[Federal Register Volume 61, Number 244 (Wednesday, December 18, 1996)]
[Proposed Rules]
[Pages 66637-66639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32077]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1301 and 1304

[DEA-143P]
RIN 1117-AA36


Establishment of Freight Forwarding Facilities for DEA 
Distributor Registrants

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Proposed rule.

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SUMMARY: In response to industry concerns, the Drug Enforcement 
Administration (DEA) proposes to amend its regulations to define the 
term freight forwarding facility. DEA further proposes to amend its 
regulations to exempt certain freight forwarder facilities from 
registration requirements. These amendments will establish regulatory 
guidelines under which distributors registered with DEA may utilize 
freight forwarding facilities when shipping controlled substances to 
another DEA registrant.

DATES: February 18, 1996.

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

FOR FURTHER INFORMATION CONTACT:
Mr. G. Thomas Gitchel, Chief, Liaison and Policy Section, Office of 
Diversion Control, Drug Enforcement Administration, Washington, DC 
20537, Telephone (202) 307-7297.

SUPPLEMENTARY INFORMATION:

I. Background

    For many years, distributors registered with the DEA have utilized 
the services of common carriers to transport controlled substances to 
other registrants. These common carriers, who are not DEA registrants 
and therefore are not subject to the security and record keeping 
regulations promulgated pursuant to the Controlled Substances Act 
(CSA), often transfer the controlled substances from one conveyance to 
another at certain points during the shipment. In-transit losses due to 
theft of controlled substances have frequently occurred at these 
transfer points.
    In discussions with DEA, distributors have expressed their interest 
in utilizing ``freight forwarding facilities,'' enabling them to employ 
proprietary or contracted shipping and better prevent in-transit 
losses. These controlled substance distributors represent that 
permitting distributors to utilize freight forwarding facilities will 
not only minimize in-transit losses, it will also facilitate more 
timely delivery of controlled substances and help lower health care 
costs.
    To accomplish these goals, DEA proposes to permit distributors to 
extend their registrations to freight forwarding facilities operated by 
the distributor. In so doing, DEA is providing distributors an 
alternative means of delivery and allowing them to exercise direct 
control and responsibility for the controlled substances. By so 
extending the registration, the distributor will be required to comply 
with certain security and record keeping requirements proposed below.
    Pursuant to these regulations, DEA proposes to allow distributors 
to use certain designated freight forwarding facilities as an extension 
of their registration. However, DEA has determined that due to security 
concerns, returns of controlled substances cannot be routed through the 
freight forwarding facilities because the registrant operating the 
facility will have no control over when drugs will be returned to the 
facility. Distributors who use freight forwarding facilities will not 
be required to obtain a separate registration for such facilities, but 
will be required to comply with record keeping and security 
requirements detailed below.
    Distributors will be required to notify DEA in advance of their 
intent to utilize a freight forwarding facility. The distributor 
understands that if DEA approves the distributor's request, DEA will 
have the authority to conduct administrative inspections of the freight 
forwarding facility pursuant to 21 U.S.C. 822 and 880.

II. Notification of Use of a Freight Forwarding Facility

    Although no separate DEA registration will be required for 
utilization of freight forwarding facilities for DEA distributor 
registrants, it will be necessary to notify DEA of their existence. DEA 
distributor registrants who intend to operate a freight forwarding 
facility must first notify both the DEA office in the area in which the 
distributor is located and the office in which the freight forwarding 
facility will be located. This facility must be for exclusive use of 
the named DEA distributor registrant and cannot be shared for use by 
another DEA registrant. Notification must be accomplished by registered 
letter, return receipt requested. If DEA does not communicate written 
disapproval within 21 days after confirmed receipt, the facility will 
be considered approved. Reasons for disapproval of a freight forwarding 
facility might include a registrant's failure to comply with DEA 
regulations or a history of losses.
    Notification should consist of the distributor's DEA registration 
number, registered address and the address of the freight forwarding 
facility. A description of the operation of the freight forwarding 
facility should be included, listing such information as the hours of 
operation and the name, home address and date of birth of the 
designated responsible person. Information should be provided 
indicating what measures have been taken to limit accessibility to 
controlled substances at the facility. Notification should also include 
a description of the physical security in place at the facility. The 
physical security description should include a summary of the 
controlled substance temporary storage area including dimensions, 
specifications and alarm devices and identify the central station 
provider or delineation of the registrant's control station as 
specified in 21 CFR 1301.72(b)(4)(v).
    A description of the recordkeeping procedures should also be 
included in the notification by providing an outline of recordkeeping 
procedures or copies of sample records.

III. Security of Freight Forwarding Facilities

    The DEA distributor registrant utilizing a freight forwarding 
facility is

[[Page 66638]]

responsible for providing adequate security to guard against losses of 
controlled substances. DEA is proposing to amend 21 CFR Part 1301 by 
adding a new Section, 1301.77, outlining the security requirements. The 
new section requires either continuous observation of controlled 
substances stored in a segregated area by a designated responsible 
person(s) during the temporary storage, or by the installation of 
appropriate physical security measures. In some situations, a 
combination of the aforementioned two options may be permitted. The 
general security requirements currently found in 21 CFR 1301.71 are 
applicable and should be emphasized, since the freight forwarding 
facilities are located outside the normal realm of the distributor's 
registered location. It is necessary to pay special attention to 
security considerations, such as the extent of unsupervised public 
access and adequacy of supervision over employees within the facility. 
Definite procedures are required to be in place to control maintenance 
personnel and nonemployee service personnel.
    Proposed physical security controls for all controlled substances 
routed through the freight forwarding facility, including Schedule II 
controlled substances, are those currently in place for Schedule III-V 
substances as set forth in 21 CFR 1301.72(b), unless the substances 
will remain under the constant observation of responsible person(s).
    Access to controlled substances will be kept to an absolute minimum 
number of specifically authorized individuals. Only sealed containers, 
which do not identify controlled substances contents on the outside 
packaging, will be permitted to be temporarily stored or shipped 
through the freight forwarding facility. DEA distributor registrants 
will be permitted to utilize their proprietary fleet, or a specific 
contract carrier. Temporary storage at the freight forwarding facility 
will be permitted for a period of less than twenty-four (24) hours.

IV. Recordkeeping

    There must be a clearly defined audit trail as part of the complete 
records maintained for all controlled substances transferred through 
the freight forwarding facility. DEA is proposing to amend the 
regulations by adding 21 CFR Section 1304.03(i), to specify the 
recordkeeping requirements. The records must contain dates, times of 
transfer, authorized signatures and number of cartons, crates, drums, 
or other packages in which commercial containers of controlled 
substances are shipped, to document the flow of controlled substances 
from the long distance conveyance through the freight forwarding 
facility to the local conveyance or from long distance conveyance 
directly to the local conveyance. These records must be traceable to a 
particular registrant invoice. The type of records to be kept can be 
designed by the individual registrant and must be kept for two years 
and stored at the freight forwarding facility. All other controlled 
substance recordkeeping requirements currently found in 21 CFR part 
1304 are applicable. The freight forwarding facility will be exempt 
from all inventory requirements and ARCOS reporting.
    The Deputy Assistant Administrator, Office of Diversion Control, in 
accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has 
reviewed this proposed regulation and by approving it certifies that 
this regulation will not have a significant economic impact on a 
substantial number of small entities. This proposal provides an 
alternative system that may allow some distributors a more efficient 
means of delivering controlled substances. Indeed, the regulated 
industry has represented that this procedure will benefit the industry 
by allowing it to lower costs associated with shipping controlled 
substances. Further, this regulation has been drafted and reviewed in 
accordance with Executive Order 12866, Sec. 1(b), Principles of 
Regulations. The Deputy Assistant Administrator, Office of Diversion 
Control, has determined that this rule is not a ``significant 
regulatory action'' under Executive Order 12866, section 3(f), 
Regulatory Planning and Review, and accordingly this rule has not been 
reviewed by the Office of Management and Budget. This regulation 
provides an exemption from certain requirements of the CSA for 
registrants operating freight forwarding facilities, thus allowing them 
a more efficient and cost effective means of doing business.
    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 1301

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

21 CFR Part 1304

    Drug traffic control, Reporting and recordkeeping requirements.

    For reasons set out above, DEA is proposing to amend 21 CFR parts 
1301 and 1304 as follows:

PART 1301--[AMENDED]

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

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

    2. Section 1301.02 is proposed to be amended by redesignating 
paragraph (m) as paragraph (n) and adding a new paragraph (m) to read 
as follows:


Sec. 1301.02  Definitions.

* * * * *
    (m) The term freight forwarding facility means a separate facility 
operated by a DEA distributor registrant through which sealed, packaged 
controlled substances, in unmarked shipping containers, are stored for 
less than 24 hours while being routed to the ultimate DEA registrant 
consignee. A freight forwarding facility is a controlled premises as 
defined in Sec. 1316.02 (c). The term does not include a facility 
through which controlled substance returners are processed.
* * * * *
    3. Section 1301.23 is proposed to be amended by adding a new 
paragraph (b)(4) to read as follows:


Sec. 1301.23  Separate registrations for separate locations.

* * * * *
    (b) * * *
    (4) A freight forwarding facility operated by the registrant 
distributor through which the registered distributor transfers 
controlled substances from long distance conveyances to local 
conveyances, provided that the registrant has submitted written notice 
by registered mail, return receipt requested, of intent to operate the 
facility to the Administration's offices in the area in which the 
distributor is registered and in the area in which the facility will be 
located and that notice has been approved. Such notice shall detail the 
location of the facility, the hours of operation, the individual(s) 
responsible for the controlled substances, and the security and 
recordkeeping procedures that will be employed. The notice will be 
considered approved 21 days after receipt by the Administration 
provided the registrant has not been otherwise notified in writing by 
the Administration.
    4. Section 1301.77 is proposed to be added under the undesignated 
center

[[Page 66639]]

heading ``Security Requirements'' as follows:


Sec. 1301.77  Security controls for freight forwarding facilities.

    (a) All Schedule II-V controlled substances that will be 
temporarily stored/docked at the freight forwarding facility must be:
    (1) Maintained under constant observation of the designated 
responsible individual(s) in a segregated area; or
    (2) Where controlled substances will not be under the constant 
observation of the designated responsible individual(s), temporary 
storage in a caged area which meets the requirements of 
Sec. 1301.72(b), and is secured by an alarm system operated by the 
registrant as specified in Sec. 1301.72 (b)(4)(v), is required.
    (b) Access to controlled substances must be kept to a minimum 
number of specifically authorized individuals.
    (c) Only sealed, unmarked shipping containers will be permitted for 
transfer or temporary storage at the freight forwarding facility.

PART 1304--[AMENDED]

    1. The authority citation for part 1304 continues to read as 
follows:

    Authority: 21 U.S.C. 821, 827, 871(b), 958(d), 965, unless 
otherwise noted.

    2. Section 1304.03 is proposed to be amended by adding a new 
paragraph (i) to read as follows:


Sec. 1304.03  Person required to keep records and file reports.

* * * * *
    (i) A distributor registrant that utilizes a freight forwarding 
facility shall maintain records reflecting the transfer of controlled 
substances from the long distance conveyance, through the facility, to 
the local conveyance or from the long distance conveyance directly to 
the local conveyance. The records must contain the date, time of 
transfer, number of cartons, crates, drums or other packages in which 
commercial containers of controlled substances are shipped and 
authorized signatures for each transfer. The records of these shipments 
must be maintained at the facility for a period of two years.

    Dated: December 6, 1996.
Gene R. Haislip,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 96-32077 Filed 12-17-96; 8:45 am]
BILLING CODE 4410-09-M