[Federal Register Volume 64, Number 230 (Wednesday, December 1, 1999)]
[Proposed Rules]
[Pages 67216-67220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30960]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1309

[DEA NUMBER 185-P]
RIN 1117-AA50


Chemical Registration and Reregistration Fees

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Proposed rule.

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SUMMARY: The Drug Enforcement Administration (DEA) proposes to amend 
its application fees for registration and reregistration of 
manufacturers, distributors, importers, and exporters of List I 
chemicals, as authorized by section 3(a) of the Domestic Chemical 
Diversion Control Act of 1993 (DCDCA), reducing the fees from $595 to 
$326 for initial registration, and the reregistration fees from $477 to 
$171. Fees for retail registrants will increase from $255 to $326 for 
registration, and from $116 to $171 for reregistration. Office of 
Management and Budget (OMB) Circular A-25 requires a periodic review of 
user charges for agency programs. This review will bring fees into 
alignment with current changes in costs or market values.

DATES: Written comments or objections must be submitted on or before 
January 31, 2000.

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: Patricia Good, Chief, Liaison and 
Policy Section, Office of Diversion Control, Drug Enforcement 
Administration, Washington, DC 20537. Telephone (202) 307-7297.

SUPPLEMENTARY INFORMATION: 

Impact of the Proposed Rule

What Is the Effect of This Proposed Rule, and to Whom Does It Apply?

    The Drug Enforcement Administration (DEA) proposes to reduce the 
registration and

[[Page 67217]]

reregistration fees for persons manufacturing, distributing (non-
retail), importing and exporting List I chemicals. There are currently 
3,685 such registrants. Fees are reduced from $595 to $326 for 
registration, and from $477 to $171 for reregistration. Registration 
and reregistration fees for the 47 current retail registrants increase 
slightly, from $255 to $326 for registration, and from $116 to $171 for 
reregistration. At this time, DEA is receiving, on average, fewer than 
the new retail applications per year.

Legislative History

What is the Legal Basis for Registering Persons Manufacturing, 
Distributing, Importing and Exporting List I Chemicals

    The Chemical Diversion and Trafficking Act (CDTA) of 1988 was 
passed by Congress to control the diversion of certain chemicals that 
are necessary for the illicit manufacture of controlled substances. The 
CDTA and its regulations, set forth in Title 21 Code of Federal 
Regulations (CFR) parts 1310 and 1313, established a system of record 
keeping and reporting requirements through which DEA and the chemical 
industry could identify persons seeking to divert listed chemicals for 
the manufacture of illicit controlled substances.
    The Domestic Chemical Diversion Control Act of 1993 (DCDCA), which 
became effective on April 16, 1994, established a number of new 
requirements intended to close avenues used by illicit controlled 
substance manufacturers to circumvent the CDTA. One of the main 
provisions of the DCDCA was the requirement that manufacturers, 
distributors, importers and exporters of List I chemicals obtain a 
registration from DEA.
    Concurrent with the establishment of the registration requirement, 
DEA established, by regulations, the fees to be charged for 
registration and reregistration of List I chemical handlers, as 
required under the Independent Offices Appropriations act (IOAA) and 
the guidelines set forth in the Office of Management and Budget (OMB) 
Circular A-25.
    OMB Circular A-25, Section 6 provides that ``[A] user charge * * * 
will be assessed against each identifiable recipient for special 
benefits derived from Federal activities beyond those received by the 
general public.'' The section further requires that the user charge be 
sufficient to ``* * * recover the full cost to the Federal Government 
for providing the special benefit.'' A special benefit is described as 
a Government service which ``Enables the beneficiary to obtain more 
immediate or substantial gains or values (which may or may not be 
measurable in monetary terms) than those that accrue to the general 
public (e.g., receiving a patient, insurance, or guarantee provision, 
or a license to carry on a specific activity or business [emphasis 
added] or various kinds of public land use).''
    Sections 822 and 957 of Title 21, United States Code, as amended by 
the DCDCA, require that any person who manufactures, distributes, 
imports or exports a List I chemical must obtain annually a 
registration in accordance with DEA rules and regulations. A 
registration to manufacture, distribute, import or export List I 
chemicals is a special benefit under Circular A-25, in that it allows 
the registrant to engage in certain activities while a member of the 
general public may not. Therefore, the costs associated with DEA's 
issuance of a registration to manufacture, distribute, import or export 
a List I chemical; certain costs associated with advising registrants 
of their responsibilities; and maintenance of the integrity of the 
registration system must be recovered through assessment of a user fee.
    Section 6(d) of Circular A-25 describes the requirements for 
determining the full cost of a service or benefit. ``Full cost'' is 
defined as all direct and indirect costs, including, but not limited 
to: direct and indirect personnel costs, including salaries, fringe 
benefits (such as life and health insurance and retirement) and travel; 
physical overhead, including material and supply costs, rent and 
utilities; management and supervisory costs; and the costs of 
enforcement, collection, research, establishment of standards, and 
regulations. Section 6(d)(1)(e) provides that the cost figures shall be 
established utilizing ``the best available records of the agency, and 
new cost accounting systems need not be established solely for this 
purpose.'' The costs of the services provided by DEA were determined by 
use of proven and accepted budget estimating techniques as outlined in 
the DOJ budget guidelines and OMB Circular A-11.

Initial Fee Implementation

How did DEA Implement the Initial Fees

    DEA established two distinct categories of chemical registrants: 
retail distributors, such as convenience stores, gas stations, truck 
stops, liquor stores, etc., whose regulated activities consist of the 
direct sales to walk-in customers of drug products that are regulated 
as List I chemicals; and non-retail registrants, such as manufacturers 
which distribute, distributors, importers, and exporters of List I 
chemicals. Each category of registrant was addressed independently 
during the original establishment of the fees.
    Establishment of the initial application fee was a simple matter 
since the costs associated with the processing of each application for 
registration were direct costs applicable to each individual 
application; there were minimal general program costs that were 
required to be averaged across the applicant population. For renewal 
applications the calculation of the fee required identification of 
general program maintenance costs which were to be averaged across the 
registrant population. However, because List I chemical registration 
was a new requirement, there was no existing registrant population and 
the fees had to be calculated based on estimates of the potential 
population. For purposes of calculating the fee DEA estimated 10,000 
retail registrants and 1,500 non-retail registrants.
    Full details regarding the calculation of the original fees are 
contained in DEA's proposed rule regarding Implementation of the 
Domestic Chemical Diversion Control Act of 1993 (Pub. L. 103-200) which 
was published in the Federal Register on October 13, 1994 (59 FR 
51887).

New Applications

What Factors Were Involved in Establishing New Application Fees

    Due to industry comments regarding the financial impact of the 
registration fee received at the time the requirements of the MCA were 
implemented, DEA reviewed the preregistration process and waived a 
significant portion of the initial registration fee for manufacturers, 
distributors, importers, and exporters of regulated drug products, 
requiring that only $116 of the $595 fee be paid. Notice regarding the 
fee waiver was published in the Federal Register on October 17, 1997 
(62 FR 53958). Since that time, DEA has continued to assess the 
situation and has become aware of a number of incidents involving the 
theft of significant quantities of drug products and raw materials from 
persons distributing controlled substances and listed chemicals. At 
least five million dosage units of drug products and 75 kilograms of 
pseudoephedrine powder have been reported stolen. DEA is concerned that 
with the emphasis placed on ``knowing the customer'' and ensuring that 
all sales are legitimate, there may be

[[Page 67218]]

insufficient emphasis placed on maintaining security of the listed 
chemicals that registrants have in their possession. It is clear that a 
strong DEA presence at the time of initial registration remains 
necessary to ensure that applicants are fully aware of all 
requirements, not only in terms of ``knowing the customer'' and 
ensuring that sales are legitimate, but also ensuring that appropriate 
safeguards are in place to prevent theft or diversion of listed 
chemicals from the regulated location. However, while DEA will continue 
to conduct on-site activities as part of the preregistration 
investigation, at this time, due to the demand on resources for the 
pursuit of criminal investigations, DEA will only be able to allocate 
six hours of investigative time for each preregistrant investigation. 
However, DEA anticipates that, over time, these demands will lessen and 
resources currently dedicated to criminal investigations will be 
reallocated to other chemical regulatory activities, including 
preregistration investigations. DEA will reexamine chemical 
registration and reregistration fees when this reallocation of 
resources occurs.

Reregistration Applications

What Factors Were Involved in Establishing Reregistration Application 
Fees

    Two factors have affected the calculation of the reregistration 
fees. First, due to the continued demand for resources for the pursuit 
of investigations, DEA anticipates dedicating a total of six 
investigator work years to regulatory audits of both retail and non-
retail registrants. Second, the actual non-retail registrant population 
is greater than the originally estimated population of 1,500 
registrants, due in part to the expanded registration requirements of 
the MCA. At the time of drafting of this notice, there are 47 retail 
registrants and 3,685 non-retail registrants, for a total of 3,732 
chemical registrants.

Fees

What Specific Costs Were Included in the Calculation of the Fees?

    DEA utilized the standard modular costing method used throughout 
the federal government to calculate fees. This methodology relates 
costs to the number of personnel within the program and accounts for 
inflationary increase. Funding for salaries, benefits, equipment, 
training, and other position-related expenses is predicted on the 
modular formula which is reviewed and revised each budget year by the 
Department of Justice (DOJ) and OMB, the latter having ultimate 
authority in finalizing the formula for each fiscal year.
    As previously stated, the personnel costs listed below include all 
direct and indirect costs, including salaries, fringe benefits (such as 
life and health insurance and retirement) and travel; physical 
overhead, including material and supply costs such as forms, postage, 
equipment, rent and utilities. Direct costs are those costs which are 
apportionable to a specific registration or reregistration application, 
i.e., direct personnel and materials costs, whereas indirect costs are 
costs not directly apportionable to a specific registration or 
reregistration application, i.e., managerial, regulatory, and 
supervisory costs.
    In light of the minimal number of retail registrants (47), the fact 
that direct costs are the same for retail and non-retail registrants, 
and the indirect costs are averaged across the entire retail/non-retail 
registrant population, DEA has determined that the initial fee for 
retail and non-retail registrants can be calculated together rather 
than separately, and that the renewal fee for retail and non-retail 
registrants can be calculated together rather than separately.
    Based on the costs as laid out in the following tables, the initial 
registration fee will be $326.00, and the reregistration fee will be 
$171.00.

Costs for Processing an Application and Issuing an Initial 
Registration

Direct Costs:
    Clerical Time \1\........................  .5 hour..........................................          $10.34
    Material Costs: \2\
        Application Form.....................  .................................................            .043
        Postage..............................  .................................................            .064
        Chemical Handlers Manual.............  .................................................            0.30
        Registration Certificate.............  .................................................            0.10
    Investigator Time \3\....................  6 hours..........................................          237.44
                                                                                                 ---------------
        Total Direct Costs...................  .................................................          249.25
                                                                                                 ===============
Indirect Costs:
    Management/Supervisory time \4\..........  .................................................           23.87
    Regulatory/Policy Development \5\........  .................................................            7.82
    Applicant/Registrant Support \6\.........  .................................................           44.26
                                                                                                 ---------------
        Total Indirect Costs.................  .................................................           75.95
                                                                                                 ===============
        Total Direct and Indirect Costs......  .................................................          325.20
 

Notes Regarding the Costs Associated With Issuance of an Initial 
Registration

    1. Clerical time includes the time required for preparing and 
mailing application packages, time for processing applications 
received, including computer data entry, encoding the application 
form, filing, and transmitting a copy of the application to the 
appropriate DEA field office for the registration review process. 
Following the registration review, time is required to approve the 
registration, initiate issuance of the registration certificate, and 
file copies of the report and application.
    2. The printing cost for application forms for chemical 
registration is $4,500 for 20,000 forms or 22.5 cents per form. The 
cost for the last printing of the Chemical Handlers Manual was 
$2,250 for 7,500 copies, or 30 cents per copy.
    3. DEA is including an average of six hours of investigator time 
toward the following: travel, on-site visits, telephonic 
communications, and paperwork processing.
    4. Management/Supervisory time is that time spent by management 
and supervisory personnel in the overall development and maintenance 
of the registration program, including establishment of program 
priorities and policy, resource allocation, and administrative 
direction. The following positions are involved:

[[Page 67219]]



    Deputy Assistant Administrator and Deputy Director of  .05 work year each...................         $22,304
     the Office of Diversion Control.
    Chief, Chemical Control Section......................  .1 work year.........................          13,067
    Chief, Data Processing and Analysis Unit.............  .25 work year........................          29,030
    Chief, Liaison and Policy Section....................  .1 work year.........................          13,067
    Chief, Policy Unit...................................  .1 work year.........................          11,612
                                                                                                 ---------------
        Total Costs......................................  .....................................          89,080
 

Because the Management/Supervisory costs are related to the general 
operation of the registration program, they must be averaged across 
the entire applicant population. For 3,732 applicants, the average 
cost would be $23.87.
    5. Regulatory and policy development time consists of .5 work 
year of a program analyst time for drafting new/amended regulations 
and Federal Register notices, issuance of policy statements and 
directives related to the registration program and responding to 
registrant queries regarding registration matters. This time is for 
general chemical registration program purposes and must be spread 
equally across the applicant population. The cost of that time, 
$29,192, divided by 3,732 applicants equals $7.82.
    6. Applicant/Registrant Support time will consist of 2 work 
years of Diversion Investigator time, which will be dedicated to 
providing technical assistance, advice and informational materials 
to the industry to assist in complying with the registration, record 
keeping and reporting requirements. The total cost for 2 work years 
of Diversion Investigator time is $165,178, divided by 3,732 
applicants equals $44.26.

Cost for Processing a Reregistration Application

Direct Costs:
    Clerical Time 1..........................  .25 hours........................................           $5.17
    Material Costs  2                          .................................................             .43
        Forms................................  .................................................             .64
        Postage..............................  .................................................             .64
                                                                                                 ---------------
            Total Direct Costs...............  .................................................            6.24
                                                                                                 ===============
Indirect Costs:
    Management/Supervisory Time 3............  .................................................           23.87
    Regulatory/Policy Development 4..........  .................................................            7.82
    Regulatory Audit Time 5..................  .................................................          132.78
                                                                                                 ---------------
        Total Indirect Costs.................  .................................................          164.47
                                                                                                 ===============
        Total Direct and Indirect Costs......  .................................................          170.71
 

Notes Regarding the Costs Associated With Reregistration

    1. Clerical time includes the time required for preparing and 
mailing application packages, time for processing applications 
received, including computer data entry, encoding the application 
form, filing, and preparing the fee for deposit.
    2. The forms cost covers both the reregistration application 
form and the registration certificate. Postage is for mailing the 
reregistration application and the registration certificate.
    3. Management/Supervisory time is that time spent by management 
and supervisory personnel in the overall development and maintenance 
of the registration program, including establishment of program 
priorities and policy, resource allocation, and administrative 
direction. The following positions are involved:

    Deputy Assistant Administrator and Deputy Director of  .05 work year each...................         $22,304
     the Office of Diversion Control.
    Chief, Chemical Control Section......................  .1 work year.........................          13,067
    Chief, Data Processing and Analysis Unit.............  .25 work year........................          29,030
    Chief, Liaison and Policy Section....................  .1 work year.........................          13,067
    Chief, Policy Unit...................................  .1 work year.........................          11,612
                                                                                                 ---------------
        Total Costs......................................  .....................................          89,080
 

Because the Management/Supervisory costs are related to the general 
operation of the registration program, they must be averaged across 
the entire reregistration applicant population. DEA has received 
3,732 retail and non-retail reregistration applications. The average 
cost per applicant would be $23.87.
    4. Regulatory and policy development time consists of .5 work 
year of a program analyst time for drafting new/amended regulations 
and Federal Register notices, issuance of policy statements and 
directives related to the registration program and responding to 
registrant queries regarding registration matters. This time is for 
general chemical registration program purposes and must be spread 
equally across the reregistration applicant population. The cost of 
that time, $29,192, divided by 3,732 reregistration applicants, 
equals $7.82.
    5. DEA will conduct regulatory audits to ensure that registrants 
are complying with the chemical control requirements and that 
chemicals are not being distributed to persons seeking to divert 
them. The investigations will consist of a comprehensive review of 
each registrant's records, reporting systems, and security 
provisions. Each investigation will require comprehensive on-site 
review of the registrant's records; verification of transactions and 
purchasers, including record checks of and visits to purchasers; 
travel; and report preparation. DEA anticipates that all such 
investigations combined will require 6 work years of Diversion 
Investigator time. The total cost for 6 work years of Diversion 
Investigator time is $495,534, divided by 3,732 reregistration 
applicants equals $132.78.

Refund of Fees for Certain Registrants

    Section 8(e) of OMB Circular A-25 requires periodic review of user 
fees. DEA's initial review of these fees in 1997 was delayed due to 
passage of the Comprehensive Methamphetamine Control Act of 1996 (MCA) 
which significantly expanded the scope of the registration requirement. 
DEA postponed the review of the fees until all persons affected by the 
MCA had submitted their applications. Due to this delay, there are 
registrants who have been required to pay the full reregistration fee 
of $477.00. DEA will

[[Page 67220]]

be making arrangements to refund the difference between the current and 
proposed reregistration fees. Refunds will be provided to those 
registrants who have renewed their registration in the year preceding 
the effective date of the final rule published in conjunction with this 
notice. Refunds will only be provided to those registrants who renewed 
their registration on time, not those applicants who, by virtue of 
renewing late, fell into this payment period.

Regulatory Certifications

Regulatory Flexibility Act

    The Deputy Assistant Administrator hereby certifies that this 
proposed rulemaking has been drafted in a manner consistent with the 
principles of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). It 
will not have a significant economic impact on a substantial number of 
small business entities. This notice reduces the registration and 
reregistration fee substantially for the larger portion of the 
industry, i.e., those persons required to submit applications for 
renewal of registration, reducing the registration fee from $595 to 
$326, and the reregistration fee from $447 to $171, providing economic 
relief to the small businesses affected. With respect to the one 
category of fee that increased, for retail distributors, there are 
currently less than 50 retail distributor registrants and DEA is 
receiving, on average, less than 10 new applications from retail 
distributors per year.

Executive Order 12866

    The Deputy Assistant Administrator further certifies that this 
rulemaking has been drafted in accordance with the principles of 
Executive Order 12866 Section 1(b). DEA has determined that this is not 
a significant regulatory action. As noted above, this proposed rule 
reduces the existing fee structure for most registrants, thus providing 
economic relief to the registrant population . DEA has determined that 
this rulemaking is not significant. Therefore, it has not been 
submitted to the Office of Management and Budget for review.

Executive Order 13132

    This action has been analyzed with the principles and criteria in 
Executive Order 13132, and it has been determined that this rule does 
not have sufficient federalism implications to warrant the preparation 
of a Federalism assessment.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by state, local, and 
tribal governments in the aggregate, or by the private sector, of $100 
million 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.

Small Business Regulatory Enforcement Fairness Act of 1996

    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 million 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.

Plain Language Instructions

    The Drug Enforcement Administration makes every effort to write 
clearly. If you have suggestions as to how to improve the clarity of 
these regulations, call or write Patricia Good, Chief, Liaison and 
Policy Section, Office of Diversion Control, Drug Enforcement 
Administration, Washington, DC 20537. Telephone (202) 307-7297.

List of Subjects in 21 CFR Part 1309

    Administrative practice and procedure, Drug traffic control, List I 
and List II chemicals, Security measures For the reasons set out above, 
21 CFR Part 1309 is proposed to be amended as follows:

PART 1309--[AMENDED]

    1. The authority citation for 21 CFR Part 1309 continues to read as 
follows:

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

    2. Section 1309.11 is revised to read as follows:


Sec. 1309.11  Fee amounts.

    (a) For each initial registration to manufacture for distribution, 
distribute (either retail distribution or non-retail distribution), 
import, or export a List I chemical, the applicant shall pay a fee of 
$326 for an annual registration.
    (b) For each reregistration to manufacture for distribution, 
distribute (either retail distribution or non-retail distribution), 
import, or export a List I chemical, the registrant shall pay a fee of 
$171 for an annual registration.
    3. Section 1309.12 is revised to read as follows:


Sec. 1309.12  Time and method of payment; refund.

    (a) For each application for registration or reregistration to 
manufacture for distribution, distribute (either retail distribution or 
non-retail distribution), import, or export a List I chemical, the 
applicant shall pay the fee when the application for registration or 
reregistration is submitted for filing.
    (b) Payment should be made in the form of a personal, certified, or 
cashier's check or money order made payable to ``Drug Enforcement 
Administration.'' Payments made in the form of stamps, foreign 
currency, or third party endorsed checks will not be accepted. These 
application fees are not refundable.

    Dated: October 1, 1999.
John H. King,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 99-30960 Filed 11-30-99; 8:45 am]
BILLING CODE 4410-09-M