[Federal Register Volume 63, Number 179 (Wednesday, September 16, 1998)]
[Proposed Rules]
[Pages 49506-49517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24293]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1300 and 1310

[DEA Number 137P]
RIN 1117-AA31


Exemption of Chemical Mixtures

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Proposed rule.

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SUMMARY: The DEA is proposing regulations to implement those portions 
of the Domestic Chemical Diversion Control Act of 1993 [Pub. L. 103-
200] (DCDCA) that exempt from regulation under the Controlled 
Substances Act (CSA) certain chemical mixtures that contained regulated 
chemicals. The DCDCA amended the CSA to require that only those 
chemical mixtures identified by regulation shall be exempt from 
application of DEA's regulatory controls. These proposed regulations 
identify those mixtures, or categories of mixtures, that will be exempt 
from regulation. This proposal also defines an application process that 
can be used to exempt chemical mixtures that do not meet the criteria 
for automatic exemption.

DATES: Written comments or objections must be submitted on or before 
November 16, 1998.

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

FOR FURTHER INFORMATION CONTACT:
Frank Sapienza, Chief, Drug and Chemical Evaluation Section, Office of 
Diversion Control, Drug Enforcement Administration, Washington, DC 
20537, Telephone (202) 307-7138.

SUPPLEMENTARY INFORMATION: The Chemical Diversion and Trafficking Act 
of 1998 (PL 100-690) (CDTA) was passed by Congress to curtail the 
diversion of specific chemicals used in the illicit manufacture of 
controlled substances. The CDTA established recordkeeping and reporting 
requirements necessary for DEA to identify and track chemical 
diversion. While the CDTA achieved initial success in curtailing the 
diversion of chemicals, traffickers soon found and took advantage of 
certain shortcomings in the law. In the United States (U.S.), 
traffickers were able to obtain needed supplies by purchasing products 
that were exempted from regulation under the CDTA. Foreign traffickers 
were able to obtain chemicals from sources outside the U.S., while 
taking advantage of U.S. brokers and traders because of these 
shortcomings. Additionally, taking action against unscrupulous 
suppliers proved difficult.
    To address the weaknesses in the CDTA, Congress passed the Domestic 
Chemical Diversion Control Act of 1993 (DCDCA), which was enacted in 
April of 1994. One provision of the DCDCA dealt with the exemption of 
chemical mixtures, which are defined as ``a combination of two or more 
chemical substances, at least one of which is not a list I chemical or 
a list II chemical, except that such term does not include any 
combination of a list I chemical or a list II chemical with another 
chemical that is present solely as an impurity.''
    Prior to the enactment of the DCDCA, the term regulated transaction 
was defined to exclude `any transaction in a chemical mixture' (21 
U.S.C. 802 (39)(A)(v)). Therefore, transactions involving all chemical 
mixtures were exempt from recordkeeping and other chemical regulatory 
control requirements of the CSA. This exemption provided traffickers 
with an unregulated source for obtaining chemicals for use in the 
manufacture of controlled substances. Furthermore, this exemption was 
inconsistent with the requirements of Article 12, Paragraph 14 of the 
United Nations 1988 Convention on Psychotropic Substances. Article 12 
states, in part, that ``The provisions of this article shall not apply 
to pharmaceutical preparations, nor to other preparations containing 
substances in Table I or Table II that are compounded in such a way 
that such substances cannot be easily used or recovered by readily 
applicable means''. To address these problems, the DCDCA amended the 
exemption to provide that only those chemical mixtures specified by 
regulation would be exempt.
    The DCDCA amended the definition of a regulated transaction to 
exclude only those mixtures which the Attorney General has by 
regulation designated as exempt. This designation is ``based on a 
finding that the mixture is formulated in such a way that it cannot be 
easily used in the illicit production of a controlled substance and 
that the listed chemical or chemicals contained in the mixture cannot 
be readily recovered''. Accordingly, with this proposal, the DEA is 
seeking to enact regulations that prevent diversion of mixtures which 
contain listed chemicals, while removing from the regulatory scheme 
mixtures which meet the above legal criteria [21 U.S.C. 802(39)(A)(v)].
    Chemical mixtures which contain listed chemicals are of concern to 
DEA if they can be used in the manufacturing of controlled substances. 
Laboratory operators have continually searched for unregulated sources 
of materials in their efforts to illegally manufacture controlled 
substances. These efforts have led to the diversion and illicit 
utilization of chemical mixtures.
    Chemical mixtures can and do play a role in the illicit production 
of controlled substances such as heroin, cocaine and amphetamine 
related compounds, including methamphetamine. Some examples follow.
    The chemicals used in the production of cocaine are included 
primarily on list II of the CSA. Suspicious shipments of mixtures 
containing solvents in list II to cocaine producing areas have been 
identified by DEA. Additionally, diversion of such chemical mixtures 
for the illicit production of cocaine in foreign countries has been 
established by DEA. DEA continually monitors the chemical composition 
of seized cocaine hydrochloride. The DEA laboratory system is able to 
detect the trace quantities of solvents present in seized cocaine 
hydrochloride. Such solvents are utilized in the final stage of cocaine 
production whereby cocaine base is converted to cocaine hydrochloride. 
Recent data indicate that a broader range of solvents and solvent 
combinations are being caused in cocaine processing. This laboratory 
data supports intelligence information that chemical mixtures are used 
in the production of cocaine hydrochloride.
    Chemical mixtures also play a role in the production of 
methamphetamine, the most prevalent controlled substance illicitly 
synthesized in the United States. During calendar years 1994 through 
1997, the DEA was involved in the domestic seizure of over 2,800 
clandestine methamphetamine laboratories. The chemicals ephedrine and/
or pseudoephedrine were utilized as the precursor material at the vast 
majority of these laboratories.
    The clandestine manufacture, distribution and abuse of 
methamphetamine are serious public

[[Page 49507]]

health problems. Nationally, the Drug Abuse Warning Network (DAWN) has 
documented approximately 2,900 methamphetamine/speed related deaths in 
the United States between January 1992 and December 1996.
    Despite considerable efforts by Federal, state and local law 
enforcement, the illicit production, distribution and abuse of 
methamphetamine continue. Recent DEA seizure statistics indicate that 
the number of methamphetamine laboratory seizures has increased 
dramatically in 1996 and 1997. During 1997, the DEA participated in 
more than 1,400 methamphetamine laboratory seizures. This figure does 
not take into account the many laboratory seizures conducted 
independently by state and local law enforcement agencies. The problem 
continues into 1998.
    During the 1970's and early 1980's, P2P was the primary precursor 
used in the clandestine production of methamphetamine in the U.S. P2P 
was controlled as a Schedule II controlled substance in 1980 through 
the administrative provision authorizing control of immediate 
precursors under the CSA (21 U.S.C. 811(e)). In an attempt to 
circumvent the control of P2P, traffickers sought P2P in unregulated 
international markets and resorted to the manufacture of P2P in 
clandestine laboratories utilizing phenylacetic acid and acetic 
anhydride.
    In the middle 1980's, U.S. clandestine laboratory operators began 
utilizing the ephedrine reduction method of manufacturing 
methamphetamine. Since ephedrine was unregulated at the time, most 
laboratory operators abandoned the P2P method and instead moved to the 
use of bulk ephedrine powder as their source of precursor material.
    The Chemical Diversion and Trafficking Act of 1988 (CDTA) modified 
the Controlled Substances Act (CSA) to give DEA authority to exercise 
regulatory control of the chemicals used for the refinement and 
synthesis of illicitly manufactured controlled substances. The CDTA 
imposed recordkeeping, reporting, and import/export notification 
requirements for regulated transactions of listed chemicals in order to 
prevent the diversion of these chemicals to the illicit manufacture of 
controlled substances. The CDTA included bulk ephedrine and 
pseudoephedrine as listed chemicals.
    However, under the CDTA, products containing a listed chemical 
which were marketed or distributed lawfully under the Federal Food, 
Drug, and Cosmetic Act were exempt from the CSA's chemical regulatory 
control provisions. This included over-the-counter (OTC) products which 
contained ephedrine and pseudoephedrine. Clandestine laboratory 
operators soon learned that they could obtain the needed precursor 
materials through the unregulated purchase of millions of dosage units 
of single-entity OTC ephedrine products.
    This loophole in the law was closed by the passage of the Domestic 
Chemical Diversion Control Act (DCDCA) which became effective on April 
16, 1994. This Act further amended the CSA and removed the exemption 
for those transactions involving products which are marketed or 
distributed lawfully under the Federal Food, Drug, and Cosmetic Act, if 
these products contain ephedrine as the only active medicinal 
ingredient. Thus, single entity ephedrine products became subject to 
the chemical regulatory control requirements of the CSA.
    In response to these actions taken against OTC ephedrine products, 
clandestine laboratory operators again attempted to circumvent CSA 
chemical controls in an effort to obtain precursor material. The search 
for unregulated source of precursor material led to the diversion and 
illicit utilization of OTC pseudoephedrine products and combination OTC 
ephedrine products. In response, the Comprehensive Methamphetamine 
Control Act of 1996 placed regulatory controls on the sale and 
distribution of such OTC products.
    Today, the vast majority (approximately 97 percent) of U.S. 
clandestine laboratories continue to utilize ephedrine and/or 
pseudoephedrine as the precursor material. At practically all of these 
laboratories, the precusor material was obtained via the diversion of 
ephedrine or pseudoephedrine products marketed in tablet and capsule 
form and was not obtained through the diversion of bulk powder.
    While the vast majority of products seized at illicit 
methamphetamine laboratories were OTC drug products, dietary supplement 
products containing ephedrine and/or pseudoephedrine (i.e ephedra) have 
been seized at clandestine methamphetamine laboratories. At this time, 
the frequency with which these products are encountered is small. 
However, DEA studies indicate that the ephedrine/pseudoephedrine 
contained in this material can be readily recovered and ephedra 
material can be easily used in the production of methamphetamine. 
Ephedra (in the form of dietary supplements or ephedra extract), 
therefore, can and is being used as the source of precursor material 
for the illicit production of methamphetamine.
    Regulation of chemical mixtures is appropriate to guard against 
their diversion if the products are not formulated in such a way that: 
(1) they cannot be easily used in the illicit production of a 
controlled substance; or (2) the listed chemicals cannot be readily 
recovered. The DCDCA provides DEA with the means to regulate the 
mixtures and yet allows enough flexibility to ensure that the impact of 
the regulations can legitimate commerce is minimized.
    Regulations regarding the exemption of chemical mixtures were 
initially proposed by DEA on October 13, 1994 (59 FR 51888). In 
response to industry concerns, the proposed regulations regarding the 
exemption of chemical mixtures were withdrawn on December 9, 1994 (59 
FR 63738). Between withdrawal of the proposed regulations regarding the 
exemption of chemical mixtures and the publication of this action as a 
final rule, all transactions involving chemical mixtures as defined in 
21 U.S.C. 802(40) remain exempt from the definition of regulated 
transaction under the CSA. Based on the discussions and input from 
industry, DEA is proposing new regulations regarding the exemption of 
chemical mixtures.
    Following withdrawal of the initial proposal, DEA solicited input 
from, and engaged in discussions with, organizations representing the 
manufacturers and distributors of products containing listed chemicals. 
DEA met with representatives from associations (and affiliated members) 
representing chemical manufacturers, the paint and coating industry, 
flavor and fragrance manufacturers, chemical distributors and the 
dietary supplements industry. These different groups expressed unique 
concerns that the DEA attempted to address within this notice. More 
recently, however, the DEA has become aware of additional concerns 
raised by other segments of the affected industries including the 
dietary supplement industry. While DEA has received input from several 
associations and firms within these industries, because of the 
diversity of these industries, the DEA believes that others may have 
information that the DEA should consider. The DEA is therefore 
soliciting input from all sectors of the chemical and dietary 
supplements industry potentially affected by this proposed rulemaking. 
The DEA recognizes that there may be situations within unique segments 
of one or more of the affected industries which may not be specifically 
addressed in this

[[Page 49508]]

proposed rulemaking. These may involve products which are not 
automatically exempt and entities which would not likely be sources of 
diversion since their products cannot be easily used in the illicit 
production of a controlled substance or the listed chemicals, which 
they contain, cannot be readily recovered. In the event that not all 
exemption provisions for chemical mixtures are included, specific 
mixtures can be exempted by an application process. The application 
process is designed to exempt those chemical mixtures that are not 
automatically exempted under this proposal, but meet the criteria of 
Title 21 U.S.C. 802(39)(a)((v). As described below, these are processes 
which individual firms can use to apply for exemption from some or all 
regulatory controls.
    One of the potentially affected industries is the dietary 
supplement industry which markets non-drug products containing 
ephedrine/pseudoephedrine. DEA has recently received information from a 
coalition of direct marketers of these dietary supplements regarding 
the perceived impact of the proposed regulations on their industry. The 
principal concern of the direct marketers is how the chemical 
registration, recordkeeping, reporting requirements may affect those 
individuals engaged in the direct marketing of the products to the 
public. DEA emphasizes that it does not foresee the need for the 
regulation of individuals engaged in the direct marketing of the 
products to the public, provided certain basic conditions are met. This 
is consistent with the established intent of the Comprehensive 
Methamphetamine Control Act of 1966 (MCA) with respect to OTC drug 
products. While the MCA placed certain regulatory controls on the sale 
and distribution of pseudoephedrine, phenylpropanolamine and 
combination ephedrine drug products, it went to great lengths to ensure 
continued public access to these products at the retail level for face-
to-face transactions.
    Correspondingly, DEA is proposing in this notice a process by which 
manufacturers may request exemption for their products. Additionally, 
DEA can exempt a category of transaction from regulation if it is 
determined to be unnecessary for enforcement of the CSA (21 U.S.C. 
802(39)(a)(iii)) and can exempt any manufacturers or distributors, from 
the registration requirement if it is consistent with the public health 
and safety (21 U.S.C. 822(d)). DEA has already received and responded 
favorably to a request from a direct marketing organization of 
regulated drug products, excluding the individual marketers from 
regulations and requiring only that the wholesale activities be 
regulated. The information submitted by the coalition regarding the 
manner in which their dietary supplement products are marketed does not 
to be significantly different from the manner in which these OTC drug 
products are distributed.
    Listed chemicals cover a wide sector of industry because of their 
varied uses. Some are routinely utilized in legitimately produced 
chemical formulations while others are not. The DEA has attempted to 
better understand the degree with which specific listed chemicals are 
formulated in chemical mixtures that are legitimately produced. An 
accurate assessment has proved difficult for various reasons. One 
reason is that, although some examples of formulated products were made 
available, many manufacturers either did not have this information or 
were reluctant to discuss their formulations due to concerns regarding 
the disclosure of trade secrets. Another reason is that chemical 
mixtures are used in a wide variety of industrial sectors. A complete 
assessment would involve many diverse sectors such as those involved in 
paints, coatings, plastics, refineries, and other industrial processes. 
Additionally, many chemical mixtures are intended for human 
consumption. These include food and dietary supplements, food 
additives, flavorings and fragrances.
    After careful consideration of the available information, including 
the input from the chemical industry, DEA is proposing a three-tiered 
approach to the exemption of chemical mixtures. This approach best 
captures those chemical mixtures that are ``formulated in such a way 
that they cannot be easily used in the illicit production of a 
controlled substance and that the listed chemical or chemicals 
contained in the mixture cannot be readily recovered'', in accordance 
with Title 21 U.S.C. Section 802 (39)(A)(v). A mixture will be exempt 
if: (1) it contains a listed chemical at or below an established 
concentration limit; or (2) it falls within a specifically defined 
category; and (3) the manufacturer of the mixture applies for and is 
granted a specific exemption for the product.

I. Concentration Limits

    DEA is proposing to use a system of concentration limits as the 
primary means to determine the regulatory status of chemical mixtures. 
The use of such a quantitative system is necessary due to the 
complexity of chemical-based commodities and the huge variety of 
products. The use of a narrative approach is too subjective and would 
be in danger of inconsistent interpretation, both by industry and DEA. 
Use of the concentration limit eliminates subjective interpretation; if 
the amount of listed chemical in a mixture is less than, or equal to, 
the concentration limit, then the mixture is exempt.
    The concentration of a chemical in a mixture can be determined by 
either volume or weight, depending on the physical state of the 
mixture. It is more common to determine the concentration of a solid or 
gas based on weight, as this more accurately reflects the relative 
amounts of components in the mixture. The relative amount of a solid or 
gas in a mixture may not be accurately reflected if based on volume 
because the weight may change disproportionally relative to volume. The 
volume is commonly used to determine concentration in liquid--liquid 
mixtures. For listed chemicals that are liquids, the volume is proposed 
to be used in determining concentration. The density parameter allows 
for easy conversion between volume and weight for liquids. 
Concentration limits are proposed to be determined by weight if the 
listed chemical exist as a solid or gas at ambient temperature. The 
weight of the free base or acid will be used to determine the 
concentration of a listed chemical if it is a salt. A mixture is exempt 
if the listed chemical or chemicals are less than or equal to the 
percentages and other conditions described in the ``Table of 
Concentration Limits.''
    Where a mixture contains more than one listed chemical, determining 
the concentration limit will depend on the properties of the chemicals 
included in the mixture. Some chemicals, such as the different 
solvents, are cumulative, i.e., the concentration of the mixture will 
be determined by adding the concentrations of each individual solvent 
in the mixture. This approach is necessary when chemicals can be 
interchanged to carry out an illicit manufacturing procedure. The 
combined volume of two or more such chemicals would be functionally 
equivalent to the same volume of either one of the chemicals. If the 
chemicals are not cumulative, then the concentration of each chemical 
is considered individually in determining if the mixture is regulated. 
Those chemicals that are cumulative are identified in the ``Table of 
Concentration Limits'' in the proposed new Section 1310.12(c).

List I Chemicals

    The DEA proposes that N-acetylanthranilic acid, anthranilic acid,

[[Page 49509]]

benzyl cyanide, ethylamine, hydriodic acid, 3 4-methylenedioxyphenyl-2-
propane, methylamine, nitroethane, phenylacetic acid, piperidine, 
piperonal, propionic anhydride, isosafrole and safrole have a 
concentration limit of 20 percent. List I chemicals are used as 
precursors with the exception of hydriodic acid which is a reagent in 
the production of controlled substances. These chemicals are extremely 
valuable to traffickers and, in concentrations of greater than 20 
percent, represent a viable source of material for the illegal 
manufacture of controlled substances. The concentration limit proposed 
by the DEA takes into consideration the information supplied by the 
private sector and DEA concerns. The 20 percent limit for these 
chemicals maintains exemption status for chemical mixtures that are not 
likely to be diverted while excluding from regulation the majority of 
the present commerce in these mixtures, as identified by DEA. Safrole 
and isosafrole are sufficiently similar precursors when used 
clandestinely, that they will be cumulative. DEA is proposing the 
following concentration limits for the remaining List I chemicals:
Ephedrine and Pseudoephedrine--2 Percent
    Combinations of ephedrine and pseudoephedrine will be cumulative 
because these two chemicals are completely interchangeable as 
precursors in the same reaction to make methamphetamine and 
methcathinone. Thus, if the total concentration of ephedrine and 
pseudoephedrine is greater than 2 percent, the mixture is treated by 
DEA as a regulated chemical.
    Ephedrine and pseudoephedrine are major precursors for clandestine 
mathamphetamine and methcathinone production. As previously noted, 
clandestine laboratory operators have migrated to unregulated sources 
of precursor material. This has led to the diversion of marketed tablet 
and capsule pharmaceutical products containing ephedrine and 
pseudoephedrine. While OTC drug products have been a major source for 
these chemicals in clandestine laboratories, DEA has also identified 
non-drug products (i.e. ephedra extracts and dietary supplements) in 
seized laboratories.
    Regulations pertaining to OTC drug products containing ephedrine 
and pseudoephedrine have been established under separate rulemaking. 
Non-drug products, including dietary and nutritional supplements are 
chemical mixtures and therefore shall be subject to these proposed 
provisions.
    Representatives of retail sectors from the dietary and nutritional 
supplement industry have represented that their products contain 
amounts consistent with those found in most natural sources. The 2 
percent limit has been deliberately proposed at a level greater than 
the concentrations found in most natural sources. Representatives of 
the dietary and nutritional supplement retail industry have represented 
in meetings that the proposed concentration limit would be adequate, 
however, DEA has subsequently become aware of concerns from other, 
previously unidentified segments of the dietary and nutritional 
supplement industry that the proposed regulations could have a 
significant impact on their operations. This new information revealed 
that the proposed limit may not be appropriate to exempt certain 
distributions from the regulatory process.
    Of great concern to DEA, however, is the seizure of dietary 
supplements and ephedra bulk material at clandestine laboratories. Some 
of this seized material has been found to contain concentrations as low 
as 3 to 4 percent ephedrine/pseudoephedrine. The 2 percent threshold 
would therefore capture such material.
    Under this proposal, products and material containing less than 2 
percent would be automatically exempt. Additionally, harvested plant 
material will be exempt provided that it is unaltered from its natural 
state. Manufacturers of products containing greater than 2 percent 
would be able to apply for exemption based on the criteria in 21 U.S.C. 
802(39)(A)(v). In meetings with dietary supplement firms and 
association, the DEA has requested information on the specific types, 
composition and volume of dietary supplement products in the 
marketplace. Responses to these inquires have been sparse.
    The 2 percent concentration threshold was established in the 
consideration of a single entity product containing ephedrine/
pseudoephedrine and combination products from which ephedrin/
pseudoephedrine can be easily removed. It is likely that multiple 
ingredient products containing higher concentrations of ephedrin/
pseudoephedrine may, in fact, be more difficult to use in the 
clandestine synthesis of methamphetamine. As such, these products would 
likely qualify for exemption.
    To ensure that DEA has all possible information regarding both the 
extent and volume of this industry and the impact of any regulations on 
it, DEA is requesting comments from interested persons who market 
products that contain ephedrine and/or pseudoephedrine (either as 
dietary/nutritional supplements or as other products). Comments should 
identify the type of industry, including the number of companies/
individuals involved and the annual volume of business they conduct; 
how the proposed regulatory requirements would impact that industry, 
(through the registration, recordkeeping, and reporting requirements), 
and within the confines of statutory requirements, any suggestions or 
comments on how the final regulations might better be tailored to the 
industry without compromising the basic mandate of the law to prevent 
the diversion of ephedrine and pseudoephedrine for the illicit 
manufacture of controlled substances.
    The DCDCA initiated provisions for the regulatory control of 
chemical mixtures. However, the DCDCA included exemption provisions for 
chemical mixtures formulated in such a way that they cannot be easily 
used in the illicit production of a controlled substance and the listed 
chemical or chemicals contained in the mixture cannot be readily 
recovered. Accordingly, if a dietary supplement or any other 
formulations meet the exemption criteria, these chemical mixtures will 
receive exemption status. Therefore, the dietary and nutritional 
supplement industry is requested to provide information as to the 
nature of these products in relation to the exemption criteria and 
specify any unique attributes such as formulation, composition, or 
method of distribution which would prevent diversion for illicit uses. 
Additionally, the DEA invites comments in response to its concerns 
regarding the seizure of dietary supplements and ephedra bulk material 
at clandestine laboratories and the potential expanded role that these 
products may play in the illicit production of methamphetamine.
Norpseudoephedrine/Phenylpropanolamine--0.6 Percent
N-methylephedrine/N-Methylpseudoephedrine--0.1 Percent
    In each set of the above chemical pairs, the chemicals are 
interchangeable in the clandestine synthesis of controlled substances. 
Therefore, the concentration limit is proposed to be determined by 
adding the concentration of each chemical in the pair.
    These chemicals can be used in the manufacture of amphetamine and 
methamphetamine. Commercially, they are used in the manufacture of drug 
products and can appear in dietary and

[[Page 49510]]

nutritional supplements. As with ephedrine and pseudoephedrine, the 
limits are set higher than concentrations found in most natural 
sources, even when paired. Therefore, the limit should not affect the 
dietary and nutritional supplement products.
Benzaldehyde--30 Percent
    Benzaldehyde is used for the clandestine manufacture of amphetamine 
and methamphetamine. DEA has identified it as being widely used in 
flavoring and as a source of derivatives.
    Mixtures containing more than 30 percent benzaldehyde can be 
readily used in clandestine synthesis, especially when the other 
chemicals are solvents. This is also true when benzaldehyde is mixed 
with several other chemicals if those additional chemicals are not 
reactive in the synthetic pathways used to manufacture illicit 
substances. DEA is aware that this concentration limit may not capture 
most mixtures, especially with respect to flavoring and fragrance 
products. However, with the increasing effectiveness of the chemical 
controls against the diversion of other amphetamine/methamphetamine 
source materials, the potential for diversion of benzaldehyde, 
including mixtures, may increase significantly. The DEA is interested 
in soliciting comments from interested persons involved with chemical 
mixtures containing benzaldehyde. For products which contain greater 
than 30 percent benzaldehyde, the proposal establishes an application 
process by which individual or group exemptions can be obtained.
Ergonovine and Ergotamine--No Concentration Limit
    DEA is proposing to regulate all mixtures containing ergonovine and 
ergotamine. The natural concentrations of these chemicals is on the 
order of a few hundredths of a percent. The alkaloids are precursors 
for the manufacture of hallucinogens that are potent in microgram 
dosages; little material is required to manufacture viable quantities 
of illicit drugs. Commercially, these chemicals are only found in 
prescription drug products, which are already exempt; therefore their 
regulation in chemical mixtures should not have any impact.

List II Chemicals

    List II chemicals, while not precursors of the controlled 
substances, are essential for carrying out the illegal manufacture of 
controlled substances. DEA is proposing the following concentration 
limits for List II chemicals:
Acetone, Methyl Ethyl Ketone (MEK), Methyl Isobutyl Ketone (MIBK), 
Toluene, and Ethyl Ether--35 Percent
    These chemicals are interchangeable and also are effective when 
used in combination in clandestine operations; therefore, they are 
cumulative.
    These solvents are used, either singly or in combination, in the 
processing of cocaine hydrochloride. Commercially, they are used in a 
wide variety of industrial processes and represent the majority of 
mixtures affected by the chemical regulations. In reviewing the 
properties of these solvents, DEA has determined that in mixtures with 
concentrations of greater than 35 percent, either individually or in 
combination with another solvent, the mixture emulates the properties 
of the listed solvent. Therefore, the concentration limit for such 
mixtures is proposed to be 35 percent.
Acetic Anhydride, Benzyl Chloride, Hydrochloric Acid, Iodine and 
Sulfuric Acid--20 Percent
Potassium Permanganate--15 Percent
    These chemicals are used as reagents and precursors in the process 
of manufacturing controlled substances. Reagents and precursors are 
typically solutes which are dissolved in a solvent in order for a 
chemical reaction to be carried out. Because they are dissolved, the 
amount of listed precursor or reagent needed is less than the amount of 
listed solvent needed to manufacture a controlled substance. This puts 
mixtures containing less than the 35 percent concentration limit, as 
set for solvents, at risk of diversion. Consequently, a 20 percent 
concentration limit is proposed for these chemicals, except for 
potassium permanganate, for which the proposed concentration limit is 
15 percent. DEA has not identified any mixtures that contain potassium 
permanganate in concentrations greater than 15 percent.

II. Specific Mixture Categories

    While the concentration limits will suffice for the majority of 
chemical mixtures, there are certain categories of mixtures that fall 
outside of the limits provided, but are not considered to be likely 
sources for diversion. DEA has identified three such categories: (1) 
waste materials regulated by the Environmental Protection Agency (EPA); 
(2) paints and coatings; and (3) harvested plant material.
    (1) Waste mixtures that: (a) are subject to the requirements of 40 
CFR Sections 262 and 263.20-22; (b) must be documented on U.S. 
Environmental Protection Agency Form 8700-22/22A (Uniform Hazardous 
Waste Manifest); and (c) are being distributed to another person solely 
for the purpose of disposal by incineration are exempt. These mixtures 
include only those that are covered by EPA regulations and have a 
`cradle to grave' paper trail. Further, the exemption applies only to 
the extent that the Form 8700-22/22A is available for inspection and 
copying by DEA. If the generator fails to release, or permit the 
release, of the necessary information required by DEA, then the 
mixtures will be treated as a regulated mixture. Finally, any change in 
the requirements with respect to Form 8700-22/22A, including EPA 
exemption of a mixture or a waste management site, could result in 
modification or removal of the exemption.
    (2) Completely formulated paints and coatings. DEA recognizes that 
while paints and coatings, as defined below, may contain a higher 
concentration of a listed chemical than allowed for exemption, they 
also contain other ingredients, such as pigments, that render them 
unsuitable as a source of supply for chemical traffickers.
    For purposes of the exemption, a completely formulated paint or 
coating is defined as any clear or pigmented liquid, liquefiable, or 
mastic composition designed for application to a substrate in a thin 
layer which is converted to a clear or opaque solid protective, 
decorative, or functional adherent film after application. A completely 
formulated paint or coating contains all the components of the paint/
coating mixed without the need to add any other material except a 
thinner for use in the final application. Included in this category are 
paints, clear coats, topcoats, primers, varnishes, sealers, adhesives, 
lacquers, stains, shellacs, inks and temporary protective coatings. To 
qualify for the exemption, a paint or coating must meet the American 
Society for Testing Materials specifications for the specific product.
    (3) Harvested plant material. Harvested plant material that 
contains listed chemicals, while meeting the definition of chemical 
mixture, will be exempt provided that the plant material is unaltered 
from its natural state. Changes in the physical state that preserve the 
natural composition of the material, such as grining, chopping, 
mulching, or cutting, do not affect the exemption status. However, 
changes that alter the natural composition of the material, such as 
that resulting from chemical or physical extraction, concentrating, 
enhancement, or by chemical reaction or any such

[[Page 49511]]

treatment, will disqualify the mixture from exemption.

III. Exemption By Application

    For those chemical mixtures that may not otherwise qualify for an 
exemption, but are formulated in such a manner that the listed 
chemicals cannot be readily recovered from the mixture and the mixture 
itself cannot be used for illicit drug manufacture, DEA is proposing a 
procedure by which the manufacturer of the mixture may apply for an 
exemption of the mixture or group of mixtures. The application may be 
submitted for a single mixture or a group of mixtures containing the 
same listed chemical at equal concentration with variations in the 
concentration of the other non-listed chemicals in the mixture. 
Consideration will also be given to applications for mixtures in which 
the concentration of the listed chemical varies without regard to the 
specific concentrations of the other non-listed chemicals in the 
mixture. In either group, variation of the concentration of any 
chemical within the mixture that will result in a change in the 
function of the mixture will disqualify the mixture from the group. The 
Administrator may determine that a specific mixture does not qualify as 
part of a group. Each manufacturer must request exemption status for 
its particular products; exemption of a product for one manufacturer 
does not carry over to the same or similar products for another 
manufacturer.
    An application for exemption must contain identifying information 
about the applicant, qualitative and quantitative data regarding the 
mixture, and justification as to why the mixture should be exempted. 
DEA may request additional information on the formulation and 
distribution of the mixture or clarification of any submitted 
information, as needed. The application for exemption will contain a 
consent for the termination of exemption by decision of the 
Administrator upon evidence that the product has been diverted for the 
use of producing a controlled substance.

Termination of Exemption

    The Administrator may terminate or modify the exemption for any 
chemical mixture that has been granted an exemption if evidence of 
diversion or attempted diversion is found. Evidence that a chemical 
mixture has been or is being used in the manufacuturing of a controlled 
substance will be adequate reason to revoke exemption status for a 
specific product or all similar chemical mixtures which the DEA 
determines can be used in the illicit manufacdturing process for which 
the evidence is obtained.
    Procedures are given in this proposed rule for the termination of 
an exemption granted pursuant to 21 CFR 1310.12 or 1310.13 and differ 
according to whether removal of exemption status is product specific or 
by change of any criterion in 21 CFR 1310.12(c) or 1310.12(d). The DEA 
will issue and publish in the Federal Register notification of the 
termination of exemption of a specific exempt product or group of 
exempt products for which evidence of diversion has been found. This 
order shall specify the date on which the termination of exemption 
shall take effect. The Administrator shall permit any interested party 
to file written comments on or objections to the notice within 60 days 
of the date of publication of the order in the Federal Register. If any 
such comments or objections 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 reconsideration of the order in light of comments and objections 
filed. Thereafter, the Administrator shall reinstate, terminate, or 
amend the original order as deemed appropriate. The DEA shall send 
written notification to the manufacturer only in instances where the 
manufacturer of affected products has been readily identified, advising 
of an action prior to publication in the Federal Register.

Trade Secrets

    Information required by the DEA to exempt a product includes 
qualitative and quantitative data for the product. Industry groups 
expressed concern regarding confidenticality and trade secrets. The DEA 
has considerable experience in safeguarding trade secrets. The issue of 
protection of confidential business information has been addressed by 
the DEA in the Federal Register Final Rule published on June 22, 1995 
which finalized specific provisions of the DCDCA (60 FR 32453). The 
release of confidential business information 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 310 (c) of the CSA (21 
U.S.C. 830(c)) and the Department of Justice procedures set forth in 28 
CFR 16.7.
    Section 310(c) of the CSA provides that information collected under 
Section 310 that is protected from disclosure under Exemption 4 may 
only be released in circumstances related to the enforcement of 
controlled substance or chemical laws, custom 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.

Regulation of Chemical Mixtures

    There are some chemical mixtures that will not meet the proposed 
exemption criteria and will be subject to regulation. It is proposed 
that the threshold be determined by taking the entire weight or volume 
of the regulated mixture for mixtures regulated due to the presence of 
acetone, ethyl ether, methyl ethyl ketone, methyl isobutyl ketone and 
toluene. In mixtures that contain two or more listed chemicals, other 
than acetone, ethyl ether, methyl ethyl ketone, methyl isobutyl ketone 
and toluene, each chemical shall be compared against its respective 
threshold. Where the mixture contains two or more chemicals that are 
cumulative, other than acetone, ethyl ether, methyl ethyl ketone, 
methyl isobutyl ketone and toluene, then the summed concentration of 
the listed chemicals that are cumulative will be considered; where the 
total weight of the cumulative listed chemicals exceeds the threshold 
for any one of the listed chemicals contained in the mixture, then the 
transaction will be regulated. Thresholds are proposed to be determined 
by taking the weight or volume of listed chemical contained in the 
mixture for all other listed chemicals.
    Further, the provisions regarding excluded transactions, as set out 
in 21 CFR 1310.08, will apply equally to mixtures containing the 
specified chemicals.

Regulatory Flexibility and Small Business Concerns

    The Domestic Chemical Diversion Control Act of 1993 replaced the 
existing blanket exemption from regulation for chemical mixtures with a 
provision that only those chemical mixtures specifically identified by 
regulation would be exempt from DEA's chemical controls, based on a 
finding that each mixture cannot be easily used in the illicit 
manufacture of a controlled substance and that the chemical(s) 
contained in the mixtures cannot be readily recovered. This change was 
necessary to make the U.S.'s chemical controls consistent with Article 
12,

[[Page 49512]]

Paragraph 14 of the United Nations 1998 Convention Against Illicit 
Traffic in Narcotic Drugs and Psychotropic Substances (1988 
Convention), which requires that chemical controls apply to the 
chemicals themselves and to products containing the chemicals that are 
compounded in such a way that such chemicals cannot be easily used or 
recovered by readily applicable means.
    In considering application for the new requirement, DEA recognized 
that neither regulation nor exemption of all mixtures were a feasible 
approach. Regulation of all chemical mixtures would cast too broad a 
net, encompassing products that are not of significant concern to DEA 
as sources for the diversion of listed chemicals and resulting in an 
unnecessary regulatory burden on both industry and DEA. Also of 
significance, exemption of all chemical mixtures would leave products 
that are suitable for use in the illicit manufacture of controlled 
substances open for diversion. With the growing effectiveness of 
chemical controls, such unregulated mixtures could become a significant 
source of chemicals for diversion, which would be inconsistent with 
both DEA's mandate and the U.S.'s responsibilities under the 1988 
Convention. Therefore, it was necessary to identify some middle ground 
that would minimize the impact on industry while still satisfying the 
intent of the requirement and the U.S.'s obligations under the 1988 
Convention.
    Originally, DEA proposed a system whereby manufacturers would 
request exemptions for their specific products. However, industry 
expressed concerns that the administrative burdens, for both industry 
and DEA, would be too great, given the number of chemical mixtures in 
commerce. Based on those concerns, DEA withdrew the proposal and opened 
a dialogue with representative from the manufacturing, distributing, 
and related segments of the chemical industry regarding how to best 
address the matter of exemption.
    An important DEA objective in establishing exemption criteria was 
to obtain recommendations from the affected industry. The DEA met with 
several interested parties including associations representing chemical 
manufacturers, paint and coatings industry, flavor and extract 
manufacturing, dietary supplement manufacturers and distributors, and 
chemical distributors and affiliated members. These discussions, along 
with available DEA information pertaining to the illicit manufacture of 
controlled substances, were considered in the establishment of 
exemption criteria under this proposal. The DEA realizes that, because 
of the diverse industries affected by these regulations, not all 
interested persons may have been fully represented prior to the 
publication of this proposal. The DEA is therefore requesting that 
comments be submitted to help ensure that the concerns of all 
interested parties are considered.
    Comments should identify the type of industry, including the number 
of companies/individuals involved and the annual volume of business 
they conduct; how the proposed regulatory requirements would impact 
that industry (through the registration, recordkeeping, and reporting 
requirements), and within the statutory requirements, any suggestions 
or comments on how the final regulations might better be tailored to 
the industry without compromising the basic mandate of the law to 
prevent the diversion of listed chemicals for the illicit manufacture 
of controlled substances.
    The initial concern in addressing the matter of exemption was to 
establish a system for the identification of the categories of chemical 
mixtures to be exempted that would be objective and specific enough to 
allow nontechnical personnel to easily understand and apply the 
criteria and to allow accurate identification of those mixtures that 
could readily be used in the illicit manufacture of controlled 
substances while not encumbering those that could not.
    Two options were considered: (1) The used of general product 
categories, such as paints, coatings, adhesives, and sealants; refinery 
and chemical plant streams; waste products; insecticides, pesticides, 
and herbicides; consumer products, including cosmetics; and solutions 
containing more than 5 percent solids by weight; and (2) the use of 
concentration limits, expressed as the percentage of chemical, either 
by volume or weight, that a mixture may contain.
    Examination of the use of product categories revealed problems 
involving their subjective nature, which could lead to confusion 
regarding whether certain products might be included in the category. 
In addition, the lack of specificity in such a system would cause 
difficulties in identifying products that should not be included in a 
category because of the manner in which they are formulated. It quickly 
became apparent that use of product categories as the primary means to 
identify exempt chemical mixtures would require the development of a 
cumbersome, highly technical, and complicated set of definitions and 
criteria in order to identify the mixtures to be granted exemption.
    The concentration limits, by contrast, provide a clear cut, 
objective means to identify whether a chemical mixture is or is not 
exempt. By focusing specifically on the amount of chemical contained in 
a given amount of mixture, which is of primary concern to DEA, the 
system provides and unequivocal standard that is easily understood by 
expert and layman alike. There is no need to establish a large, complex 
and highly technical set of definitions and crtiera that must be used 
to make a subjective determinations to what category a mixture belongs 
in and whether it meets the exemptions criteria or not.
    While the system of concentration limits can be used satisfactorily 
with most chemical mixtures, it does not address those circumstances 
where the formulation of the mixture or the manner in which the mixture 
is distributed may be factors for consideration in determining 
exemption status. Therefore, DEA is proposing the use of certain 
limited categories for exemption. Additionally, DEA recognizes that 
there will be those individual products which may not meet the 
established exemption criteria but are deserving of consideration for 
exemption due to specific factors that may limit their use in the 
illicit manufacture of controlled substances. Therefore, provisions 
have been made in the proposed regulations for a system for which a 
manufacture may request exemption of a specific mixture.
    Once the basic framework for the exemption process had been 
established, DEA consulted with representatives of the regulated 
industry, including chemical manufacturers and distributors, as well as 
the paint and coatings, the flavoring and fragrances, and the dietary 
and nutritional supplements industries, to identify the concentration 
limits or other criteria that would satisfy the requirements of the law 
with the least possible burden on regular commerce. The proposed 
concentration limits were based on consideration of how useful the 
mixtures would be in the illicit manufacture of controlled substances 
and how great a percentage of the mixtures in regular commerce could be 
exempted from regulation; the proposed limits provide a good balance 
between the requirements of the law and the need to minimize the impact 
of the law on legitimate commerce. Representatives of the chemical 
manufacturers and distributors have indicated that the proposed 
concentration limits should provide for

[[Page 49513]]

exemption of the majority of chemical mixtures in commerce.
    In those instances where a chemical mixture will be subject to 
regulation, the regulatory requirements are not unduly burdensome and 
should not present any restriction on regular commerce. The primary 
requirement, recordkeeping, applies only to those transactions that 
meet or exceed the threshold established for the chemical contained in 
the mixture. The information required to be maintained in the records 
is minimal and can usually be found in the normal business records 
maintained by anyone following good business practices. Additionally, 
the chemicals contained in the mixture may be subject to other Federal 
or state recordkeeping requirements, in which case the records 
maintained may be used to satisfy DEA's requirement, provided the 
necessary information is readily available. In addition, this proposed 
rule will exempt persons from registration if the only List I chemicals 
which they distribute, import or export are contained in exempt 
mixtures; it is DEA's understanding that the bulk of chemical mixtures 
in commerce contain List II, rather than List I chemicals.
    In summary, the proposed system provides for the exemption of the 
greatest possible population of mixtures while remaining consistent 
with the requirements of the law and obligations under the U.N. 
Convention. The combination of exemptions, together with the threshold 
system and requirement that registration be obtained only for 
activities involving List I chemicals allows for the lease possible 
burden and cost to industry. Therefore the Acting Deputy Administrator, 
in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), 
has reviewed this proposed rule and by approving it certifies that it 
will not have a significant economic impact on a substantial number of 
small business entities.
    With respect to the specific economic and regulatory burdens 
associated with the regulation of chemical mixtures (in those instances 
where exemption is not possible), there are three different 
requirements to be considered:

Registration

    This requirement applies solely to persons who distribute, import, 
or export List I chemicals, including those contained in regulated 
chemical mixtures. Registration is required on an annual basis. The 
initial registration cost is $595.00 and the annual registration 
renewal cost is $477.00. Completion of the application requires 
approximately 30 minutes.
    The impact of the registration requirement will vary depending on 
the type of industry and type of transactions. As noted, the 
registration requirement applies only to List I chemicals.

Recordkeeping

    Regulated persons must keep records regarding regulated 
transactions. The records must reflect the name, address, and, if 
required, DEA registration number of each party to the transaction; the 
date of the transaction; the name, quantity, and form of packaging of 
the listed chemical; the method of transfer (company truck, picked up 
by customer, etc.); and the type of identification used by the 
purchaser and any unique number on that identification.
    As noted in 21 CFR 1310.06(b), normal business records shall be 
considered adequate for satisfying the recordkeeping requirement, if 
they contain the required information and are readily retrievable from 
the other business records of the regulated person. It has been DEA's 
experience that regulated persons at the non-retail level maintain such 
information in their normal business records; therefore, no additional 
burden is considered to apply. At the retail level, such information is 
not normally kept, therefore, any records to be maintained would have 
to be considered as part of the regulatory burden.

Reporting

    Regulated persons must make reports of any regulated transactions 
involving an extraordinary quantity of a listed chemical, an uncommon 
method of payment or delivery, or any other circumstance that the 
regulated person believes may indicate that the listed chemical will be 
used in violation of the regulations (21 CFR 1310.05(a)(1)). 
Additionally, any unusual or excessive loss or disappearance of a 
listed chemical must be reported. It must be emphasized that this 
requirement does not apply to all sales of listed chemicals; it applies 
only to those sales involving suspicious/unusual circumstances or 
thefts/losses.
    In addition to the above reporting requirement, the Comprehensive 
Methamphetamine Control Act of 1996 (MCA) established the requirement 
that each regulated person who engages in a transaction with a 
nonregulated person which involves ephedrine, pseudoephedrine, or 
phenylpropanolamine (including drug products containing those 
chemicals) and uses or attempts to use the Postal Service or any 
private or commercial carrier, shall, on a monthly basis, submit a 
report of each such transaction conducted during the previous month to 
the Attorney General (21 U.S.C. 830(b)(3)). This requirement has been 
the subject of much discussion and it is generally accepted that the 
manner in which it is written provides DEA with no discretion to 
exclude any person from the requirement. Legislative amendment of this 
requirement to allow DEA some measure of discretion in its application 
is being explored.

Total Regulatory Impact

    The total regulatory impact of these requirements will vary based 
on the type of industry involved and the types of transactions being 
conducted. With the chemical industry, the total impact should be 
limited. DEA has been informed by representatives of the chemical 
industries that the bulk of chemical mixtures will contain List II 
chemicals. Further, many of the companies that handle List I chemical 
mixtures are already registered to handle List I chemicals. Therefore, 
the registration requirement will have limited impact on that industry.
    With respect to the recordkeeping requirements, the bulk of the 
chemical mixture transactions are commercial in nature and involve 
materials that are subject to stringent Federal and state requirements; 
the information required to satisfy DEA's recordkeeping requirements 
will already be available as part of the business records being 
maintained by the regulated persons. Therefore, no additional burden is 
anticipated to satisfy the recordkeeping requirement. With respect to 
reporting, DEA is adjusting its existing, OMB approved information 
collection regarding Reports of Suspicious Orders or Theft/Loss of 
Listed Chemicals/Machines (OMB Number 1117-0024), to increase the 
estimated number of annual reports by 2,000 and the estimated burden 
hours by 340 hours per year.
    With the dietary and nutritional supplement industry, the issue is 
somewhat less clear. DEA has been informed by the manufacturers and 
distributors of products that are sold at retail that their products 
contain concentrations of ephedrine that are consistent with the 
proposed exemption limit; therefore, the retail side of the industry 
should experience little, if any, regulatory impact. However, DEA was 
recently contacted by representatives of a segment of the industry 
involved in the direct marketing of these products, who expressed grave 
concern regarding the potential impact of the requirements on direct 
marketers, especially the individual marketers selling small

[[Page 49514]]

amounts of the product to friends and neighbors.
    DEA is well aware of the potential impact that the regulations 
could have on such operations, having dealt with the issue with respect 
to the direct marketing of drug products containing ephedrine, 
pseudoephedrine, and phenylpropanolamine. As was stated in the 
discussion regarding Exemption by Application earlier in this document, 
it is not the intent of DEA to regulate those individuals engaged in 
direct marketing sales of small amounts of these products in face-to-
face transactions. In addition to the proposed regulations allowing for 
exemption by application, there are existing exemption procedures 
available for types of transactions and categories of persons. An 
exemption has already been provided to one direct marketing 
organization and discussions are underway with another to also provide 
an exemption provided certain circumstances are met. It must be noted 
that the exemptions apply to individuals engaged in direct marketing 
sales of small amounts of these products in face-to-face transactions; 
manufacturers and wholesale distributors of the products remain subject 
to the regulatory requirements.
    Assessing the overall impact of the regulations on the dietary and 
nutritional supplement industry has been hampered by the lack of 
information regarding the overall scope and population of the industry. 
DEA has, along with others, requested demographic information from the 
industry; however, to date, we have not received the details necessary 
to adequately estimate the potential impact of the regulations. As 
stated elsewhere in this document, interested persons are invited to 
submit comments identifying the scope and population of the industry; 
the effect of the regulations on the industry, both in terms of the 
extent to which proposed and existing exemptions will exclude the 
industry from regulation and, where the exemptions do not extend, how 
the above requirements will impact the industry; and any comments or 
suggestions on how the regulations might be adjusted to address 
industry concerns without compromising their intent to prevent the 
diversion of listed chemicals to the illicit manufacture of controlled 
substances.
    This proposed rule has been reviewed pursuant to Executive Order 
12866 and has been determined to be a significant regulatory action. 
Therefore, it has been reviewed and approved 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 this 
proposed rule does not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment.
    This rule will not result in the expenditure by state, local, and 
tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more in any one year, and will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.
    This rule is not a major rule as defined by Section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100,000,000 or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based companies to 
compete with foreign-based companies in domestic and export markets.

List of Subjects

21 CFR Part 1300

    Definitions, Drug traffic control, Controlled substances, List I 
and List II chemicals.

21 CFR Part 1310

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

    For the reasons set out above, it is proposed that 21 CFR parts 
1300 and 1310 be amended as follows:

PART 1300--[AMENDED]

    1. The authority citation for part 1300 continues to read as 
follows:

    Authority: 21 U.S.C. 802, 871(b), 951, 958(f).

    2. Section 1300.02 is proposed to be amended by revising the 
paragraph (b)(28)(i)(E) to read as follows:


Sec. 1300.02.  Definitions relating to listed chemicals.

* * * * *
    (b) * * *
    (28) * * *
    (i) * * *
    (E) Any transaction in a chemical mixture designated in 
Secs. 1310.12 and 1310.13 that the Administrator has exempted from 
regulation.
* * * * *

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 1310.04 is proposed to be amended by adding a new 
paragraph (h) as follows:


Sec. 1310.04  Maintenance of records.

* * * * *
    (h) The thresholds and conditions in 21 CFR 1310.04(f) and 
1310.04(g) will apply to transactions involving regulated chemical 
mixtures. All regulated chemical mixtures containing List I and List II 
chemicals with the exception of acetone, ethyl ether, methyl ethyl 
ketone, toluene and methyl isobutyl ketone will have the threshold 
determined by taking the weight of the listed chemical in the regulated 
mixture. Regulated chemical mixtures that contain one or more of the 
List II chemicals acetone, ethyl ether, methyl ethyl ketone, toluene 
and methyl isobutyl ketone will have the threshold determined by taking 
the entire weight of the mixture. The threshold for these mixtures will 
be 1500 kilograms for export to the western hemisphere except Canada 
and 150 kiograms for domestic transactions.
    3. Part 1310 is proposed to be amended by adding new sections 
1310.12 and 1310.13 as follows:


Sec. 1310.12  Exempt chemical mixtures.

    (a) The chemical mixtures meeting the criteria in paragraphs (c), 
(d) and (g) of this section are 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) 
and (c) of this section.
    (b) No exemption granted pursuant to Sec. 1310.12 or Sec. 1310.13 
affects the criminal liability of illegal possession, distribution, 
exportation, or importation of listed chemicals contained in the exempt 
chemical mixture.
    (c) Mixtures containing a listed chemical in concentrations equal 
to or less than those specified in the `Table of Concentration Limits' 
are designated as exempt chemical mixtures for the purpose set forth in 
this section. Calculation of percent by weight or by volume is given in 
the Table along with the concentration limit and other relative 
information.

[[Page 49515]]



                                          Table of Concentration Limits                                         
----------------------------------------------------------------------------------------------------------------
                                      The DEA                                                                   
         List I chemicals             chemical       Concentration                 Special conditions           
                                      code no.         (percent)                                                
----------------------------------------------------------------------------------------------------------------
N-Acetylanthranilic acid, its              8522  20% by weight........  Concentration based on any combination  
 salts and esters.                                                       of N-acetylanthranilic acid and its    
                                                                         salts and esters.                      
Anthranilic acid, and its salts            8530  20% by weight........  Concentration based on any combination  
 and esters.                                                             of anthranilic acid and its salts and  
                                                                         esters.                                
Benzaldehyde......................         8256  30% by volume........                                          
Benzyl cyanide....................         8570  20% by volume........                                          
Ephedrine, its salts, optical              8113  2% by weight.........  Concentration based on any combination  
 isomers, and salts of optical                                           of ephedrine, pseudoephedrine, and     
 isomers.                                                                their salts, optical isomers and salts 
                                                                         of optical isomers.                    
Ergonovine and its salts..........         8675  Not exempt at any      Chemical mixtures containing any amount 
                                                  concentration.         of ergonovine, including its salts, are
                                                                         not exempt.                            
Ergotamine and its salts..........         8676  Not exempt at any      Chemical mixtures containing any amount 
                                                  concentration.         of ergotamine, including its salts, are
                                                                         not exempt.                            
Ethylamine and its salts..........         8678  20% by weight........  Ethylamine or its salts in an inert     
                                                                         carrier solvent is not considered a    
                                                                         mixture. Weight is based on ethylamine 
                                                                         in the mixture and not the combined    
                                                                         weight of carrier solvent, if any.     
Hydriodic acid....................         6695  20% by weight........  Aqueous or alcoholic solutions are not  
                                                                         considered mixtures.                   
Isosafrole........................         8704  20% by volume........  Concentration in mixture cannot exceed  
                                                                         20% if taken alone or in any           
                                                                         combination with safrole.              
Methylamine, and its salts........         8520  20% by weight........  Methylamine or its salts in an inert    
                                                                         carrier solvent is not considered a    
                                                                         mixture. Weight is based on methylamine
                                                                         in the mixture and not the combined    
                                                                         weight of carrier solvent, if any.     
3,4-Methylenedioxyphenyl-2-                8502  20% by weight........                                          
 propanone.                                                                                                     
N-Methylephedrine, its salts,              8115  0.1% by weight.......  Concentration based on any combination  
 optical isomers, and salts of                                           of N-methylephedrine, N-               
 optical isomers.                                                        methylpseudoephedrine and their salts, 
                                                                         optical isomers and salts of optical   
                                                                         isomers.                               
N-Methylpseudoephedrine, its               8119  0.1% by weight.......  Concentration based on any combination  
 salts, optical isomers, and salts                                       of N-methylpseudoephedrine N-          
 of optical isomers.                                                     methylephedrine, and their salts,      
                                                                         optical isomers and salts of optical   
                                                                         isomers.                               
Nitroethane.......................         6724  20% by volume........                                          
Norpseudoephedrine, its salts,             8317  0.6% by weight.......  Concentration based on any combination  
 optical isomers, and salts of                                           of norpseudoephedrine,                 
 optical isomers.                                                        phenylpropanolamine and their salts,   
                                                                         optical isomers and salts of optical   
                                                                         isomers.                               
Phenylacetic acid, and its salts           8791  20% by weight........  Concentration based on any combination  
 and esters.                                                             of phenylacetic acid and its salts and 
                                                                         esters.                                
Phenylpropanolamine, its salts,            1225  0.6% by weight.......  Concentration based on any combination  
 optical isomers, and salts of                                           of phenylpropanolamine,                
 optical isomers.                                                        norpseudoephedrine and their salts,    
                                                                         optical isomers and salts of optical   
                                                                         isomers.                               
Piperidine, and its salts.........         2704  20% by volume........  Concentration based on any combination  
                                                                         of piperidine and its salts.           
Piperonal.........................         8750  20% by weight........                                          
Propionic anhydride...............         8328  20% by volume........                                          
Pseudoephedrine, its salts,                8112  2% by weight.........  Concentration based on any combination  
 optical isomers, and salts of                                           of pseudoephedrine, ephedrine, and     
 optical isomers.                                                        their salts, optical isomers and salts 
                                                                         of optical isomers.                    
Safrole...........................         8323  20% by volume........  Concentration in mixture cannot exceed  
                                                                         20% if taken alone or in any           
                                                                         combination with isosafrole.           
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                      The DEA                                                                   
         List II chemicals            chemical       Concentration                 Special conditions           
                                      code no.         (percent)                                                
----------------------------------------------------------------------------------------------------------------
Acetic Anhydride..................         8519  20% by volume........                                          
Acetone...........................         6532  35% by volume........  Limit applies to acetone or any         
                                                                         combination of acetone, ethyl ether,   
                                                                         methyl ethyl ketone, methyl isobutyl   
                                                                         ketone and toluene if present in the   
                                                                         mixture by summing the concentrations  
                                                                         for each chemical.                     
Benzyl chloride...................         8568  20% by volume.                                                 
Ethyl ether.......................         6584  35% by volume........  Limit applies to ethyl ether or any     
                                                                         combination of acetone, ethyl ether,   
                                                                         methyl ethyl ketone, methyl isobutyl   
                                                                         ketone and toluene if present in the   
                                                                         mixture by summing the concentrations  
                                                                         for each chemical.                     
Hydrochloric acid.................         6545  20% by weight........  Aqueous or alcoholic solutions are not  
                                                                         considered mixtures.                   
Iodine............................         6699  20% by weight........                                          
Methyl ethyl ketone...............         6714  35% by volume........  Limit applies to methyl ethyl ketone or 
                                                                         any combination of acetone, ethyl      
                                                                         ether, methyl ethyl ketone, methyl     
                                                                         isobutyl ketone and toluene if present 
                                                                         in the mixture by summing the          
                                                                         concentrations for each chemical.      

[[Page 49516]]

                                                                                                                
Methyl isobutyl ketone............         6715  35% by volume........  Limit applies to methyl isobutyl ketone 
                                                                         or any combination of acetone, ethyl   
                                                                         ether, methyl ethyl ketone, methyl     
                                                                         isobutyl ketone and toluene if present 
                                                                         in the mixture by summing the          
                                                                         concentrations for each chemical.      
Potassium permanganate............         6579  15% by weight........                                          
Sulfuric acid.....................         6552  20% by weight........  Aqueous solutions are not considered    
                                                                         mixtures.                              
Toluene...........................         6594  35% by volume........  Limit applies to toluene or any         
                                                                         combination of acetone, ethyl ether,   
                                                                         methyl ethyl ketone, methyl isobutyl   
                                                                         ketone and toluene if present in the   
                                                                         mixture by summing the concentrations  
                                                                         for each chemical.                     
----------------------------------------------------------------------------------------------------------------

    (d) The following categories of chemical mixtures are automatically 
exempt from the provisions of the Controlled Substances Act as 
described in paragraph (a) of this section:
    (1) Chemical mixtures that are distributed directly to an 
incinerator for destruction and are subject to the United States 
Environmental Protection Agency documentation on EPA Form 8700-22 and 
8700-22A, provided that the person distributing the mixture to the 
incinerator maintains and makes available to agents of the 
Administration upon request such documentation for a period of no less 
than two years.
    (2) Completely formulated paints/coatings that meet the American 
Society for Testing Materials specifications for the product. A 
completely formulated paint/coating are only those formulations that 
contain all the components of the paint/coating for use in the final 
application without the need to add any additional substances except 
possibly a thinner. A completely formulated paint or coating is defined 
as any clear or pigmented liquid, liquefiable or mastic composition 
designed for application to a substrate in a thin layer that is 
converted to a clear or opaque solid protective, decorative or 
functional adherent film after application.
    (3) Harvested plant material that is in its natural state or has 
been processed in a way that preserves the natural constituents in the 
ratios that are found in the plant's natural state. Plant material 
subjected to chemical or physical extraction, concentration, chemical 
reaction or other treatment that alters the plant's natural 
constituents or the ratios of the plant constituents are not exempt.
    (e) The Administrator may at any time terminate or modify the 
exemption for any chemical mixture which has been granted an exemption 
pursuant to the concentration limits as specified in Sec. 1310.12(c); 
or the exemption provisions for specific categories of chemical 
mixtures as specified in Sec. 1310.12(d), if evidence of diversion or 
attempted diversion is found. In terminating or modifying an exemption, 
the Administrator shall issue and publish in the Federal Register 
notification of the removal of an exempt product or group of exempt 
products for which evidence of diversion has been found. This order 
shall include a reference to the legal authority under which the order 
is based and shall specify the date on which the termination of 
exemption shall take effect. The Administrator shall permit any 
interested party to file written comments on or objections to the order 
within 60 days of the date of publication of the order in the Federal 
Register. If any such comments or objections 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 order in light of comments and 
objections filed. Thereafter, the Administrator shall reinstate, 
terminate, or amend the original order as determined appropriate.
    (f) The Administrator may upon evidence of diversion or attempted 
diversion modify any part of the criteria for exemption as specified in 
Sec. 1310.12(c) and Sec. 1310.12(d). In doing so, the Administrator 
shall issue and publish a Notice of Proposed Rulemaking in the Federal 
Register. The Administrator shall permit any interested persons to file 
written comments on or objections to the proposal. After considering 
any comments or objections filed, the Administrator shall publish in 
the Federal Register a final order.


Sec. 1310.13  Exemption of chemical mixtures; application.

    (a) The Administrator may, by publication of a Final Rule in the 
Federal Register, exempt from the application of all or any part of the 
Act, a chemical mixture consisting of two or more chemical components, 
at least one of which is not a List I or List II chemical, if:
    (1) The mixture is formulated in such a way that it cannot be 
easily used in the illicit production of a controlled substance; and
    (2) The listed chemical or chemicals contained in the chemical 
mixture cannot be readily recovered.
    (b) Any manufacturer seeking an exemption for a chemical mixture, 
not exempt under Sec. 1310.12, from the application of all or any part 
of the Act, pursuant to paragraph (a) of this section, may apply to the 
Administrator, Drug Enforcement Administration, Department of Justice, 
Washington, D.C. 20537.
    (c) An application for exemption under this section shall contain 
the following information:
    (1) The name, address, and registration number, if any, of the 
applicant;
    (2) The date of the application;
    (3) The exact trade name(s) of the applicant's chemical mixture 
and, if the applicant formulates or manufactures the chemical mixture 
for other entities, the exact trade names of the chemical mixtures and 
the names of the entities for which the chemical mixtures were 
prepared;
    (4) The complete qualitative and quantitative composition of the 
chemical mixture (including all listed and all non listed chemicals) 
and its intended use;
    (5) The chemical and physical properties of the mixture and how 
they differ from the properties of the listed chemical or chemicals;
    (6) A statement which the applicant believes is justification for 
granting an exemption for the chemical mixture. The statement must 
explain how the chemical mixture meets the exemption criteria set forth 
in paragraph (a) of this section.
    (7) The application will include a statement that the applicant 
accepts the right of the Administrator to terminate exemption from 
regulation for the chemical mixture granted exemption

[[Page 49517]]

under Sec. 1310.13 if evidence of diversion of the mixture, or similar 
mixture, is found.
    (8) The identification of any information on the application which 
is considered by the applicant to be a trade secret or confidential and 
entitled to protection under U.S. laws restricting the public 
disclosure of such information.
    (d) The Administrator may require the applicant to submit such 
additional documents or written statements of fact relevant to the 
application which he deems necessary for determining if the application 
should be granted.
    (e) Within a reasonable period of time after the receipt of an 
application for an exemption under this section, the Administrator will 
notify the applicant of acceptance or nonacceptance of the application. 
If the application is not accepted, an explanation will be provided. 
The Administrator is not required to accept an application if any 
information required pursuant to paragraph (c) of this section or 
requested pursuant to paragraph (d) of this section is lacking or not 
readily understood. The applicant may, however, amend the application 
to meet the requirements of paragraphs (c) and (d) of this section. If 
the exemption is granted the applicant shall be notified in writing and 
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 persons 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 has reconsidered the application in light of the comments and 
objections filed. Thereafter, the Administrator shall reinstate, 
terminate, or amend the original order as deemed appropriate.
    (f) The Administrator may at any time terminate or modify any 
product or product line granted an exemption pursuant to paragraph (e) 
of this section. In terminating or modifying an exemption, the 
Administrator shall issue and publish in the Federal Register 
notification of the removal of an exempt product or group of exempt 
products for which evidence of diversion has been found. This order 
shall include a reference to the legal authority under which the order 
is based and shall specify the date on which the termination of 
exemption shall take effect. The Administrator shall permit any 
interested party to file written comments on or objections to the order 
within 60 days of the date of publication of the order in the Federal 
Register. If any such comments or objections 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 order in light of comments and 
objections filed. Thereafter, the Administrator shall reinstate, 
terminate, or amend the original order as determined appropriate.
    (g) Any change in the quantitative or qualitative composition of a 
chemical mixture which has been granted an exemption by application 
will require a new application for exemption unless such change causes 
the newly formulated mixture to be automatically exempt by definition 
in Sec. 1310.12. A new application is not necessary for a change in 
name or other designation, code, or any identifier. For such changes or 
additions a written notification is required. The DEA must be notified 
of any changes at least 60 days in advance of the effective date for 
the change.
    (h) Each manufacturer which desires a mixture to be exempt must 
apply separately as only those products specifically named in this 
exempted category will be recognized. Companies which have similar 
products to those in an exempted category must request and receive 
separate approval for their product line.
    (i) The following chemical mixtures, in the form and quantity 
listed in the application submitted (indicated as the ``date'') are 
designated as exempt chemical mixtures for the purposes set forth in 
this section:

                        Exempt Chemical Mixtures                        
------------------------------------------------------------------------
                                             Product                    
               Manufacturer                   name      Form      Date  
------------------------------------------------------------------------
[Reserved]................................  ........  ........  ........
------------------------------------------------------------------------

    Dated: September 1, 1998.
Donnie R. Marshall,
Acting Deputy Administrator.
[FR Doc. 98-24293 Filed 9-15-98; 8:45 am]
BILLING CODE 4410-09-M