[Federal Register Volume 61, Number 62 (Friday, March 29, 1996)]
[Rules and Regulations]
[Pages 14022-14024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7739]



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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1310

[DEA-135F]
RIN 1117-AA30


Manufacturer Reporting

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final Rule.

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SUMMARY: This rule is issued by the Deputy Administrator of the Drug 
Enforcement Administration (DEA) to implement provisions of the 
Domestic Chemical Diversion Control Act of 1993 (Pub. 103-200) (DCDCA) 
to specify certain reporting requirements for manufacturers of listed 
chemicals. This rule requires bulk manufacturers of listed chemicals to 
provide annual reports containing certain production data to the DEA.

EFFECTIVE DATE: April 29, 1996. The first annual reports which detail 
data for calendar year 1995, shall be submitted on or before June 27, 
1996.

FOR FURTHER INFORMATION CONTACT: Howard McClain Jr., Chief, Drug and 
Chemical Evaluation Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, D.C. 20537 Telephone (202) 307-
7183.

SUPPLEMENTARY INFORMATION: The Domestic Chemical Diversion Control Act 
1993 (Pub. 103-200) (DCDCA) amended 21 U.S.C. 830(b) to require that 
regulated persons who manufacture listed chemicals (other than a drug 
product that is exempted under 21 U.S.C. 802(39)(A)(iv)) report 
annually to DEA information detailing the specific quantities 
manufactured. This rule specifies certain reporting requirements for 
manufacturers of listed chemicals and finalizes a proposed rule 
published in the Federal Register on September 26, 1995 (60 FR 49529). 
Interested parties were given 60 days to submit written comments 
regarding the proposed rule.

Comments

    Five organizations submitted comments in response to the proposed 
regulations. One comment suggested that Section 1310.03(b) be modified 
in order to clarify that the reporting requirements pertain to both 
List I and List II chemicals. Therefore Section 1310.01(b) has been 
amended to clarify that ``Each regulated person who manufactures a List 
I or List II chemical shall file reports regarding such manufacture as 
specified in Section 1310.05.''
    Another comment stated that DEA had not clearly established its 
basis for needing information requested under the reporting 
requirement. This requirement, which was established by the Domestic 
Chemical Diversion Control Act of 1993, will provide the DEA with 
information on the amounts of listed chemicals available in the U.S. 
and provide specific strategic information and parameters on the size 
and direction of the legitimate listed chemical market and the 
availability of such chemicals for diversion. It will also enable the 
DEA to provide the International Narcotics Control Board (INCB) with 
aggregate data regarding the production and availability of chemicals 
controlled under provisions of the 1988 United Nations Convention 
Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
    Two comments requested that hydrochloric acid be exempted and one 
comment suggested that sulfuric acid be exempted since only exports of 
these chemicals to certain countries are currently regulated. However, 
both these chemicals are controlled in Table II of the 1988 United 
Nations Convention Against Illicit Traffic in Narcotic Drugs and 
Psychotropic Substances. This reporting provision will enable the DEA 
to provide the INCB with aggregate manufacturing data on hydrochloric 
and sulfuric acid.
    The DEA recognizes that bulk manufacturers must file other similar 
reports to other government agencies. For example, one of the comments 
stated that the requested information is provided to the U.S. 
Environmental Protection Agency (EPA) four times per year. Therefore, 
as stated in the Notice of Proposed Rulemaking, if an existing standard 
industry report contains the information required in Section 1310.06(h) 
and such information is separate or readily retrievable from the 
report, that report may be submitted in satisfaction of this 
requirement. Each report shall be submitted to the DEA under company 
letterhead and signed by an appropriate, responsible official.
    One comment stated that even though the DEA has specified that an 
existing standard industry report may satisfy the reporting 
requirements, the reporting obligation would end up as a special report 
for each listed material at each location and therefore would be 
extremely burdensome. In addition, two comments dealt with the issue of 
whether data must be reported by individual facility, as opposed to 
submitting one corporate report which includes data for all facilities.
    In response to these concerns, the DEA has determined that either 
reporting method is acceptable. Therefore, each business entity which 
manufactures a listed chemical may elect to (1) report separately by 
individual location or (2) report as an aggregate amount for the entire 
business entity. These manufacturers, however, must inform the DEA of 
which method they will use.
    One commentor asked whether inventories should be reported for 
listed chemicals stored in foreign locations. The DEA has determined 
that such foreign inventories are not subject to the inventory 
reporting requirements since such material would have already been 
reported to the DEA under existing export notification requirements if 
it were manufactured in the U.S. and shipped to a foreign location.
    One commentor requested clarification of the term year-end 
inventory as used in Section 1310.06(h)(3). For purposes of this annual 
reporting requirement, inventory shall reflect the quantity of listed 
chemicals, whether in bulk or non-exempt product form, held in storage 
for later distribution. Inventory does not include waste material for 
destruction, material stored as an in-process intermediate or other in-
process material. The DEA recognizes that bulk manufacturers may have 
specific situations which will affect the complexity of inventory 
reporting. Therefore, the Drug and Chemical Evaluation Section, Office 
of Diversion Control, Drug Enforcement Administration is available to 
provide guidance in response to questions bulk manufacturers may have 
regarding what material should be included as inventory.
    One commentor requested clarification of the terms ``product'' and 
``converted'' as used in Section 1310.06(h)(5). The term product refers 
to all pharmaceutical preparations and chemical mixtures exempted under 
Sections 1310.01(f)(1)(iv) or 1310.01(f)(1)(v) intended for later 
distribution. In order to provide clarification of Section 
1310.06(h)(5), the term ``converted'' is being removed. This section 
will now specify that each annual report required by Section 1310.05(d) 
shall provide ``[t]he aggregate quantity of each listed chemical 
manufactured which becomes a component of a product exempted

[[Page 14023]]
under Section 1310.01(f)(1)(iv) or 1310.01(f)(1)(v) during the 
preceding calendar year.''
    One commentor requested clarification that the reporting 
requirements do not apply to formulators of chemical mixtures. In 
response to this comment, a bulk manufacturer is defined under the 
proposed rule, as a person who produces a listed chemical by means of 
chemical synthesis or by extraction from other substances. Unless a 
formulator of chemical mixtures produces a listed chemical by means of 
chemical synthesis or by extraction from other substances, that 
formulator is not considered a bulk manufacturer and therefore is not 
subject to these reporting requirements.
    One firm noted that the proposed rule stated that quantities be 
reported to the nearest kilogram. The comment further stated that this 
was not feasible due to the large volumes of some of the listed 
chemicals. In response to this inquiry, be advised that the reference 
to reporting ``to the nearest kilogram'' was intended to mean that 
quantities should be reported in kilogram units of measure and was not 
intended to specify the precision with which data should be supplied. 
The DEA is therefore modifying the regulatory language to read that 
information should be reported ``in kilogram units of measure''.
    One firm commented that an exemption should be provided for bulk 
manufacturers that produce listed chemicals solely for internal 
consumption. The DEA has determined that bulk manufacturers that 
produce a listed chemical solely for internal consumption shall not be 
required to report for that listed chemical. For purposes of these 
reporting requirements, internal consumption shall consist of any 
quantity of a listed chemical otherwise not available for further 
resale or distribution. Internal consumption shall include (but not be 
limited to) quantities used for quality control testing, quantities 
consumed in-house or production losses. Internal consumption does not 
include the quantities of a listed chemical consumed in the production 
of exempted products. (These quantities used in the production of 
exempted products shall be reported separately.) Section 1310.05 has 
been modified to reflect this reporting exemption.
    One firm commented that the proposed rule establishes a DEA code 
number for each listed chemical and made a suggestion regarding the use 
of an alternate numbering system. However, the proposed rule only 
clarifies and implements manufacturer reporting requirements and does 
not deal with the issue of DEA code numbers. This issue was previously 
addressed under the regulations which implemented the Chemical 
Diversion and Trafficking Act (60 FR 32447). In that notice, DEA 
responded that it had considered the use of other numbering systems 
such as the Chemical Abstract Services (CAS) and Harmonized Tariff 
System (HTS). However, in reviewing these systems DEA determined that 
they were designed for other purposes and that their use could lead to 
confusion and jeopardize the accuracy of 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 there are 
chemicals that are assigned multiple codes. The DEA has produced and 
made available a chemical reference guide that provides a cross 
reference to the CAS and HTS numbers.

Conclusion

    These reporting requirements will apply only to bulk manufacturers 
of listed chemicals. The term bulk manufacturer as used in this 
regulation means a person who manufactures a listed chemical by means 
of chemical synthesis or by extraction from other substances. It does 
not include persons whose sole activity consists of repackaging or 
relabeling listed chemical products or the manufacture of drug dosage 
form products which contain a listed chemical. For each listed 
chemical, each manufacturer is required to report annually to DEA (1) 
the year-end inventory, (2) the aggregate quantity manufactured, (3) 
the aggregate quantity used for internal consumption and (4) the 
aggregate quantity of each listed chemical manufactured which becomes a 
component of a product exempted under Section 1310.01(f)(1)(iv) or 
1310.01(f)(1)(v) during the preceding calendar year. While 
manufacturers are required to report the quantities of listed chemicals 
used in the production of exempted products (e.g. exempted drug 
products and chemical mixtures), the manufacturer is not required to 
report data regarding the aggregate quantity of the exempted products 
produced.
    Data provided under these reporting requirements shall be submitted 
annually to the Drug and Chemical Evaluation Section, Drug Enforcement 
Administration, Washington D.C. 20537, on or before the 15th day of 
March of the year immediately following the calendar year for which 
submitted. However, in order to provide sufficient time for preparation 
of the initial annual reports which detail manufacturing data for 
calendar year 1995, these initial reports shall not be due until June 
27, 1996.
    The Attorney General has delegated authority under the CSA and all 
subsequent amendments to the CSA to the Administrator of the DEA (28 
CFR 0.100). The Administrator, in turn, has redelegated this authority 
to the Deputy Administrator pursuant to 28 CFR 0.104. The Deputy 
Administrator hereby certifies that this rulemaking will have no 
significant impact upon entities whose interests must be considered 
under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq.  The DEA 
estimates that only approximately 210 manufacturers of listed chemicals 
will be impacted by these reporting requirements. The impact is minimal 
since the requested information is frequently maintained in the normal 
course of business operation. In an effort to further minimize the 
impact of these reporting requirements and avoid duplicate reporting, 
the DEA will accept existing reports which contain the required data, 
provided the data is separate or readily retrievable from other data in 
the report.
    This final rule is not a significant regulatory action and 
therefore has not been reviewed by the Office of Management and Budget 
pursuant to Executive Order 12866.
    This action has been analyzed in accordance with the principles and 
criteria in E.O. 12612, and it has been determined that the rule does 
not have sufficient federalism implications to warrant the preparation 
of a Federalism Assessment.

List of Subjects in 21 CFR Part 1310

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

    For reasons as set out above, 21 CFR Part 1310 is amended as 
follows:

PART 1310--[AMENDED]

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

    Authority: 21 U.S.C. 801, 830, 871(b).

    2. Section 1310.03 is amended by redesignating the existing text as 
paragraph (a) and adding a new paragraph (b) to read as follows:


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

    (a) * * *
    (b) Each regulated person who manufactures a List I or List II 
chemical shall file reports regarding such

[[Page 14024]]
manufacture as specified in Section 1310.05.
    3. Section 1310.05 is amended by adding a new paragraph (d) to read 
as follows:


Sec. 1310.05  Reports.

* * * * *
    (d) Each regulated bulk manufacturer of a listed chemical shall 
submit manufacturing, inventory and use data on an annual basis as set 
forth in Sec. 1310.06(h). This data shall be submitted annually to the 
Drug and Chemical Evaluation Section, Drug Enforcement Administration 
(DEA), Washington, D.C. 20537, on or before the 15th day of March of 
the year immediately following the calendar year for which submitted. A 
business entity which manufactures a listed chemical may elect to 
report separately by individual location or report as an aggregate 
amount for the entire business entity provided that they inform the DEA 
of which method they will use. This reporting requirement does not 
apply to drug or other products which are exempted under 
Secs. 1310.01(f)(1)(iv) or 1310.01(f)(1)(v) except as set forth in 
Sec. 1310.06(h)(5). Bulk manufacturers that produce a listed chemical 
solely for internal consumption shall not be required to report for 
that listed chemical. For purposes of these reporting requirements, 
internal consumption shall consist of any quantity of a listed chemical 
otherwise not available for further resale or distribution. Internal 
consumption shall include (but not be limited to) quantities used for 
quality control testing, quantities consumed in-house or production 
losses. Internal consumption does not include the quantities of a 
listed chemical consumed in the production of exempted products. If an 
existing standard industry report contains the information required in 
Sec. 1310.06(h) and such information is separate or readily retrievable 
from the report, that report may be submitted in satisfaction of this 
requirement. Each report shall be submitted to the DEA under company 
letterhead and signed by an appropriate, responsible official. For 
purposes of this paragraph only, the term regulated bulk manufacturer 
of a listed chemical means a person who manufactures a listed chemical 
by means of chemical synthesis or by extraction from other substances. 
The term bulk manufacturer does not include persons whose sole activity 
consists of the repackaging or relabeling of listed chemical products 
or the manufacture of drug dosage from products which contain a listed 
chemical.
    4. Section 1310.06 is amended by adding a new paragraph (h) to read 
as follows:


Sec. 1310.06  Content of records and reports.

* * * * *
    (h) Each annual report required by Section 1310.05(d) shall provide 
the following information for each listed chemical manufactured:
    (1) The name, address and chemical registration number (if any) of 
the manufacturer and person to contact for information.
    (2) The aggregate quantity of each listed chemical that the company 
manufactured during the preceding calendar year.
    (3) The year-end inventory of each listed chemical as of the close 
of business on the 31st day of December of each year. (For each listed 
chemical, if the prior period's ending inventory has not previously 
been reported to DEA, this report should also detail the beginning 
inventory for the period.) For purposes of this requirement, inventory 
shall reflect the quantity of listed chemicals, whether in bulk or non-
exempt product form, held in storage for later distribution. Inventory 
does not include waste material for destruction, material stored as an 
in-process intermediate or other in-process material.
    (4) The aggregate quantity of each listed chemical used for 
internal consumption during the preceding calendar year, unless the 
chemical is produced solely for internal consumption.
    (5) The aggregate quantity of each listed chemical manufactured 
which becomes a component of a product exempted from Section 
1310.01(f)(1)(iv) or 1310.01(f)(1)(v) during the preceding calendar 
year.
    (6) Data shall identify the specific isomer, salt or ester when 
applicable but quantitative data shall be reported as anhydrous base or 
acid in kilogram units of measure.

    Dated: March 19, 1996.
Stephen H. Greene,
Deputy Administrator, Drug Enforcement Administration.
[FR Doc. 96-7739 Filed 3-28-96; 8:45 am]
BILLING CODE 4410-09-M