[House Report 109-115]
[From the U.S. Government Publishing Office]



109th Congress                                            Rept. 109-115
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
            CONTROLLED SUBSTANCES EXPORT REFORM ACT OF 2005

                                _______
                                

                  June 9, 2005.--Ordered to be printed

                                _______
                                

    Mr. Barton of Texas, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 184]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 184) to amend the Controlled Substances Import 
and Export Act to provide authority to the Attorney General to 
authorize any controlled substance that is in schedule I or II 
or is a narcotic drug in schedule III or IV to be exported from 
the United States to a country for subsequent export from that 
country to another country, if certain conditions are met, 
having considered the same, report favorably thereon with 
amendments and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     4
Advisory Committee Statement.....................................     4
Constitutional Authority Statement...............................     4
Applicability to Legislative Branch..............................     4
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     5

                               Amendment


    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:

    Page 2, line 11, strike ``or II'' and insert ``or II,''.

    Page 2, line 12, strike ``or IV'' and insert ``or IV,''.

                          Purpose and Summary

    The purpose of this legislation is to amend Section 1003 of 
the Controlled Substances Import and Export Act by allowing a 
controlled substance that has been exported from the United 
States to be subsequently exported to a third country under 
certain conditions and pending a permit from the Attorney 
General.

                  Background and Need for Legislation

    Current law allows U.S. companies to export most controlled 
substances only to the immediate country where the products 
will be consumed. Shipment to central sites for further 
distribution across national boundaries is prohibited.
    Foreign competitors labor under no such restrictions and 
can readily move approved medical products between 
international drug control treaty countries without limit or 
restriction. American manufacturers have reported that the 
exclusive prohibitions imposed by U.S. law on American 
manufacturers place them at significant disadvantage in 
international markets, creating incentives for these domestic 
companies to move production overseas, damaging local 
economies, and costing U.S. jobs.
    H.R. 184 authorizes the Attorney General to permit 
carefully regulated pharmaceutical exports to countries that 
are parties to the Single Convention on Narcotic Drugs and the 
Convention on Psychotropic Substances.
    Under the bill, the Attorney General retains full Attorney 
authority over all shipments of controlled substances and 
establishes procedures to ensure these products are used solely 
for legitimate medical or scientific purposes. While the 
Attorney General's authority over exports is undiminished, by 
creating new parity for U.S. companies with their international 
competitors, the legislation encourages domestic production and 
job growth.
    With over 260 small U.S. pharmaceutical manufacturing 
exporters bringing products to market each year, H.R. 184 will 
help create thousands of new American jobs annually.
    Enactment of H.R. 184 will also protect the jobs of 
thousands of current U.S. workers whose positions are 
jeopardized by an outdated law that encourages U.S. drug 
manufacturers to move production overseas. With production 
facilities located outside major metropolitan areas, these 
companies are important to the health and stability of their 
local economies.

                                Hearings

    The Committee on Energy and Commerce has not held hearings 
on this legislation.

                        Committee Consideration

    On Wednesday, April 27, 2005, the Subcommittee on Health 
met in open markup session and approved H.R. 184 for Full 
Committee consideration, without amendment, by a voice vote, a 
quorum being present. On Wednesday, May 4, 2005, the Full 
Committee met in open markup session and ordered H.R. 184 
favorably reported to the House, without amendment, by a voice 
vote, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 184 reported. A motion by Mr. Barton to order H.R. 184 
reported to the House, without amendment, was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of Rule XIII of the rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The goal of this legislation is to allow small 
pharmaceutical manufacturers to be more competitive in the 
global marketplace by reducing costs associated with regulated 
shipments of controlled substances intended for multiple 
countries.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
184, The Controlled Substances Export Reform Act of 2005 would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 13, 2005.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 184, the 
Controlled Substances Export Reform Act of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

 H.R. 184--Controlled Substances Export Reform Act of 2005

    H.R. 184 would permit the Attorney General to authorize the 
export of certain controlled substances from the United States 
to a country for subsequent export to another country, if 
certain conditions are met. Current law allows U.S. companies 
to export controlled substances only to the countries where 
they will be used. Based on information from the Department of 
Justice, CBO estimates that implementing H.R. 184 would have no 
significant effect on the department's spending on drug 
enforcement activities. Enacting the bill would not affect 
direct spending or revenues.
    H.R. 184 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Mark Grabowicz. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 designates the title of the bill, the 
``Controlled Substances Export Reform Act of 2005.''

Section 2. Subsequent export of controlled substances

    Section 2 amends Section 1003 of the Controlled Substances 
Import and Export Act by adding a new paragraph; (f). Current 
law under Section 1003(a)(4) for narcotic drugs and Section 
1003(c)(3) for nonnarcotic controlled substances prohibits 
mandates that a controlled substance exported from the United 
States be used exclusively in the country of import. This 
section, notwithstanding (a)(4) and (c)(3), will allow the 
Attorney General to authorize any controlled substance that is 
in schedule I or II, or is a narcotic drug in schedule III or 
IV, to be exported from the United States to a country for 
subsequent export from that country to another country, if 
certain conditions are met.
    First, the country to which the controlled substance is 
exported from the United States must be are party to the Single 
Convention on Narcotic Drugs, 1961, and the Convention on 
Psychotropic Substances, 1971. The country that imports the 
controlled substance from the country who received the 
controlled substances from the United States must also be a 
party to both treaties. Both countries must have each 
instituted and maintain, in conformity with such Conventions, a 
system of controls of imports of controlled substances which 
the Attorney General deems adequate. The receiver of import in 
the first county must be a holder of such permits or licenses 
as may be required under the laws of that country, and a permit 
or license to import the controlled substance must have been 
issued by the country.
    With respect to the second country, substantial evidence 
must be furnished to the Attorney General by the person who 
will export the controlled substance from the United States 
that the controlled substance is to be consigned to a holder of 
such permits or licenses as may be required under the laws of 
that country, and a permit or license to import the controlled 
substance is to be issued by the country. In addition, it must 
be demonstrated that the controlled substance is to be applied 
exclusively to medical, scientific, or other legitimate uses 
within the country.
    The controlled substance will be prohibited from being 
exported from the second country. Within 30 days after the 
controlled substance is exported from the first country to the 
second country, the person who exported the controlled 
substance from the United States must deliver to the Attorney 
General documentation certifying that such export from the 
first country has occurred. Finally, the Attorney General must 
issue a permit to export the controlled substance from the 
United States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

    SECTION 1003 OF THE CONTROLLED SUBSTANCES IMPORT AND EXPORT ACT


                  exportation of controlled substances

  Sec. 1003. (a) * * *

           *       *       *       *       *       *       *

  (f) Notwithstanding subsections (a)(4) and (c)(3), the 
Attorney General may authorize any controlled substance that is 
in schedule I or II, or is a narcotic drug in schedule III or 
IV, to be exported from the United States to a country for 
subsequent export from that country to another country, if each 
of the following conditions is met:
          (1) Both the country to which the controlled 
        substance is exported from the United States (referred 
        to in this subsection as the ``first country'') and the 
        country to which the controlled substance is exported 
        from the first country (referred to in this subsection 
        as the ``second country'') are parties to the Single 
        Convention on Narcotic Drugs, 1961, and the Convention 
        on Psychotropic Substances, 1971.
          (2) The first country and the second country have 
        each instituted and maintain, in conformity with such 
        Conventions, a system of controls of imports of 
        controlled substances which the Attorney General deems 
        adequate.
          (3) With respect to the first country, the controlled 
        substance is consigned to a holder of such permits or 
        licenses as may be required under the laws of such 
        country, and a permit or license to import the 
        controlled substance has been issued by the country.
          (4) With respect to the second country, substantial 
        evidence is furnished to the Attorney General by the 
        person who will export the controlled substance from 
        the United States that--
                  (A) the controlled substance is to be 
                consigned to a holder of such permits or 
                licenses as may be required under the laws of 
                such country, and a permit or license to import 
                the controlled substance is to be issued by the 
                country; and
                  (B) the controlled substance is to be applied 
                exclusively to medical, scientific, or other 
                legitimate uses within the country.
          (5) The controlled substance will not be exported 
        from the second country.
          (6) Within 30 days after the controlled substance is 
        exported from the first country to the second country, 
        the person who exported the controlled substance from 
        the United States delivers to the Attorney General 
        documentation certifying that such export from the 
        first country has occurred.
          (7) A permit to export the controlled substance from 
        the United States has been issued by the Attorney 
        General.