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



109th Congress                                            Rept. 109-115
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================
 
            CONTROLLED SUBSTANCES EXPORT REFORM ACT OF 2005

                                _______
                                

 July 11, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, 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 the Judiciary, 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, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Vote of the Committee............................................     3
Committee Oversight Findings.....................................     3
New Budget Authority and Tax Expenditures........................     4
Congressional Budget Office Cost Estimate........................     4
Performance Goals and Objectives.................................     5
Constitutional Authority Statement...............................     5
Section-by-Section Analysis and Discussion.......................     5
Changes in Existing Law Made by the Bill, as Reported............     5
Markup Transcript................................................     7

                             The Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Controlled Substances Export Reform 
Act of 2005''.

SEC. 2. SUBSEQUENT EXPORT OF CONTROLLED SUBSTANCES.

    Section 1003 of the Controlled Substances Import and Export Act (21 
U.S.C. 953) is amended by adding at the end the following subsection:
    ``(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.''.

                          Purpose and Summary

    H.R. 184 would amend current law with regard to exports of 
controlled substances. Currently, controlled substances may 
only be exported to one country from the U.S. and may not be 
exported to beyond that first country. This legislation 
authorizes the Attorney General to permit reexport beyond the 
first country, under tightly controlled circumstances, to other 
countries that are parties to the Single Convention on Narcotic 
Drugs and the Convention on Psychotropic Drugs. As a result, 
H.R. 184 will allow pharmaceutical companies to export 
controlled substances to distribution centers for export to one 
additional country.

                Background and Need for the Legislation

    Under the Controlled Substances Import and Export Act 
(``CSIEA''), U.S. pharmaceutical manufacturers of schedule I 
and II controlled substances and schedules III and IV narcotics 
are currently permitted to export most controlled substances 
only to the immediate country where the products will be 
consumed. The law prohibits export of these products if the 
drugs are to be distributed outside the country to which they 
are initially sent. Shipment to central sites in other 
countries for further distribution across national boundaries 
is prohibited. Additionally, unexpected demands or demand 
surges in other countries cannot be met. Complex and time-
sensitive export licensing procedures do not allow for ready 
shipment of pharmaceuticals on a real time basis. This 
contrasts with the laws in other countries that allow 
pharmaceutical manufacturers to move approved medical products 
between international drug control treaty countries without 
limit on restriction.
    The prohibitions that are imposed on domestic manufacturers 
create a disadvantage for U.S. businesses by requiring smaller, 
more frequent and costly shipments to each country of use. By 
imposing these restrictions, which create additional burdens on 
U.S. companies, this law creates an incentive for domestic 
pharmaceutical manufacturers to move production centers 
overseas, threatening American jobs.
    H.R. 184 was introduced on January 4, 2005, and referred to 
the Committee on Energy and Commerce and the Committee on the 
Judiciary. H.R. 184 was ordered reported favorably by voice 
vote by the Committee on Energy and Commerce on May 4, 2005. 
The Committee on Energy and Commerce file H. Rept. No. 109-115, 
Part 1 on June 9, 2005. The Committee on the Judiciary was 
granted an extension for further consideration until July 11, 
2005.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
184.

                        Committee Consideration

    On June 23, 2005, the Subcommittee on Crime, Terrorism, and 
Homeland Security met in open session and ordered favorably 
reported the bill H.R. 184, as amended, by a voice vote, a 
quorum being present. On June 29, 2005, the Committee met in 
open session and ordered favorably reported the bill H.R. 184 
with an amendment by voice vote, a quorum being present.

                         Vote of the Committee

    In compliance with clause 3(b) of Rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during the committee consideration of 
H.R. 184.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of Rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of Rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of Rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R.184, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 5, 2005.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
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, who can be reached at 226-2860.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
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.
    On May 13, 2005, CBO transmitted a cost estimate for H.R. 
184 as ordered reported by the House Committee on Energy and 
Commerce on May 4, 2005. The two versions of the bill are 
identical, as are the cost estimates.
    The CBO staff contact for this estimate is Mark Grabowicz, 
who can be reached at 226-2860. This estimate was approved by 
Peter H. Fontaine, Deputy Assistant Director for Budget 
Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
Rule XIII of the Rules of the House of Representatives, H.R.184 
will allow pharmaceutical companies to export controlled 
substances to distribution centers around the world for export 
to one additional country; thereby eliminating the disadvantage 
and increased costs of exporting controlled substances for U.S. 
companies.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8 of the Constitution.

               Section-by-Section Analysis and Discussion

    This section-by-section represents H.R. 184 as reported by 
the Committee on the Judiciary.

                         SECTION 1. SHORT TITLE

    This section establishes the short title of this act as the 
``Controlled Substances Export Reform Act of 2005.''

         SECTION 2. SUBSEQUENT EXPORT OF CONTROLLED SUBSTANCES

    This section allows the Attorney General to authorize 
exports of any controlled substance under Schedule I or II or 
any narcotic drug under Schedule III or IV from the United 
States for subsequent export to a second country if the 
following conditions are met:
    1) both the first country of export and the second country 
are parties to the Single Convention on Narcotic Drugs and the 
Convention on Psychotropic Substances;
    2) both the first country and the second country have 
controls in place satisfactory to the Attorney General;
    3) the controlled substances will be transferred to persons 
in the first country possessing a permit or license to import 
controlled substance issued by the country of import;
    4) sufficient evidence is provided to the Attorney General 
that the person who will receive the controlled substances in 
the second country is licensed and such controlled substances 
is to be applied to medical, scientific, or other legitimate 
use;
    5) the controlled substance will not be exported from the 
second country;
    6) documentation is provided to the Attorney General within 
30 days of the export from the first country to the second 
country by the person who exported the controlled substance 
from the United States; and
    7) a permit to export the controlled substance from the 
United States has been issued by the Attorney General.

         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 italics 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.

           *       *       *       *       *       *       *


                           Markup Transcript



                            BUSINESS MEETING

                        WEDNESDAY, JUNE 29, 2005

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order. A 
quorum is present. The Chair recognizes the Ranking Member for 
a unanimous consent request.
    Mr. Conyers. Thank you, Mr. Chairman. I ask unanimous 
consent that Representative Debbie Wasserman Schultz of Florida 
be added to the Subcommittee on Commercial and Administrative 
Law. She will be replacing Representative Adam Smith, who is no 
longer on the Committee. Representative Wasserman Schultz 
should be added after Representative Nadler.
    Chairman Sensenbrenner. Without objection, the election to 
the Subcommittee is agreed to.
    Mr. Conyers. Mr. Chairman.
    Chairman Sensenbrenner. The gentleman from Michigan.
    Mr. Conyers. May I ask to strike the last word?
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Conyers. I know the National Basketball Association 
playoffs are water over the dam, but the gentleman from Texas, 
Mr. Smith, and I had engaged in a wager that required me or 
whoever did not prevail to wear the other teams' cap. And there 
is being widely circulated across the press a picture of me 
with the Spurs cap on.
    I wanted to acknowledge this on the record for the 
Committee, congratulate his team for an incredible series of 
games, and warn them that we will be looking forward to seeing 
them next year in the season.
    Mr. Smith. Would the gentleman yield, very briefly?
    Mr. Conyers. Yes, of course, with pleasure.
    Mr. Smith. First of all, I agree with you. It was a 
wonderful championship series and both teams acquitted 
themselves well.
    I will have to say on that last game, when the Pistons were 
ahead nine points, I actually turned the TV off for several 
year minutes. I had to decompress, but the end came out all 
right.
    I wanted to thank the gentleman from Michigan for being 
such a good sport and showing up on the Capitol steps and 
having that photograph taken. The Associated Press did pick it 
up, as the gentleman knows, and I appreciate his participation 
in that friendly wager.
    I yield back.
    Mr. Conyers. Thank you. I yield back.
    Chairman Sensenbrenner. The time of the gentleman has 
expired. The next item on the agenda is H.R. 184, the 
``Controlled Substances Export Reform Act.''
    [The bill, H.R. 184, follows:]
      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. The Chair recognizes the gentleman 
from North Carolina, Mr. Coble, The Chairman of the 
Subcommittee on Crime, Terrorism, and Homeland Security for a 
motion.
    Mr. Coble. Mr. Chairman, the Subcommittee on Crime, 
Terrorism, and Homeland Security reports favorably the bill 
H.R. 184 with a single amendment in the nation of a substitute 
and moves its favorable recommendation to the full House.
    Chairman Sensenbrenner. Without objection, the bill will be 
considered as read and open for amendment at any point.
    The Subcommittee amendment in the nature of a substitute, 
which the Members have before them, will be considered as read, 
considered as the original text for purposes of amendment and 
open for amendment at any point.
    [The amendment follows:]
      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. The Chair recognizes the gentleman 
from North Carolina, Mr. Coble, to strike the last word.
    Mr. Coble. I thank the Chairman and, Mr. Chairman, if you 
will forgive me for my irregular procedure, I want to gain 
support from the gentleman from Texas and lose support from the 
gentleman from Michigan, Mr. Conyers. I feel obliged to say to 
you that Tim Duncan, who was named the MVP of the tournament, 
played college basketball in North Carolina. So I was obliged 
to be pulling for the Spurs.
    Chairman Sensenbrenner. Without objection, the gentleman 
from North Carolina is excused for doing that.
    Mr. Coble. I thank the Chairman.
    Mr. Chairman, I want to thank Mr. Forbes, the gentleman 
from Virginia, and Mr. Scott, the gentleman from Virginia, for 
covering for me very ably regarding these three bills. I was 
involved in a Transportation Bill matter and I was not present. 
But I'm told these three bills are noncontroversial.
    The current bill, H.R. 184, Mr. Chairman, permits U.S. 
companies export most controlled substances only to the 
immediate country where the products will be consumed. The law 
prohibits export of these products if the drugs are to be 
exported beyond the country to which they are initially sent. 
Shipment to central sites in other countries for further 
distribution across the country's national boundaries is 
prohibited.
    This legislation amends the current law to allow re-export 
of controlled substances to remove this disadvantage for 
American companies. The legislation authorizes the Attorney 
General to permit re-export beyond the first country to one 
additional country. This may only be done under tightly 
controlled circumstances and only to other countries that are 
approved as parties to international drug treaties.
    H.R. 184 would allow American pharmaceutical companies to 
remain competitive with other companies worldwide and provides 
an incentive for companies to keep distribution centers and 
jobs in the United States.
    I urge my colleagues to support this legislation and yield 
back.
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    H.R. 184 would remove an unproductive limitation with 
respect to authorized shipment of controlled drugs and 
substances between two countries. Currently, the U.S. companies 
are restricted in exporting such drugs only to one country and 
cannot be re-exported to another.
    This bill allows drugs to be transported to a second 
country, so long as the Attorney General determines that the 
second country has also appropriate controls and is a signatory 
to appropriate international drug control conventions. This 
would remove current disadvantages U.S. drug companies have in 
competing with other countries.
    I am aware of no opposition to the bill and encourage 
support for it. I yield back.
    Chairman Sensenbrenner. Without objection, all Members may 
include opening statements in the record at this point.
    [The prepared statement of Mr. Cannon follows:]
 Prepared Statement of the Honorable Chris Cannon, a Representative in 
    Congress from the State of Utah, and Chairman, Subcommittee on 
                   Commercial and Administrative Law
    Mr. Chairman, as America strives to adapt to a world of rapidly 
changing international trade, preserving and expanding U.S. 
manufacturing and production capabilities becomes ever more important. 
This is particularly true in Utah where current restrictions on exports 
of the medicines we produce have discouraged industry growth and 
threatened workers' jobs.
    The Controlled Substances Import and Export Act currently allows 
U.S. pharmaceutical companies to export most controlled substances only 
to the exact country where their product will be used. Shipment of U.S. 
medicines to central sites for further cross-border distribution, even 
when conducted under the watchful eyes of the U.S. Drug Enforcement 
Administration and Department of Justice, is prohibited for U.S. 
exporters. This contrasts with the freedom of drug manufacturers 
throughout the rest of the world to readily move their products among 
and between international drug control treaty countries without limit 
or restriction.
    These limitations put U.S. manufacturers at a disadvantage by 
requiring more frequent and costly shipments to each individual country 
of use. We are effectively discouraging domestic manufacturing while 
encouraging U.S. drug exporters to move production overseas.
    Utah, with a small but growing pharmaceutical manufacturing 
industry, is committed to maintaining a strong domestic base so that 
U.S. businesses can compete on a level playing field with our 
international competitors. But this industry faces an uncertain future 
unless we do something.
    HR 184, the Controlled Substances Export Reform Act, that Rep. Joe 
Pitts and I introduced advances that goal by permitting the carefully 
regulated international transshipment of exported U.S. pharmaceuticals. 
The bill retains full DEA control over all drug exports and establishes 
strict permitting requirements to ensure drug safety while removing an 
unnecessary barrier to U.S. production and the growth of well-paid 
jobs.
    Mr. Chairman, on behalf of the 500 Utah workers whose jobs may be 
endangered by current law, and on behalf of the many more workers we 
stand to gain by updating an outdated statute, I am pleased to support 
H.R. 184 and I urge the measure's adoption.

    Chairman Sensenbrenner. Are there amendments? Are there 
amendments?
    If there are no amendments, a reporting quorum is not 
present. Without objection, the Committee amendment in the 
nature of a substitute laid down as the base text is adopted. A 
reporting quorum is not present. Without objection, the 
previous question will be ordered on the motion to report the 
bill as amended favorably to the House.
    [Intervening business.]
    Chairman Sensenbrenner. A reporting quorum is present. The 
unfinished business is the motion to report the bill H.R. 184 
favorably as amended, on which the previous question was 
ordered.
    All in favor will say aye. Opposed, no.
    The ayes appear to have it. The ayes have it. The motion to 
report favorably is adopted.
    Without objection, the bill will be reported favorably to 
the House in the form of a single amendment in the nature of a 
substitute, incorporating the amendments adopted here today.
    Without objection, the staff is directed to make any 
technical and conforming changes, and all Members will be given 
2 days, as provided by the House rules, in which to submit 
additional dissenting, supplemental or minority views.
    [Intervening business.]
    Chairman Sensenbrenner. Now I believe we have concluded the 
agenda. Without objection, the Committee stands adjourned.
    [Whereupon, at 10:24 p.m., the Committee was adjourned.]

                                  
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