[Federal Register Volume 59, Number 113 (Tuesday, June 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14333]


[[Page Unknown]]

[Federal Register: June 14, 1994]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1301

 

Registration of Manufacturers and Importers of Controlled 
Substances

AGENCY: Drug Enforcement Administration (DEA).

ACTION: Supplemental notice of proposed rulemaking (SNPRM).

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SUMMARY: On October 7, 1993, DEA published a notice a proposed 
rulemaking (NPRM) in the Federal Register (58 FR 52246) to amend its 
regulations to eliminate the mandatory administrative hearing 
requirement for objections to the registration of certain bulk 
manufacturers and importers of controlled substances. This SNPRM 
revises the NPRM by proposing to eliminate the hearing provision 
relating to bulk manufacturers altogether and leave unaltered the 
hearing provision relating to registration of importers.

DATES: Written comments and objections to this SNPRM must be received 
on or before August 15, 1994.

ADDRESSES: Comments and objections should be submitted in quintuplicate 
to the Administrator, Drug Enforcement Administration, Washington, DC 
20537, Attention: DEA Federal Register Representative/CCR.

FOR FURTHER INFORMATION CONTACT:
Julie C. Gallagher, Associate Chief Counsel, Diversion and Regulatory 
Section, Office of Chief Counsel, Drug Enforcement Administration, 
Washington, DC 20537, telephone (202) 307-8010.

SUPPLEMENTARY INFORMATION: On October 7, 1993, DEA published a NPRM in 
the Federal Register (58 FR 52246). The DEA proposed to amend two 
sections of its regulations, specifically 21 CFR 1301.43(a) and 
1311.42(a), in which the Administrator is required to hold an 
administrative hearing on an application for registration to 
manufacture or import a bulk Schedule I or II controlled substance when 
requested to do so by any current bulk manufacturer of the substance(s) 
or by any other applicant for a similar registration. Because the 
proposals in this SNPRM differ in some respects from the NPRM, DEA 
encourages interested persons to file comments in response to this 
SNPRM even if they have already commented on the NPRM. Comments 
previously received under the NPRM will be considered under the SNPRM 
to the extent they are relevant to the changes in the SNPRM.

Section 1311.42(a)

    In the NPRM, DEA proposed to remove the provision which enabled a 
person registered as a bulk manufacturer of a controlled substance or 
applicant thereof to request a hearing on the application of an 
importer of that controlled substance. As several commentators argued, 
the proposed amendment to 21 CFR 1311.42, cannot be reconciled with the 
hearing provisions of 21 U.S.C. 958(i). The relevant portion of 21 
U.S.C. 958(i) states: ``prior to issuing a registration under this 
section . . . the Attorney General shall give manufacturers holding 
registrations for the bulk manufacture of the substance an opportunity 
for a hearing.'' In keeping with the above requirement, 21 CFR 1311.42, 
allows current bulk manufacturer registrants to request an 
administrative hearing regarding their objections to the registration 
of certain importers of Schedule I and II controlled substances. With 
an existing statute in effect, DEA is not empowered to adopt 
regulations that contravene the express language of that statute. 
Therefore, based on the hearing provisions under 21 U.S.C. 958(i), 21 
CFR 1311.42, Application for importation of Schedule I and II 
controlled substances, shall remain unchanged.

Section 1301.43(a)

    Unlike the registration of importers, the Controlled Substances Act 
(21 U.S.C. 801, et seq.) does not require that current registrants be 
allowed to request a hearing on an application for registration as a 
bulk manufacturer of a controlled substance. The NPRM proposed to 
modify Sec. 1301.43(a) and provide for a hearing only when ``the 
Administrator determines that a hearing is necessary to receive factual 
evidence and/or expert testimony with respect to issues raised by the 
application or objections thereto.'' The SNPRM goes one step further 
and eliminates this hearing provision entirely. However, the 
Administrator would still be required to hold hearings when requested 
by the applicant pursuant to an order to show cause, Sec. 1301.44, and 
current registrants and applicants would still be permitted to submit 
comments or objections concerning an application for registration. In 
addition, current registrants and applicants would be granted an 
opportunity to participate in any hearings conducted pursuant to 
Sec. 1301.44.
    DEA recognizes that the antecedent for this hearing provision 
derives from statutory acknowledgement that limiting the number of 
registrants may increase the capability to control diversion. The 
regulations clearly state, however, that the Administrator is not 
required to limit the number of manufacturers even if the current 
registrants can provide an adequate supply, as long as DEA can maintain 
effective controls against diversion. 21 CFR 1301.43(b). In addition, 
as stated in the NPRM, the Administrator has never denied an 
application solely on the basis of increased danger of diversion or 
adverse impact upon domestic competition.
    DEA also agrees that current registrants and applicants should be 
allowed to object to an additional registration by filing comments on 
grounds that it would adversely affect diversion or competition in a 
highly regulated industry. But DEA finds that registrants and 
applicants have abused the mandatory hearing requirement in the past 
and it remains a future source of abuse where these individuals deter 
or delay new registrations and retaliate by opposing annual renewals.
    Most important, the proposed change as provided herein does not 
violate statutory intent but instead comports with sound principles of 
substantive and procedural due process. First, eliminating the hearing 
requirement except when requested by the applicant after issuance of an 
order to show cause, supports the statutory and regulatory mandate that 
an applicant for registration as a bulk manufacturer shall have the 
burden of proof at ``any hearing'' that the requirements of 
registration are met. See 21 CFR 1301.55. The Administrative Procedure 
Act (APA) which controls these matters further provides that ``[e]xcept 
as otherwise provided by statute, the proponent of a rule or order has 
the burden of proof.'' See 5 U.S.C. 556(d).
    Second, the proposed change eliminates the potential for multiple 
hearings which not only promotes judicial economy but also avoids the 
anomalous result of DEA conducting administrative hearings which are 
not dispositive of the ultimate issue of whether an applicant should be 
registered. For example, because DEA must issue an order to show cause 
whenever it takes action to deny an application, 21 U.S.C. 824(c), 
under the current regulation a second hearing would likely be required 
when DEA decided to deny an application after a hearing held pursuant 
to a ``third-party'' request. Further, this second hearing would 
involve many of the same issues raised in the prior proceeding.
    Finally, the proposed change continues to permit current 
registrants and applicants to submit written comments and objections 
concerning an applicant's registration. There is no reason to believe 
that this procedure does not provide an adequate mechanism for these 
individuals to convey the substance and criticality of any objections 
or that DEA would fail to consider such evidence prior to making a 
final determination. Moreover, these individuals could still 
participate in any hearing conducted contemporaneous with an 
application, thereby providing an additional opportunity to present 
evidence.
    Accordingly, the Deputy Assistant Administrator for Diversion 
Control is proposing to delete the hearing requirement from this 
regulation. The notice requirement and the opportunity to comment upon 
and oppose applications shall be retained, while current registrants 
and other applicants will retain the opportunity to participate in any 
hearing requested by the Applicant pursuant to an order to show cause.
    The Deputy Assistant Administrator hereby certifies that the SNPRM 
will have no significant impact upon those entities whose interests 
must be considered under the Regulatory Flexibility Act, 5 U.S.C. 601, 
et seq. The registrants and applicants who use, or are affected by, the 
hearing covered by these regulations are typically not small entities.
    The proposed rule is not a significant regulatory action pursuant 
to Executive Order 12866 and therefore, has not been submitted to the 
Office of Management and Budget centralized review. This action has 
been analyzed in accordance with the principles and criteria in E.O. 
12612, and it has been determined that the proposed rule does not have 
sufficient federalism implications to warrant the preparation of a 
Federalism Assessment.

List of Subjects in 21 CFR Part 1301

    Administrative practice and procedure, Drug traffic control and 
security measures.

    Therefore, pursuant to the authority vested in the Attorney General 
by 21 U.S.C. 821 and 871(b), as delegated to the Administrator of the 
Drug Enforcement Administration, and redelegated to the Deputy 
Assistant Administrator, Office of Diversion Control by 28 CFR 0.100 
and 0.104, the Deputy Assistant Administrator, Office of Diversion 
Control hereby proposes that part 1301 of Title 21, Code of Federal 
Regulations be amended as follows:

PART 1301--[AMENDED]

    1. The authority citation for part 1301 continues to read as 
follows:

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

    2. Section 1301.43 is proposed to be amended by revising paragraph 
(a) to read as follows:


Sec. 1301.43  Application for bulk manufacture of Schedule I and II 
substances.

    (a) In the case of an application for registration or 
reregistration to manufacture in bulk a basic class of controlled 
substance listed in Schedule I or II, the Administrator shall, upon the 
filing of such application, publish in the Federal Register a notice 
naming the applicant and stating that such applicant has applied to be 
registered as a bulk manufacturer of a basic class of narcotic or 
nonnarcotic controlled substance, which class shall be identified. A 
copy of said notice shall be mailed simultaneously to each person 
registered as a bulk manufacturer of that basic class and to any other 
applicant therefor. Any such person may, within 30 days from the date 
of publication of the notice in the Federal Register, file with the 
Administrator written comments on or objections to the issuance of the 
proposed registration.
* * * * *
    3. Section 1301.44 is proposed to be amended by redesignating 
paragraph (b) as paragraph (c) and adding a new paragraph (b) to read 
as follows:


Sec. 1301.44  Certificate of registration; denial of registration.

* * * * *
    (b) If a hearing is requested by an applicant for registration or 
reregistration to manufacture in bulk a basic class of controlled 
substance listed in Schedule I or II, any person entitled to file 
comments or objections to the issuance of the proposed registration 
pursuant to Sec. 1301.43(a) may participate in the hearing by filing a 
notice of appearance in accordance with Sec. 1301.54. Notice of the 
hearing shall be published in the Federal Register and shall be mailed 
simultaneously to the applicant and to all persons to whom notice of 
the application was mailed. Notice of the hearing shall contain a 
summary of all comments and objections filed regarding the application 
and shall state the time and place for the hearing, which shall not be 
less than 30 days after the date of publication of such notice in the 
Federal Register.
* * * * *
    4. Section 1301.54 is proposed to be amended by revising paragraphs 
(a), (b), (c) and (d) to read as follows:


Sec. 1301.54  Request for hearing or appearance; waiver.

    (a) Any person entitled to a hearing pursuant to Secs. 1301.42, 
1301.44, or 1301.45 and desiring a hearing shall, within 30 days after 
the date of receipt of the order to show cause, file with the 
Administrator a written request for a hearing in the form prescribed in 
Sec. 1316.47 of this chapter.
    (b) Any person entitled to participate in a hearing pursuant to 
Sec. 1301.44(b) and desiring to do so shall, within 30 days of the date 
of publication of notice of the hearing in the Federal Register, file 
with the Administrator a written notice of his intention to participate 
in such hearing in the form prescribed in Sec. 1316.48 of this chapter. 
Any person filing a request for a hearing need not also file a notice 
of appearance.
    (c) Any person entitled to a hearing or to participate in a hearing 
pursuant to Secs. 1301.42, 1301.44, or 1301.45 may, within the period 
permitted for filing a request for a hearing or a notice of appearance, 
file with the Administrator a waiver of an opportunity for a hearing or 
to participate in a hearing, together with a written statement 
regarding his position on the matters of fact and law involved in such 
hearing. Such statement, if admissible, shall be made a part of the 
record and shall be considered in light of the lack of opportunity for 
cross-examination in determining the weight to be attached to matters 
of fact asserted therein.
    (d) If any person entitled to a hearing or to participate in a 
hearing pursuant to Secs. 1301.42, 1301.44, or 1301.45 fails to file a 
request for a hearing or a notice of appearance, or if he so files and 
fails to appear at the hearing, he shall be deemed to have waived his 
opportunity for the hearing or to participate in the hearing, unless he 
shows good cause for such failure.
* * * * *
    5. Section 1301.55 is proposed to be amended by revising paragraph 
(a) to read as follows:


Sec. 1301.55  Burden of proof.

    (a) At any hearing on an application to manufacture any controlled 
substance listed in Schedule I or II, the applicant shall have the 
burden of proving that the requirements for such registration pursuant 
to section 303(a) of the Act (21 U.S.C. 823(a)) are satisfied. Any 
other person participating in the hearing pursuant to Sec. 1301.44(b) 
shall have the burden of proving any propositions of fact or law 
asserted by him in the hearing.
* * * * *
    Dated: May 26, 1994.
Gene R. Haislip,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 94-14333 Filed 6-13-94; 8:45 am]
BILLING CODE 4410-09-M