[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25071]


[[Page Unknown]]

[Federal Register: October 13, 1994]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1307, 1309, 1310, 1313 and 1316

 

Implementation of the Domestic Chemical Diversion Control Act of 
1993 (Pub. L. 103-200)

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: DEA is proposing these regulations to implement the Domestic 
Chemical Diversion Control Act of 1993, which became effective on April 
16, 1994, in order to provide additional safeguards against the 
diversion of regulated chemicals.

DATES: Written comments or objections must be received on or before 
December 12, 1994.

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

FOR FURTHER INFORMATION CONTACT:
G. Thomas Gitchel, Chief, Liaison and Policy Section, Office of 
Diversion Control, Drug Enforcement Administration, Washington, D.C. 
20537, Telephone (202) 307-4025.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The Chemical Diversion and Trafficking Act of 1988, (PL 100-690) 
(CDTA) was passed by Congress to control the diversion of certain 
chemicals (hereinafter referred to as listed chemicals) that are 
necessary for the illicit manufacture of drugs such as heroin, cocaine, 
methamphetamine and LSD. The CDTA and its implementing regulations, as 
set forth in Title 21, Code of Federal Regulations (21 CFR), parts 1310 
and 1313, established a system of recordkeeping and reporting 
requirements through which DEA and the chemical industry could identify 
persons seeking to divert listed chemicals for the manufacture of 
illicit drugs. The CDTA allows for the tracking and, where necessary, 
control of domestic and international transactions involving listed 
chemicals.
    The CDTA has had strong success. The greatest impact has been in 
the international arena, with a significant reduction in exports of 
listed chemicals from the United States to countries that are known 
sources of cocaine. Domestically, the volume of chemicals available to 
clandestine laboratories was reduced. However, these successes also 
highlighted several shortcomings in the CDTA, including:
    1. The CDTA provided a mechanisms for DEA, with the cooperation of 
the chemical industry, to identify persons engaging in suspicious 
transactions and, as needed, take action against those persons. 
However, lacking evidence that an individual knowingly supplied 
chemicals for the illicit manufacture of drugs, DEA's options were 
limited.
    2. Persons engaged in the illicit manufacture of methamphetamine 
and methcathinone were able to obtain supplies of the listed chemicals 
critical to the manufacture of such drugs through the purchase of drug 
products that were exempted from the provisions of the CDTA.
    3. Illicit drug manufacturers in foreign countries began to 
purchase their supplies of listed chemicals from countries other than 
the United States, on occasion utilizing the services of United States 
based brokers and traders to facilitate the transactions.
    To address these and other concerns, Congress passed legislation in 
late 1993 to amend the CDTA.

II. The Domestic Chemical Diversion Control Act of 1993 (Pub. L. 103-
200)

    The Domestic Chemical Diversion Control Act of 1993 (DCDCA) was 
signed into law on December 17, 1993, and became effective on April 16, 
1994. The DCDCA is intended to close avenues used by illicit drug 
manufacturers to circumvent the CDTA. The main provisions of the DCDCA 
are as follows:
    1. Precursor and essential chemicals have been redesignated as List 
I and List II chemicals respectively.
    2. Any person who manufactures, distributes, imports or exports a 
List I chemical must obtain a registration from DEA. DEA is authorized 
to deny an application for registration or suspend or revoke a 
registration to manufacture, distribute, import or export a List I 
chemical, if it is established that such registration would not be in 
the public interest.
    3. Transactions involving drug products marketed under the Food, 
Drug, and Cosmetic Act (FDCA) which contain ephedrine, either as the 
sole active medicinal ingredient or in combination with therapeutically 
insignificant quantities of another active medicinal ingredient, are 
now included in the definition of regulated transaction. Subjecting 
these products to the registration, recordkeeping and reporting 
requirements eliminates a virtually unrestricted source of ephedrine 
for illicit manufacturers of methamphetamine and methcathinone. The 
DCDCA also grants DEA the authority to remove the exemption for any 
other drug that contains a listed chemical if DEA determines that the 
drug is being diverted in order to obtain the listed chemical for use 
in the illicit manufacture of a controlled substance.
    4. Brokers and traders based in the United States who arrange 
international transactions involving listed chemicals will be subject 
to the same reporting and recordkeeping requirements as exporters of 
listed chemicals, thus controlling a previously unmonitored source of 
chemicals for clandestine laboratories in foreign countries.
    5. Manufacturers of listed chemicals are required to provide DEA 
with annual reports regarding the manufacture of such chemicals. The 
reports will provide DEA with information regarding the volume of 
listed chemicals available in the United States.

III. Implementation of the DCDCA

    To implement the DCDCA, DEA is proposing the following regulatory 
changes and additions:
    1. A new part 1309 of Title 21, Code of Federal Regulations is to 
be added, setting forth the specific requirements for registration, the 
application forms to be used, the application fees, exemptions from the 
registration requirement, security provisions, and administrative 
procedures regarding approval or denial of an application, revocation 
of registration, and administrative hearings. With respect to the 
requirement of registration in the proposed Section 1309.21, DEA has 
granted a temporary exemption from the registration requirement pending 
implementation of the registration program, as set forth in an Interim 
Rule published in the Federal Register on March 24, 1994 (59 FR 13881).
    Under the CDTA, regulated persons consist of those firms engaged in 
the distribution, importation or exportation of chemicals. The DCDCA 
regulates drug products containing ephedrine which are distributed by 
retail distributors such as convenience stores, liquor stores, truck 
stops, gas stations, nutrition centers, etc. These retail outlets do 
not distribute any other listed chemicals and their activities consist 
solely of the sale of such products directly to walk-in customers. DEA 
has determined that retail distributors should be categorized 
separately in light of the limited scope and volume of their chemical 
activities.
    Pursuant to 21 U.S.C. 822(d), the Administrator may waive the 
requirement of registration. The Administrator is proposing in 
Sec. 1309.25 of these regulations to exempt persons registered with DEA 
to manufacture, distribute, dispense, import, or export a controlled 
substance from the chemical registration requirement for equivalent 
activities involving drug products that are regulated as List I 
chemicals pursuant to Sec. 1310.01(f)(1)(iv). This includes such 
traditional sources for these products as pharmacies, hospitals, 
pharmaceutical manufacturers, distributors, etc. Further, the 
Administrator proposes in Sec. 1309.27 to exempt from the registration 
requirement those persons who manufacture a List I chemical solely for 
internal use, with no subsequent distribution or exportation.
    With respect to the exemptions from the registration requirement, 
DEA has determined that persons who manufacture List I chemicals solely 
for internal use, without any subsequent distribution or exportation of 
such chemicals, should not be required to obtain a registration, since 
there is a low risk of diversion from such persons.
    It has also been determined that persons who are registered with 
DEA to manufacture, distribute, or dispense controlled substances shall 
not be required to obtain a separate registration to distribute drug 
products that are regulated as List I chemicals. Further, persons who 
are registered with DEA to import or export controlled substances shall 
not be required to obtain a separate registration to engage in the same 
activities with drug products which are regulated as List I chemicals. 
Persons registered to engage in activities with controlled substances 
are subjected to more comprehensive investigations by Federal and state 
authorities relating to their controlled substance registrations than 
is required for a chemical registration. The Administrator reserves the 
right in this proposal to cancel a person's exemption from the 
registration requirement, if continuation of the exemption would not be 
in the public interest.
    2. Section 1310.01 is amended to revise the definitions of 
``regulated transaction'' and ``regulated person'', and to add new 
definitions of ``broker'' and ``trader'', and ``international 
transaction''.
    3. Chemical mixtures that met the definition of ``chemical 
mixture'' set forth in Sec. 1310.01(g) prior to the effective date of 
the DCDCA shall remain exempted from the definition of regulated 
transaction until DEA has promulgated final regulations regarding the 
procedures by which manufacturers may request exemption of chemical 
mixtures.
    4. Section 1310.02 is amended to remove three chemicals from List 
I: d-lysergic acid, n-ethylephedrine and n-ethylpseudoephedrine; and to 
add to List I: nitroethane and benzaldehyde, as established by the 
DCDCA. In addition, the DEA chemical codes assigned to the listed 
chemicals have been added.
    5. Section 1310.03 is amended to implement the requirement that 
manufacturers of listed chemicals report certain data to DEA. This 
requirement will only apply to bulk manufacturers of listed chemicals.
    6. Section 1310.04 is amended to reflect the additions and 
deletions of the List I chemicals and to set forth the proposed 
thresholds for the new chemicals. With respect to the newly added 
chemicals Nitroethane and Benzaldehyde, records and reports must be 
kept only for those transactions, including cumulative transactions 
within a calendar month, which equal or exceed the proposed thresholds.
    7. Sections 1310.05 and 1310.06 are amended to include a reporting 
requirement with respect to drug products containing ephedrine that are 
regulated as List I chemicals and to set forth the required format for 
the chemical manufacturer reports. Drug products containing ephedrine 
are legitimately distributed solely for human consumption. Thus, the 
distribution of 375 dosage units (approximately a two-month supply at 
the current recommended therapeutic dose) or more of such drug products 
in a calendar month to a person who is not registered with DEA to 
distribute or export a List I chemical would be considered 
extraordinary and therefore would have to be reported.
    8. Section 1310.08 is amended to add international transactions to 
the types of transactions regulated.
    9. Sections 1310.10 through 1310.15 are added to set forth the 
procedures regarding removal of the exemption from recordkeeping and 
reporting requirements of drugs distributed under the Food, Drug, and 
Cosmetic Act, the exemption from recordkeeping and reporting 
requirements of chemical mixtures, and the identification of drugs 
which contain ephedrine in combination with therapeutically significant 
quantities of another medicinal ingredient.
    10. Section 1313.02 is amended to revise the definitions for 
``regulated person'' and ``regulated transaction''; and definitions for 
``regular importer'', ``established record as an importer'', ``broker'' 
and ``trader'', and ``international transaction''; and to remove the 
definition of ``regular supplier''.
    11. Sections 1313.12, 1313.15 and 1313.21 are amended to set forth 
criteria regarding the waiver of the 15 day notification requirement 
for certain imports and exports of listed chemicals and the removal of 
the waiver of the 15 day notification requirement for exports of listed 
chemicals to specified countries.
    12. Sections 1313.32, 1313.33 and 1313.34 are added to establish 
the notification requirements for brokers and traders engaging in 
international transactions.

IV. Fees

    Section 1309.11 proposes the application fee for registration and 
reregistration of manufacturers, distributors, importers and exporters 
of List I chemicals, as authorized by section 3(a) of the DCDCA. The 
proposed fee was established pursuant to the Office of Management and 
Budget (OMB) Circular A-25, as revised on July 15, 1993 (58 FR 38142), 
which sets forth Federal policy regarding user fees.
    1. Circular A-25, Section 6 provides that ``[A] user charge * * * 
will be assessed against each identifiable recipient for special 
benefits derived from Federal activities beyond those received by the 
general public.'' The section further requires that the user charge be 
sufficient to ``* * * recover the full cost to the Federal Government 
for providing the special benefit.'' A special benefit is described as 
a Government service which ``Enables the beneficiary to obtain more 
immediate or substantial gains or values (which may or may not be 
measurable in monetary terms) than those that accrue to the general 
public (e.g., receiving a patent, insurance, or guarantee provision, or 
a license to carry on a specific activity or business [emphasis added] 
or various kinds of public land use)''.
    Sections 822 and 957 of Title 21, United States Code, as amended by 
the DCDCA, require that any person who manufactures, distributes, 
imports or exports a List I chemical must obtain annually a 
registration in accordance with DEA rules and regulations. A 
registration to manufacture, distribute, import or export List I 
chemicals is a benefit under Circular A-25, in that it allows the 
registrant to engage in certain activities while a member of the 
general public may not. Therefore, the costs associated with DEA's 
issuance of a registration to manufacture, distribute, import or export 
a List I chemical; certain costs associated with advising registrants 
of their responsibilities; and maintenance of the integrity of the 
registration system must be recovered through assessment of a user fee.
    2. Section 6(d) of Circular A-25 describes the requirements for 
determining the full cost of a service or benefit. ``Full cost'' is 
defined as all direct and indirect costs, including, but not limited 
to: direct and indirect personnel costs, including salaries, fringe 
benefits (such as life and health insurance and retirement) and travel; 
physical overhead, including material and supply costs such as forms, 
postage, equipment, rent and utilities; management and supervisory 
costs; and the costs of enforcement, collection, research, 
establishment of standards, and regulation. Section 6(d)(1)(e) provides 
that the cost figures shall be established utilizing ``the best 
available records of the agency and new cost accounting systems need 
not be established solely for this purpose.'' The cost of the services 
provided by DEA were determined by use of proven and accepted budget 
estimating techniques as outlined in the DOJ budget guidelines and OMB 
Circular A-11.

Considerations for the Establishment of the Original Fee

    DEA has identified two distinct categories of chemical registrants: 
retail distributors, such as convenience stores, gas stations, truck 
stops, liquor stores, etc., whose regulated activities consist of the 
direct sale to walk-in customers of drug products that are regulated as 
List I chemicals; and non-retailers, such as manufacturers which 
distribute, distributors, importers and exporters of List I chemicals.
    Based upon contacts with the chemical industry and surveys of the 
industry over the past three years, DEA estimates that approximately 
1,500 applications for registration will be received from non-
retailers.
    Based on the information gathered from various sources, including 
association data, surveys of ephedrine manufacturers and distributors, 
and correspondence received from ephedrine distributors, DEA estimates 
that there may have been as many as 100,000 retail distributors that, 
prior to the April 16, 1994 effective date of the DCDCA, sold drug 
products that are now subject to regulation. However, estimating the 
number of persons who will continue to engage in activities with the 
regulated drug products is speculative, due to a variety of factors. 
Some retailers who engaged in this previously unregulated activity may 
decide to no longer sell items for which registration is required by 
law. Also, the activities of retail distributors may be affected by 
state laws, such as those in Wisconsin, Florida and Missouri, which 
require that drug products containing ephedrine as the sole medicinal 
ingredient may only be dispensed pursuant to prescription. Another 
consideration is the availability of alternative products that are not 
subject to the registration, recordkeeping and reporting requirements. 
DEA has learned that certain distributors of single-entity ephedrine 
products have already advised their retail customers to switch to such 
alternative products to avoid the registration and recordkeeping 
requirements. Therefore, for purposes of establishing the initial fee, 
DEA estimates that 10,000 applications will be submitted by retail 
distributors. The number of applications is important only when 
considering apportionment of indirect costs associated with initial 
registration. For the first year of the registration program, this 
amount will constitute $22.00 of the total fee. Thus, a larger or 
smaller number of applicants would not result in any significant 
increase or decrease in the registration fee.
    During the implementation of the DCDCA, DEA will focus on 
processing applications, conducting pre-registration and follow-up 
investigations and the creation and dissemination of information 
regarding the registrant's responsibilities under the DCDCA. DEA 
expects that the majority of its chemical control resources will be 
required to handle the applications which will be submitted immediately 
following implementation of the regulations.
    Once the pre-registration process for existing businesses has been 
handled, the primary focus of DEA's chemical control program will be 
investigations of violative firms and registration denial or revocation 
proceedings. Such enforcement activities protect the integrity of the 
registration system by ensuring that registrants continue to meet the 
requirements of the DCDCA. DEA's activities will include, but not be 
limited to, extensive investigation and collection of documentation 
regarding violative practices by registrants; attorney review and 
preparation by DEA's Office of Chief Counsel; staff and attorney time 
to prepare for proceedings to deny or revoke a registration; 
Administrative Law Judge and staff to conduct registration denial 
hearings; and DEA budget and controller staff time for budget planning, 
accounting and auditing of fees collected. The benefits of these 
activities accrue to the over-all registrant population and the costs 
for such activities must be averaged across the entire registrant 
population. However, as described earlier, the expected registrant 
population and the extent of these enforcement activities are 
speculative at this time. Therefore, the costs associated with these 
activities have not been included in this initial fee, since they are 
indirect costs that would have to be averaged across a presently 
unknown population of applicants.
    After the registration process is completed and the registrant 
population and extent of activities necessary to protect the integrity 
of the system has been determined, DEA will revise its fee schedule to 
recover the full costs of its chemical control program, as required by 
Circular A-25. DEA will publish in the Federal Register its revised fee 
schedule and invite comment by interested parties.
    In light of the above, the initial registration fee will be based 
upon the cost of processing the individual application, the associated 
investigation of the qualifications and suitability for registration, 
and the creation and dissemination of information regarding the 
responsibilities under the DCDCA. Reregistration fees under this 
proposal will include enforcement and compliance costs associated with 
maintenance of the integrity of the registration and control system. 
These fees will not include enforcement costs of reviews of records and 
reports of fully complaint registrants exclusively to identify leads to 
possible illicit drug laboratories.

The Initial Registration Investigation

    The fundamental purpose of the pre-registration investigation is to 
determine the fitness and suitability of the applicant to engage in the 
activities for which registration is requested and to ensure that the 
applicant is familiar with its responsibilities to prevent the 
diversion of regulated products or chemicals. This will be accomplished 
through an on-site visit to the applicant (following receipt and 
processing of the application for registration by clerical personnel) 
by DEA Diversion Investigators. During this on-site visit, the 
applicant's responsibilities with respect to security, record-keeping 
and reporting will be discussed; the applicant's existing provisions 
for security, record-keeping and reporting, if any, will be reviewed, 
along with previous sales and customers; and the applicant will be 
provided with material, such as the Chemical Handlers Manual, regarding 
chemical trafficking and controls. In addition, the investigator will 
perform background checks on the applicant, owner and employees, and 
prepare the necessary reports summarizing the results of the 
registration review.
    Retail distributors engage in a limited activity as regulated by 
the DCDCA. By contrast, non-retail chemical firms may deal in a range 
of List I chemicals, in bulk lots or, pursuant to orders received by 
mail, telephone, facsimile or other electronic means. Consequently, the 
average pre-registration investigation for a retail distributor will 
entail less DEA investigative time than for a non-retail chemical firm.

Method for Collection of Fees

    For the initial registration fee, DEA has established separate 
costs for processing the application, and for conducting the pre-
registrant investigation. Both costs will be incurred by the applicant 
prior to their initial registration under the DCDCA.
    As noted above, DEA anticipates receiving 1500 applications from 
non-retail chemical firms and approximately 10,000 applications from 
retail distributors. DEA will place priority on the completion of the 
pre-registration investigations of non-retail chemical firms. All non-
retail applications will be processed and reviewed within the first 
year of the effective date of this regulation. Therefore, the full fee 
(application and pre-registration investigation costs) must be 
submitted with the application.
    Because of the demands for resources to conduct registration 
reviews of non-retail applications and for other chemical control 
activities, DEA will be unable to process and review all of the 
applications submitted by retail distributors within the first year 
following the effective date of the final rule. As a consequence, 
retail distributors will be subject to a split fee schedule for their 
initial registration. Each retail distributor will include with their 
application the established fee to cover the costs of processing the 
application.
    Based on available resources, DEA will identify and notify 
approximately 1500-2000 of the retail applicants that they are 
scheduled for pre-registration review in the first year. Each applicant 
so identified will be required to pay the additional established cost 
for the registration investigation prior to commencement of the review. 
Based upon the volume of applications received, DEA may conduct 
additional retail registration investigations in the first year. In the 
second year, DEA will redirect resources spent conducting non-retail 
pre-registration investigations to the retail level. DEA anticipates an 
additional 6,000 to 8,000 pre-registrant investigations to be conducted 
in the second year. These retail distributors will similarly be 
notified of the investigation fee to be paid. They will not be required 
to submit another application fee. However, if a retail distributor 
fails to submit the required investigation fee within 30 days after 
notification by DEA, that retail distributor's application will be 
withdrawn.

Reregistration Fees

    Following the completion of the initial registration process, DEA 
will dedicate ongoing resources to insuring the controls of the DCDCA 
are being maintained, protecting the integrity of the system, and 
providing assistance, guidance, and interpretation of the chemical 
control requirements to the registrants. These costs, along with 
application processing costs will establish the basis for the annual 
reregistration fee. Since many of these costs will be averaged across 
the registrant population, it is only possible to establish a 
reregistration fee at this time based upon estimated populations. After 
the full second year of the regulations implementing the DCDCA, the fee 
schedule will be reviewed, as required by Circular A-25, and a new fee 
structure proposed for public comment, based upon the actual registrant 
population.
    As stated above, DEA will complete the registration process for all 
non-retail applicants in the first year. Investigative resources 
devoted to these pre-registration investigations (approximately 12 
workyears) will be directed towards completion of the pre-registration 
process of retail distributor applicants in the second year. At the 
non-retail level, DEA will dedicate eight workyears of investigator 
time to conduct follow-up investigations of approximately 75 non-retail 
firms. Each investigation will require a comprehensive review of each 
registrant's records, reporting systems and security provisions to 
ensure that the registrant is complying with the chemical control 
requirements, and chemicals are not being distributed to persons 
seeking to divert them. Investigators will conduct a comprehensive on-
site review of the registrant's records; verification of transactions 
and purchasers, including record checks of and visits to purchasers; 
travel; and report preparation. This cost, plus the reregistration 
processing fee and the above listed indirect costs averaged over the 
estimated 1500 non-retail registrants will constitute the non-retail 
reregistration fee.
    At the retail level, due to the large volume of firms and the 
general lack of experience in the required record-keeping and reporting 
requirements, DEA will conduct a greater number of follow-up 
investigations. However, in light of the anticipated smaller volumes of 
regulated transactions of such firms, each follow-up is scheduled for a 
smaller amount of on-site time. DEA anticipates that two Diversion 
Investigator workyears will be required to conduct follow-up 
investigations at the retail level. This cost, plus the reregistration 
processing fee and above listed indirect costs averaged over the 
estimated 2000 retail distributors registered in the first year will 
constitute the reregistration fee.
    As DEA completes the second year of the chemical registration 
program, the bulk of the retail distributor new applications will have 
been processed, thus freeing the resources assigned to conduct the 
registration investigations. In the following years, there will be a 
greater number of registrants submitting applications for 
reregistration. DEA will dedicate proportionally greater resources to 
these registrants. As noted earlier, following the initial two years of 
the registration program, DEA will conduct a review of the fee 
structure and, as needed, publish a notice in the Federal Register 
regarding amendment of the fee schedule.

Registration Costs.

    The costs associated with the registration process are as follows. 
DEA estimates that 1,500 non-retail applications and approximately 
10,000 retail applications will be received. As previously stated, the 
personnel costs listed below include all direct and indirect costs, 
including salaries, fringe benefits (such as life and health insurance 
and retirement) and travel; physical overhead, including material and 
supply costs such as forms, postage, equipment, rent and utilities:

                Costs for Processing an Application and Issuing a Retail Distributor Registration               
                                                                                                                
                                                                                                                
                         Cost for processing a retail distributor application                                   
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Clerical Time\1\...  .25 hours................................................  $6.52                           
Material Costs:\2\                                                                                              
    Application      .........................................................  0.22                            
     Form.                                                                                                      
    Postage........  .........................................................  0.39                            
    Chemical         .........................................................  0.30                            
     Handlers                                                                                                   
     Manual.                                                                                                    
                                                                               ------------------------         
                                                                                                                
      Total          .........................................................  7.43                            
       Application                                                                                              
       Processing                                                                                               
       Cost.                                                                                                    
----------------------------------------------------------------------------------------------------------------
                   Cost for registration review for a retail distributor applicant                              
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Direct Costs:                                                                                                   
    Investigator     5.5 hours................................................  219.56                          
     Time\3\.                                                                                                   
    Clerical         .25 hours................................................  6.52                            
     Time\4\.                                                                                                   
    Material Costs:                                                                                             
        Registratio  .........................................................  0.10                            
         n                                                                                                      
         Certificat                                                                                             
         e.                                                                                                     
        Postage....  .........................................................  0.29                            
                                                                               ------------------------         
          Total      .........................................................  226.47                          
           Direct                                                                                               
           Costs.                                                                                               
Indirect Costs:                                                                                                 
    Management/Supe  .........................................................  5.58                            
     rvisory                                                                                                    
     Time\5\.                                                                                                   
    Regulatory/Poli  .........................................................  1.93                            
     cy                                                                                                         
     Development\6\.                                                                                            
    Applicant/Regis  .........................................................  14.49                           
     trant                                                                                                      
     Support\7\.                                                                                                
                                                                               ------------------------         
      Total          .........................................................  22.00                           
       Indirect                                                                                                 
       Costs.                                                                                                   
                                                                               ========================         
      Total Direct   .........................................................  248.47                          
       and Indirect                                                                                             
       Costs.                                                                                                   
Notes Regarding the Costs Associated With Issuance of a Retail Distributor Registration                         
                                                                                                                
\1\Clerical time includes the time required for preparing and mailing out application packages, time for        
  processing applications received, including computer data entry, encoding the application form, filing, and   
  transmitting a copy of the application to the appropriate DEA field office for the registration review        
  process.                                                                                                      
\2\The printing cost for application forms of the same format as will be used for chemical registration is      
  $4,500 for 20,000 forms or 22.5 cents per form. The cost for the last printing of the Chemical Handlers Manual
  was $2,250 for 7,500 copies, or 30 cents per copy.                                                            
\3\The Investigator time to conduct the registration review consists of:                                        
                                                                                                                
2 hours time at the applicant's place of business to review with the applicant the chemical registration and    
  control regulations; review the applicant's existing recordkeeping, reporting and security systems; and       
  discuss customer and trafficking patterns.                                                                    
.75 hours to conduct the necessary background and record checks of the applicant, owner and employees.          
.75 hours to prepare the reports regarding the results of the registration review.                              
                                                                                                                
\4\The clerical time spent during the registration review includes the time necessary to approve the            
  registration, initiate issuance of the registration certificate, and file copies of the report and            
  application.                                                                                                  
\5\Management/Supervisory time is that time spent by management and supervisory personnel in the overall        
  development and maintenance of the registration program, including establishment of program priorities and    
  policy, resource allocation, and administrative direction. The following positions are involved:              
Deputy Assistant Administrator and Deputy Director of the Office of Diversion Control--.05 work year each--     
  $14,619.                                                                                                      
Chief and Deputy Chief Chemical Operations Section--.1 work year each--$27,651.                                 
Chief, Liaison and Policy Section--.1 work year--$11,853.                                                       
Chief, Policy Unit--.1 work year--$10,045.                                                                      
Total--$64,168.                                                                                                 
Because the Management/Supervisory costs are related to the general operation of the registration program, they 
  must be averaged across the entire applicant population. For 11,500 applicants, the average cost would be     
  $5.58.                                                                                                        
\6\Regulatory and policy development time consists of .25 work year of a program analyst time for drafting new/ 
  amended regulations and Federal Register notices, issuance of policy statements and directives related to the 
  registration program and responding to registrant queries regarding registration matters. This time is for    
  general chemical registration program purposes and must be spread equally across the applicant population. The
  cost of that time, $22,202, divided by 11,500 applicants equals $1.93.                                        
\7\Applicant/Registrant support time will consist of 2 work years of Diversion Investigator time, which will be 
  dedicated to providing technical assistance, advice and informational materials to the industry to assist in  
  complying with the registration, recordkeeping and reporting requirements. The total cost for 2 work years of 
  Diversion Investigator time is $166,616, divided by 11,500 applicants equals $14.49.                          


                    Costs for Processing an Application and Issuing a Non-Retail Registration                   
                                                                                                                
                                                                                                                
Direct Costs:                                                                                                   
    Clerical Time\1\........................................................  .5 hour..............       $13.05
    Material Costs:\2\                                                                                          
        Application Form....................................................  .....................         0.22
        Postage.............................................................  .....................         0.39
        Chemical Handlers Manual............................................  .....................         0.30
        Registration Certificate............................................  .....................         0.10
        Postage.............................................................  .....................         0.29
    Investigator Time\3\....................................................  14 hours.............       558.88
                                                                                                    ------------
      Total Direct Costs....................................................  .....................       573.23
Indirect Costs                                                                                                  
    Management/Supervisory Time\4\..........................................  .....................         5.58
    Regulatory/Policy Development\5\........................................  .....................         1.93
    Applicant/Registrant Support\6\.........................................  .....................        14.49
                                                                                                    ------------
      Total Indirect Costs..................................................  .....................        22.00
                                                                                                    ============
      Total Direct and Indirect Costs.......................................  .....................       595.23
----------------------------------------------------------------------------------------------------------------
Notes Regarding the Costs Associated With Issuance of a Non-Retail Registration                                 
                                                                                                                
\1\Clerical time includes the time required for preparing and mailing out application packages, time for        
  processing applications received, including computer data entry, encoding the application form, filing, and   
  transmitting a copy of the application to the appropriate DEA field office for the registration review        
  process. Following the registration review, time is required to approve the registration, initiate issuance of
  the registration certificate, and file copies of the report and application.                                  
\2\The printing cost for application forms of the same format as will be used for chemical registration is      
  $4,500 for 20,000 forms or 22.5 cents per form. The cost for the last printing of the Chemical Handlers Manual
  was $2,250 for 7,500 copies, or 30 cents per copy.                                                            
\3\The investigator time to conduct the registration review consists of:                                        
10 hours, 5 hours time each for two investigators, at the applicants place of business to review with the       
  applicant the chemical registration and control regulations; review the applicant's existing recordkeeping,   
  reporting and security systems; and discuss customer and trafficking patterns.                                
2 hours for travel to and from the applicant's location.                                                        
1 hour to conduct the necessary background and record checks of the applicant, owner and employees.             
1 hour to prepare the reports regarding the results of the registration review.                                 
\4\Management/Supervisory time is that time spent by management and supervisory personnel in the overall        
  development and maintenance of the registration program, including establishment of program priorities and    
  policy, resource allocation, and administrative direction. The following positions are involved:              
Deputy Assistant Administrator and Deputy Director of the Office of Diversion Control--.05 work year each--     
  $14.619.                                                                                                      
Chief and Deputy Chief Chemical Operations Section--.1 work year each--$27,651.                                 
Chief, Liaison and Policy Section--.1 work year--$11,853.                                                       
Chief, Policy Unit--.1 work year--$10,045.                                                                      
Total Costs--$64,168.                                                                                           
Because the Management/Supervisory costs are related to the general operation of the registration program, they 
  must be averaged across the entire applicant population. For 11,500 applicants, the average cost would be     
  $5.58.                                                                                                        
\5\Regulatory and policy development time consists of .25 work year of a program analyst time for drafting new/ 
  amended regulations and Federal Register notices, issuance of policy statements and directives related to the 
  registration program and responding to registrant queries regarding registration matters. This time is for    
  general chemical registration program purposes and must be spread equally across the applicant population. The
  cost of that time, $22,202, divided by 11,500 applicants equals $1.93.                                        
\6\Applicant/Registrant Support time will consist of 2 work years of Diversion Investigator time, which will be 
  dedicated to providing technical assistance, advice and informational materials to the industry to assist in  
  complying with the registration, recordkeeping and reporting requirements. The total cost for 2 work years of 
  Diversion Investigator time is $166,616, divided by 11,500 applicants equals $14.49.                          


                            Costs for Processing a Retail Reregistration Application                            
                                                                                                                
                                                                                                                
Direct Costs:                                                                                                   
    Clerical         .25 hours................................................  $6.52                           
     Time\1\.                                                                                                   
    Material                                                                                                    
     Costs:\2\                                                                                                  
        Forms......  .........................................................  .45                             
        Postage....  .........................................................  .68                             
                                                                               ------------------------         
          Total      .........................................................  7.65                            
           Direct                                                                                               
           Costs.                                                                                               
Indirect Costs:                                                                                                 
    Management/Supe  .........................................................  18.33                           
     rvisory                                                                                                    
     Time\3\.                                                                                                   
    Regulatory/Poli  .........................................................  6.34                            
     cy                                                                                                         
     Development\4\.                                                                                            
    Follow-up        .........................................................  83.30                           
     Investigation                                                                                              
     Time\5\.                                                                                                   
                                                                               ------------------------         
      Total          .........................................................  107.97                          
       Indirect                                                                                                 
       Costs.                                                                                                   
                                                                               ========================         
      Total Direct   .........................................................  115.62                          
       and Indirect                                                                                             
       Costs.                                                                                                   
Notes Regarding the Costs Associated With a Retail Distributor Reregistration                                   
                                                                                                                
\1\Clerical time includes the time required for preparing and mailing out application packages, time for        
  processing applications received, including computer data entry, encoding the application form, filing, and   
  preparing the fee for deposit.                                                                                
\2\The forms cost covers both the reregistration application form and the registration certificate. Postage is  
  for mailing the reregistration application and the registration certificate.                                  
\3\ Management/Supervisory time is that time spent by management and supervisory personnel in the overall       
  development and maintenance of the registration program, including establishment of program priorities and    
  policy, resource allocation, and administrative direction. The following positions are involved:              
Deputy Assistant Administrator and Deputy Director of the Office of Diversion Control--.05 work year each--     
  $14,619.                                                                                                      
Chief and Deputy Chief Chemical Operations Section--.1 work year each--$27,651.                                 
Chief, Liaison and Policy Section--.1 work year--$11,853.                                                       
Chief, Policy Unit--.1 work year--$10,045.                                                                      
Total Costs--$64,168.                                                                                           
Because the Management/Supervisory costs are related to the general operation of the registration program, they 
  must be averaged across the entire reregistration applicant populations. For the initial reregistration year, 
  DEA anticipates receiving 3,500 retail and non-retail reregistration applications. The average cost per       
  application would be $18.33.                                                                                  
\4\Regulatory and policy development time consists of .25 work year of a program analyst time for drafting new/ 
  amended regulations and Federal Register notices, issuance of policy statements and directives related to the 
  registration program and responding to registrant queries regarding registration matters. This time is for    
  general chemical registration program purposes and must be spread equally across the reregistration applicant 
  population. The cost of that time, $22,202, divided by 3,500 applicants equals $6.34.                         
\5\DEA will conduct follow-up investigations of retail registrants to ensure that they are complying with the   
  chemical control requirements. The investigations will consist of a comprehensive review of each registrant's 
  records, reporting systems and security provisions. Each investigation will require on-site record reviews;   
  transaction follow-ups, including purchaser verification and record checks; travel; and report preparation.   
  Based on present estimates, DEA anticipates that all such investigations combined will require 2 work years of
  Diversion Investigator time. The total cost for 2 work years of Diversion Investigator time is $166,616,      
  divided by 2,000 retail reregistration applicants equals $83.30.                                              


                          Costs for Processing a Non-Retail Reregistration Application                          
                                                                                                                
                                                                                                                
Direct Costs:                                                                                                   
    Clerical         .25 hours................................................  $6.52                           
     Time\1\.                                                                                                   
    Material                                                                                                    
     Costs\2\                                                                                                   
        Forms......  .........................................................  .45                             
        Postage....  .........................................................  .68                             
                                                                               ------------------------         
          Total      .........................................................  7.65                            
           Direct                                                                                               
           Costs.                                                                                               
Indirect Costs                                                                                                  
    Management/Supe  .........................................................  18.33                           
     rvisory                                                                                                    
     Time\3\.                                                                                                   
    Regulatory/Poli  .........................................................  6.34                            
     cy                                                                                                         
     Development\4\.                                                                                            
    Follow-up        .........................................................  444.31                          
     Investigation                                                                                              
     Time\5\.                                                                                                   
                                                                               ------------------------         
      Total          .........................................................  468.98                          
       Indirect                                                                                                 
       Costs.                                                                                                   
                                                                               ========================         
      Total Direct   .........................................................  476.63                          
       and Indirect                                                                                             
       Costs.                                                                                                   
Notes Regarding the Costs Associated With a Non-Retail Registration                                             
                                                                                                                
\1\Clerical time includes the time required for preparing and mailing out application packages, time for        
  processing applications received, including computer data entry, encoding the application form, filing, and   
  preparing the fee for deposit.                                                                                
\2\The forms cost covers both the reregistration application form and the registration certificate. Postage is  
  for mailing the reregistration application and the registration certificate.                                  
\3\Management/Supervisory time is that time spent by management and supervisory personnel in the overall        
  development and maintenance of the registration program including establishment of program priorities and     
  policy, resource allocation, and administrative direction. The following positions are involved:              
Deputy Assistant Administrator and Deputy Director of the Office of Diversion Control--.05 work year each--     
  $14,619.                                                                                                      
Chief and Deputy Chief Chemical Operations Section--.1 work year each--$27,651.                                 
Chief, Liaison and Policy Section--.1 work year--$11,853                                                        
Chief, Policy Unit--.1 work year--$10,045.                                                                      
Total Costs--$64,168.                                                                                           
Because the Management/Supervisory costs are related to the general operation of the registration program, they 
  must be averaged across the entire reregistration applicant population. For the initial renewal year, DEA     
  anticipates receiving 3,500 retail and non-retail reregistration applications. The average cost per applicant 
  would be $18.33.                                                                                              
\4\Regulatory and policy development time consists of .25 work year of a program analyst time for drafting new/ 
  amended regulations and Federal Register notices, issuance of policy statements and directives related to the 
  registration program and responding to registrant queries regarding registration matters. This time is for    
  general chemical registration program purposes and must be spread equally across the reregistration applicant 
  population. The cost of that time, $22,202, divided by 3,500 reregistration applicants, 3,500, equals $6.34.  
\5\DEA will conduct follow-up investigations of approximately 75 non-retail registrants to ensure that          
  registrants are complying with the chemical control requirements and that chemicals are not being distributed 
  to persons which wishing to divert them. The investigations will consist of a comprehensive review of each    
  registrant's records, reporting systems and security provisions. Each investigation will require comprehensive
  on-site review of the registrant's records; verification of transactions and purchasers, including record     
  checks of and visits to purchasers; travel; and report preparation. Based on current estimates, DEA           
  anticipates that all such follow-up investigations combined will require 8 workyears of Diversion Investigator
  time. The total cost for 8 workyears of Diversion Investigator time is $666,464, divided by 1,500 non-retail  
  reregistration applicants equals $444.31.                                                                     

V. Regulatory Flexibility and Small Business Impact

    DEA has examined the impact of the DCDCA and this proposed rule in 
the light of Executive Order 12866 and the Regulatory Flexibility Act 
(PL 96-354). DEA has identified approximately 1,500 firms or persons, 
other than retail distributors, who handle List I chemicals. These non-
retail chemical firms are generally known to DEA because most have been 
subject to the recordkeeping and reporting requirements of the CDTA for 
a number of years. Independent retail distributors, however, are 
primarily small business entities.
    DEA has found that in addition to the traditional sources of 
distribution (i.e., hospitals, pharmacies, pharmaceutical manufacturers 
and distributors, etc.), independently owned and operated retail 
outlets such as convenience stores, liquor stores, truck stops, gas 
stations, and nutrition centers engage in sales to the public of the 
single entity drug products that are not regulated. Based on 
information received from various distributors, the potential affected 
population of retail outlets that handled the single entity drug 
products prior to the April 1994 effective date of the DCDCA, could be 
as high as 100,000. How many of these will choose to continue their 
sales of the single entity drug products and be subject to the 
registration, recordkeeping and reporting requirements is unclear, due 
to such factors as: (1) The introduction of state laws making drug 
products containing ephedrine prescription drugs, (2) the availability 
of alternative products which are not subject to the chemical 
regulations at this time, and (3) the intent of the DCDCA to eliminate 
sales by those persons who have been supplying clandestine 
laboratories.
    The DCDCA requires that any person wishing to distribute, import, 
or export a List I chemical must obtain a registration from DEA for 
each location at which such activities are carried out, prior to 
conducting such activities. The statutory basis for this requirement is 
found in Sections 822 and 957 of the CSA, as amended by the DCDCA. 
Therefore, a separate registration must be issued for each location 
pursuant to the factors regarding the public interest set forth in 
Section 823(h) of the CSA. Prior to taking final action on an 
application, DEA will conduct an on-site investigation at each location 
for which registration is requested. The guidelines set forth in the 
Office of management and Budget (OMB) Circular A-25 require that the 
costs of the registration process must be recovered through application 
fees charged to the applicants. As noted in the fee analysis, the 
preregistration investigation for retail distributor applicants will be 
less intensive than the investigation for other chemical applicants, 
due to the limited scope and volume of a retail distributor's chemical 
activities. As a result, the retail distributor's fees will be 
significantly less than those for non-retail chemical applicants. In 
addition to the cost of registration and reregistration, it is 
estimated that applicants would be required to expend one-half hour per 
year completing the appropriate application for registration or 
reregistration.
    In reviewing the implementation of the registration requirement, 
DEA gave consideration to the specific purposes for requiring 
registration and the nature of the problem of diversion of List I 
chemicals and made the following determinations:
    1. DEA will not require that persons already registered to engage 
in certain activities with controlled substances obtain a separate 
registration for similar activities with FDA approved drug products 
which are regulated as List I chemicals. A principal reason for 
requiring registration is to allow DEA to determine the fitness of the 
applicant to conduct a specified activity and to allow DEA, if 
circumstances require, to prohibit the applicant from engaging in the 
activity. Persons required to register with DEA to engage in activities 
with controlled substances are subject to Federal and State 
investigations of their fitness which exceed the requirements for 
registration for List I chemical activities. Further, the proposed 
regulation allows that DEA may remove any person's exemption from the 
registration requirement and may, if appropriate, take action against 
the person's controlled substance registration, if the person engages 
in activities in violation of the chemical laws and regulations. 
Accordingly, DEA is proposing in Sec. 1309.25 to exempt persons 
registered with DEA to handle controlled substances from the 
requirement to obtain a separate chemical registration for certain 
similar activities with the regulated FDA approved drug products. The 
exemption could potentially exempt over 70,000 hospitals, pharmacies, 
distributors, manufacturers, importers, and exporters of controlled 
substances who are currently registered with DEA to handle controlled 
substances.
    2. DEA will not require persons who manufacture a List I chemical 
solely for internal use, with no subsequent distribution or exportation 
of the chemical, to obtain a chemical registration. DEA has found that 
such persons have not been a source of any significant diversion of 
List I chemicals; the primary sources of diversion are through the 
distribution channels which deal directly with the public. If these 
manufacturers should later become a source of diversion, the exemption 
can be removed. DEA is proposing in Section 1309.27 that such 
manufacturers be exempted from the chemical registration requirement.
    DEA has also determined that the requirement that manufacturers of 
listed chemicals report to DEA annually can be limited without 
compromising the intent of the requirement. DEA's primary interest in 
this area is determining the total quantity of each individual listed 
chemical that is available on the domestic market. Therefore, DEA 
proposes that only bulk manufacturers of the chemicals need report to 
DEA; other manufacturers, such as repacker/relabelers, dosage form, 
etc., do not need to report.
    DEA has also considered the impact on small businesses of the 
application of the existing chemical recordkeeping and reporting 
requirements to those drug products containing ephedrine which are now 
regulated as List I chemicals. The recordkeeping and reporting 
provisions of the CDTA, as set forth in section 830 of the CSA and 
parts 1310 and 1313 of title 21 of the Code of Federal Regulations, 
have been in place since 1989 and form the backbone of DEA's chemical 
control program. The requirements were developed jointly with the 
chemical industry to provide the necessary information to track 
chemical transfers while minimizing the recordkeeping and reporting 
burden on the chemical industry. A retail distributor must keep records 
that reflect the name and address of the purchaser, the date of the 
transaction, the type of chemical and amount being transferred, and the 
form of identification provided by the purchaser. The requirement to 
make reports is limited to those transactions that are unusual or 
suspicious and to thefts or losses of listed chemicals. It is estimated 
that creating and storing a record will require an average of one 
minute per record. These recordkeeping procedures are accepted practice 
in the conduct of legitimate chemical commerce in the years they have 
been in effect.
    DEA is obligated to implement the mandate of Congress as set out in 
the DCDCA. The DCDCA states that persons who wish to manufacture, 
distribute, import or export List I chemicals must register with DEA. 
Further, the DCDCA makes drug products containing ephedrine as the sole 
medicinal ingredient subject to such registration, as well as to the 
existing chemical recordkeeping and reporting requirements. 
Consideration was given to exempting retail distributors from the 
registration, recordkeeping and reporting requirements. However, such 
an action would negate the purpose of the DCDCA by leaving a 
significant portion of the sales of regulated ephedrine products 
unregulated. Controlling the diversion of these products requires 
monitoring and recordkeeping by all portions of the industry. DEA has 
proposed steps to lessen the impact on retail distributors of the 
DCDCA's requirements, while simultaneously carrying out the chemical 
control mandate of the DCDCA.
    In addition to these proposed regulations to implement the DCDCA, 
DEA has published two other notices that should be given consideration 
by parties concerned with the DCDCA. The first, published on March 17, 
1994 (59 FR 12562), proposes removal of the established threshold for 
ephedrine to reduce the diversion of ephedrine to clandestine 
laboratories for the illicit manufacture of methamphetamine and 
methcathinone. The second, published on March 24, 1994 (59 FR 13881), 
establishes a temporary exemption from the registration requirements 
for persons who manufacture, distribute, import or export List I 
chemicals.
    This notice proposes two new information collections: The DEA 510 
and 510a application forms for registration and reregistration, and the 
reports required from certain manufacturers of listed chemicals. DEA is 
submitting a request to the Office of Management and Budget for review 
and approval of these new collections pursuant to the provisions of the 
Paperwork Reduction Act of 1980, 44 U.S.C. et seq.
    This regulation has been drafted and reviewed in accordance with 
Executive Order 12866, section 1(b), Principals of Regulation. The DEA 
has determined that this rule is a significant regulatory action under 
Executive Order 12866, section 3(f), Regulatory Planning and Review, 
and accordingly this rule has been reviewed by the Office of Management 
and Budget.
    This action has been analyzed in accordance with the principles and 
criteria in Executive Order 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

21 CFR Part 1307

    Drug traffic control.

21 CFR Part 1309

    Administrative practice and procedure, Drug traffic control, List I 
and List II chemicals, Security measures.

21 CFR Part 1310

    Drug traffic control, List I and List II chemicals, Reporting and 
recordkeeping requirements.

21 CFR Part 1313

    Drug traffic control, Exports, Imports, List I and List II 
chemicals, Transshipment and in-transit shipments.

21 CFR Part 1316

    Administrative practice and procedure, Drug traffic control, 
Research, Seizures and forfeitures.

    I. For the reasons set out above, it is proposed that 21 CFR part 
1307 be amended as follows:

PART 1307--[AMENDED]

    1. The authority citation for part 1307 continues to read as 
follows:

    Authority: 21 U.S.C. 821, 822(d), 871(b), unless otherwise 
noted.

    2. Section 1307.03 is proposed to be amended by revising the 
introductory language to read as follows:


Sec. 1307.03  Exceptions to regulations.

    Any person may apply for an exception to the application of any 
provision of parts 1301-1313, or 1316 of this chapter by filing a 
written request stating the reasons for such exception. Requests shall 
be filed with the Administrator, Drug Enforcement Administration, 
Department of Justice, Washington, DC 20537. The Administrator may 
grant an exception in his discretion, but in no case shall he be 
required to grant an exception to any person which is not otherwise 
required by law or the regulations cited in this section.
    II. 21 CFR part 1309 is proposed to be added to read as follows:

PART 1309--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, IMPORTERS 
AND EXPORTERS OF LIST I CHEMICALS

General Information

Sec.
1309.01  Scope of part 1309.
1309.02  Definitions.
1309.03  Information; special instructions.

Fees for Registration and Reregistration

1309.11  Fee Amounts.
1309.12  Time and Method of Payment; refund.

Requirements for Registration

1309.21  Persons required to register.
1309.22  Separate registration for independent activities.
1309.23  Separate registration for separate locations.
1309.24  Exemption of agents and employees.
1309.25  Exemption of certain controlled substance registrants.
1309.26  Exemption of law enforcement officials.
1309.27  Exemption of certain manufacturers.

Applications for Registration

1309.31  Time for application for registration; expiration date.
1309.32  Application forms; contents, signature.
1309.33  Filing of application; joint filings.
1309.34  Acceptance for filing; defective applications.
1309.35  Additional information.
1309.36  Amendments to and withdrawals of applications.

Action on Applications for Registration: Revocation or Suspension of 
Registration

1309.41  Administrative review generally.
1309.42  Certificate of registration; denial of registration.
1309.43  Suspension or revocation of registration.
1309.44  Suspension of registration pending final order.
1309.45  Extension of registration pending final order.
1309.46  Order to show cause.

Hearings

1309.51  Hearings generally.
1309.52  Purpose of hearing.
1309.53  Waiver or modification of rules.
1309.54  Request for hearing or appearance; waiver.
1309.55  Burden of proof.
1309.56  Time and place of hearing.
1309.57  Final order.

Modification, Transfer and Termination of Registration

1309.61  Modification in registration.
1309.62  Termination of registration.
1309.63  Transfer of registration.

Security Requirements

1309.71  General security requirements.
1309.72  Felony conviction; employer responsibilities.
1309.73  Employee responsibility to report diversion.

    Authority: 21 U.S.C. 821, 822, 823, 824, 830, 871(b), 875, 877, 
958.

General Information


Sec. 1309.01  Scope of part 1309.

    Procedures governing the registration of manufacturers, 
distributors, importers and exporters of List I chemicals pursuant to 
sections 102, 302, 303, 1007 and 1008 of the Act (21 U.S.C. 802, 822, 
823, 957 and 958) are set forth generally by those sections and 
specifically by the sections of this part.


Sec. 1309.02  Definitions.

    (a) The Term Act means the Controlled Substances Act (84 Stat. 
1242; 21 U.S.C. 801) and/or the Controlled Substances Import and Export 
Act (84 Stat. 1285; 21 U.S.C. 951).
    (b) The term hearing means any hearing held pursuant to the part 
for the granting, denial, revocation, or suspension of a registration 
pursuant to sections 303 and 304 of the Act (21 U.S.C. 823-824).
    (c) The term person includes any individual, corporation, 
government or governmental subdivision or agency, business trust, 
partnership, association, or other legal entity.
    (d) The terms register and registration refer only to registration 
required and permitted by sections 302 and 1007 of the Act (21 U.S.C. 
822 and 957).
    (f) The term registrant means any person who is registered pursuant 
to either section 303 or section 1008 of the Act (21 U.S.C. 823 and 
958).
    (g) The term retail distributor means a distributor whose List I 
chemical activities are restricted to the sale of drug products that 
are regulated as List I chemicals pursuant to Sec. 1310.01(f)(1)(iv), 
directly to walk-in customers for personal use.
    Any term not defined in this section shall have the definition set 
forth in section 102 of the Act (21 U.S.C. 802) or in Secs. 1310.01 and 
1313.02 of this chapter.


Sec. 1309.03  Information; special instructions.

    Information regarding procedures under these rules and instructions 
supplementing these rules will be furnished upon request by writing to 
the Drug Enforcement Administration, Chemical Operations Section, 
Office of Diversion Control, Washington, DC 20537.

Fees for Registration and Reregistration


Sec. 1309.11  Fee amounts.

    (a) For each initial registration to manufacture for distribution, 
distribute, import, or export the applicant shall pay a fee of $595 for 
an annual registration.
    (b) For each reregistration to manufacture for distribution, 
distribute, import, or export, the registrant shall pay a fee of $477 
for an annual registration.
    (c) For each initial registration to conduct business as a retail 
distributor the applicant shall pay an application processing fee of $7 
and an investigation fee of $248, for an annual registration.
    (d) For each reregistration to conduct business as a retail 
distributor the registrant shall pay a fee of $116.


Sec. 1309.12  Time and method of payment; refund.

    (a) For each application for registration or reregistration to 
manufacture for distribution, distribute, import, or export the 
applicant shall pay the fee when the application for registration or 
reregistration is submitted for filing.
    (b) For retail distributor initial applications, the applicant 
shall pay the application processing fee when the application for 
registration is submitted for filing. The investigation fee shall be 
paid within 30 days after DEA notifies the applicant that the 
preregistration investigation has been scheduled.
    (c) For retail distributor reregistration applications, the 
registrant shall pay the fee when the application for reregistration is 
submitted for filing.
    (d) Payments should be made in the form of a personal, certified, 
or cashier's check or money order made payable to ``Drug Enforcement 
Administration.'' Payments made in the form of stamps, foreign 
currency, or third party endorsed checks will not be accepted. These 
application fees are not refundable.

Requirements for Registration


Sec. 1309.21  Persons required to register.

    (a) Every person who distributes, imports, or exports any List I 
chemical, other than those List I chemicals contained in a product 
exempted under Sec. 1310.01(f)(1)(iv) of this chapter, or who proposes 
to engage in the distribution, importation, or exportation of any List 
I chemical, shall obtain annually a registration specific to the List I 
chemicals to be handled, unless exempted by law or pursuant to 
Secs. 1309.24-1309.27. Only persons actually engaged in such activities 
are required to obtain a registration; related or affiliated persons 
who are not engaged in such activities are not required to be 
registered. (For example, a stockholder or parent corporation of a 
corporation distributing List I chemicals is not required to obtain a 
registration.)
    (b) Every person who distributes or exports a List I chemical they 
have manufactured, other than a List I chemical contained in a product 
exempted under Sec. 1310.01(f)(1)(iv) of this chapter, or proposes to 
distribute or export a List I chemical they have manufactured, shall 
obtain annually a registration specific to the List I chemicals to be 
handled, unless exempted by law or pursuant to Secs. 1309.24-1309.27.


Sec. 1309.22  Separate registration for independent activities.

    (a) The following groups of activities are deemed to be independent 
of each other:
    (1) Retail distributing of List I chemicals;
    (2) Non-Retail distributing of List I chemicals;
    (3) Importing List I chemicals; and
    (4) Exporting List I chemicals.
    (b) Every person who engages in more than one group of independent 
activities shall obtain a separate registration for each group of 
activities, unless otherwise exempted by the Act or Secs. 1309.24-
1309.26, except that a person registered to import any List I chemical 
shall be authorized to distribute that List I chemical, but no other 
chemical that the person is not registered to import.


Sec. 1309.23  Separate registration for separate locations.

    (a) A separate registration is required for each principal place of 
business at one general physical location where List I chemicals are 
distributed, imported, or exported by a person.
    (b) The following locations shall be deemed to be places not 
subject to the registration requirement:
    (1) A warehouse where List I chemicals are stored by or on behalf 
of a registered person, unless such chemicals are distributed directly 
from such warehouse to locations other than the registered location 
from which the chemicals were originally delivered; and
    (2) An office used by agents of a registrant where sales of List I 
chemicals are solicited, made, or supervised but which neither contains 
such chemicals (other than chemicals for display purposes) nor serves 
as a distribution point for filling sales orders.


Sec. 1309.24  Exemption of agents and employees.

    The requirement of registration is waived for any agent or employee 
of a person who is registered to engage in any group of independent 
activities, if such agent or employee is acting in the usual course of 
his or her business or employment.


Sec. 1309.25  Exemption of certain controlled substance registrants.

    (a) The requirement of registration is waived for any person who 
distributes a product containing a List I chemical that is regulated 
pursuant to Sec. 1310.01(f)(1)(iv) of this chapter, if that person is 
registered with the Administration to manufacture, distribute or 
dispense a controlled substance.
    (b) The requirement of registration is waived for any person who 
imports or exports a product containing a List I chemical that is 
regulated pursuant to Sec. 1310.01(f)(1)(iv) of this chapter, if that 
person is registered with the Administration to engage in the same 
activity with a controlled substance.
    (c) The Administrator may, upon finding that continuation of the 
waiver would not be in the public interest, suspend or revoke a 
person's waiver pursuant to the procedures set forth in Secs. 1309.43-
1309.46 and 1309.51-1309.57. In considering the revocation or 
suspension of a person's waiver, the Administrator shall also consider 
whether action to revoke or suspend the person's controlled substance 
registration pursuant to 21 U.S.C. 824 is warranted.
    (d) Any person exempted from the registration requirement under 
this section shall comply with the security requirements set forth in 
Sec. 1309.71-1309.73 and the recordkeeping and reporting requirements 
set forth under parts 1310 and 1313 of this chapter.


Sec. 1309.26  Exemption of law enforcement officials.

    (a) The requirement of registration is waived for the following 
persons in the circumstances described in this section:
    (1) Any officer or employee of the Administration, any officer of 
the U.S. Customs Service, any officer or employee of the United States 
Food and Drug Administration, any other Federal officer who is lawfully 
engaged in the enforcement of any Federal law relating to listed 
chemicals, controlled substances, drugs or customs, and is duly 
authorized to possess and distribute List I chemicals in the course of 
official duties; and
    (2) Any officer or employee of any State, or any political 
subdivision or agency thereof, who is engaged in the enforcement of any 
State or local law relating to listed chemicals and controlled 
substances and is duly authorized to possess and distribute List I 
chemicals in the course of his official duties.
    (b) Any official exempted by this section may, when acting in the 
course of official duties, possess any List I chemical and distribute 
any such chemical to any other official who is also exempted by this 
section and acting in the course of official duties.


Sec. 1309.27  Exemption of certain manufacturers.

    The requirement of registration is waived for any manufacturer of a 
List I chemical, if that chemical is produced solely for internal 
consumption by the manufacturer and there is no subsequent distribution 
or exportation of the List I chemical.

Application for Registration


Sec. 1309.31  Time for application for registration; expiration date.

    (a) Any person who is required to be registered and who is not so 
registered may apply for registration at any time. No person required 
to be registered shall engage in any activity for which registration is 
required until the application for registration is approved and a 
Certificate of Registration is issued by the Administrator to such 
person.
    (b) Any person who is registered may apply to be reregistered not 
more than 60 days before the expiration date of his registration.
    (c) At the time a person is first registered, that person shall be 
assigned to one of twelve groups, which shall correspond to the months 
of the year. The expiration date of the registrations of all 
registrants within any group will be the last day of the month 
designated for that group. In assigning any of the above persons to a 
group, the Administration may select a group the expiration date of 
which is less than one year from the date such business activity was 
registered. If the person is assigned to a group which has an 
expiration date less than eleven months from the date of which the 
person is registered, the registration shall not expire until one year 
from that expiration date; in all other cases, the registration shall 
expire on the expiration date following the date on which the person is 
registered.


Sec. 1309.32  Application forms; contents; signature.

    (a) Any person who is required to be registered pursuant to 
Sec. 1309.21 and is not so registered, shall apply on DEA Form 510.
    (b) Any person who is registered pursuant to Sec. 1309.21, shall 
apply for reregistration on DEA Form 510a.
    (c) DEA Form 510 may be obtained at any divisional office of the 
Administration or by writing to the Registration Unit, Drug Enforcement 
Administration, Department of Justice, Post Office Box 28083, Central 
Station, Washington, DC 20005. DEA Form 510a will be mailed to each 
List I chemical registrant approximately 60 days before the expiration 
date of his or her registration; if any registered person does not 
receive such forms within 45 days before the expiration date of the 
registration, notice must be promptly given of such fact and DEA Form 
510a must be requested by writing to the Registration Unit of the 
Administration at the foregoing address.
    (d) Each application for registration shall include the 
Administration Chemical Code Number, as set forth in Sec. 1310.02 of 
this chapter, for each List I chemical to be distributed, imported, or 
exported.
    (e) Registration shall not entitle a person to engage in any 
activity with any List I chemical not specified in his or her 
application.
    (f) Each application shall include all information called for in 
the form, unless the item is not applicable, in which case this fact 
shall be indicated.
    (g) Each application, attachment, or other document filed as part 
of an application, shall be signed by the applicant, if an individual; 
by a partner of the applicant, if a partnership; or by an officer of 
the applicant, if a corporation, corporate division, association, trust 
or other entity. An applicant may authorize one or more individuals, 
who would not otherwise be authorized to do so, to sign applications 
for the applicant by filing with the application or other document a 
power or attorney for each such individual. The power of attorney shall 
be signed by a person whose is authorized to sign applications under 
this paragraph and shall contain the signature of the individual being 
authorized to sign the application or other document. The power of 
attorney shall be valid until revoked by the applicant.


Sec. 1309.33  Filing of application; joint filings.

    (a) All applications for registration shall be submitted for filing 
to the Registration Unit, Drug Enforcement Administration, Chemical 
Registration/ODC, Post Office Box 2427, Arlington, Virginia 22202-2427. 
The appropriate registration fee and any required attachments must 
accompany the application.
    (b) Any person required to obtain more than one registration may 
submit all applications in one package. Each application must be 
complete and must not refer to any accompanying application for 
required information.


Sec. 1309.34  Acceptance for filing; defective applications.

    (a) Applications submitted for filing are dated upon receipt. If 
found to be complete, the application will be accepted for filing. 
Applications failing to comply with the requirements of this part will 
not generally be accepted for filing. In the case of minor defects as 
to completeness, the Administrator may accept the application for 
filing with a request to the applicant for additional information. A 
defective application will be returned to the applicant within 10 days 
of receipt with a statement of the reason for not accepting the 
application for filing. A defective application may be corrected and 
resubmitted for filing at any time.
    (b) Accepting an application for filing does not preclude any 
subsequent request for additional information pursuant to Sec. 1309.35 
and has no bearing on whether the application will be granted.


Sec. 1309.35  Additional information.

    The Administrator may require an applicant to submit such documents 
or written statements of fact relevant to the application as he deems 
necessary to determine whether the application should be granted. The 
failure of the applicant to provide such documents or statements within 
a reasonable time after being requested to do so shall be deemed to be 
a waiver by the applicant of an opportunity to present such documents 
or facts for consideration by the Administrator in granting or denying 
the application.


Sec. 1309.36  Amendments to and withdrawals of applications.

    (a) An application may be amended or withdrawn without permission 
of the Administrator at any time before the date on which the applicant 
receives an order to show cause pursuant to Sec. 1309.46. An 
application may be amended or withdrawn with permission of the 
Administrator at any time where good cause is shown by the applicant or 
where the amendment or withdrawal is in the public interest.
    (b) After an application has been accepted for filing, the request 
by the applicant that it be returned or the failure of the applicant to 
respond to official correspondence regarding the application, including 
a request that the applicant submit the required fee, when sent by 
registered or certified mail, return receipt requested, shall be deemed 
to be a withdrawal of the application.

Action of Applications for Registration: Revocation or Suspension of 
Registration


Sec. 1309.41  Administrative review generally.

    The Administrator may inspect, or cause to be inspected, the 
establishment of an applicant or registrant, pursuant to subpart A of 
part 1316 of this chapter. The Administrator shall review the 
application for registration and other information gathered by the 
Administrator regarding an applicant in order to determine whether the 
applicable standards of section 303 of the Act (21 U.S.C. 823) have 
been met by the applicant.


Sec. 1309.42  Certificate of registration; denial of registration.

    (a) The Administrator shall issue a Certificate of Registration 
(DEA Form 511) to an applicant if the issuance of registration or 
reregistration is required under the applicable provisions of section 
303 of the Act (21 U.S.C. 823). In the event that the issuance of 
registration or reregistration is not required, the Administrator shall 
deny the application. Before denying any application, the Administrator 
shall issue an order to show cause pursuant to Sec. 1309.46 and, if 
requested by the applicant, shall hold a hearing on the application 
pursuant to Sec. 1309.51.
    (b) The Certificate of Registration (DEA Form 511) shall contain 
the name, address, and registration number of the registrant, the 
activity authorized by the registration, the amount of fee paid, and 
the expiration date of the registration. The registrant shall maintain 
the certificate of registration at the registered location in a readily 
retrievable manner and shall permit inspection of the certificate by 
any official, agent or employee of the Administration or of any 
Federal, State, or local agency engaged in enforcement of laws relating 
to List I chemicals or controlled substances.


Sec. 1309.43  Suspension or revocation of registration.

    (a) The Administrator may suspend any registration pursuant to 
section 304(a) of the Act (21 U.S.C. 824(a)) for any period of time he 
determines.
    (b) The Administrator may revoke any registration pursuant to 
section 304(a) of the Act (21 U.S.C. 824(a)).
    (c) Before revoking or suspending any registration, the 
Administrator shall issue an order to show cause pursuant to 
Sec. 1309.46 and, if requested by the registrant, shall hold a hearing 
pursuant to Sec. 1309.51. Notwithstanding the requirements of this 
Section, however, the Administrator may suspend any registration 
pending a final order pursuant to Sec. 1309.44.
    (d) Upon service of the order of the Administrator suspending or 
revoking registration, the registrant shall immediately deliver his or 
her Certificate of Registration to the nearest office of the 
Administration.


Sec. 1309.44  Suspension of registration pending final order.

    (a) The Administrator may suspend any registration simultaneously 
with or at any time subsequent to the service upon the registrant of an 
order to show cause why such registration should not be revoked or 
suspended, in any case where he finds that there is an imminent danger 
to the public health or safety. If the Administrator so suspends, he 
shall serve with the order to show cause pursuant to Sec. 1309.46 an 
order of immediate suspension that shall contain a statement of his 
findings regarding the danger to public health or safety.
    (b) Upon service of the order of immediate suspension, the 
registrant shall promptly return his Certificate of Registration to the 
nearest office of the Administration.
    (c) Any suspension shall continue in effect until the conclusion of 
all proceedings upon the revocation or suspension, including any 
judicial review thereof, unless sooner withdrawn by the Administrator 
or dissolved by a court of competent jurisdiction. Any registrant whose 
registration is suspended under this section may request a hearing on 
the revocation or suspension of his registration at a time earlier than 
specified in the order to show cause pursuant to Sec. 1309.46, which 
request shall be granted by the Administrator, who shall fix a date for 
such hearing as early as reasonably possible.


Sec. 1309.45  Extension of registration pending final order.

    In the event that an applicant for reregistration (who is doing 
business under a registration previously granted and not revoked or 
suspended) has applied for reregistration at least 45 days before the 
date on which the existing registration is due to expire, and the 
Administrator has issued no order on the application on the date on 
which the existing registration is due to expire, the existing 
registration of the applicant shall automatically be extended and 
continue in effect until the date on which the Administrator so issues 
his order. The Administrator may extend any other existing registration 
under the circumstances contemplated in this section even though the 
registrant failed to apply for reregistration at least 45 days before 
expiration of the existing registration, with or without request by the 
registrant, if the Administrator finds that such extension is not 
inconsistent with the public health and safety.


Sec. 1309.46  Order to show cause.

    (a) If, upon examination of the application for registration from 
any applicant and other information gathered by the Administration 
regarding the applicant, the Administrator is unable to make the 
determinations required by the applicable provisions of section 303 of 
the Act (21 U.S.C. 823) to register the applicant, the Administrator 
shall serve upon the applicant an order to show cause why the 
application for registration should not be denied.
    (b) If, upon information gathered by the Administration regarding 
any registrant, the Administrator determines that the registration of 
such registrant is subject to suspension or revocation pursuant to 
section 304 of the Act (21 U.S.C. 824), the Administrator shall serve 
upon the registrant an order to show cause why the registration should 
not be revoked or suspended.
    (c) The order to show cause shall call upon the applicant or 
registrant to appear before the Administrator at a time and place 
stated in the order, which shall not be less than 30 days after the 
date of receipt of the order. The order to show cause shall also 
contain a statement of the legal basis for such hearing and for the 
denial, revocation, or suspension of registration and a summary of the 
matters of fact and law asserted.
    (d) Upon receipt of an order to show cause, the applicant or 
registrant must, if he desires a hearing, file a request for a hearing 
pursuant to Sec. 1309.54. If a hearing is requested, the Administrator 
shall hold a hearing at the time and place stated in the order, 
pursuant to Sec. 1309.51.
    (e) When authorized by the Administrator, any agent of the 
Administration may serve the order to show cause.

Hearings


Sec. 1309.51  Hearings generally.

    (a) In any case where the Administrator shall hold a hearing on any 
registration or application therefor, the procedures for such hearing 
shall be governed generally by the adjudication procedures set forth in 
the Administrative Procedure Act (5 U.S.C. 551-559) and specifically by 
sections 303 and 304 of the Act (21 U.S.C. 823-824), by Secs. 1309.51-
1309.57, and by the procedure for administrative hearings under the Act 
set forth in Secs. 1316.41-1316.67 of this chapter.
    (b) Any hearing under this part shall be independent of, and not in 
lieu of, criminal prosecutions or other proceedings under the Act or 
any other law of the United States.


Sec. 1309.52  Purpose of hearing.

    If requested by a person entitled to a hearing, the Administrator 
shall hold a hearing for the purpose of receiving factual evidence 
regarding the issues involved in the denial, revocation, or suspension 
of any registration. Extensive argument should not be offered into 
evidence but rather presented in opening or closing statements of 
counsel or in memoranda or proposed findings of fact and conclusions of 
law.


Sec. 1309.53  Waiver or modification of rules.

    The Administrator or the presiding officer (with respect to matters 
pending before him) may modify or waive any rule in this party by 
notice in advance of the hearing, if he determines that no party in the 
hearing will be unduly prejudiced and the ends of justice will thereby 
be served. Such notice of modification or waiver shall be made a part 
of the record of the hearing.


Sec. 1309.54  Request for hearing or appearance; waiver.

    (a) Any person entitled to a hearing pursuant to Secs. 1309.42 and 
1309.43 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 Section 1316.47 
of this chapter.
    (b) Any person entitled to a hearing pursuant to Secs. 1309.42 and 
1309.43, within the period permitted for filing a request for a 
hearing, file with the Administrator a waiver of an opportunity for 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.
    (c) If any person entitled to a hearing pursuant to Secs. 1309.42 
and 1309.43 fails to file a request for a hearing, or if he so files 
and fails to appear at the hearing, he shall be deemed to have waived 
his opportunity for the hearing, unless he shows good cause for such 
failure.
    (d) If any person entitled to a hearing waives or is deemed to 
waive his or her opportunity for the hearing, the Administrator may 
cancel the hearing, if scheduled, and issue his final order pursuant to 
Sec. 1309.57 without a hearing.


Sec. 1309.55  Burden of proof.

    (a) At any hearing for the denial of a registration, the 
Administrator shall have the burden of proving that the requirements 
for such registration pursuant to section 303 of the Act (21 U.S.C. 
823) are not satisfied.
    (b) At any hearing for the revocation or suspension of a 
registration, the Administrator shall have the burden of proving that 
the requirements for such revocation or suspension pursuant to section 
304(a) of the Act (21 U.S.C. 824(a)) are satisfied.


Sec. 1309.56  Time and place of hearing.

    The hearing will commence at the place and time designated in the 
order to show cause or notice of hearing published in the Federal 
Register (unless expedited pursuant to Sec. 1309.44(c)) but thereafter 
it may be moved to a different place and may be continued from day to 
day or recessed to a later day without notice other than announcement 
thereof by the presiding officer at the hearing.


Sec. 1309.57  Final order.

    As soon as practicable after the presiding officer has certified 
the record to the Administrator, the Administrator shall cause to be 
published in the Federal Register his final order in the proceeding, 
which shall set forth the final rule and the findings of fact and 
conclusions of law upon which the rule is based. This order shall 
specify the date on which it shall take effect, which date shall not be 
less than 30 days from the date of publication in the Federal Register 
unless the Administrator finds that the public interest in the matter 
necessitates an earlier effective date, in which case the Administrator 
shall specify in the order his findings as to the conditions which led 
him to conclude that an earlier effective date was required.

Modification, Transfer and Termination of Registration


Sec. 1309.61  Modification in registration.

    Any registrant may apply to modify his or her registration to 
authorize the handling of additional List I chemicals or to change his 
or her name or address, by submitting a letter of request to the Drug 
Enforcement Administration, Chemical Registration/ODC, Post Office Box 
2427, Arlington, Virginia 22202-2427. The letter shall contain the 
registrant's name, address, and registration number as printed on the 
certificate of registration, and the List I chemicals to be added to 
his registration or the new name or address and shall be signed in 
accordance with Sec. 1309.32(g). No fee shall be required to be paid 
for the modification. The request for modification shall be handled in 
the same manner as an application for registration. If the modification 
in registration is approved, the Administrator shall issue a new 
certificate of registration (DEA Form 511) to the registrant, who shall 
maintain it with the old certificate of registration until expiration.


Sec. 1309.62  Termination of registration.

    The registration of any person shall terminate if and when such 
person dies, ceases legal existence, or discontinues business or 
professional practice. Any registrant who ceases legal existence or 
discontinues business or professional practice shall notify the 
Administrator promptly of such fact.


Sec. 1309.63  Transfer of registration.

    No registration or any authority conferred thereby shall be 
assigned or otherwise transferred except upon such conditions as the 
Administrator may specifically designate and then only pursuant to his 
written consent.

Security Requirements


Sec. 1309.71  General security requirements.

    (a) All applicants and registrants shall provide effective controls 
and procedures to guard against theft and diversion of List I 
chemicals. Specific attention shall be paid to storage of and 
controlling access to List I chemicals as follows:
    (1) Chemicals shall be stored in containers sealed in such a manner 
as to indicate any attempts at tampering with the container. Where 
chemicals cannot be stored in sealed containers, access to the 
chemicals should be controlled through physical means or through human 
or electronic monitoring.
    (2) In retail settings open to the public where drugs containing 
List I chemicals that are regulated pursuant to Sec. 1310.01(f)(1)(iv) 
of this chapter are distributed, such drugs will be stocked behind a 
counter where only employees have access.
    (b) In evaluating the effectiveness of security controls and 
procedures, the Administrator shall consider the following factors:
    (1) The type, form, and quantity of List I chemicals handled;
    (2) The location of the premises and the relationship such location 
bears on the security needs;
    (3) The type of building construction comprising the facility and 
the general characteristics of the building or buildings;
    (4) The availability of electric detection and alarm systems;
    (5) The extent of unsupervised public access to the facility;
    (6) The adequacy of supervision over employees having access to 
List I chemicals;
    (7) The procedures for handling business guests, visitors, 
maintenance personnel, and nonemployee service personnel in areas where 
List I chemicals are processed or stored;
    (8) The adequacy of the registrant's or applicant's systems for 
monitoring the receipt, distribution, and disposition of List I 
chemicals in its operations.
    (c) Any registrant or applicant desiring to determine whether a 
proposed system of security controls and procedures is adequate may 
submit materials and plans regarding the proposed security controls and 
procedures either to the Special Agent in Charge in the region in which 
the security controls and procedures will be used, or to the Chemical 
Operations Section Office of Diversion Control, Drug Enforcement 
Administration, Washington, DC 20537.


Sec. 1309.72  Felony conviction; employer responsibilities.

    (a) The registrant shall not employ, as an agent or employee who 
has access to List I chemicals, any person who has been convicted of a 
felony offense relating to controlled substances or listed chemicals or 
who has, at any time, had an application for registration with the DEA 
denied, had a DEA registration revoked or has surrendered a DEA 
registration for cause. For purposes of this subsection, the term ``for 
cause'' means a surrender in lieu of, or as a consequence of, any 
Federal or State administrative, civil or criminal action resulting 
from an investigation of the individual's handling of controlled 
substances or listed chemicals.
    (b) It is the position of DEA that employees who possess, sell, use 
or divert listed chemicals or controlled substances will subject 
themselves not only to State or Federal prosecution for any illicit 
activity, but shall also immediately become the subject of independent 
action regarding their continued employment. The employer will assess 
the seriousness of the employee's violation, the position of 
responsibility held by the employee, past record of employment, etc., 
in determining whether to suspend, transfer, terminate or take other 
action against the employee.


Sec. 1309.73  Employee responsibility to report diversion.

    Reports of listed chemical diversion by fellow employees is not 
only a necessary part of an overall employee security program but also 
serves the public interest at large. It is, therefore, the position of 
DEA that an employee who has knowledge of diversion from his employer 
by a fellow employee has an obligation to report such information to a 
responsible security official of the employer. The employer shall treat 
such information as confidential and shall take all reasonable steps to 
protect the confidentiality of the information and the identity of the 
employee furnishing information. A failure to report information of 
chemical diversion will be considered in determining the feasibility of 
continuing to allow an employee to work in an area with access to 
chemicals. The employer shall inform all employees concerning this 
policy.

    III. 21 CFR Part 1310 is proposed to be amended as follows:

PART 1310--[AMENDED]

    1. The authority citation for part 1310 continues to read as 
follows:

    Authority: 21 U.S.C. 802, 830, 871(b).

    2. Section 1310.01 is proposed to be amended by revising paragraphs 
(b), (c), (d), (e), (f) and (g), redesignating paragraph (k) as 
paragraph (m) and adding new paragraphs (k) and (l) as follows:


Sec. 1310.01  Definitions.

* * * * *
    (b) The term listed chemical means any List I chemical or List II 
chemical.
    (c) The term List I chemical means a chemical specifically 
designated by the Administrator in Section 1310.02(a) that, in addition 
to legitimate uses, is used in manufacturing a controlled substance in 
violation of the Act and is important to the manufacture of a 
controlled substance.
    (d) The term List II chemical means a chemical, other than a List I 
chemical, specifically designated by the Administrator in 
Sec. 1310.02(b) that, in addition to legitimate uses, is used in 
manufacturing a controlled substance in violation of the Act.
    (e) The term regulated person means any individual, corporation, 
partnership, association, or other legal entity who manufactures, 
distributes, imports, or exports a listed chemical, a tableting 
machine, or an encapsulating machine, or who acts as a broker or trader 
for an international transaction involving a listed chemical, tableting 
machine, or encapsulating machine.
    (f) The term regulated transaction means:
    (1) A distribution, receipt, sale, or importation, or exportation 
of a listed chemical, or an international transaction involving 
shipment of a listed chemical, or if the Administrator establishes a 
threshold amount for a specific listed chemical, a threshold amount as 
determined by the Administrator, which includes a cumulative threshold 
amount for multiple transactions, of a listed chemical, except that 
such term does not include:
    (i) A domestic lawful distribution in the usual course of business 
between agents or employees of a single regulated person; in this 
context, agents or employees means individuals under the direct 
management and control of the regulated person;
    (ii) A delivery of a listed chemical to or by a common or contract 
carrier for carriage in the lawful and usual course of the business of 
the common or contract carrier, or to or by a warehouseman for storage 
in the lawful and usual course of the business of the warehouseman, 
except that if the carriage or storage is in connection with the 
distribution, importation, or exportation of a listed chemical to a 
third person, this paragraph does not relieve a distributor, importer, 
or exporter from compliance with this part or parts 1309 and 1313 of 
this chapter;
    (iii) Any category of transaction or any category of transaction 
for a specific listed chemical or chemicals specified by regulation of 
the Administrator as excluded from this definition as unnecessary for 
enforcement of the Act;
    (iv) Any transaction in a listed chemical that is contained in a 
drug that may be marketed or distributed lawfully in the United States 
under the Federal Food, Drug, and Cosmetic Act unless--
    (A) The drug contain ephedrine or its salts, optical isomers, or 
salts of optical isomers as the only active medicinal ingredient or 
contains ephedrine or its salts, optical isomers or salts of optical 
isomers and therapeutically insignificant quantities of another active 
medicinal ingredient. For purposes of this paragraph, the term 
``therapeutically insignificant quantities'' shall apply if the product 
formulation (i.e., the qualitative and quantitative composition of 
active ingredients within the product) is not listed in any of the 
following compendiums:
    (1) American Pharmaceutical Association (APhA) Handbook of 
Nonprescription Drugs;
    (2) Drug Facts and Comparisons (published by Wolters Kluwer 
Company); or
    (3) USP DI (published by authority of the United States 
Pharmacopeial Convention, Inc.);
    (4) Or the product is not listed in Sec. 1310.15 as an exempt drug 
product. For drug products having formulations not found in the above 
compendiums, the Administrator shall determine, pursuant to a written 
request as specified in Sec. 1310.14, whether the active medicinal 
ingredients are present in quantities considered therapeutically 
significant for purposes of this paragraph.
    (B) The Administrator has determined that the drug or group of 
drugs is being diverted to obtain the listed chemical for use in the 
illicit production of a controlled substance; and
    (C) The quantity of ephedrine or other listed chemical contained in 
the drug included in the transaction or multiple transaction equals or 
exceeds the threshold established for that chemical by the 
Administrator; or
    (v) Any transaction in a chemical mixture listed in Sec. 1310.13.
    (g) The term chemical mixture means a combination of two or more 
chemical substances, at least one of which is not a listed chemical, 
except that such term does not include any combination of a listed 
chemical with another chemical that is present solely as an impurity or 
which has been created to evade the requirements of the act.
* * * * *
    (k) The terms broker and trader mean any individual, corporation, 
corporate division, partnership, association, or other legal entity 
which assists in arranging an international transaction in a listed 
chemical by--
    (1) Negotiating contracts;
    (2) Serving as an agent or intermediary; or
    (3) Bringing together a buyer and seller, a buyer and transporter, 
or a seller and transporter.
    (l) The term international transaction means a transaction 
involving the shipment of a listed chemical across an international 
border (other than a United States border) in which a broker or trader 
located in the United States participates.
* * * * *
    3. Section 1310.02 is proposed to be amended by revising paragraphs 
(a) and (b) to read as follows:


Sec. 1310.02  Substances covered.

    The following chemicals have been specifically designated by the 
Administrator of the Drug Enforcement Administration as the listed 
chemicals subject to the provisions of this part and parts 1309 and 
1313 of this chapter. Each chemical has been assigned the DEA Chemical 
Code Number set forth opposite it.

    (a) List I chemicals:

(1) Anthranilic acid, its esters, and its salts
 8530
(2) Benzyl cyanide
 8570
(3) Ephedrine, its salts, optical isomers, and salts of optical isomers
 8113
(4) Ergonovine and its salts
 8675
(5) Ergotamine and its salts
 8676
(6) N-Acetylanthranilic acid, its esters, and its salts
 8522
(7) Norpseudoephedrine, its salts, optical isomers, and salts of 
optical isomers
 8317
(8) Phenylacetic acid, its esters, and its salts
 8791
(9) Phenylpropanolamine, its salts, optical isomers, and salts of 
optical isomers
 1225
(10) Piperidine and its salts
 2704
(11) Pseudoephedrine, its salts, optical isomers, and salts of optical 
isomers
 8112
(12) 3,4-Methylenedioxyphenyl-2-propanone
 8502
(13) Methylamine and its salts
 8520
(14) Ethylamine and its salts
 8678
(15) Propionic anhydride
 8328
(16) Insosafrole (Isosafrole)
 8704
(17) Safrole
 8323
(18) Piperonal
 8750
(19) N-Methylephedrine, its salts, optical isomers, and salts of 
optical isomers (N-Methylephedrine)
 8115
(20) N-Methylpseudoephedrine, its salts, optical isomers, and salts of 
optical isomers
 8119
(21) Hydriotic acid (Hydriodic Acid)
 6695
(22) Benzaldehyde
 8256
(23) Nitroethane
 6724

    (b) List II Chemicals:

(1) Acetic anhydride
 8519
(2) Acetone
 6532
(3) Benzyl chloride
 8568
(4) Ethyl ether
 6584
(5) Potassium permanganate
 6579
(6) 2-Butanone (or Methyl Ethyl Ketone or MEK)
 6714
(7) Toluene
 6594
(8) Hydrochloric acid
 6545
(9) Sulfuric acid
 6552

* * * * *
    4. Section 1310.03 is proposed to be amended by redesignating the 
introductory text as paragraph (a) and adding a new paragraph (b) as 
follows:


Sec. 1310.03  Persons required to keep records and file reports.

    (a) * * *
    (b) Each regulated person who manufactures a listed chemical shall 
file reports regarding such manufacture as specified by Sec. 1310.05. 
However, a manufacturer of a drug product that is exempted under 
Sec. 1310.01(f)(1)(iv) shall not be required to file reports regarding 
such manufacture.

    5. Section 1310.04 is proposed to be amended by revising paragraphs 
(a), (b), and (f)(1), introductory text, removing paragraphs 
(f)(1)(xv), (f)(1)(xxi), and (f)(1)(xxiii); redesignating paragraphs 
(f)(1) (xvi) through (xx) as (f)(1) (xv) through (xix), paragraph 
(f)(1) (xxii) as (f)(1) (xx) and paragraph (f)(1) (xxiv) as (f)(1) 
(xxi); and adding new paragraphs (f)(1) (xxii) and (xxiii), revising 
(f)(2), introductory test and (f)(2)(iv) to read as follows:


Sec. 1310.04  Maintenance of records.

    (a) Every record required to be kept subject to Section 1310.03 for 
a List I chemical, a tableting machine, or an encapsulating machine 
shall be kept by the regulated person for four years after the date of 
the transaction.
    (b) Every record required to be kept subject to Section 1310.03 for 
List II chemical shall be kept by the regulated person for two years 
after the date of the transaction.
* * * * *
    (f) * * *
    (1) List I Chemicals:

------------------------------------------------------------------------
                   Chemical                     Threshold by base weight
------------------------------------------------------------------------
(i) ***                                                                 
(xxii) Benzaldehyde...........................  4 kilograms.            
(xxiii) Nitroethane...........................  2.5 kilograms.          
------------------------------------------------------------------------

    (2) List II Chemicals:
    (i) * * *
    (iv) Exports, transshipments and international transactions to 
Designated Countries set forth in Section 1310.08(b).
* * * * *
    6. Section 1310.05 is proposed to be amended by redesignating 
paragraphs (a)(2) through (a)(4) as paragraphs (a)(3) through (a)(5), 
adding a new paragraph (a)(2), revising paragraph (b), and adding a new 
paragraph (d) to read as follows:


Sec. 1310.05  Reports.

    (a) * * *
    (2) Any regulated transaction with a person not registered with DEA 
who is obtaining within a calendar month and quantity of 375 dosage 
units or more of a drug product containing ephedrine, which is 
regulated pursuant to Sec. 1310.01(f)(1)(iv). The requirement to make 
such reports is waived if a pharmacist employed by the regulated person 
consults with the purchaser regarding the appropriate uses and dosing 
of the product for legitimate medical purposes and includes 
documentation of the consultation in the record of the transaction.
* * * * *
    (b) Each report submitted pursuant to paragraphs (a)(1), (a)(3), 
(a)(4), and (a)(5) of this section shall, whenever possible, be made 
orally to the DEA Divisional Office for the area in which the regulated 
person making the report is located at the earliest practicable 
opportunity after the regulated person becomes aware of the 
circumstances involved and as much in advance of the conclusion of the 
transaction as possible. Written reports of transactions listed in 
paragraphs (a)(1), (a)(4) and (a)(5) of this section will subsequently 
be filed as set forth in Sec. 1310.06 within 15 days after the 
regulated person becomes aware of the circumstances of the event. 
Written reports of transactions listed in paragraph (a)(2) of this 
section shall be submitted to the DEA Divisional Office for the area in 
which the regulated person making the report is located within 5 days 
following the end of the calendar month in which the transaction took 
place. A transaction may not be completed with a person who description 
or identifying characteristic has previously been furnished to the 
regulated person by the Administration unless the transaction is 
approved by the Administration.
* * * * *
    (d) Each regulated bulk manufacturer of a listed chemical shall 
submit manufacturing, inventory, transaction and use data on an annual 
basis as set forth in Sec. 1310.06 (h). For purposes of this paragraph 
only, the term bulk manufacturer means a person who produces a listed 
chemical by means of chemical synthesis or by extraction from other 
substances. The term bulk manufacturer does not include persons whose 
sole activity consists of the repackaging or relabeling of listed 
chemical products or the manufacture of drug products containing listed 
chemicals. This data shall be submitted annually to the Drug and 
Chemical Evaluation Section, Drug Enforcement Administration (DEA), 
Washington DC 20537, on or before the 31st day of January of the year 
immediately following the period for which submitted. This reporting 
requirement does not apply to drug products which are exempted under 21 
U.S.c. 802 (39)(A)(iv) except as set forth in Sec. 1310.06 (h)(5). Each 
report shall be submitted on company letterhead and signed by an 
appropriate, responsible official.
    7. Section 1310.06 is amended by revising paragraphs (a), 
introducing text, (a)(1), (c), and (d) and by adding a new paragraph 
(h) to read as follows:


Sec. 1310.06  Content of records and reports.

    (a) Each record required by Sec. 1310.03 shall include the 
following:
    (1) The name, address, and, if required, DEA registration number of 
each party to the regulated transaction.
* * * * *
    (c) Each report required by Sec. 1310.05(a) shall include the 
information as specified by Sec. 1310.06(a) and, where obtainable, the 
registration number of the other party, if such party is registered. A 
report submitted pursuant to Sec. 1310.059a)(1) or (a)(4) must also 
include a description of the circumstances leading the regulated person 
to make the report, such as the reason that the method of payment was 
uncommon or the loss unusual. If the report is for a loss or 
disappearance under Sec. 1310.05(a)(4), the circumstances of such loss 
must be provided (in-transit, theft from premise, etc.)
    (d) A suggested format for the reports is provided below:

Supplier:

Registration Number----------------------------------------------------
Name-------------------------------------------------------------------
Business Address-------------------------------------------------------
City-------------------------------------------------------------------
State------------------------------------------------------------------
Zip--------------------------------------------------------------------
Business Phone---------------------------------------------------------
Purchaser:

Registration Number----------------------------------------------------
Name-------------------------------------------------------------------
Business Address-------------------------------------------------------
City-------------------------------------------------------------------
State------------------------------------------------------------------
Zip--------------------------------------------------------------------
Business Phone---------------------------------------------------------
Identification---------------------------------------------------------

Shipping Address (If different than purchaser Address):

Street-----------------------------------------------------------------
City-------------------------------------------------------------------
State------------------------------------------------------------------
Zip--------------------------------------------------------------------
Date of Shipment-------------------------------------------------------
Name of Listed Chemical(s)---------------------------------------------
Quantity and Form of Packaging-----------------------------------------
Description of Machine:

Make-------------------------------------------------------------------
Model------------------------------------------------------------------
Serial #---------------------------------------------------------------
Method of Transfer-----------------------------------------------------

If Loss or Disappearance:

Date of Loss-----------------------------------------------------------
Type of Loss-----------------------------------------------------------
Description of Circumstances-------------------------------------------
* * * * *
    (h) Each annual report required by Sec. 1310.05 (d) shall provide 
the following information for each listed chemical manufactured:
    (1) The name and address of the listed chemical manufacturer and 
person to contact for information.
    (2) The name and total quantity of the listed chemical manufactured 
during the preceding calendar year.
    (3) The year end inventory of the listed chemical as of the close 
of business on the 31st day of December of the preceding calendar year.
    (4) The total quantity of listed chemical used for internal 
consumption during the preceding calender year and a written 
description of this use.
    (5) The quantity of listed chemical manufactured which has been 
converted to a product exempted under Sec. Sec. 1310.01(f)(1)(iv) or 
1310.01(f)(1)(v) and a written description of the exempt products 
produced.
    (6) The total annual quantity of the listed chemical distributed 
during the preceding calendar year. This data shall include an 
itemization of foreign versus domestic distribution.
    (7) If applicable, the total annual quantity of the listed chemical 
purchased during the preceding calendar year.
    (8) Data shall identify the specific isomer, salt or ester when 
applicable but quantitative data shall be reported as annydrous base or 
acid in kilograms.

    8. Section 1310.07 is proposed to be amended by revising paragraphs 
(a) and (b) to read as follows:


Sec. 1310.07  Proof of identity.

    (a) Each regulated person who engages in a regulated transaction 
must identify the other party to the transaction. For domestic 
transaction, this shall be accomplished by having the other party 
present documents which would verify the identity, or registration 
status if a registrant, of the other party to the regulated person at 
the time the order is placed. For export transactions, this shall be 
accomplished by good faith inquiry through reasonably available 
research documents or publicly available information which would 
indicate the existence of the foreign customer. No proof of identity is 
required for foreign suppliers.
    (b) The regulated person must verify the existence and apparent 
validity of a business entity ordering a listed chemical, tableting 
machine or encapsulating machine. For domestic transactions, this may 
be accomplished by such methods as checking the telephone directory, 
the local credit bureau, the local Chamber of Commerce or the local 
Better Business Bureau, or, it the business entity is a registrant, by 
verification of the registration. For export transactions, a good faith 
inquiry to verify the existence and apparent validity of a foreign 
business entity may be accomplished by such methods as verifying the 
business telephone listing through international telephone information, 
the firm's listing in international or foreign national chemical 
directories or other commerce directories of trade publications, 
confirmation through foreign subsidiaries of the U.S. regulated person, 
verification through the country of destination's embassy Commercial 
Attache, or official documents provided by the purchaser which confirm 
the existence and apparent validity of the business entity.
* * * * *
    9. Section 1310.08 is proposed to be amended by revising paragraph 
(b) to read as follows:


Sec. 1310.08  Excluded transactions.

* * * * *
    (b) Exports, transshipments, and international transactions of 
hydrochloric and sulfuric acids, except for exports, transshipments and 
international transactions to the following countries.
* * * * *
    10. Section 1310.10, 1310.11, 1310.12, 1310.13, 1310.14 and 1310.15 
are proposed to be added to read as follows:


Sec. 1310.10  Removal of the exemption of drugs distributed under the 
Food, Drug and Cosmetic Act.

    (a) The Administrator may remove from exemption under 
Sec. 1310.01(f)(1)(iv) any drug or group of drugs that the 
Administrator finds is being diverted to obtain a listed chemical for 
use in the illicit production of a controlled substance. In removing a 
drug or group of drugs from the exemption the Administrator shall 
consider:
    (1) The scope, duration, and significance of the diversion;
    (2) Whether the drug or group of drugs is formulated in such a way 
that it cannot be easily used in the illicit production of a controlled 
substance; and
    (3) Whether the listed chemical can be readily recovered from the 
drug or group of drugs.
    (b) Upon determining that a drug or group of drugs should be 
removed from the exemption under paragraph (a) of this section, the 
Administrator shall issue and publish in the Federal Register his 
proposal to remove the drug or group of drugs from exemption, which 
shall include a reference to the legal authority under which the 
proposal is based. The Administrator shall permit any interested person 
to file written comments on or objections to the proposal. After 
considering any comments or objections filed, the Administrator shall 
publish in the Federal Register his final order.
    (c) The Administrator shall limit the removal of a drug or group of 
drugs from exemption under paragraph (a) of this section to the most 
identifiable type of the drug or group of drugs for which evidence of 
diversion exists unless there is evidence, based on the pattern of 
diversion and other relevant factors, that the diversion will not be 
limited to that particular drug or group of drugs.
    (d) Any manufacturer seeking reinstatement of a particular drug 
product that has been removed from an exemption under paragraph (a) of 
this section, may apply to the Administrator for reinstatement of the 
exemption for that particular drug product on the grounds that the 
particular drug product is manufactured and distributed in a manner 
that prevents diversion. In determining whether the exemption should be 
reinstated the Administrator shall consider:
    (1) The package sizes manner of packaging of the drug product;
    (2) The manner of distribution and advertising of the drug product;
    (3) Evidence of diversion of the drug product;
    (4) Any actions taken by the manufacturer to prevent diversion of 
the drug product; and
    (5) Such other factors as are relevant to and consistent with the 
public health and safety, including the factors described in paragraph 
(a) of this section as applied to the drug product.
    (e) Within a reasonable period of time after receipt of the 
application for reinstatement of the exemption, The Administrator shall 
notify the applicant of his acceptance or non-acceptance of his 
application, and if not accepted, the reason therefor. If the 
application is accepted for filing, the Administrator shall issue and 
publish in the Federal Register his order on the reinstatement of the 
exemption for the particular drug product, which shall include a 
reference to the legal authority under which the order is based. This 
order shall specify the date on which it shall take effect. The 
Administrator shall permit any interested person to file written 
comments on or objections to the order. If any such comments raise 
significant issues regarding any finding of fact or conclusion of law 
upon which the order is based, the Administrator shall immediately 
suspend the effectiveness of the order until he may reconsider the 
application in light of the comments and objections filed. Thereafter, 
the Administrator shall reinstate, revoke, or amend his original order 
as he determines appropriate.
    (f) Unless the Administrator has evidence that the drug product is 
being diverted, as determined by applying the factors set forth in 
paragraph (a) of this section, and the Administrator so notifies the 
applicant, transactions involving a specific drug product will not be 
considered regulated transactions during the following periods:
    (1) While a bonafide application for reinstatement of exemption 
under paragraph (d) of this section for the specific drug product is 
pending resolution, provided that the application for reinstatement is 
filed not later than 60 days after the publication of the final order 
removing the exemption; and
    (2) For a period of 60 days following the Administrator's denial of 
an application for reinstatement.
    (g) An order published by the Administrator in the Federal Register 
pursuant to paragraph (e) of this section to reinstate an exemption may 
be modified or revoked with respect to a particular drug product upon a 
finding that:
    (1) Applying the factors set forth in paragraph (a) to the 
particular drug product, the drug product is being diverted; or
    (2) There is a significant change in the data that led to the 
issuance of the final rule.


Sec. 1310.11  Reinstatement of exemption for drug products distributed 
under the Food, Drug and Cosmetic Act.

    (a) The Administrator has reinstated the exemption for the drug 
products listed in paragraph (e) of this section from application of 
sections 302, 303, 310, 1007, and 1008 of the Act (21 U.S.C. 822-823, 
830, and 957-958 to the extent described in paragraphs (b), (c), and 
(d) of this section.
    (b) Records and reports: All regulated persons who manufacture an 
exempted drug product must keep complete and accurate records and file 
all reports required under Secs. 1310.05 and 1310.06 on all listed 
chemicals used in manufacturing the exempt drug product. Transactions 
involving reinstated exempt drug products contained in paragraph (e) of 
this section are not regulated transactions and thus records and 
reports are not required to be kept for listed chemicals once they 
become part of the reinstated exempt drug product.
    (c) No reinstated exemption granted pursuant to 1310.10 affects the 
criminal liability for illegal possession or distribution of listed 
chemicals contained in the exempt drug product.
    (d) Changes in exempt drug product compositions: Any change in the 
quantitative or qualitative composition, trade name or other 
designation of an exempt drug product listed in paragraph (e) of this 
section requires a new application for reinstatement of the exemption.
    (e) The following drug products, in the form and quantity listed in 
the application submitted (indicated as the ``date'') are designated as 
reinstated exempt drug products for the purposes set forth in this 
section: 

                          Exempt Drug Products                          
------------------------------------------------------------------------
                                                 Product                
                   Supplier                       name     Form    Date 
------------------------------------------------------------------------
[Reserved]                                                              
------------------------------------------------------------------------

Sec. 1310.12  Exemption of chemical mixtures; application.

    (a) The Administrator may, by publication of a Final Rule in the 
Federal Register, exempt from the application of all or any part of the 
Act, a chemical mixture consisting of two or more chemical substances, 
at least one of which is not a List I or List II chemical, if:
    (1) The mixture is formulated in such a way that it cannot be 
easily used in the illicit production of a controlled substance; and
    (2) The listed chemical or chemicals contained in the chemical 
mixture cannot be readily recovered.
    (b) Any person seeking an exemption for a chemical mixture from the 
application of all or any part of the Act, pursuant to paragraph (a) of 
this section, may apply to the Administrator, Drug Enforcement 
Administration, Department of Justice, Washington, DC 20537.
    (c) An application for exemption under this section shall contain 
the following information:
    (1) The name, address, and registration number, if any, of the 
applicant;
    (2) The date of the application;
    (3) The name, address, and registration number, if any, of the 
manufacturer or importer of the chemical mixture, if not the applicant;
    (4) The exact trade name(s) of the applicant's chemical mixture 
and, if the applicant formulates or manufactures the chemical mixture 
for other entities, the exact trade names of the chemical mixtures and 
the names of the entities for which the chemical mixtures were 
prepared;
    (5) The complete qualitative and quantitative composition of the 
chemical mixture (including all listed and non-listed chemicals) and 
its intended use;
    (6) The chemical and physical properties of the mixture and how 
they differ from the properties of the listed chemical or chemicals;
    (7) A statement which the applicant believes is justification for 
granting an exemption for the chemical mixture. The statement must 
explain how the chemical mixture meets the exemption criteria set forth 
in paragraph (a) of this section.
    (8) The identification of any information on the application which 
is considered by the applicant to be a trade secret or confidential and 
entitled to protection under U.S. laws restricting the public 
disclosure of such information.
    (d) The Administrator may require the applicant to submit such 
additional documents or written statements of fact relevant to the 
application which he deems necessary for determining if the application 
should be granted.
    (e) Within a reasonable period of time after the receipt of a 
completed application for an exemption under this section, the 
Administrator shall notify the applicant of acceptance or non-
acceptance of the application. If the application is not accepted, an 
explanation will be provided. The Administrator is not required to 
accept an application if any information required pursuant to paragraph 
(c) of this section or requested pursuant to paragraph (d) of this 
section is lacking or not readily understood. The applicant may, 
however, amend the application to meet the requirements of paragraphs 
(c) and (d) of this section. If the application is accepted for filing, 
the Administrator shall issue and publish in the Federal Register an 
order on the application, which shall include a reference to the legal 
authority under which the order is based. This order shall specify the 
date on which it shall take effect. The Administrator shall permit any 
interested person to file written comments on or objections to the 
order. If any comments or objections raise significant issues regarding 
any findings of fact or law upon which the order is based, the 
Administrator shall immediately suspend the effectiveness of the order 
until he may reconsider the application in light of the comments and 
objections filed. Thereafter, the Administrator shall reinstate, 
revoke, or amend the original order as deemed appropriate.
    (f) The Administrator may at any time revoke or modify any 
exemption granted pursuant to this section by following the procedures 
set forth in paragraph (e) of this section for handling an exemption 
application which has been accepted for filing.


Sec. 1310.13  Exempt chemical mixtures.

    (a) The chemical mixtures listed in paragraph (e) of this section 
have been exempted by the Administrator from application of sections 
302, 303, 310, 1007, and 1008 of the Act (21 U.S.C. 822-3, 830, and 
957-8 to the extent described in paragraphs (b), (c), and (d) of this 
section.
    (b) Records and reports: All regulated persons who manufacture an 
exempt chemical mixture must keep complete and accurate records and 
file all reports required under Secs. 1310.05 and 1310.06 on all listed 
chemicals used in manufacturing the exempt chemical mixture. 
Transactions involving approved exempt chemical mixtures contained in 
paragraph (e) of this section are not regulated transactions and thus 
records and reports are not required to be kept for listed chemicals 
once they become part of an exempt chemical mixture.
    (c) No exemption granted pursuant to Sec. 1310.12 affects the 
criminal liability for illegal possession or distribution of listed 
chemicals contained in the exempt chemical mixture.
    (d) Changes in chemical mixture compositions: Any change in the 
quantitative or qualitative composition, trade name or other 
designation of an exempt chemical mixture listed in paragraph (e) of 
this section requires a new application for exemption.
    (e) The following chemical mixtures, in the form and quantity 
listed in the application submitted (indicated as the ``date'') are 
designated as exempt chemical mixtures for the purposes set forth in 
this section:

                        Exempt Chemical Mixtures                        
------------------------------------------------------------------------
                                                 Product                
                   Supplier                       name     Form    Date 
------------------------------------------------------------------------
[Reserved]                                                              
------------------------------------------------------------------------

Sec. 1310.14  Exemption of drug products containing ephedrine and 
therapeutically significant quantities of another active medicinal 
ingredient.

    (a) Any manufacturer of a drug product containing ephedrine in 
combination with another active medicinal ingredient, the product 
formulation of which is not listed in the compendiums set forth in 
Sec. 1310.01(f)(1)(iv)(A), may request that the Administrator exempt 
the product as one which contains ephedrine together with a 
therapeutically significant quantity of another active medicinal 
ingredient.
    (b) An application for an exemption under this section shall 
contain the following information:
    (1) The name and address of the applicant;
    (2) The exact trade name of the drug product for which exemption is 
sought;
    (3) The complete quantitative and qualitative composition of the 
drug product;
    (4) A brief statement of the facts which the applicant believes 
justify the granting of an exemption under this section; and
    (5) Verification from the Food and Drug Administration that the 
product may be lawfully marketed or distributed under the Food, Drug, 
and Cosmetic Act.
    (6) The identification of any information on the application which 
is considered by the applicant to be a trade secret or confidential and 
entitled to protection under U.S. laws restricting the public 
disclosure of such information by government employees.
    (c) The administrator may require the applicant to submit such 
additional documents or written statements of fact relevant to the 
application which he deems necessary for determining if the application 
should be granted.
    (d) Within a reasonable period of time after the receipt of a 
completed application for an exemption under this section, the 
Administrator shall notify the applicant of acceptance or nonacceptance 
of the application. If the application is not accepted, an explanation 
will be provided. The Administrator is not required to accept an 
application if any of the information required in paragraph (b) of this 
section or requested pursuant to paragraph (c) of this section is 
lacking or not readily understood. The applicant may, however, amend 
the application to meet the requirements of paragraphs (b) and (c) of 
this section. If the application is accepted for filing, the 
Administrator shall issue and publish in the Federal Register an order 
on the application, which shall include a reference to the legal 
authority under which the order is based. This order shall specify the 
date on which it shall take effect. The Administrator shall permit any 
interested person to file written comments on or objections to the 
order. If any comments or objections raise significant issues regarding 
any findings of fact or law upon which the order is based, the 
Administrator shall immediately suspend the effectiveness of the order 
until he may reconsider the application in light of the comments and 
objections filed. Thereafter, the Administrator shall reinstate, 
revoke, or amend the original order as deemed appropriate.


Sec. 1310.15  Exempt drug products containing ephedrine and 
therapeutically significant quantities of another active medicinal 
ingredient.

    (a) The drug products containing ephedrine and therapeutically 
significant quantities of another active medicinal ingredient listed in 
paragraph (e) of this section have been exempted by the Administrator 
from application of sections 302, 303, 310, 1007, and 1008 of the Act 
(21 U.S.C. 822-3, 830, and 957-8) to the extent described in paragraphs 
(b), (c), and (d) of this section.
    (b) Records and reports: All regulated persons who manufacture an 
exempt drug product must keep complete and accurate records and file 
all reports required under Secs. 1310.05 and 1310.06 on all listed 
chemicals used in manufacturing the exempt drug product. Transactions 
involving approved exempt drug products contained in paragraph (e) of 
this section are not regulated transactions and thus records and 
reports are not required to be kept for listed chemicals once they 
become part of an exempt drug product.
    (c) No exemption granted pursuant to Sec. 1310.14 affects the 
criminal liability for illegal possession or distribution of listed 
chemicals contained in the exempt drug product.
    (d) Changes in drug product compositions: Any change in the 
quantitative or qualitative composition of an exempt drug product 
listed in paragraph (e) of this section requires a new application for 
exemption.
    (e) In addition to the drug products listed in the compendium set 
forth in Sec. 1310.01(f)(1)(iv)(A), the following drug products, in the 
form and quantity listed in the application submitted (indicated as the 
``date'') are designated as exempt drug products for the purposes set 
forth in this section:

      Exempt Drug Products Containing Ephedrine and Therapeutically     
      Significant Quantities of Another Active Medicinal Ingredient     
------------------------------------------------------------------------
                                                 Product                
                   Supplier                       name     Form    Date 
------------------------------------------------------------------------
[Reserved]                                                              
------------------------------------------------------------------------

    IV. 21 CFR Part 1313 is proposed to be amended as follows:

PART 1313--[AMENDED]

    1. The authority citation for part 1313 continues to read as 
follows:

    Authority: 21 U.S.C. 802, 830, 871(b), 971.

    2. Section 1313.02 is proposed to be amended by revising paragraphs 
(c), (d), (h) and (i); redesignating paragraph (m) as paragraph (o) and 
adding new paragraphs (m) and (n) to read as follows:


Sec. 1313.02  Definitions.

* * * * *
    (c) The term regulated person means any individual, corporation, 
partnership, association, or other legal entity who manufactures, 
distributes, imports, or exports a listed chemical, a tableting 
machine, or an encapsulating machine, or who acts as a broker or trader 
for an international transaction involving a listed chemical, a 
tableting machine, or an encapsulating machine.
    (d) The term regulated transaction means:
    (1) A distribution, receipt, sale, importation, exportation, or 
international transaction of a listed chemical, or if the Administrator 
establishes a threshold amount for a specific listed chemical, a 
threshold amount as determined by the Administrator, which includes a 
cumulative threshold amount for multiple transactions, of a listed 
chemical, except that such term does not include:
    (i) A domestic lawful distribution in the usual course of business 
between agents or employees of a single regulated person; in this 
context, agents or employees means individuals under the direct 
management and control of the regulated person;
    (ii) A delivery of a listed chemical to or by a common or contract 
carrier for carriage in the lawful and usual course of the business of 
the common or contract carrier, or to or by a warehouseman for storage 
in the lawful and usual course of the business of the warehouseman, 
except that if the carriage or storage is in connection with the 
distribution, importation, or exportation of a listed chemical to a 
third person, this paragraph does not relieve a distributor, importer, 
or exporter from compliance with this part or parts 1309 and 1310 of 
this chapter;
    (iii) Any category of transaction or any category of transaction 
for a specific listed chemical or chemicals specified by regulation of 
the Administrator as excluded from this definition as unnecessary for 
enforcement of the Act;
    (iv) Any transaction in a listed chemical that is contained in a 
drug that may be marketed or distributed lawfully in the United States 
under the Federal Food, Drug, and Cosmetic Act unless--
    (A) The drug contains ephedrine or its salts, optical isomers, or 
salts of optical isomers as the only active medicinal ingredient or 
contains ephedrine or its salts, optical isomers or salts of optical 
isomers and therapeutically insignificant quantities of another active 
medicinal ingredient (for purposes of this paragraph, the term 
``therapeutically insignificant quantities'' shall apply if the product 
formulation (i.e., the qualitative and quantitative composition of 
active ingredients within the product) is not listed in any of the 
following compendiums:
    (1) American Pharmaceutical Association (APhA) Handbook of 
Nonprescription Drugs;
    (2) Drug Facts and Comparisons (published by Wolters Kluwer 
Company); or
    (3) USP DI (published by authority of the United States 
Pharmacopeial Convention, Inc.);
    (4) Or the product is not listed in Sec. 1310.15 as an exempt drug 
product. For drug products having formulations not found in the above 
compendiums, the Administrator shall determine, pursuant to a written 
request as specified in Sec. 1310.14, whether the active medicinal 
ingredients are present in quantities considered therapeutically 
significant for purposes of this paragraph.
    (B) The Administrator has determined that the drug or group of 
drugs is being diverted to obtain the listed chemical for use in the 
illicit production of a controlled substance; and
    (C) The quantity of ephedrine or other listed chemical contained in 
the drug included in the transaction or multiple transactions equals or 
exceeds the threshold established for that chemical by the 
Administrator; or
    (v) Any transaction in a chemical mixture listed in Sec. 1310.13 of 
this chapter.
* * * * *
    (h) The term regular importer means, with respect to a listed 
chemical, a person that has an established record as an importer of 
that listed chemical that is reported to the Administrator.
    (i) The term established record as an importer means that the 
regulated person has imported a listed chemical at least once within 
the past six months, or twice within the past twelve months from a 
foreign supplier. The term also means that the regulated person has 
provided the Administration with the following information in 
accordance with the waiver of the 15-day advance notice requirements of 
Sec. 1313.15:
    (1) The name, DEA registration number (where applicable), street 
address, telephone number, telex number, and, where available, the 
facsimile number of the regulated person and of each foreign supplier; 
and
    (2) The frequency and number of transaction occurring during the 
preceding 12 month period.
* * * * *
    (m) The terms broker and trader means any individual, corporation, 
corporate division, partnership, association, or other legal entity 
which assists in arranging an international transaction in a listed 
chemical by--
    (1) Negotiating contracts;
    (2) Serving as an agent or intermediary; or
    (3) Bringing together a buyer and seller, a buyer and transporter, 
or a seller and transporter.
    (n) The term international transaction means a transaction 
involving the shipment of a listed chemical across an international 
border (other than a United States border) in which a broker or trade 
located in the United States participates.
* * * * *
    3. Section 1313.12 is proposed to be amended by revising paragraph 
(c) and adding new paragraphs (d), (e) and (f) to read as follows:


Sec. 1313.12  Requirement of authorization to import.

* * * * *
    (c) The 15-day advance notification requirement for listed chemical 
imports may be waived for:
    (1) Any regulated person who has satisfied the requirement for 
reporting to the Administration as a regular importer of such listed 
chemicals.
    (2) A specific listed chemical, as set forth in paragraph (f) of 
the section, for which the Administrator determines that advance 
notification is not necessary for effective chemical diversion control.
    (d) For imports where advance notification is waived pursuant to 
paragraph (c)(1) of this section, the DEA Form 486 must be received by 
the Drug Enforcement Administration, Chemical Operations Section, on or 
before the date of importation through use of the mailing address 
listed in Sec. 1313.12(b) or through use of electronic facsimile media.
    (e) For importations where advance notification is waived pursuant 
to paragraph (c)(2) of this section no DEA Form 486 is required, 
however, the regulated person shall file quarterly reports to the Drug 
Enforcement Administration, Chemical Operations Section, P.O. Box 
28346, Washington, DC 20038, by no later than the 15th day of the month 
following the end of each quarter. The report shall contain the 
following information regarding each individual importation:
    (1) The name of the listed chemical;
    (2) The quantity and date imported;
    (3) The name and full business address of the supplier;
    (4) The foreign port of embarkation; and
    (5) The port of entry.
    (f) The 15 day advance notification requirement set forth in 
paragraph (a) of this section has been waived for imports of the 
following listed chemicals:
    (1)-(2) [Reserved]
    4. Section 1313.15 is proposed to be revised to read as follows:


1313.15  Waiver of 15-day advance notice for regular importers.

    (a) Each regulated person seeking designation as a ``regular 
importer'' shall provide, by certified mail return receipt requested, 
to the Administration such information as is required under 
Sec. 1313.02(i), documenting their status as a regular importer.
    (b) Each regulated person making application under paragraph (a) of 
this section shall be considered a ``regular importer'' for purposes of 
waiving the 15-days advance notice, 30 days after receipt of the 
application by the Administration, as indicated on the return receipt, 
unless the regulated person is otherwise notified in writing by the 
Administration.
    (c) The Administrator may, at any time, disqualify a regulated 
person's status as a regular importer on the grounds that the chemical 
being imported may be diverted to the clandestine manufacture of the 
chemical substance.
    (d) Unless the Administration notifies the chemical importer to the 
contrary, the qualification of a regular importer of any one of these 
three chemicals, acetone, 2-Butanone (MEK), or toluene, qualifies that 
importer as a regular importer of all three of these chemicals.
    (e) All chemical importer shall be required to file a DEA Form 486 
as required by Sec. 1313.12.
    5. Section 1313.21 is proposed to be amended by revising paragraph 
(c), revising the text of and redesignating paragraph (d) as paragraph 
(g) and adding new paragraphs (d), (e), (f) to read as follows:


Sec. 1313.21  Requirement of authorization to export.

* * * * *
    (c) The 15-day advance notification requirement for listed chemical 
exports may be waived for:
    (1) any regulated person who has satisfied the requirements of 
Sec. 1313.24 for reporting to the Administration an established 
business relationship with a foreign customer as defined in 
Sec. 1313.02(j).
    (2) A specific listed chemical to a specified country, as set forth 
in paragraph (f) of this section, for which the Administrator 
determines that advance notification is not necessary for effective 
chemical diversion control.
    (d) For exports where advance notification is waived pursuant to 
paragraph (c)(1) of this section, the DEA Form 486 must be received by 
the Drug Enforcement Administration, Chemical Operations Section, on or 
before the date of exportation through use of the mailing address 
listed in Sec. 1313.12(b) or through use of electronic facsimile media.
    (e) For exportations where advance notification is waived pursuant 
to paragraph (c)(2) of this section, the regulated person shall file 
quarterly reports to the Drug Enforcement Administration, Chemical 
Operations Section, PO Box 28346, Washington, DC 20038, by no later 
than the 15th day of the month following the end of the each quarter. 
The report shall contain the following information regarding each 
individual importation:
    (1) The name of the listed chemical;
    (2) The quantity and date exported;
    (3) The name and full business address of the foreign customer;
    (4) The port of embarkation; and
    (5) The foreign port of entry.
    (f) The 15 day advance notification requirement set forth in 
paragraph (a) of this section has been waived for exports of the 
following listed chemicals to the following countries:

------------------------------------------------------------------------
                       Name of Chemical                         Country 
------------------------------------------------------------------------
[Reserved]                                                              
------------------------------------------------------------------------

    (g) No person shall export or cause to be exported any listed 
chemical, knowing or having reasonable cause to believe the export is 
in violation of the laws of the country to which the chemical is 
exported or the chemical will be used to manufacture a controlled 
substance in violation of the Act or the laws of the country to which 
the chemical is exported. The Administration will publish a notice of 
foreign import restrictions for listed chemicals of which DEA has 
knowledge as provided in Sec. 1313.25.
    6. A new undesignated center heading and new Secs. 1313.32, 1313.33 
and 1313.34 are proposed to be added to read as follows:

Transshipments, In-Transit Shipments, and International Transactions 
Involving Listed Chemicals

1313.32  Requirement of Authorization for international 
transactions.
1313.33  Contents of an international transaction declaration.
1313.34  Distribution of the international transaction declaration.

Transshipments, In-Transit Shipments, and International 
Transactions Involving Listed Chemicals


Sec. 1313.32  Requirement of authorization for international 
transactions.

    (a) A broker or trader shall notify the Administrator prior to an 
international transaction involving a listed chemical which meets or 
exceeds the threshold amount identified in Sec. 1310.04 of this 
chapter, in which the broker or trader participates. Notification must 
be made no later than 15 days before the transaction is to take place. 
In order to facilitate an international transaction involving listed 
chemicals and implement the purpose of the Act, regulated persons may 
wish to provide advance notification to the Administration as far in 
advance of the 15 days as possible.
    (b) A completed DEA Form 486 must be received at the following 
address not later than 15 days prior to the international transaction:
    Drug Enforcement Administration, PO Box 28346, Washington, DC 
20038.
    A copy of the DEA Form 486 may be transmitted directly to the Drug 
Enforcement Administration, Chemical Operations Section, through 
electronic facsimile media not later than 15 days prior to the 
exportation.
    (c) No person shall serve as a broker or trader for an 
international transaction involving a listed chemical knowing or having 
reasonable cause to believe that the transaction is in violation of the 
laws of the country to which the chemical is exported or the chemical 
will be used to manufacture a controlled substance in violation of the 
laws of the country to which the chemical is exported. The 
Administration will publish a notice of foreign import restrictions for 
listed chemicals of which DEA has knowledge as provided in 
Sec. 1313.25.


Sec. 1313.33  Contents of an international transaction declaration.

    (a) An international transaction involving a chemical listed in 
Sec. 1310.02 of this chapter which meets the threshold criteria 
established in Sec. 1310.04 of this chapter may be arranged by a broker 
or trader if the chemical is needed for medical, commercial, 
scientific, or other legitimate uses.
    (b) Any broker or trader who desires to arrange an international 
transaction involving a listed chemical which meets the criteria set 
forth in Sec. 1310.04 of this chapter shall notify the Administration 
through the procedures outlined in Sec. 1313.32(b).
    (c) The DEA Form 486 must be executed in triplicate and must 
include all the following information:
    (1) The name, address, telephone number, telex number, and, where 
available, the facsimile number of the chemical exporter; the name, 
address, telephone number, telex number, and, where available, the 
facsimile number of the chemical importer;
    (2) The name and description of each listed chemical as it appears 
on the label or container, the name of each listed chemical as it is 
designated in Sec. 1310.02 of this chapter, the size or weight of 
container, the number of containers, the net weight of each listed 
chemical given in kilograms or parts thereof, and the gross weight of 
the shipment given in kilograms or parts thereof;
    (3) The proposed export date, the port of exportation, and the port 
of importation; and
    (4) The name, address, telephone, telex, and where available, the 
facsimile number, of the consignee in the country where the chemical 
shipment is destined; the name(s) and address(es) of any intermediate 
consignee(s).


Sec. 1313.34  Distribution of the international transaction 
declaration.

    The required three copies of the DEA Form 486 will be distributed 
as follows:
    (a) Copies 1 and 3 shall be retained on file by the broker or 
trader as the official record of the international transaction. 
Declaration forms involving List I chemicals shall be retained for four 
years; declaration forms for List II chemicals shall be retained for 
two years.
    (b) Copy 2 is the Drug Enforcement Administration copy used to 
fulfill the notification requirements of Sec. 1313.32.

    8. In addition to the amendments set forth above, DEA proposes in 
21 CFR part 1313 to remove the words ``Precursors and Essential 
Chemicals'' and ``Precursor and Essential Chemical'' and add, in their 
place, the words ``listed Chemicals'' in the following places:
    (a) The table of contents of part 1313;
    (b) Section 1313.01;
    (c) The center heading after Section 1313.02;
    (d) Section 1313.14;
    (e) The center heading after Section 1313.15;
    (f) Section 1313.23.
    8. In Secs. 1313.13(a) and 1313.22(a) DEA proposes to remove the 
words ``precursor or essential chemical'' and add, in their place, the 
words ``List I or List II chemical''.
    9. In Secs. 1313.14(a) and 1313.23(a) DEA proposes to remove the 
words ``listed precursor chemical'' and ``listed essential chemical'' 
and add, in their place, the words ``List I chemical'' and ``List II 
chemical'' respectively.
    V. 21 CFR part 1316 is proposed to be amended as follows:

PART 1316--[AMENDED]

    1. The authority citation for part 1316, Subpart A is proposed to 
be revised to read as follows:

    Authority: 21 U.S.C. 822(f), 830(a), 871(b), 880, 958(f), 965.

    2. Section 1316.02 is proposed to be amended by revising paragraph 
(c)(2) to read as follows:


Sec. 1316.02  Definitions.

* * * * *
    (c) * * *
    (2) Places, including factories, warehouses, or other 
establishments and conveyances, where persons registered under the Act 
or exempted from registration under the Act, or regulated persons may 
lawfully hold, manufacture, or distribute, dispense, administer, or 
otherwise dispose of controlled substances or listed chemicals or where 
records relating to those activities are maintained.
* * * * *
    3. Section 1316.03 is proposed to be amended by revising paragraphs 
(b), (c), (d) and (e) to read as follows:


Sec. 1316.03  Authority to make inspections.

* * * * *
    (b) Inspecting within reasonable limits and to a reasonable manner 
all pertinent equipment, finished and unfinished controlled substances, 
listed chemicals, and other substances or materials, containers, and 
labeling found at the controlled premises relating to this Act;
    (c) Making a physical inventory of all controlled substances and 
listed chemicals on-hand at the premises;
    (d) Collecting samples of controlled substances or listed chemicals 
(in the event any samples are collected during an inspection, the 
inspector shall issue a receipt for such samples on DEA Form 84 to the 
owner, operator, or agent in charge of the premises);
    (e) Checking of records and information on distribution of 
controlled substances or listed chemicals by the registrant or 
regulated person as they relate to total distribution of the registrant 
or regulated person (i.e., has the distribution of controlled 
substances or listed chemicals increased markedly within the past year, 
and if so why);
* * * * *
    4. Section 1316.09 is proposed to be amended by revising paragraph 
(a)(3) to read as follows:


Sec. 1316.09  Application for administrative inspection warrant.

    (a) * * *
    (3) A statement relating to the nature and extent of the 
administrative inspection, including, where necessary, a request to 
seize specified items and/or to collect samples or finished or 
unfinished controlled substances or listed chemicals;
* * * * *
    Dated: August 30, 1994.
Stephen H. Greene,
Deputy Administrator, Drug Enforcement Administration.
[FR Doc. 94-25071 Filed 10-12-94; 8:45 am]
BILLING CODE 4410-09-M