or the average employment of a firm. The SBA size standards for the three industries are 1,000 employees for Medicinal and Botanical Manufacturing, 1,250 employees for Pharmaceutical Preparation Manufacturing, and 250 employees for Drugs and Druggists' Sundries Merchant Wholesalers. 20

Comparing the SBA size standards to the U.S. Census Bureau, Statistics of U.S. Businesses (SUSB) detailed data on establishment size by NAICS code for each affected industry, DEA estimates the following number of small entities (and percent of establishments that are small entities) by industry:

• 377 (93.3 percent of total) `Medicinal and Botanical Manufacturing' (325411);

• 885 (92.5 percent of total) `Pharmaceutical Preparation Manufacturing' (325412); and

• 6,475 (96.1 percent of total) `Drugs and Druggists' Sundries Merchant Wholesalers' (424210).

The table below summarizes the calculation for the estimated number of small entities (establishments) above.

Because DEA registrants frequently hold more than one registration for separate locations, one entity may hold many registrations. DEA estimates the number of affected entities by multiplying the number of DEA registrations in each business activity by its “firm-to-establishment” ratio to find the total amount of entities. The firm-to-establishment ratio is calculated by dividing the number of firms in each industry NAICS code by the total number of establishments found in the third and fourth columns of the previous table. 21 DEA analyzed how each provision of the proposed rule will affect DEA registrants, including how many entities each provision will affect, and found that at least one provision of this proposed rule will affect 561 DEA registered entities. A summary of this analysis is detailed in the table below:

After accounting for how many DEA registered entities are affected by each provision, DEA applied the estimated percentage of establishments that are small entities to each respective business activity to estimate the number of affected small entities. DEA estimates that of the 561 affected entities 525 are small entities: 161 distributors, 304 dosage-form manufacturers, 37 bulk manufacturers, and 23 importers. In summary, the percentages of small entities affected are as follows:

• 9.8 percent `Medicinal and Botanical Manufacturing' (325411);

• 34.4 percent `Pharmaceutical Preparation Manufacturing' (325412); and

• 2.8 percent `Drugs and Druggists' Sundries Merchant Wholesalers' (424210).

The table below summarizes the estimated number of small entities, number of affected small entities, and the percentage of small entities affected.

As described above, the quota certification provision of this final rule is estimated to cost a total of $23,494 to manufacturers annually and a total of $11,747 to distributors annually, or an average cost of $70 ($23,494/334) per affected manufacturer and $71 ($11,747/166) per distributor. Additionally, the reduction to inventory allowances are estimated to impose costs of $600,000 annually on the 44 affected bulk manufacturers that are registered with DEA, 37 of which are small entities. DEA generally uses 30 percent as a “substantial” number of affected small entities. The analysis reveals that a non-substantial percentage of small distributor entities (2.8 percent) and small bulk manufacturer entities (9.8 percent) will be affected while a substantial percentage of small dosage-form manufacturing entities (34.3 percent) will be affected by this rule. DEA generally considers impacts that are greater than three percent of yearly revenue to be a “significant economic impact” on an entity. DEA compared the compliance cost of $70 and $71 to the average annual receipts of dosage-form manufacturers and distributors/imports, respectively, for each size range. 22 Additionally, DEA compared the estimated $600,000 per-entity cost attributed to reducing inventory allowances to the average annual receipts of bulk manufacturers for each size range. For even the smallest of entities, the costs calculated above are much less than three percent of yearly revenue and are not significant. The table below summarizes the analysis.

DEA examined the economic impact of this final rule for each affected industry for various size ranges. Based on the analysis above, and because of these facts, DEA believes this rule will not have a significant economic impact on a substantial number of small entities.

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year and will not significantly or uniquely affect small governments. Therefore, no actions were deemed subject to the provisions of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532.

Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), this action revises existing information collections 1117-0006, 1117-0008, and 1117-0047 and creates one new information collection. DEA is amending its regulations for establishing quotas for United States companies manufacturing schedules I and II controlled substances and ephedrine, pseudoephedrine, and phenylpropanolamine and for procurement quota certification and recordkeeping requirements. A person is not required to respond to a collection of information unless it displays a valid OMB control number. DEA has submitted these collection requests to the OMB for review and approval.

1. Title: Application for Individual Manufacturing Quota for a Basic Class of Controlled Substance and for Ephedrine, Pseudoephedrine, and Phenylpropanolamine.

OMB Control Number: 1117-0006.

DEA Form Number: DEA-189.

DEA is formally implementing the use of subcategories to facilitate the issuance of manufacturing quotas and provide a more accurate calculation of the aggregate production quotas for the United States. DEA will be adding the following five subcategories for quota: (1) Quota for Commercial Sales; (2) Quota for Transfer; (3) Quota for Product Development; (4) Quota for Replacement; and (5) Quota for Packaging/Repackaging and Labeling/Relabeling. All types of quota could be requested using the same application and format registrants are accustomed to using in an online form. Manufacturers of schedules I and II controlled substances and list I chemicals will continue to receive manufacturing and procurement quotas appropriate to their manufacturing and inventory requirements, and DEA will retain greater control over the amount of these controlled substances and list I chemicals produced, thereby reducing the amount of inventories at risk of diversion.

DEA estimates the following number of respondents and burden associated with reporting:

• Number of respondents: 33.

• Frequency of response: Annually/As-needed (26.0303 average).

• Number of responses: 859.

• Burden per response: 0.5 hour.

• Total annual hour burden: 430.

2. Title: Application for Procurement Quota for Controlled Substances and for Ephedrine, Pseudoephedrine, and Phenylpropanolamine.

OMB Control Number: 1117-0008.

DEA Form Number: DEA-250.

DEA is formally implementing the use of subcategories to facilitate the issuance of procurement quotas and provide a more accurate calculation of the aggregate production quotas for the United States. DEA is adding the following five subcategories for quota: (1) Quota for Commercial Sales; (2) Quota for Transfer; (3) Quota for Product Development; (4) Quota for Replacement; and (5) Quota for Packaging/Repackaging and Labeling/Relabeling. All types of quota will be requested using the same application and format registrants are accustomed to using in an online form. Manufacturers of schedules I and II controlled substances and list I chemicals will continue to receive manufacturing and procurement quotas appropriate to their manufacturing and inventory requirements, and DEA will retain greater control over the amount of these controlled substances and list I chemicals produced, thereby reducing the amount of inventories at risk of diversion.

DEA estimates the following number of respondents and burden associated with reporting:

• Number of respondents: 344.

• Frequency of response: Annually/As-needed (8.9128 average).

• Number of responses: 3,066.

• Burden per response: 0.5 hour.

• Total annual hour burden: 1,533.

3. Title: Application for Import Quota for Ephedrine, Pseudoephedrine, and Phenylpropanolamine.

OMB Control Number: 1117-0047.

DEA Form Number: DEA-488.

DEA will be formally implementing the use of subcategories to facilitate the issuance of import quotas and provide a more accurate calculation of the assessment of annual needs for the United States. DEA is adding the following five subcategories for quota: (1) Quota for Commercial Sales; (2) Quota for Transfer; (3) Quota for Product Development; (4) Quota for Replacement; and (5) Quota for Packaging/Repackaging and Labeling/Relabeling. All types of quota will be requested using the same application and format registrants are accustomed to using in an online form. Importers of list I chemicals will continue to receive import quotas appropriate to their manufacturing and inventory requirements, and DEA will retain greater control over the amount of these list I chemicals produced, thereby reducing the amount of inventories at risk of diversion.

DEA estimates the following number of respondents and burden associated with reporting:

• Number of respondents: 49.

• Frequency of response: Annually/As-needed (2.5714 average).

• Number of responses: 126.

• Burden per response: 0.5 hour.

• Total annual hour burden: 63.

4. Title: Procurement Quota Certification and Recordkeeping Requirements.

OMB Control Number: 1117-0055.

DEA Form Number: N/A.

This final rule will require all DEA registrants supplying schedules I and II controlled substances or list I chemicals to DEA manufacturers to obtain certification of the manufacturer's procurement quota before completing the transaction. This provision will prevent manufacturers from purchasing active pharmaceutical ingredients from distributors, rather than other manufacturers, without including a quota certification. Current DEA regulations stipulate only that orders to entities registered as importers, manufacturers, or bulk manufacturers must include quota certifications. Manufacturers procuring schedules I and II controlled substances or list I chemicals must maintain a copy of the certification they provide with their order for a period of two years from the date of the certification. Under this final rule, this recordkeeping requirement will apply to certifications included with orders for schedules I and II controlled substances or list I chemicals to all registrants, including distributors.

DEA estimates that distributors fill an average of 3,000 orders to manufacturers per year, which under this final rule, will require 3,000 certification letters to be drafted and retained by manufacturers and reviewed by distributors. The estimated yearly cost of this activity is $35,241. For the purposes of this final rule, DEA estimates the following number of respondents and burden associated with the proposed requirement that procuring manufacturers create and retain copies of schedules I and II controlled substance and list I chemical quota certifications for two years:

• Number of respondents: 500 (334 manufacturers and 166 distributors).

• Frequency of response: 9 per year.

• Number of responses: 3,000.

• Burden per response: .25 (minimal).

• Total annual hour burden: 750 (minimal).

If you need a copy of the information collection instrument(s) with instructions or additional information, please contact the Regulatory Drafting and Policy Support Section (DPW), Diversion Control Division, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (571) 362-3261.

No comments were received on any of the information collections being modified in connection with this final rule. Any comments related this collection of information may be sent in writing to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for DOJ, Washington, DC 20503. Please state that your comment refers to RIN 1117-AB49/Docket No. DEA-455.

This rule is not a major rule as defined by the Congressional Review Act, 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

For the reasons set forth above, DEA is amending 21 CFR parts 1303 and 1315 as follows:

This document of the Drug Enforcement Administration was signed on August 28, 2023, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of DEA. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

The Privacy Act permits Federal agencies to exempt eligible records in a system of records from certain provisions of the Act, including the provisions providing individuals with a right to request access to and amendment of their own records and accountings of disclosures of such records. If an agency intends to exempt a particular system of records, it must first go through the rulemaking process to provide public notice and an opportunity to comment on the exemption.

DoD is amending 32 CFR 310.13(e)(6) to correct an error in the Privacy Act exemption rule associated with the Privacy Act system of records notice DoD-0007, “Defense Reasonable Accommodation and Assistive Technology Records.” Section 310.13(e)(6) erroneously claims an exemption for this system of records from 5 U.S.C. 552a(c)(4), which generally requires the agency maintaining the system of records to inform recipients with whom it has shared a record if later the record was corrected or disputed pursuant to the requirements of the Privacy Act. DoD's inclusion of subsection 552a(c)(4) was an error and DoD is removing it from the exemption rule as well as the DoD-0007 system of records notice, which is being modified in a notice published concurrently in today's issue of the Federal Register .

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. It has been determined that this rule is not a significant regulatory action under these Executive Orders.

The Congressional Review Act, 5 U.S.C. 801 et seq., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. DoD will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule may take effect no earlier than 60 calendar days after Congress receives the rule report or the rule is published in the Federal Register , whichever is later. This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532) requires agencies to assess anticipated costs and benefits before issuing any rule whose mandates may result in the expenditure by State, local and tribal governments in the aggregate, or by the private sector, in any one year of $100 million in 1995 dollars, updated annually for inflation. This rule will not mandate any requirements for State, local, or tribal governments, nor will it affect private sector costs.

The ATSD(PCLT) has certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. This rule is concerned only with the administration of Privacy Act systems of records within the DoD. Therefore, the Regulatory Flexibility Act, as amended, does not require DoD to prepare a regulatory flexibility analysis.

The Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ) was enacted to minimize the paperwork burden for individuals; small businesses; educational and nonprofit institutions; Federal contractors; State, local and tribal governments; and other persons resulting from the collection of information by or for the Federal Government. The Act requires agencies obtain approval from the Office of Management and Budget before using identical questions to collect information from ten or more persons. This rule does not impose reporting or recordkeeping requirements on the public.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This rule will not have a substantial effect on State and local governments.

Executive Order 13175 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct compliance costs on one or more Indian tribes, preempts tribal law, or affects the distribution of power and responsibilities between the Federal government and Indian tribes. This rule will not have a substantial effect on Indian tribal governments.

Privacy.

Accordingly, 32 CFR part 310 is amended as follows:

The Coast Guard will enforce a special local regulation found in 33 CFR 100.911 for the 35th Annual Glass City Regatta “Formerly known as Frogtown Race Regatta” from 7 a.m. through 5 p.m. on September 23, 2023. This notice of enforcement is necessary to safely control vessel movement in the vicinity of the race and provide for the safety of the general boating public and commercial shipping. This notice of enforcement applies to all U.S. navigable waters of the Maumee River from the I-280 Bridge south to the I-75 bridge.

To ensure the safety of the spectators and participating vessels, the Coast Guard will patrol the race area under the direction of a designated Coast Guard Patrol Commander (PATCOM). Vessel desiring to transit the regulated area may do so only with prior approval of the PATCOM and when so directed by that officer. The PATCOM may be contacted on Channel 16 (156.8 MHZ) by the call sign “Coast Guard Patrol Commander.” Vessels permitted to transit the regulated area will operate at no wake speed and in a manner which will not endanger participants in the event or any other craft. The rules contained above shall not apply to participants in the event or vessels of the patrol operating in the performance of their assigned duties.

This notice of enforcement is issued under the authority of 33 CFR 100.911 and 5 U.S.C. 552(a). If the District Commander, Captain of the Port or PATCOM determines that the regulated area need not be enforced for the full duration stated in this notice, he or she may use a Broadcast Notice to Mariners to grant general permission to enter the regulated area.

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because potential hazards created by the power line crossing over the Upper Mississippi River and lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule. It is impracticable to publish an NPRM because we must establish this safety zone by August 28, 2023.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be impracticable because immediate action is needed to respond to the potential safety hazards associated with the power line crossing starting August 28, 2023.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Upper Mississippi (COTP) has determined that potential hazards associated with the power line crossing starting August 28, 2023, will be a safety concern for anyone operating or transiting within the Upper Mississippi River from MM 476-477. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone while the power line crossing is being conducted.

This rule establishes a safety zone during an power line crossing project over the Upper Mississippi River on August 28, 2023 through September 11, 2023. The safety zone will cover all navigable waters from MM 476-477. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the power line crosses the Upper Mississippi River. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative via VHF-FM channel 16, or through USCG Sector Upper Mississippi River at 314-269-2332. Persons and vessels permitted to enter the safety zone must comply with all lawful orders or directions issued by the COTP or designated representative. The COTP or a designated representative will inform the public of the effective period for the safety zone as well as any changes in the dates and times of enforcement, as well as reductions in the size of the safety zone as conditions improve, through Local Notice to Mariners (LNMs), Broadcast Notices to Mariners (BNMs), and/or Safety Marine Information Broadcast (SMIB), as appropriate.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on a safety zone located on the Upper Mississippi River MM 476-477 near Davenport, IA. The safety zone will be active only while work associated with the power line crossing is being conducted, from August 28, 2023, until September 11, 2023.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone encompassing the width of the Upper Mississippi River from MM 476 to MM 477. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable and contrary to the public interest. The Coast Guard has an existing safety zone for this recurring marine event at 33 CFR 165.786, Table to § 165.786, Item No. 9.1; however, the existing regulation only covers the event when it is scheduled on the third Saturday of September. The primary justification for this action is that the Coast Guard received final details of the event without sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule. It would be impracticable and contrary to the public interest to delay promulgating this rule, as it is necessary to protect the safety of participants, spectators, the public, and vessels transiting in the area.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be impracticable because the event is taking place on September 9, 2023, and immediate action is needed to respond to the potential safety hazards associated with this event.

The Coast Guard is issuing this rule under the authority in 46 U.S.C. 70034. The Captain of the Port Key West (COTP) has determined that potential hazards associated with this open water swim event will be a safety concern for persons and vessels in the safey zone. This rule is needed to ensure the safety of the event participants, the general public, vessels and the marine environment in the navigable waters within the safety zone during the Swim for Alligator Lighthouse open water swim event.

This rule establishes a safety zone on September 9, 2023 for a period of 8.5 hours, from 7:30 a.m. to 4:00 p.m. The safety zone will cover all waters of the Atlantic Ocean, between Amara Cay, and Alligator Lighthouse, beginning at a point Latitude 24°54.82′ N, longitude 080°38.03′ W, thence to latitude 24°54.36′ N, longitude 080°37.72′ W, thence to latitude 24°51.07′ N, longitude 080°37.14′ W, thence to latitude 24°54.36′ N, longitude 080°37.72′ W, thence to point of origin at latitude 24°54.82′ N, longitude 080°38.03′ W. The event course begins and ends at Amara Cay Resort in Islamorada, Florida, and extends through Hawks Channel, with a turnaround at Alligator Lighthouse. Approximately 500 swimmers with kayak escorts and eight safety vessels are anticipated to participate in the event. The size and duration of the safety zone is intended to protect personnel, vessels, and the marine environment in these navigable waters during the open water swim. Persons and non-participant vessels are prohibited from entering, transiting through, anchoring in, or remaining within the safety zone without obtaining permission from the COTP Key West or a designated representative. If authorization to enter, transit through, anchor in, or remain within the safety zone is granted by the COTP Key West or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the COTP Key West or a designated representative. The Coast Guard will provide notice of the safety zone by Local Notice to Mariners, Broadcast Notice to Mariners, or by on-scene designated representatives.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, duration and available exceptions to the enforcement of the safety zone. The regulated area will impact small designated areas of the Atlantic Ocean between Islamorada, Florida, and the Alligator Lighthouse for only 8.5 hours and thus is limited in time and scope. Furthermore, the rule will allow vessels to seek permission to enter the safety zone. Non-participant persons and vessels may enter, transit through, anchor in, or remain within the regulated area during the enforcement periods if authorized by the COTP or a designated representative. Vessels not able to enter, transit through, anchor in, or remain within the regulated area without authorization from the COTP or a designated representative may operate in the surrounding areas during the 8.5 hour enforcement period. The Coast Guard will issue a Local Notice to Mariners and a Broadcast Notice to Mariners, allowing mariners to make alternative plans or seek permission to transit the safety zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting only 8.5 hours that will prohibit entry into the area being used by swimmers and safety craft for the Alligator Lighthouse swim. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

EPA published a final rule in the Federal Register on August 4, 2023 (88 FR 51713), titled “Air Plan Approval; North Carolina; Volatile Organic Compound Regulations.” The final rule approved changes to the following regulations in North Carolina's SIP: 15A North Carolina Administrative Code Subchapter 02D, Rules .0901, Definitions; .0902, Applicability; .0903, Recordkeeping: Reporting: Monitoring; .0906, Circumvention; .0909, Compliance Schedules for Sources in Ozone Nonattainment and Maintenance Areas; .0912, General Provisions on Test Methods and Procedures; .0918, Can Coating; .0919, Coil Coating; .0922, Metal Furniture Coatings; .0923, Surface Coating of Large Appliance Parts; .0924, Magnet Wire Coating; .0925, Petroleum Liquid Storage in Fixed Roof Tanks; .0928, Gasoline Service Stations Stage 1; .0930, Solvent Metal Cleaning; .0931, Cutback Asphalt; .0933, Petroleum Liquid Storage in External Floating Roof Tanks; .0935, Factory Surface Coating of Flat Wood Paneling; .0937, Manufacture of Pneumatic Rubber Tires; .0943, Synthetic Organic Chemical and Polymer Manufacturing; .0944, Manufacture of Polyethylene: Polypropylene and Polystyrene; .0945 Petroleum Dry Cleaning; .0947, Manufacture of Synthesized Pharmaceutical Products; .0948, VOC Emissions from Transfer Operations; .0949, Storage of Miscellaneous Volatile Organic Compounds; .0951, RACT For Sources of Volatile Organic Compounds; .0955, Thread Bonding Manufacturing; .0956, Glass Christmas Ornament Manufacturing; .0957, Commercial Bakeries; .0961, Offset Lithographic Printing and Letterpress Printing; .0962, Industrial Cleaning Solvents; .0963, Fiberglass Boat Manufacturing Materials; .0964, Miscellaneous Industrial Adhesives; .0965, Flexible Package Printing; .0966, Paper, Film and Foil Coatings; .0967, Miscellaneous Metal and Plastic Parts Coatings; and .0968, Automobile and Light Duty Truck Assembly Coatings. However, the Federal Register document contained an error in the instructions regarding amendments to the table titled “EPA-Approved North Carolina Regulations” found at 40 CFR 52.1770(c)(1). See 88 FR 51715. In the instructions, EPA inadvertently referred to the table entries to be amended as “Section .0901,” “Section .0902,” “Section .0903,” “Section .0906,” “Section .0909,” “Section .0912,” “Section .0918,” “Section .0919,” “Section .0922,” “Section .0923,” “Section .0924,” “Section .0925,” “Section .0928,” “Section .0930,” “Section .0931,” “Section .0933,” “Section .0935,” “Section .0937,” “Section .0943,” “Section .0944,” “Section .0945,” “Section .0947,” “Section .0948,” “Section .0949,” “Section .0951,” “Section .0955,” “Section .0956,” “Section .0957,” “Section .0961,” “Section .0962,” “Section .0963,” “Section .0964,” “Section .0965,” “Section .0966,” “Section .0967,” and “Section .0968” instead of “Rule .0901,” “Rule .0902,” “Rule .0903,” “Rule .0906,” “Rule .0909,” “Rule .0912,” “Rule .0918,” “Rule .0919,” “Rule .0922,” “Rule .0923,” “Rule .0924,” “Rule .0925,” “Rule .0928,” “Rule .0930,” “Rule .0931,” “Rule .0933,” “Rule .0935,” “Rule .0937,” “Rule .0943,” “Rule .0944,” “Rule .0945,” “Rule .0947,” “Rule .0948,” “Rule .0949,” “Rule .0951,” “Rule .0955,” “Rule .0956,” “Rule .0957,” “Rule .0961,” “Rule .0962,” “Rule .0963,” “Rule .0964,” “Rule .0965,” “Rule .0966,” “Rule .0967,” and “Rule .0968” and therefore inadvertently sought to replace, rather than revise, those entries. EPA is now correcting that error.

EPA published a final rule in the Federal Register on August 9, 2023 (88 FR 53795), titled “Air Plan Approval; North Carolina; Bulk Gasoline Plants, Terminals Vapor Recovery Systems.” The final rule approved changes to the following regulations in North Carolina's SIP: 15A North Carolina Administrative Code, Subchapter 02D, Rules .0926, Bulk Gasoline Plants;   1 .0927, Bulk Gasoline Terminals;   2 .0932, Gasoline Cargo Tanks and Vapor Collection Systems; and .2615, Determination of Leak Tightness and Vapor Leaks. However, the Federal Register document contained an error in the instructions regarding amendments to the table titled “EPA-Approved North Carolina Regulations” found at 40 CFR 52.1770(c)(1). See 88 FR 53797. In the instructions, EPA inadvertently referred to the table entries to be amended as “Section .0926,” “Section .0927,” “Section .0932,” and “Section .2615” instead of “Rule .0926,” “Rule .0927,” “Rule .0932,” and “Rule .2615” and therefore inadvertently sought to replace, rather than revise, those entries. EPA is now correcting that error.