[Congressional Record Volume 144, Number 141 (Friday, October 9, 1998)]
[Senate]
[Page S12168]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 2600. A bill to amend section 402 of the Controlled Substances Act 
to reform the civil remedy provisions relating to recordkeeping 
violations; to the Committee on the Judiciary.


             controlled substance civil penalty reform act

  Mr. HATCH. Mr. President, I rise today to introduce the ``Controlled 
Substances Civil Penalty Reform Act of 1998,'' S. 2600, legislation I 
have been developing for some months working in conjunction with 
Senator Gregg and the Appropriations Committee, our House colleague, 
Bill McCollum, and other interested parties including the Drug 
Enforcement Administration, the National Association of Chain Drug 
Stores, and the National Wholesale Druggists Association.
  This is a ``good government'' bill, legislation which I intend to 
correct a situation which has proven to be of great concern to 
America's drug stores, the wholesale community which supplies them, and 
America's consumers.
  As a House hearing amply documented last month, there have been a 
number of cases in which the Drug Enforcement Administration has 
imposed large fines for small, record-keeping errors committed by those 
the agency regulates, primarily drug stores and their suppliers.
  The DEA has a critical mission to combat diversion of controlled 
substances. This is of great national significance, and the agency 
should zealously pursue to the limits of the law those who traffic in 
illicit drugs.
  That being said, there is a difference between going after drug 
dealers and examining the records kept by legitimate wholesalers and 
pharmacies. Overzealously throwing the book at above-board businesses, 
who are doing so much to help America's consumers, for relatively minor 
record-keeping violations is not warranted.
  In 1997, these fines, which may be assessed at up to $25,000 per 
violation, totaled a substantial $12 million. But given the nature of 
some of the minor deficiencies, which I am advised are sometimes for 
trivial matters such as incorrect zip codes, the question must be 
raised whether this particular enforcement activity is operating more 
life a hidden tax or user fees than a meaningful deterrent to drug 
diversion.
  In short, S. 2600 amends the Controlled Substances Act in three 
important ways. First, it adds a negligence standard to current law, so 
that the government must prove that the record-keeping violation was 
due to a negligent act, rather than an unintended mistake or omission, 
prior to any fines being imposed. Second, it lowers the ceiling on 
these fines from ``up to $25,000'' per violation, to ``up to $10,000'' 
per violation.
  The third provision adds a number of needed standards that the 
Attorney General must consider before any fine is imposed. These 
include: whether diversion actually occurred; whether actual harm to 
the public resulted from the diversion; whether the violations were 
intentional or negligent in nature; whether the violations were a first 
time offense; the time intervals between inspections where no, or any 
serious, violations were found; whether the violations were multiple 
occurrences of the same type of violation; whether and to what extent 
financial profits may have resulted from the diversion; and the 
financial capacity of registrants to pay the fines assessed.
  Finally, my proposal makes clear that in determining whether to 
assess a penalty, the Attorney General may take into account whether 
the violator has taken immediate and effective corrective action, 
including demonstrating the existence of compliance procedures, in 
order to reduce the potential for any future violations. The Attorney 
General may also follow informal procedures such as sending one or more 
warning letters to the violator, as she determines appropriate.
  Mr. President, I recognize that our time is short for the remainder 
of this session. However, given Senator Gregg's significant interest in 
this issue, and the abundant work that Representative McCollum and I 
have devoted to this issue this year, I am hopeful this needed reform 
is something we can accomplish before we adjourn.
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