[Federal Register Volume 60, Number 120 (Thursday, June 22, 1995)]
[Rules and Regulations]
[Pages 32447-32466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14978]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

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

[DEA No. 112F]
RIN 1117-AA23

Implementation of the Domestic Chemical Diversion Control Act of 
1993 (PL 103-200)

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.

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

SUMMARY: This final rule establishes regulations to implement the 
Domestic Chemical Diversion Control Act of 1993 (DCDCA or Act). These 
regulations provide additional safeguards to prevent and detect the 
diversion of listed chemicals by illicit drug manufacturers.

EFFECTIVE DATE: August 21, 1995. Persons seeking registration must 
apply on or before October 5, 1995 in order to continue their business 
pending final action by DEA on their application.

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) 307-7297.

SUPPLEMENTARY INFORMATION: On October 13, 1994, DEA published a notice 
of proposed rulemaking (NPRM) entitled Implementation of the Domestic 
Chemical Diversion Control Act of 1993 (Pub. L. 103-200) in the Federal 
Register (59 FR 51887). The NPRM proposed to amend Title 21, Code of 
Federal Regulations (21 CFR) by adding a new Part 1309, relating to the 
registration of List I chemical manufacturers, distributors, retail 
distributors, importers and exporters; revising Parts 1310 and 1313 to 
amend the recordkeeping and reporting requirements for domestic as well 
as import/export activities; adding new procedures with respect to the 
exemption of regulated chemicals, including chemical mixtures and 
certain drug products that are marketed under the Food, Drug and 
Cosmetic Act; adding new procedures regarding ``brokers'', ``traders'' 
and ``international transactions''; and revising Part 1316 with respect 
of DEA's administrative inspection authority.
    There are two additional notices that DEA has published in the 
Federal Register that relate to these regulations. On March 24, 1994 an 
Interim Rule notice entitled Provisional Exemption From Registration 
for Certain List I Chemical Handlers was published in the Federal 
Register (59 FR 13881). This rule grants a temporary exemption from the 
registration requirements of the DCDCA. The exemption will remain in 
effect for any person who files with DEA a properly completed 
application for registration on or before October 5, 1995, until such a 
time as DEA takes final action on their application.
    DEA published the second notice in the Federal Register on December 
9, 1994, (59 FR 63738) withdrawing, for further study, Sections 
1310.05(d) and 1310.06(h), which relate to manufacturer reports, and 
Sections 1310.12 and 1310.13, which relate to the exemption of chemical 
mixtures. The regulations regarding manufacturer reports and the 
exemption of chemical mixtures will be re-proposed at a later date 
following additional consultations with the affected chemical industry. 
Formal comments that were received in response to the NPRM regarding 
the withdrawn sections will be given consideration in the redrafting of 
a new proposal for these sections.

Regulatory Flexibility and Small Business Impact

    As required under the Regulatory Flexibility Act (5 U.S.C. 601, et 
seq.), DEA addressed in detail regulatory flexibility and small 
business impact as part of the NPRM. The NPRM discussed the difficulty 
in determining with certainty how many persons would continue to handle 
regulated ephedrine drug products, and thus be subject to the 
regulations. This is due to the rapidly changing market affected by 
state laws restricting the availability of ephedrine, the availability 
of alternative products that are not regulated, and the intent of the 
DCDCA to eliminate sales to clandestine laboratories.
    No comments were received on this topic or on DEA's estimate of the 
number of persons that will seek registration to handle regulated 
ephedrine drug products. Since publication of the NPRM, the number of 
states taking restrictive actions has increased. DEA is now aware of 
twelve states that have enacted laws controlling regulated ephedrine 
drug products, eleven by making them either prescription only or a 
controlled substance, and one by setting state licensure and reporting 
requirements. An additional four states have recently introduced 
legislation to control the products, three by making them a controlled 
substance and one by setting age restrictions and requiring reports of 
all transactions. In addition, DEA has documented that several 
wholesalers of regulated ephedrine drug products, the primary source of 
supply for retail distributors, have changed their product line to 
combination products that are not subject to regulation. Finally, 
recent reports that the Food and Drug Administration (FDA) is 
considering moving ephedrine into the prescription drug category may 
further influence persons handling ephedrine drug products. Under the 
circumstances, the number of retail distributor applicants under the 
DCDCA remains uncertain.
    In the NPRM, DEA was able to provide relief from the chemical 
registration requirement for persons handling regulated ephedrine drug 
products who are already registered with DEA to engage in similar 
activities with controlled substances. In addition, manufacturers of 
List I chemicals for internal use, with no subsequent distribution or 
exportation of the chemical, were also exempted from the registration 
requirement. Both of these proposals have been retained in the final 
rule. Consideration was also 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 drug 
products unregulated.
    Following submission and review of the comments concerning the 
proposed regulations, two requirements were identified which DEA 
determined could be removed from the final regulations to reduce the 
impact of compliance without compromising the control goals of the 
DCDCA. The proposals were the reporting requirement for sales of 375 
dosage units or more of regulated ephedrine drug products (proposed 
[[Page 32448]] Section 1310.05(a)(2)) and the restrictions regarding 
employment of certain persons (proposed Section 1309.72). These 
proposals have been removed from this final rule.
    Further, DEA also determined that the proposed regulations 
regarding manufacturer reporting (proposed Sections 1310.05(d) and 
1310.06(h)) and the exemption of chemical mixtures (proposed Sections 
1310.12 and 1310.13) could result in a greater than anticipated burden 
and, possibly, a duplicative reporting requirement, for the industry. 
The requirements were withdrawn by notice published in the Federal 
Register on December 9, 1994, (59 FR 63738) for reassessment and 
redrafting following consultation with the affected industry.
    DEA has endeavored, within the requirements and goals of the DCDCA, 
to limit the impact of these regulations on the affected industry. In 
some instances, as discussed below in the responses to specific 
comments (e.g., separate registration for separate locations) the 
specific language of the DCDCA established the parameters of control. 
However, in other areas, DEA has been able to take additional steps in 
these final regulations to lessen the impact of the DCDCA's 
requirements on the affected industry, while simultaneously carrying 
out the chemical control mandate of the DCDCA.

Public Comments

    A total of 22 comments were submitted regarding the proposed 
rulemaking. While the general tone of the comments was supportive of 
efforts to prevent the flow of listed chemicals to clandestine 
laboratories, the commentors raised a number of concerns regarding 
certain provisions of the proposed regulation, as follows:

Registration

    1. Six comments objected to the requirement in Section 1309.23 that 
a separate registration be obtained for each location at which List I 
chemical activities are carried out. The comments suggested that DEA 
allow companies to obtain a single registration, with attendant fee, 
for multiple locations or activities.
    The law is specific on this point. The DCDCA requires that a 
separate registration be obtained at each location at which List I 
chemicals are distributed, imported or exported (21 U.S.C. 822(e) and 
958(h)). In accordance with the requirements of the Office of 
Management and Budget (OMB) Circular A-25, the costs associated with 
each preregistration investigation must be recovered through the fees.
    2. Four comments noted the chemical industry's practice of storing 
and distributing chemicals from independently operated warehouses. 
These commentors questioned how the requirement for separate 
registrations for separate locations would apply to these warehouses.
    In reviewing these comments, there appeared to be some confusion 
regarding whether the commentors were addressing warehouse activities 
that involved List I chemicals or List II chemicals. In subsequent 
contacts with commentors for clarification, DEA was able to 
specifically identify only two comments involving warehouses that 
handle List I chemicals. DEA wishes to clarify that the registration 
requirement applies only to the distribution, importation or 
exportation of List I chemicals. Activities involving List II chemicals 
are not subject to the registration requirement.
    With respect to the use of independently owned warehouses, the 
Controlled Substances Act (CSA), as amended, exempts warehousemen from 
the registration requirement (21 U.S.C. 802(39), 822(c)(2), and 
957(b)(1)(B)) for activities carried out in the normal course of their 
business. Instead, the person who distributes List I chemicals from 
independently owned warehouses must register at each location and 
ensure that the other chemical control requirements, including 
security, record keeping, reporting, etc., for their products are met 
while under the supervision of the non-registered warehouseman.
    3. One comment questioned what procedures would apply if more than 
one chemical company stored and distributed chemicals from a single 
warehouse, and whether separate registrations, if required, would 
result in duplicative fees.
    Each person who distributes, imports or exports a List I chemical 
must register with DEA for each separate location at which such 
activities are carried out. If more than one person independently 
carries out such activities at the same location, then each person must 
obtain a registration for their activities at that location. Each 
application would be subject to a separate pre-registration 
investigation that would require, among other things, a visit to the 
applicant's business offices (which in this circumstance would be 
separate from the warehouse). Therefore, the fees would not be 
duplicative. The fees for registration are based on the costs 
associated with the registration, as set forth in the NPRM. DEA's 
experience in working with the chemical industry indicates this is a 
rare business practice with respect to List I chemicals.
    4. Two comments questioned the impact that registration would have 
on research and development (R&D) activities that were described by the 
commentors as involving ``very small quantities'' of chemicals in 
mixtures that may be sent to laboratories for physical property or 
performance testing.
    The DCDCA does not require registration for research or development 
activities, only distributing, importing or exporting. Thus 
laboratories performing such testing would not be subject to the 
registration requirement for research and development activities. 
Further, the products referenced by the commentors are chemical 
mixtures, therefore, they will be subject to the chemical mixture 
exemption regulations that are being developed. It is DEA's intent, to 
the extent possible, that the distribution of such mixtures to 
laboratories for testing be exempted from the registration requirement.
    5. Two comments expressed concern that manufacturers would be 
forced to suspend their activities due to delays in the approval of 
their registrations.
    Early in the regulatory development process, DEA recognized that 
the demands of establishing a new registration program would require a 
transitional procedure that did not disrupt ongoing legitimate business 
activities. As a consequence, DEA published a notice in the Federal 
Register on March 24, 1994 (59 FR 13881), that provides a temporary 
exemption from the registration requirement. Any person who submits a 
proper application for registration on or before October 5, 1995 will 
remain exempt from the registration requirement until DEA takes final 
action regarding their application. There is no cause for current 
legitimate manufacturers to be concerned that they will have to suspend 
their activities pending issuance of their registrations.
    6. Two comments questioned how the registration requirement would 
apply to manufacturers of non-regulated chemicals that contain List I 
chemicals as either unintentional by-products or impurities.
    This concern has been raised with respect to the application of 
chemical diversion control requirements on a number of occasions in the 
past. The manufacture of a List I chemical as an unintentional by-
product during the manufacture of another chemical does not require 
registration, so long as the List I chemical is not distributed or 
exported. As to the presence of List I [[Page 32449]] chemicals as 
impurities in non-regulated products, it is DEA's understanding that 
the impurities are present only in trace amounts. It is not DEA's 
intent that the distribution of non-regulated chemicals that contain 
trace amounts of List I chemicals as unintentional by-products of the 
manufacturing process be subject to the registration requirement.
    7. One comment suggested that if the Food and Drug Administration 
(FDA) removes ephedrine from over-the-counter status, the primary 
reason for, and economic foundation of, the registration program would 
be removed through the elimination of the need to register and collect 
fees from the estimated 10,000 retail distributors that handle 
ephedrine drug products that are regulated as List I chemicals. The 
comment urged that if such a circumstance occurs, DEA should withdraw 
the registration requirement.
    The DCDCA requires registration of any person who distributes, 
imports or exports any List I chemical and was not intended solely to 
control the distribution of regulated ephedrine drug products. DEA's 
chemical control program, including registration, applies to all List I 
chemicals. The potential elimination of the need to register retail 
distributors of ephedrine drug products would not change the purpose of 
the program. Secondly, the FDA action is only speculative at this time, 
and its subsequent impact, if passed, is even more uncertain. However, 
OMB Circular A-25 requires the review of all fees every two years. 
Under this review, any major change in the registration population 
would require reassessment of the fees for other registrants. Any 
change to the fees would be subject to notice and comment.
    8. One comment characterized the registration of sites that 
manufacture List I chemicals as unnecessary, since it duplicates 
existing site reporting requirements under other Federal laws. A second 
comment questioned the need for a pre-registrant investigation and fee 
for high volume manufacturers.
    The DCDCA requires persons who distribute, import or export a List 
I chemical to obtain a registration and requires that DEA determine if 
such registration would be in the public interest pursuant to the 
criteria set forth in Section 823(h) of the Act. The pre-registrant 
investigation must be conducted to determine whether the criteria 
regarding the public interest are met. The required fee is assessed to 
cover the costs of that investigation.
    9. One comment requested clarification of the exemption from 
chemical registration found in Section 1309.25, for companies that are 
registered with DEA to handle controlled substances.
    A controlled substance registrant that distributes, imports or 
exports a List I chemical, other than a regulated drug product that may 
be marketed or distributed under the Food, Drug, and Cosmetic Act 
(FDCA), must obtain a chemical registration for such activities. The 
exemption in Section 1309.25 applies only to controlled substance 
registrants who engage in similar activities with a regulated drug 
product that may be marketed or distributed under the FDCA. The 
exemption is directed at the approximately 65,000 pharmacies and others 
who are already registered with DEA under the CSA, so as to avoid a 
duplicative registration requirement on these registrants. In response 
to this comment and to help clarify the provisions of the exemption, 
Section 1309.25 has been amended to specify that the exemption applies 
only to activities involving drug products that may be marketed or 
distributed under the Food, Drug and Cosmetic Act, that are regulated 
as List I chemicals pursuant to Section 1310.01(f)(1)(iv).
    10. One comment expressed concerns that the regulations will 
require persons who handle exempt chemical mixtures containing List I 
chemicals to register.
    The proposed Section 1310.13, which was withdrawn for re-
publication at a later date, established that the chemical mixtures 
exempted by the Administrator would not be subject to the registration, 
recordkeeping, reporting, and import/export provisions of the Act. It 
is DEA's intention that the same provision will be included in the new 
chemical mixture exemption regulations. In the interim, chemical 
mixtures will be exempt until the exemption regulations are 
promulgated. However, creation of a chemical mixture for the purpose of 
evading the requirements of the CSA is a violation of CSA (21 U.S.C. 
843(a)(8), subject to a penalty of imprisonment for not more than four 
years, a fine of $30,000, or both.

Brokers and Traders

    11. Three comments found the definition of ``broker'' and 
``trader'' in Sections 1310.01(k) and 1313.02(m) to be overly broad. 
Specifically, subparagraph (3) of each section may be read as covering 
any action, whether deliberate or inadvertent, that results in an 
international transaction taking place, i.e., a chemical distributor 
provides a foreign customer with a list of possible sources for a 
chemical that the distributor does not carry, thus ``bringing together 
a buyer and a seller.''
    DEA agrees that the definition is not intended to cover such 
circumstances. DEA has amended the wording of subparagraph (3) of the 
definition to read ``Fulfilling a formal obligation to effect the 
transaction by bringing together a buyer and seller, a buyer and 
transporter, or a seller and transporter; or by receiving any form of 
compensation for so doing.''
    12. One comment requested clarification of whether import brokers 
and freight forwarders would be considered brokers or traders.
    Brokers and traders are defined as U.S. based persons who assist in 
arranging international transactions in listed chemicals; the 
definition does not apply to domestic transactions, including imports 
into or exports from the United States. Further, brokers and traders, 
as defined, do not take possession of listed chemicals. Under the 
circumstances, U.S. based import brokers and freight forwarders would 
not be considered brokers or traders, as defined, while acting in the 
normal course of their business. However, it must be understood that 
imports, exports and distributions of listed chemicals are subject to 
other provisions of the CDTA and DCDCA and a regulated person is 
responsible for those transactions.

Security Provisions

    13. Two comments questioned the appropriateness of the proposed 
Section 1309.72, which concerns employment of persons who have been 
convicted of a felony relating to controlled substances or listed 
chemicals or have been subject to a denial, suspension or revocation of 
a DEA registration. One comment raised the issue of whether the 
requirements violate occupational safety and health, privacy, and non-
discrimination laws. The other pointed out that in the absence of the 
stringent security and storage requirements applied to controlled 
substances, a far greater number of personnel would have access to List 
I chemicals, such as ephedrine, thus increasing the burden required to 
satisfy the requirements of this section.
    DEA agrees that the lack of restrictions regarding possession of 
List I chemicals makes it difficult to employ comprehensive screen 
practices for all potential employees as proposed in Section 1309.72. 
However, registrants must employ safeguards to prevent List I chemicals 
from being diverted from their businesses into the illicit traffic. DEA 
is, therefore, withdrawing the proposal prohibiting such employment, 
and in its place establishing that registrants must exercise caution in 
their employment practices regarding [[Page 32450]] persons who have 
been convicted of a felony relating to controlled substances or listed 
chemicals, or have been subject to denial, suspension or revocation of 
a DEA registration. The registrant must understand that if an employee 
diverts a listed chemical, the registrant may be subject to a 
revocation action. The registrant must assess the risks involved in 
employing such a person and, in the event of employment, institute 
procedures to limit the potential for diversion of List I chemicals by 
such an employee.
    14. One comment requested that DEA provide comprehensive guidance 
regarding assessment of security measures as outlined in Section 
1309.71(b).
    List I chemical handlers vary greatly in size, type of business and 
volume handled. Under such circumstances, it would not be desirable to 
establish specific, inflexible security controls and procedures. The 
factors outlined in Section 1309.71(b) provide a general framework of 
elements that allow potential registrants flexibility in assessing the 
potential threat of diversion and to determine measures necessary to 
prevent diversion. DEA has made and will continue to make available 
additional suggestions regarding security in separate publications for 
the chemical industry. In addition, as set forth in Section 1309.71(c), 
an applicant or registrant may, following development of a proposed 
system of controls and procedures, submit materials and plans regarding 
the system to DEA for assessment.
    15. One comment opposed the proposal that retailers stock ephedrine 
drug products that are regulated as List I chemicals behind a counter 
on the basis that this requirement creates a third class of drugs 
(Section 1309.71(a)(2)).
    DEA is regulating a List I chemical, not a drug. Section 
1309.71(a)(2) provides a basic security measure for a List I chemical 
that is known to have been diverted from both the retail and wholesale 
levels for the purposes of manufacturing illicit controlled substances. 
The section does not prohibit any person from purchasing the product or 
establish any restrictive requirements, such as sale by prescription 
only, that must be met by the purchaser. The requirement simply 
provides an additional means of controlling diversion without 
restricting public access to the product.

Section 1313.12  Requirement of 486 for Imports

    16. One comment questioned the need for advance notice of 
importation in cases of a return of a previously exported listed 
chemical and suggested that manufacturers be exempted from this 
requirement for the return of chemicals which they exported.
    DEA previously recognized, under the 1988 Chemical Diversion and 
Trafficking Act, that exports of listed chemicals might be rejected or 
otherwise undeliverable, requiring that they be returned to the U.S. 
exporter. Existing Section 1313.22(e) provides that exports of listed 
chemicals that are refused, rejected, or otherwise deemed undeliverable 
may be returned to the U.S. exporter of record without advance notice 
or a 486 form. That section requires that a written notification be 
submitted to DEA within a reasonable time following the return.
    However, an export that has cleared foreign customs and been 
accepted by the foreign consignee is not subject to this exception. Any 
such shipments subsequently returned to the U.S. are imports, subject 
to all applicable requirements.
    17. Two comments questioned the provisions of Section 1313.12(e). 
One objected that the summary reports of imports required by Section 
1313.12(e) are duplicative, since DEA would already have the 
information available from previously filed 486 forms. The second 
questioned whether waiver of the advance notice requirement in Section 
1313.21(f) would also mean waiver of the quarterly report in Section 
1313.21(e), and suggested that DEA publish in Section 1313.21(f) a list 
of countries with waivers when the final rule is published.
    DEA agrees that the wording of this section needed clarification. 
Section 1313.12(e) proposed minimized reporting procedures for export 
transactions in circumstances where the Administrator has waived the 
advance notice requirements as unnecessary for effective chemical 
diversion control. The comments point out that the proposed section did 
not specify that a 486 form need not be filed for such transactions. 
The section has been amended to clarify that a 486 form does not have 
to be submitted for exports under this section; the regulated person 
need only file a quarterly summary of such exports. There are presently 
no waivers established under Section 1313.21(f). This is a new 
authority granted to the Administrator by the DCDCA. Countries to which 
this new provision will apply will be determined after implementation 
of these regulations.
    18. One comment raised concerns regarding the need to file an 
Import 486 form when foreign customers return containers that have not 
been completely emptied.
    DEA has long recognized the standard industry practice to allow a 
certain level of `overage' in the amount of chemicals actually shipped 
in very large tank car/cargo ship type exports due to the difficulty to 
full recovery and, therefore, that containers that still contain some 
of the chemicals may be returned. DEA has not required that a 486 form 
be filed for the return of containers with such ``leavings'', when the 
amount of chemical is within normal or standard residue levels.

Exports

    19. One comment noted the provisions of the DCDCA allowing the 
Administrator to withdraw the waiver of the advance notice requirement 
for all exports of listed chemical to a specified country. The 
commentor asked if, in the future, existing waivers might be withdrawn. 
The comment also questioned whether other countries have agreed to 
comply with the same rules.
    The DCDCA allows DEA to require, by regulation, that all exports of 
a listed chemical to a specified country be subject to the advance 
notice requirement, regardless of regular customer status, if it is 
determined that advance notification of export is necessary for 
compliance with international agreements regarding chemical controls or 
is necessary to support chemical control programs in other countries. 
It is possible that the waiver of the advance notice requirement for 
exports of a listed chemical to a specified country may be withdrawn. 
However, DEA would be required to publish a notice in the Federal 
Register regarding the withdrawal of the waiver and provide an 
opportunity for public comment. With respect to the question of 
compliance with these rules by other countries, all parties to the 
United Nations Convention Against Illicit Traffic in Narcotic Drugs and 
Psychotrophic Substances of 1988 are required to be able to provide 
advance notice of exports of List I chemicals, if requested by the 
importing country.
    20. One comment requested clarification of the term ``reasonable 
cause'' as used in Section 1313.21(g) and of the responsibilities of 
exporters to know the laws of the countries to which chemicals are 
exported. [[Page 32451]] 
    The term ``reasonable cause'' applies to transactions that, due to 
circumstances such as an unusual method of payment or shipping or 
quantities inconsistent with stated uses, raise concerns that a 
customer or a transaction is not what it is represented to be. 
Exporters should understand the nature of their legitimate transactions 
and should make informed decisions as to whether the circumstances 
surrounding a specific transaction give rise to questions regarding the 
legitimacy of the transaction. As to the laws of other countries, the 
exporter is expected to make a reasonable effort to determine the 
validity of a transaction prior to exporting a listed chemical to a 
country. DEA has published information regarding foreign import 
restrictions in the Federal Register. If further restrictions become 
known to DEA, they also will be published in the Federal Register.
    21. One comment objected to the general export reporting 
requirements as burdensome and unnecessary.
    The general export reporting requirements were established by the 
CDTA in 1988, and have been in continuous use for over five years 
without presenting any significant obstacles to legitimate chemical 
exports. As noted in the preamble to the NPRM, the export controls have 
been successful in significantly reducing the availability of U.S. 
chemicals to clandestine laboratories in foreign countries.

Definition of Therapeutically Insignificant

    22. Two comments argued that the U.S. Food and Drug Administration 
(FDA) is the appropriate authority for determining whether a product 
contains therapeutically significant quantities of a medicinal 
ingredient and that FDA's tentative final monograph for ephedrine 
combination products should be used as the standard for making such 
determinations.
    At this time, the monograph is a proposed rule. FDA acknowledges 
that it must publish a final rule in order to actually establish a 
monograph. When FDA publishes the final monograph, DEA will consider 
use of the monograph as the determinative standard for therapeutically 
significant quantities of a medicinal ingredient under the DCDCA. Until 
such a time, the compendiums set forth in Section 1310.01(f)(1)(iv)(A) 
provide additional flexibility and will be the primary standard for 
determining if therapeutically significant quantities of a medicinal 
ingredient are present in a product.
    23. Two comments objected to the provision that a person applying 
for exemption of a product, the formulation of which is not listed in 
the compendiums, must submit verification from FDA that the product may 
be lawfully marketed under the Food, Drug and Cosmetic Act. The 
commentor noted that FDA does not provide such verifications.
    DEA agrees and has removed that language. In its place, the person 
applying for the exemption must certify to DEA that the product may be 
lawfully marketed under the Food, Drug and Cosmetic Act.
    24. One comment questioned the lack of justification for the 
choices of compendiums and suggested that the regulation be expanded to 
include any recognized authority, such as textbooks, treatises, 
compendia, statements of qualified experts, medical/scientific journals 
or clinical studies conducted by outside researchers or by a drug 
company.
    The listed compendiums were chosen because they are readily 
available and are widely recognized as reliable, scientifically 
accurate and comprehensive listings of products that are commercially 
available. With respect to the additional sources of information 
suggested, if a product does not appear in the named compendiums, DEA 
has provided manufacturers an additional avenue for product exemption. 
A person requesting a determination from the Administrator that a 
product does contain therapeutically significant amounts of a certain 
medicinal ingredient may submit any such information that the person 
believes supports their request.
    25. One comment suggested that wholesalers do not have the 
expertise to determine whether a drug meets the therapeutically 
significant standard. Manufacturers should be responsible for making 
the determination and providing notification to wholesalers that the 
product meets the requirements.
    DEA agrees that manufacturers are responsible for determining 
whether a product meets the therapeutically significant standard and 
for notifying their customers of whether the product is, therefore, 
exempt from List I chemical controls. However, if a distributor has any 
reason to question a product, then the distributor has an obligation to 
attempt to determine whether the product meets the standard. If any 
person, wholesaler or otherwise, is unable to determine from the listed 
compendiums that a product meets the therapeutically significant 
criteria, then that person may contact the DEA for assistance in making 
such a determination.
Contents of Records and Reports

    26. One comment acknowledged that most of the information required 
by the regulations is already maintained in general business records 
for all transactions. The exception is the registration number of the 
purchaser. The comment objected that manufacturers should not be 
required to inquire about the registration number of the customer so 
long as the legitimacy of the customer is known.
    DEA attempted to design the DCDCA recordkeeping requirements to be 
consistent with existing business records to the extent possible, as 
recognized by this commentor. One step in establishing the legitimacy 
of a customer is determining the customer's activity with the regulated 
chemical and, if that activity requires registration, that the customer 
is registered to engage in the activity. A record of the customer's 
registration number confirms that the supplier has taken one of the 
appropriate steps to determine the legitimacy of the customer and the 
transaction.
    27. One comment noted that the disparity between the requirements 
for maintenance of records for controlled substances (2 years) and List 
I chemicals (4 years) would compel the maintenance of separate 
recordkeeping systems for chemical and pharmaceutical records.
    Although both laws are enforced by DEA, the chemical control 
requirements of the CDTA and DCDCA are entirely separate from the 
pharmaceutical requirements under the CSA. Each law establishes 
different recordkeeping standards (21 U.S.C. 827 for controlled 
substances and 21 U.S.C. 830 for listed chemicals), and with the 
exception of one List I chemical (regulated ephedrine products) there 
is little overlap between firms required to keep records under the two 
laws.
    28. One comment objected to the reporting requirement in Section 
1310.05(a)(2) as inappropriate. The commentor suggested that 
establishing a specific level for what constitutes an extraordinary 
quantity and subjecting a registrant to civil and criminal penalties 
for failing to file such reports should not be a role for DEA. DEA has 
not set specific levels for what constitutes extraordinary quantities 
for controlled substances, and should not do so for OTC drug products. 
Further, the pharmacist counseling provision would create a third class 
of drugs and would limit availability of the drugs to the public, since 
there are many more retailers that sell the regulated 
[[Page 32452]] ephedrine products than there are pharmacies.
    This reporting requirement was proposed with the intent of 
providing a clear standard with respect to reportable transactions 
involving regulated ephedrine drug products. However, the comments 
demonstrate that industry would prefer flexibility and discretion based 
on the circumstances of the transaction rather than a specific 
standard. Therefore, the proposed section 1310.05(a)(2) and related 
language in Section 1310.05(b) have been removed.
    However, removal of the specific standard for reporting does not 
relieve regulated persons and registrants of the responsibility to 
report transactions involving an extraordinary quantity of a listed 
chemical. Registrants must review transactions involving the sale of 
regulated ephedrine drug products to individuals for personal use 
within the context of the established FDA guideline regarding the 
manner in which the products should be used and the appropriate dosing 
levels. In this regard, 375 dosage units of regulated ephedrine drug 
products within a calendar month for individual use provides a valid 
reference for registrants in determining whether additional efforts 
should be made to confirm the validity of a transaction.

Miscellaneous

    29. Two comments were received questioning the use of the DEA 
Chemical Code Numbers set forth in Section 1310.02, rather than the 
familiar Chemical Abstract Services (CAS) or Harmonized Tariff System, 
(HTS) Numbers.
    DEA has reviewed these numbering systems and determined that they 
were designed for other purposes and that their use could lead to 
confusion and jeopardize the accuracy of the information reported to 
DEA. In the HTS numbering system there are multiple chemicals that are 
assigned the same number and in the CAS numbering system that are 
chemicals that are assigned multiple codes. DEA has produced and made 
available a chemical reference guide that provides a cross reference to 
the CAS and HTS numbers, which will be updated to include the new 
Chemical Code Numbers.
    With respect to the chemical codes, DEA discovered, following 
publication of the NPRM, that the Chemical Code Numbers assigned to 
Benzyl Chloride (8568) and Benzyl Cyanide (8570) were incorrect. The 
correct Chemical Code Number for Benzyl Chloride is 8570 and for Benzly 
Cyanide is 8735. These corrections have been made in this final order.
    30. Three comments were submitted regarding the addition of new 
chemicals to List I or List II. The first comment questioned the 
addition of hydrochloric and sulfuric acid to List II without any 
justification. The second questioned the addition of benzaldehyde and 
nitroethane without specific justification of the addition or the 
thresholds. The third recommended that DEA continue to publish the 
proposed addition of any new chemicals for notice and comment and 
suggested that DEA hold public hearings on the proposed addition of new 
chemicals.
    With respect to the hydrochloric and sulfuric acid, these chemicals 
were added to List II by final order published in the Federal Register 
on September 22, 1992 (57 FR 43615). The justification for the action 
was provided in the Federal Register notice regarding the addition of 
the two chemicals. With respect to nitroethane and benzaldehyde, 
Section 8 of the DCDCA amended Section 802(34) of the CSA to add the 
chemicals to List I; there addition to Section 1310.02 is simply a 
conforming amendment. Regarding the thresholds, benzaldehyde and 
nitroethane are diverted and used in clandestine laboratories for the 
illicit manufacture of controlled stimulants in a manner similar to 
other List I chemicals. These other chemicals, with the exception of 
ephedrine, have established threshold levels that were based on a 
review of data regarding the quantities distributed and used licitly, 
the quantities diverted and used illicitly, and the amount of each 
chemical necessary to synthesize a certain amount of controlled 
substance. DEA has reviewed the same type of data for benzaldehyde and 
nitroethane and found that the data supported the establishment of 
similar thresholds for the two chemicals. The specific thresholds of 4 
kilograms for benzaldehyde and 2.5 kilograms for nitroethane were based 
on the licit and illicit uses of the two chemicals, and are consistent 
with the thresholds set for other List I chemicals used in the illicit 
production of controlled stimulants. Regarding the third comment, 
Section 1310.02 already clearly establishes that any proposed addition 
or deletion of chemicals from List I or List II must be published in 
the Federal Register with opportunity for public comment. It has been 
DEA's experience that the notice and comment procedure provides a 
satisfactory opportunity for affected persons to provide important 
information and advice regarding the proposed action. The comment 
period also satisfies the compelling need for quick response while 
providing DEA the option to extend the comment period, should the need 
for additional comment arise.
    31. Two comments argued that DEA cannot regulate ``herb-containing 
dietary supplements and herbs containing Ephedra and its alkaloids'' on 
the grounds that the products are dietary or nutritional supplements 
and not drugs.
    The CDTA and DCDCA define and establish controls over List I and 
List II chemicals. Under these acts, the only exceptions to the 
application of regulatory controls over products containing listed 
chemicals are for certain drug products that are lawfully marketed 
under the Food, Drug and Cosmetic Act (21 U.S.C. 802(39)(A)(iv)) and 
for chemical mixtures. Within this context, DEA has reviewed the issue 
of ephedra, e.g., the entire plant or the overground portion the 
ephedra plant and determined that the unprocessed plant material 
ephedra and products containing the unprocessed plant material ephedra 
are not subject to the regulatory provisions of the CDTA and DCDCA. 
However, preparations of the ephedra plant, such as extracts and 
concentrates, that contain ephedrine, do fall within the definition of 
chemical mixture (21 C.F.R. 1310.01(g)), thus, they are subject to the 
regulations as they apply to chemical mixtures. Chemical mixtures are 
currently exempt from the regulatory provisions of the CDTA and DCDCA, 
pending promulgation of regulations concerning the exemption of 
chemical mixtures.
    32. One comment requested clarification of what constitutes 
``unusual or excessive loss or disappearance of a listed chemical.''
    This term applies to circumstances that appear to be outside the 
framework of normal business occurrences. Regulated persons and 
registrants understand the nature of their chemical activities and 
should be able to make informed decisions as to whether the above term 
applies to conditions they may encounter and to be able to explain 
their decision sufficiently to convince a ``reasonable person.''
    33. One comment requested clarification of the term transshipments.
    For purposes of DEA's regulations, a transshipment is an 
exportation of a listed chemical from one foreign country to another 
foreign country, which exportation transits the jurisdiction of the 
United States.
    34. Two comments questioned the format of paragraphs (f)(1)(iv)(B) 
and (f)(1)(iv)(C) of Section 1310.01. The first noted that while the 
present format suggests independent subjects, the use [[Page 32453]] of 
``and'' at the end of (B) implies that (C) is a subpart of (B). A 
second comment suggested that paragraph (f)(1)(iv)(B) should contain a 
reference to Section 1310.10, which sets the criteria for removal of 
the exemption.
    DEA agrees. The two paragraphs have been redesignated as paragraphs 
(f)(1)(iv)(B)(1) and (f)(1)(iv)(B)(2) of Section 1310.01, and the 
appropriate citation to Section 1310.10 will be included. Further, in 
order to keep the language of the section consistent with the language 
of the DCDCA, the period at the end of Section 1310.01(f)(1)(iv)(A)(4) 
will be deleted and ``; or '' will be inserted in its place.
    35. One comment requested clarification of the term ``imminent 
danger'' as used in the revocation provisions as uses in Section 
1309.44.
    The term ``imminent danger'', as used in Section 1309.44, refers to 
actions by a registrant that demonstrate a flagrant indifference to and 
disregard for the law and the health and safety of the public. There 
are no specific criteria for determining what constitutes ``imminent 
danger''. However, interested persons may wish to review the Federal 
Register for past notices of suspension of controlled substance 
registrations. In any action under this section related to the 
activities of a specific registrant, DEA will list the facts that are 
considered to present an imminent danger.
    36. One comment requested clarification of Section 
1310.01(f)(1)(ii), with specific emphasis on whether a common or 
contract carrier would be required to register with DEA for activities 
involving the delivery of a listed chemical either to or by the 
carrier.
    Section 1310.01(f)(1)(ii) specifically excludes the delivery of a 
listed chemical by a common or contract carrier for carriage in the 
lawful and usual course of business from the definition of a regulated 
transaction. The common or contract carrier is not subject to the 
registration requirement when transporting chemicals on a registrant's 
behalf. The registrant remains responsible for the listed chemicals 
until they are delivered to and accepted by the consignee. In this 
regard, it is important that a registrant take reasonable measures to 
insure that any common or contract carrier used to ship listed 
chemicals to customers will provide adequate security against in-
transit losses or thefts.
    37. Two comments questioned the provisions in Sections 1310.11(b) 
and 1310.15(b), which establish recordkeeping and reporting 
requirements for regulated persons who manufacture exempted drug 
products, on the grounds that a person who manufactures an exempted 
drug product is not a regulated person.
    The referenced sections as well as Section 1310.13(b), were written 
with respect to a regulated person who also manufactures an exempted 
drug product. Upon further consideration, DEA has determined that 
regulated persons should not be required, solely because of their 
status as a regulated person, to keep records and make reports of 
transactions that would otherwise be exempted from those requirements. 
Sections 1310.11(b), 1310.13(b) and 1310.15(b) have been removed.
    38. One comment requested clarification of Section 1309.45 and 
raised questions regarding procedures to be followed if an application 
for registration renewal form (DEA Form 510a) is not received in a 
timely manner.
    Section 1309.45 applies only to a registrant who is subject to 
action by the Administrator to revoke or suspend his or her 
registration. If the registrant submits a renewal application within 
the prescribed time period and the Administrator has not issued a final 
order suspending or revoking the registration, then the registration is 
deemed to continue in effect until the Administrator issues his final 
order. As to renewal in circumstances other than those set out in 
Section 1309.45, Section 1309.32(c) establishes the procedures. DEA 
will mail out renewal notices to registrants approximately 60 days 
prior to the date of expiration. If a registrant has not received their 
renewal notice within 45 days of their expiration date, then a written 
request for a replacement form must be provided to DEA. A properly 
completed renewal application and fee must be received by DEA prior to 
the registrant's expiration date if registration is to be continued 
without interruption. If a registration is allowed to expire, the 
registrant is no longer authorized to distribute, import or export a 
List I chemical. DEA will mail delinquency notices to expired 
registrants approximately 90 days after the expiration date.
    39. One comment questioned the DEA's placing priority on the 
completion of pre-registration investigations of non-retail firms while 
DEA's Federal Register notice of March 17, 1994 (59 FR 12562, 
Elimination of Threshold for Ephedrine) focused on the diversion of 
ephedrine tablets at the retail level. The comment also questioned why 
DEA has proposed steps to lessen the impact on retail distributors and 
yet has not specifically proposed steps to lessen the impact on non-
retail distributors.
    By directing its focus at the non-retail level during the initial 
registration phase, DEA will identify those firms that have failed to 
adequately identify their customers or have been shipping to 
questionable retail firms. With this information, DEA can focus its 
initial retail investigations on the most likely sources of diversion. 
With respect to the second question, DEA has taken steps to limit the 
impact of the chemical controls on all persons. The exemption from the 
registration requirement in Section 1309.25 applies to any person, 
either retail or non-retail, registered with DEA to handle controlled 
substances, who also engages in activities with regulated ephedrine 
drug products. Further, DEA has attempted to design the chemical 
control requirements to be consistent with existing business practices, 
as noted in comment number 26 with respect to the recordkeeping 
requirements.
    40. One comment objected to the exclusion of mail order activities 
from the definition of retail distribution.
    As noted in the supplemental information to the NPRM, retail 
distributors engage in a limited activity as regulated by the DCDCA. 
The amounts of product distributed per transaction are generally small 
and sales are to individuals only. By contrast, it has been DEA's 
experience that mail order distributors of ephedrine drug products that 
are regulated deal with both individuals and businesses and the volume 
of sales and product can be quite large. Additionally, such firms are 
often less readily able to positively identify their customers. 
Investigations will be significantly more complex and time consuming 
for a mail order distributor than for a retail distributor. It is 
appropriate that mail order activities remain classified as 
distributors rather than retail distributors.
Protection of Confidential Business Information

    41. Four comments expressed concern regarding the safeguarding of 
confidential business information (CBI) that will be collected by DEA 
in connection with chemical control activities. Two of the comments 
suggested that DEA establish specific and strong provisions regarding 
protection of CBI.
    DEA operates national diversion control programs related to 
controlled substances and listed chemicals. The controlled substance 
program has been in effect since the early 1970's and the chemical 
program since the late 1980's. [[Page 32454]] In each program, DEA 
collects CBI in the course of investigations and required reporting. 
With respect to the chemical program, the release of CBI that is 
protected from disclosure under Exemption 4 of the Freedom of 
Information Act, 5 U.S.C. 552(b)(4) (FOIA), is governed by Section 
830(c) of the CSA (21 U.S.C. 830(c)) and the Department of Justice 
procedures set forth in 28 CFR 16.7.
    Section 830(c) provides that information collected under Section 
830 that is protected from disclosure under Exemption 4 may only be 
released in circumstances related to the enforcement of controlled 
substance or chemical laws, customs laws, or for compliance with U.S. 
obligations under treaty or international agreements. The Department of 
Justice procedures establish that if a FOIA request is received for 
release of information that is protected under Exemption 4, the 
submitter of the protected information must be notified of such a 
request, given an opportunity to object to the disclosure and allowed 
to provide justification as to why the information should not be 
disclosed.
    In addition to the statutory and regulatory requirements, DEA has 
established internal guidelines governing the handling of CBI, 
including provisions that the material be maintained in locked 
containers, that access to the information be on a need-to-know basis, 
and that any disclosure under Section 830 be made only pursuant to a 
non-disclosure agreement by the receiving party.
    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, 
Security measures, List I and List II chemicals.

21 CFR Part 1310
    Drug Traffic Control, Reporting Requirements, List I and List II 
chemicals.

21 CFR Part 1313

    Drug Traffic Control, Imports, Exports, Transshipment and in-
transit shipments, List I and List II Chemicals.

21 CFR Part 1316

    Administrative practice and procedure, Drug Traffic Control, 
Research, Seizures and forfeitures.
    For the reasons set out above, 21 CFR Parts 1307, 1309, 1310, 1313 
and 1316 are 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 revised 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, D.C. 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.
    1. 21 CFR Part 1309 is 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.

Application 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 [[Page 32455]] 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 term 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 Section 
1310.01(f)(1)(iv), directly to walk-in customers for personal use.
    (h) 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 Sections 
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, D.C. 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 a 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 the 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 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), 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 through 
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), 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 through 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 
through 1309.26, except that a person registered to import any List I 
chemical shall be authorized to distribute that List I chemical after 
importation, 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), 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), 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 [[Page 32456]] pursuant to the procedures set forth in 
Secs. 1309.43 through 1309.46 and 1309.51 through 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 
Sections 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 Section 
1309.21 and is not so registered, shall apply on DEA Form 510.
    (b) Any person who is registered pursuant to Section 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 Section 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 of attorney for each such individual. The power of attorney shall 
be signed by a person who 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 [[Page 32457]] pursuant 
to Section 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 Administration 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 on 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 Section 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 Section 
1309.46 and, if requested by the registrant, shall hold a hearing 
pursuant to Section 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 Section 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. [[Page 32458]] 
    (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 therefore, 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. 1309.52 
through 1309.57, and by the procedures for administrative hearings 
under the Act set forth in Secs. 1316.41 through 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 part 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 Sec. 1316.47 of 
this chapter.
    (b) Any person entitled to a hearing pursuant to Secs. 1309.42 and 
1309.43 may, 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 
Administration 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 Administration 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 Section 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 
[[Page 32459]] 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) 
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 electronic 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, D.C. 20537.


Sec. 1309.72  Felony conviction; employer responsibilities.

    (a) The registrant shall exercise caution in the consideration of 
employment of persons who will have access to listed chemicals, who 
have been convicted of a felony offense relating to controlled 
substances or listed chemicals, or who have, at any time, had an 
application for registration with the DEA denied, had a DEA 
registration revoked, or 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.) The registrant should be aware of the circumstances 
regarding the action against the potential employee and the 
rehabilitative efforts following the action. The registrant shall 
assess the risks involved in employing such persons, including the 
potential for action against the registrant pursuant to Sec. 1309.43, 
If such person is found to have diverted listed chemicals, and, in the 
event of employment, shall institute procedures to limit the potential 
for diversion of List I 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.

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 amended by revising paragraphs (b), (c), (d), 
(e), (f)(1) and (g), redesignating paragraph (k) as paragraph (m) and 
inserting 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 Sec. 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 Section 
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, 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 
[[Page 32460]] for multiple transactions, of a listed chemical, except 
that such terms 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 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 American 
Pharmaceutical Association (Apha) Handbook of Nonprescription Drugs; 
Drug Facts and Comparisons (published by Wolters Kluwer Company); or 
USP DI (published by authority of the United States Pharmacopeial 
Convention, Inc.); 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; or
    (B) The Administrator has determined pursuant to the criteria in 
Sec. 1310.10 that:
    (1) 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
    (2) 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;
    (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) fulfilling a formal obligation to complete the transaction by 
bringing together a buyer and seller, a buyer and transporter, or a 
seller and transporter, or by receiving any form of compensation for so 
doing.
    (1) 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 amended by revising the introductory text and 
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
8735
(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
8570
(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
(10) Methyl Isobutyl Ketone (MIBK)
6715
* * * * *
    4. Section 1310.04 is amended by revising paragraphs (a), (b), 
(f)(1) introductory, and (f)(2) introductory text and (iv), by removing 
paragraphs (f)(1)(xiv), (f)(1)(xx), and (f)(1)(xxii); redesignating 
paragraphs (f)(1)(xv) through (xix) as (f)(1)(xiv) through (xviii), 
paragraph (f)(1)(xxi) as (f)(1)(xix) and paragraph (f)(1)(xxiii) as 
(f)(1)(xx); and adding new paragraphs (f)(1)(xxi) and (xxii) 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 [[Page 32461]] 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 Sec. 1310.08(b)
* * * * *
    5. Section 1310.06 is amended by revising paragraphs (a) 
introductory text, (a)(1), (c), and (d) 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 Section 1310.05(a) shall include the 
information as specified by Section 1310.06(a) and, where obtainable, 
the registration number of the other party, if such party is 
registered. A report submitted pursuant to Sec. 1310.05(a)(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 premises, 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-------------------------------------------

Public reporting burden for this collection of information is estimated 
to average ten minutes per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden estimate 
or any other aspect of this collection of information, including 
suggestions for reducing this burden to the Drug Enforcement 
Administration, Records Management Section, Washington, D.C. 20537; and 
to the Office of Management and Budget, Paperwork Reduction Project No. 
1117-0024, Washington, D.C. 20503.
* * * * *
    6. Section 1310.07 is 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, if 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 or 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.
* * * * *
    7. Section 1310.08 is amended by revising paragraph (b) 
introductory text 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:
* * * * *
    8. Sections 1310.10 and 1310.11 are 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 
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 the 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 [[Page 32462]] 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 and 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) of this section 
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) 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.
    (c) 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 (d) requires 
a new application for reinstatement of the exemption.
    (d) 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                          
------------------------------------------------------------------------
     Supplier         Product name          Form              Date      
------------------------------------------------------------------------
[Reserved].......  .................  ................  ................
------------------------------------------------------------------------

    9. Section 1310.14 and 1310.15. are added to read as follows:


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 
section 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) Certification by the applicant 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 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 of the information required in paragraph 
(b) of this section or requested pursuant to paragraph (c) of this 
section is lacking or not readily [[Page 32463]] 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) No exemption granted pursuant to 1310.14 affects the criminal 
liability for illegal possession or distribution of listed chemicals 
contained in the exempt drug product.
    (c) Changes in drug product compositions: Any change in the 
quantitative or qualitative composition of an exempt drug product 
listed in paragraph (d) requires a new application for exemption.
    (d) 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     
------------------------------------------------------------------------
     Supplier         Product name          Form              Date      
------------------------------------------------------------------------
[Reserved].......  .................  ................  ................
------------------------------------------------------------------------

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 amended by revising paragraphs (c), (d) 
introductory text, (d)(1), (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 American 
Pharmaceutical Association (Apha) Handbook of Nonprescription Drugs; 
Drug Facts and Comparisons (published by Wolters Kluwer Company); or 
USP DI (published by authority of the United States Pharmacopeial 
Convention, Inc.); or the product is not listed in Section 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 Section 1310.14, whether the 
active medicinal ingredients are present in quantities considered 
therapeutically significant for purposes of this paragraph; or
    (B) The Administrator has determined pursuant to the criteria in 
Section 1310.10 that:
    (1) 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
    (2) 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;
    (v) Any transaction in a chemical mixture listed in Section 
1310.13.
 * * * * *
    (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 [[Page 32464]] 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 
Section 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 transactions occurring during the 
preceding 12-month period.
 * * * * *
    (m) 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) fulfilling a formal obligation to complete the transaction by 
bringing together a buyer and seller, a buyer and transporter, or a 
seller and transporter, or by receiving any form of compensation for so 
doing.
    (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 trader 
located in the United States participates.
 * * * * *
    3. Section 1313.12 is 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 requirements for 
reporting to the Administration as a regular importer of such listed 
chemicals; or
    (2) A specific listed chemical, 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 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 submit 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) has been waived for imports of the following listed 
chemicals:
    (1) [Reserved]
    4. Section 1313.15 is revised to read as follows:


Sec. 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-day 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 a 
controlled 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 importers shall be required to file a DEA Form 486 
as required by Section 1313.12.
    5. Section 1313.21 is amended by redesignating paragraph (d) as 
paragraph (g) by revising paragraph (c) and newly designated paragraph 
(g) and by adding new paragraphs (d), (e), and (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 
Section 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 Section 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, 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 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 [[Page 32465]] 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 is added preceding 
Sec. 1313.31 to read as follows:

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

    7. Sections 1313.32, 1313.33, and 1313,34 are added to read as 
follows:

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


Sec. 1312.32  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 Section 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) (1) 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, P.O. Box 28346, Washington, 
D.C. 20038

    (2) 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 Section 
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 Section 1310.04 shall notify the Administration through the 
procedures outlined in Section 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 Section 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 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 Section 1313.32.
* * * * *
    7. In the heading of part 1313, the undesignated center heading 
preceding section 1313.12, and the undesignated center heading 
preceding section 1313.21 remove the words ``Precursors and Essential 
Chemicals'' and add, in their place, the words ``Listed Chemicals'';


Sec. 1313.01  [Amended]

    8. In Section 1313.01 remove the words ``precursors and essential 
chemicals'' and add, in their place, the words ``listed chemicals'';


Sec. 1313.14  [Amended]

    9. In Section 1313.14 introductory text, and in Section 1313.23 
introductory text, remove the words ``precursor and essential 
chemical'' and add, in their place, ``listed chemical''.


Sec. 1313.13  [Amended]

    10. In Sections 1313.13(a) and 1313.22(a) DEA is removing the words 
``precursor or essential chemical'' and adding, in their place, the 
words ``List I or List II chemical''.


Sec. 1313.14  [Amended]

    11. In Sections 1313.14(a) and 1313.23(a) DEA is removing the words 
``listed precursor chemical'' and ``listed essential chemical'' and 
adding, in their place, the words ``List I chemical'' and ``List II 
chemical'' respectively.

PART 1316--[AMENDED]

    1. The authority citation for part 1316 is amended to read as 
follows:

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

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


Sec. 1316.02  Definitions.

* * * * *
    (c) * * *
    (2) Places, including factors, 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 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 [[Page 32466]] 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 (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 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 of finished or 
unfinished controlled substances or listed chemicals;
* * * * *
    Dated: May 1, 1995.
Stephen H. Greene,
Deputy Administrator, Drug Enforcement Administration.
[FR Doc. 95-14978 Filed 6-21-95; 8:45 am]
BILLING CODE 4410-09-M