[Federal Register Volume 65, Number 139 (Wednesday, July 19, 2000)]
[Rules and Regulations]
[Pages 44674-44679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18147]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1300, 1301, 1304, and 1307

[DEA-143F]
RIN 1117-AA36


Establishment of Freight Forwarding Facilities for DEA 
Distributing Registrants

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.

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SUMMARY: This rule defines the term freight forwarding facility and 
establishes storage, security, and recordkeeping requirements for 
controlled substances that transit such facilities. It also provides a 
waiver to a freight forwarding facility from the requirement for 
registration with the Drug Enforcement Administration. This rule will 
afford a registrant who is authorized to engage in the general 
distribution of controlled substances a more efficient and competitive 
means to distribute controlled substances and should minimize in-
transit losses.

EFFECTIVE DATE: August 18, 2000.

FOR FURTHER INFORMATION CONTACT: Patricia M. Good, Chief, Liaison and 
Policy Section, Office of Diversion Control, Drug Enforcement 
Administration, Washington, D.C. 20537, Telephone (202) 307-7297.

SUPPLEMENTARY INFORMATION:

Why Is DEA Taking This Action and Whom Does It Affect?

    On December 18, 1996, DEA published a Notice of Proposed Rulemaking 
(NPRM) in the Federal Register (61 FR 66637) entitled Establishment of 
Freight Forwarding Facilities for DEA Distributor Registrants. The NPRM 
was published in response to requests by registrants within the 
controlled substances distribution industry that registrant-operated 
freight forwarding facilities be exempted from the registration 
requirement. (Currently there is no provision in the regulations that 
would allow the storage and distribution of controlled substances from 
such a location without a DEA registration.) Following discussion with 
registrants and trade association representatives within the affected 
industries, DEA determined that such a waiver could be provided to 
registrants within the controlled substances distribution industry, 
pursuant to 21 U.S.C. 822(d), subject to certain requirements with 
respect to the activity conducted, security, and recordkeeping.

What Requirements Were Proposed in the NPRM?

    The NPRM proposed to define freight forwarding facility as a 
separate facility operated by a DEA distributor registrant through 
which sealed, packaged controlled substances, in unmarked (i.e., 
without indication of the contents) containers, are stored for less 
than 24 hours while being routed to the ultimate DEA registrant 
consignee. The proposed definition specifically excluded a facility 
through which controlled substance returns are processed. Freight 
forwarding facilities would be granted a waiver from the registration 
requirement, provided that the registrant operating the facility gave 
required notice to DEA of the intent to operate such a facility and DEA 
issued no objection.
    With respect to security, the NPRM proposed that during temporary 
storage at the facility, all Schedule II-V controlled substances must 
be under constant observation by designated responsible individuals in 
a segregated area, or, if not under constant observation, stored in a 
caged and alarmed area that meets the requirements set forth in Title 
21, Code of Federal Regulations (CFR), Section 1301.72(b). Proposed 
recordkeeping consisted of the requirement that the registrant maintain 
records documenting the transfer of the controlled substances from the 
long-distance conveyance to the local conveyance, reflecting the date, 
time of transfer, the number of cartons, crates, drums, or other 
packages in which commercial containers of controlled substances were 
shipped and authorized signatures for each transfer.

What Comments Were Received in Response to the NPRM?

    Six comments were received in response to the NPRM: three from DEA 
pharmacy registrants, two from trade associations representing the 
affected industries, and one from a state regulatory agency. While the 
comments expressed general support for the changes, concerns were 
raised regarding each specific facet of the proposed rule. With regard 
to several of the matters, DEA adopted changes suggested by the 
commenters to make the rule more flexible and the waiver from 
registration for a freight forwarding facility more broadly available.

1. Use of the Freight Forwarding Facility by More Than One Registrant

    Four commenters objected to the proposed requirement that a freight 
forwarding facility be for the exclusive use of the named DEA 
distributor registrant, precluding its use by another DEA registrant. 
The commenters suggested that the new regulations allow multiple 
registrants to utilize a single freight forwarding facility. Two of the 
four commenters addressed the issue in terms of multiple registrants of 
the same company, while the other two addressed the use of a single 
freight forwarding facility by multiple unrelated registrants. Another 
commenter questioned whether it would be possible for a non-DEA 
registrant to lease space at a freight forwarding facility to more than 
one DEA registered distributor.
    The proposal to exempt a freight forwarding facility from the DEA 
registration requirement was based upon the facility being an extension 
of a specific distributing registrant, thus simplifying the issue of 
responsibility for any diversion or lack of compliance with the 
regulations at the facility. However, taking such a simplified approach 
does limit use of the facility to only that one distributing 
registrant.
    DEA acknowledges the comments that limiting the definition to such 
as extent, while simplifying the issue of responsibility under the law 
and regulations, could result in complex, inefficient, and duplicative 
efforts for a company that operates multiple distributing 
registrations. The company would be required to maintain and operate a 
separate freight forwarding facility for each registered distributing 
location. Therefore, the proposal is

[[Page 44675]]

being amended to allow a corporate entity that maintains multiple 
distributing registrations the ability to operate a single freight 
forwarding facility for shipments in transit from any of its registered 
distributing locations. Such a provision remains consistent with the 
existing framework of DEA's requirements because the controlled 
substances remain in the custody and control of the corporate entity 
who maintains both the freight forwarding facility and the various 
registrations with DEA. That corporate entity is responsible for 
ensuring that the laws and regulations are adhered to and for the 
safekeeping of the controlled substances transiting the facility. The 
ultimate responsibility for compliance would, of course, rest with the 
DEA registered location making the shipment, should there be any 
violations or thefts or losses of controlled substances from the 
shipment.
    The exemption of a freight forwarding facility is based on the 
premise that Company A ships controlled substances to its customers 
utilizing an in-transit location owned or leased by Company A. In this 
instance the controlled substances remain the legal responsibility of 
Company A until they are actually received by the customers. If, on the 
other hand, Company A were to ship controlled substances to its 
customers utilizing a freight forwarding facility which is owned by 
Company B, the custody and control of the shipment, as well as the 
legal responsibility, shifts from Company A to Company B at the freight 
forwarding facility. DEA is waiving the registration requirement only 
with respect to freight forwarding facilities operated by the 
distributing registrant; a transfer of custody, control, and legal 
responsibility of controlled substances between two different companies 
remains subject to the registration requirements set forth in 21 U.S.C. 
822 and may only occur between registered locations of the two 
companies. Additionally, all applicable records, reports, and security 
required for controlled drug transactions would continue to apply to 
such transactions.
    With respect to the question of whether a non-registrant could 
lease space at a freight forwarding facility to more than one DEA 
registrant, it should be noted that the definition of a freight 
forwarding facility refers to a facility operated by the company that 
maintains one or more distributing registrations with DEA. It is 
expected that the facility will be under the full direction and control 
of that company and will be staffed by employees of that company. 
Therefore, the sharing of the same freight forwarding facility by more 
than one company would not be possible. However, this does not preclude 
different companies from operating separate freight forwarding 
facilities within a single building, provided that each is maintained 
as a physically separate facility from the others.
    One commenter suggested that registrants other than distributors 
may wish to operate a freight forwarding facility. DEA recognizes that, 
in addition to distributors, there are other registrants (i.e. 
manufacturers and importers) who are authorized to distribute 
controlled substances under their registration. Therefore, DEA is 
amending the proposal to include controlled substances distributors, 
manufacturers, and importers.

2. Storage and Security of Controlled Substances

    Four commenters expressed concerns with the proposed requirement 
that controlled substance storage at a freight forwarding facility be 
limited to less than 24 hours. Questions were raised about dealing with 
emergency circumstances (bad weather, natural disaster, and other 
unforeseen circumstances) that may require the temporary storage of 
controlled substances at the freight forwarding facility for more than 
the allowable 24 hour time limit. One commenter suggested that a plan 
for unforeseen emergencies be submitted at the time of application.
    One of the factors in DEA's decision to establish the waiver of the 
registration requirement for freight forwarding facilities was that in 
the normal course of freight forwarding activities, shipments of 
controlled substances will transit a facility with minimal delay. As 
one commenter noted, ``* * * Product arrives at the facility via the 
long distance conveyance and is transferred to the appropriate short 
distance conveyance, typically within a matter of 2 hours or less * * 
*'' However, recognizing that there are a variety of factors, such as 
bad weather, mechanical breakdowns, scheduling errors, etc., that may 
interfere with the timely transit of shipments through the facility, 
DEA included in the definition of a freight forwarding facility the 
provision that controlled substances may be stored for less than 24 
hours. DEA expects that any registrant operating a freight forwarding 
facility will ensure that any controlled substances transiting the 
facility will remain there for less than 24 hours.
    DEA does recognize that there may be emergency circumstances that 
may temporarily prevent full compliance with the regulations.
    In such a case, the registrant operating the facility must take the 
necessary steps to safeguard the controlled substances and effect a 
return to normal operations as quickly as possible. Additionally, the 
registrant must notify the local DEA office of the circumstances and 
what actions are being taken to address the situation. DEA will not 
penalize a registrant for non-compliance with the requirements in such 
emergency circumstances, provided the registrant has taken appropriate 
steps to safeguard the controlled substances and to return to normal 
operations as soon as possible.
    With respect to what constitutes emergency circumstances, DEA 
wishes to note that the commenters included in their description of 
emergency circumstances such events as late delivery before a holiday 
weekend and inclement weather. These are not, in and of themselves, 
emergency circumstances that would warrant allowing the storage of 
controlled substances at a freight forwarding location in excess of the 
24 hour time limit. Certainly unpredictable circumstances that are 
entirely beyond a registrant's control (fire, earthquake, flash flood, 
tornado, etc.) would be emergency events that may require storage for 
24 hours or more. However, where an event can be predicted or 
anticipated (winter storm, hurricane, mechanical breakdowns, labor 
disturbances, etc.), DEA expects that a registrant will have in place 
contingency plans (rescheduling or re-routing shipments, emergency 
backup transportation or labor arrangements, etc.) to try to insure 
that controlled substances are not stored at the facility for 24 hours 
or more.
    DEA is not going to attempt to define in these regulations what 
would constitute an emergency. Any attempt to do so would inevitably 
fall short of its intended purpose. There are simply too many variables 
that could influence whether an event would, or would not, qualify as 
an emergency. Each event will have to be looked at individually, not 
only in terms of what has occurred, but also in terms of what efforts 
the registrant had taken prior to the event to anticipate and prevent 
any disruption of operations and what efforts are taken following the 
event to safeguard the controlled substances and return to normal 
operations. Registrants should approach this issue from the perspective 
of taking all possible steps to anticipate unusual events and ensure 
that these events do not prevent compliance with the regulations.

[[Page 44676]]

    Two commenters objected to the proposed security requirement that 
controlled substances be stored in accordance with 21 CFR 1301.72(b) 
whenever they are not under continuous observation by designated 
individuals.
    DEA believes that in the normal course of freight forwarding 
activities, shipments of controlled substances will transit a facility 
with minimal delay and there would be no need for the distributing 
registrant to implement specific physical security measures to guard 
against losses since the loading/unloading areas would be continuously 
attended and under the general observation of employees. However, when 
circumstances arise requiring temporary storage of controlled 
substances, the distributing registrant must either maintain continuous 
observation of the controlled substances or implement physical security 
measures that meet the requirements of 21 CFR 1301.72(b) in order to 
guard against losses.
    As an alternative to continuous observation of controlled 
substances, two commenters suggested a ``lock down'' of the facility.
    DEA believes that a distributing registrant who has the ability to 
``lock down'' a freight forwarding facility equipped with the 
appropriate alarm system or kept under constant visual surveillance by 
security patrols would, in effect, secure the controlled substances in 
a manner equivalent to the security requirements stated in 21 CFR 
1301.72(b)(3), thus satisfying the requirement in the new 21 CFR 
1301.77(a)(2).
    Two commenters noted that controlled substance containers are 
required to be unmarked, this making identification of those containers 
in a large shipment extremely difficult, if not impossible, and 
requiring that the entire facility be subject to the security 
requirements of 21 CFR 1301.72(b) or that all containers in the 
facility be kept under constant observation. One commenter suggested 
that discrete marking or coding of the containers of controlled 
substances should be allowed.
    In evaluating these comments, the presumption exists that all 
containers transiting a freight forwarding facility have a certain 
amount of controlled substances in them. As noted earlier in this 
document, DEA believes that specific security measures should not be 
necessary in the normal course of operations since the loading/
unloading areas would be continuously attended and under the general 
observation of employees. It is only when circumstances require the 
temporary (less than 24 hours) storage of these containers that they 
must be maintained in a segregated area of the facility under 
continuous observation in order to prevent access by unauthorized 
individuals (i.e. maintenance personnel, non-employee service 
personnel). Whether continuous observation is performed by an 
authorized employee of the facility or by contracted security personnel 
is the responsibility of the distributing registrant. If there is not 
continuous observation of these containers, the distributing registrant 
would be required to have the appropriate physical security measures in 
place that are consistent with the requirements of 21 CFR 1301.72(b).
    With respect to the issue of discrete marking or coding of 
containers of controlled substances, the intent of unmarked containers 
is to prevent the identification of those that contain controlled 
substances, thus helping to prevent diversion of the controlled 
substances. As the commenters noted, the identification of such 
containers in a large shipment would be extremely difficult, if not 
impossible. The act of segregating, during temporary storage, only the 
marked or coded containers would defeat this basic security measure by 
specifically identifying the containers with controlled substances, 
making them easier targets for diversion. Under the circumstances, DEA 
will hold with the requirement that the controlled substances be in 
unmarked containers.

3. Recordkeeping

    Four commenters suggested that DEA allow a person the ability to 
store controlled substance records for freight forwarding facilities at 
a central location.
    A distributing registrant who operates a freight forwarding 
facility must maintain complete records of controlled substance 
activity including a clearly defined audit trail for all controlled 
substances transferred through the facility. Records of controlled 
substances must contain the dates, times of transfer, authorized 
signatures and the number of cartons, crates, drums or other packages 
in which commercial containers of controlled substances are shipped. 
This will enable the distributing registrant to trace the flow of 
controlled substances from the long distance conveyance through the 
freight forwarding facility to the local conveyance or from the long 
distance conveyance directly to the local conveyance.
    Records are required to be maintained at the freight forwarding 
facility, however, a distributing registrant may request central 
recordkeeping authority with the initial facility exemption request. 
Approval of this request will be granted as part of the approval of the 
waiver by DEA. Subsequent requests for maintaining records at a central 
location would be handled in accordance with 21 CFR 1304.04.

4. Returns

    One commenter suggested that controlled substance returns should be 
allowed to transit a freight forwarding facility.
    The NPRM prohibited the use of a freight forwarding facility for 
handling the transit of controlled substance returns due to concerns 
that the custody and control of the controlled substance returns would 
be transferred from the registered customer at a non-registered 
location. DEA is amending its proposal to allow controlled substance 
returns within a single corporate structure to be routed through the 
corporate owned or operated freight forwarding facility only when the 
distributing registrant provides the same transfer, storage, security, 
and recordkeeping controls as outlined in this regulation for 
controlled substance distributions through a freight forwarding 
facility. In other words, a distributing registrant may pick up a pre-
authorized customer return in the same manner it makes deliveries. DEA 
is amending Section 1307.12 of the regulations to acknowledge the fact 
that a person may return controlled substances to a supplier either 
directly or through a freight forwarding facility provided that the 
return is pre-arranged and the returning registrant delivers the 
controlled substance(s) directly to an agent on employee of the 
receiving registrant. DEA is also making a technical correction in this 
section to the U.S. Code citation which should read ``21 U.S.C. 
822(c)'' rather than ``21 U.S.C. 823(c)''.
    In order to accept transfer of controlled substance returns, a 
distributing registrant must have received advance notification from 
the customer of its intent to return controlled substances. Controlled 
substance returns can only be transferred from a customer to an 
authorized representative of a distributing registrant in sealed, 
packaged, unmarked containers. The transfer of controlled substance 
returns from the customer to the authorized representative must be 
properly documented by both parties to the transaction so that there is 
an ability to track the flow of the returns from the customer back 
through the freight forwarding facility to the distributing registrant. 
Controlled substance returns cannot be shipped by a customer

[[Page 44677]]

directly to a freight forwarding facility nor can controlled substance 
returns be distributed from the freight forwarding facility to any 
other registrant except the original seller since the freight 
forwarding facility is a non-registered entity. Further, returns must 
transit the freight forwarding facility in less than 24 hours.
    The distributing registrant is to submit, along with the required 
notification requesting exemption from registration for a freight 
forwarding facility, specific procedures for the processing of 
controlled substance returns.

5. Miscellaneous Comments

    Three commenters suggested that a denial of an application(s) 
should be communicated to the applicant.
    DEA has addressed this issue by indicating in the final regulations 
that written approval or disapproval will be provided to the 
distributing registrant within thirty days after confirmed receipt of 
the notice of intent to operate a freight forwarding facility. If a 
request to operate a facility is disapproved, the reasons for 
disapproving the request will be provided in writing to the requesting 
registrant.
    Two commenters suggested that facilities operating under current 
agreements with the DEA should be grandfathered.
    With the publication of this final rule, a person who is operating 
or desiring to operate a freight forwarding facility is required to 
notify DEA of both the location(s) of the facility and the 
registrant(s) who will utilize the facility and fully abide by the 
regulations set forth in this publication. Those freight forwarding 
facilities currently operating pursuant to Memoranda of Understanding 
(MOU) with the DEA must initiate the approval process within thirty 
days of the effective date of this final rule. Failure to initiate the 
approval process within the specified time period will void the 
existing MOU.
    One commenter questioned whether DEA would coordinate with the 
appropriate State authorities regarding freight forwarding facilities. 
The waiver of the registration requirement by DEA does not imply 
similar exemption at the state level. The appropriate state agency 
should be contacted by the requesting registrant prior to obtaining 
authorization from the DEA to determine whether state licensure is 
required. Notice regarding whether state licensure is, or is not, 
required should be provided to DEA as part of the request to operate a 
freight forwarding facility. DEA will coordinate with the appropriate 
state authorities to ensure that freight forwarding operations within 
their states are in full compliance with state requirements.

What Do These Final Regulations Allow?

    Under these final regulations, a distributing registrant (i.e., a 
distributor, manufacturer, and/or importer) may establish a freight 
forwarding facility through which the distributing registrant may 
transfer controlled substances in the course of delivery to customers. 
If the distributing registrant maintains multiple registrations as a 
distributor, manufacturer, and/or importer, all of those registered 
locations may transfer controlled substances through the facility. The 
distributing registrant and the freight forwarding facility must be 
part of the same corporate entity; a distributing registrant from a 
different corporate entity may not transfer controlled substances 
through the facility.
    The registration requirement for a freight forwarding facility will 
be waived provided that the distributing registrant submits proper 
notice to DEA of their intent to operate the facility.
    Controlled substances that are being transferred through a freight 
forwarding facility may be stored in the facility for less than 24 
hours. During storage, containers with controlled substances must be 
kept under continuous observation by designated individuals or 
maintained in a secured area that meets the present requirements for 
storage of Schedule III through V controlled substances. `Locking down' 
a facility that also has a monitored alarm system or is subject to 
continuous monitoring by security personnel is consistent with the 
security requirements under 21 CFR 1301.72(b)(3) and 1301.77(a)(2).
    If controlled substances are stored in the facility for 24 hours or 
more, then the facility does not meet the definition of freight 
forwarding facility and does not qualify for waiver of the registration 
requirement.
    Records are required to be maintained by the distributing 
registrant at the freight forwarding facility regarding the transfer of 
controlled substances through the facility. The records must reflect 
the date; time of transfer; number of cartons, crates, drums, or other 
packages in which controlled substances are shipped; and authorized 
signatures for each transfer. The records may be maintained centrally, 
provided that the registrant operating the facility has been approved 
to maintain central records. In addition, each shipment should contain 
the usual documentation of controlled substances in the shipment, i.e., 
invoices, packing slips, etc.
    Customer returns may be transferred through a freight forwarding 
facility, provided that the returns are pre-authorized, the official 
transfer from the customer to the distributor takes place upon pick-up 
at the customer's registered location, and the returns are treated in 
the same manner as distributions to customers through the facility.
    These final regulations represent the best possible provisions that 
could be established while remaining consistent with the requirements 
of the CSA. Certain other provisions were considered in the 
establishment of these regulations, such as inter-company freight 
forwarding; however, the difficulties associated with the assignment of 
responsibility under the law and regulations that such activities would 
present, prevents their adoption.

OMB Information Collection Requirements

    This final rule contains a new information collection requirement, 
Notice of Intent to Operate a Freight Forwarding Facility, that has 
been reviewed and approved by OMB and assigned the OMB approval number 
1117-0035.

Plain English

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

Certifications

Regulatory Flexibility Act

    The Deputy Assistant Administrator, Office of Diversion Control has 
reviewed this rule in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) and certifies that it will not have a significant 
economic impact on a substantial number of small entities. This final 
rule provides an alternative system that may allow certain person(s) 
authorized to distribute controlled substances a more efficient means 
of delivering controlled substances. In fact, the regulated industry 
has represented that this procedure will benefit the industry by 
allowing it to lower costs associated with shipping controlled 
substances.

[[Page 44678]]

Executive Order 12866

    This final rule has been drafted and reviewed in accordance with 
Executive Order 12866, Sec. 1(b), Principles of Regulation. The Deputy 
Assistant Administrator, Office of Diversion Control, has determined 
that this rule is not a significant regulatory action under Executive 
Order 12866, Sec. 3(f), Regulatory Planning and Review, and accordingly 
this rule has not been reviewed by the Office of Management and Budget. 
This regulation provides an exemption for freight forwarding facilities 
operated by a person from certain requirements of the CSA, thus 
allowing them a more efficient and cost effective means of doing 
business.

Executive Order 13132

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

Unfunded Mandates Reform Act

    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.

Small Business Regulatory Enforcement Fairness Act

    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.
    It should be noted that due to earlier amendments to the 
regulations, certain section designations in the NPRM have changed. The 
appropriate adjustments have been made in the final rule to reflect the 
new section designations.

List of Subjects

21 CFR Part 1300

    Definitions, Drug traffic control.

21 CFR Part 1301

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

21 CFR Part 1304

    Drug traffic control, Reporting requirements.

21 CFR Part 1307

    Drug traffic control.

    For reasons set out above, DEA is amending 21 CFR Parts 1300, 1301, 
1304 and 1307 to read 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 1300.01 is amended by adding a new paragraph (b) (42) to 
read as follows:


Sec. 1300.01  Definitions.

* * * * *
    (b) * * *
    (42) The term freight forwarding facility means a separate facility 
operated by a distributing registrant through which sealed, packaged 
controlled substances in unmarked shipping containers (i.e., the 
containers do not indicate that the contents include controlled 
substances) are, in the course of delivery to, or return from, 
customers, transferred in less than 24 hours. A distributing registrant 
who operates a freight forwarding facility may use the facility to 
transfer controlled substances from any location the distributing 
registrant operates that is registered with the Administration to 
manufacture, distribute, or import controlled substances, or, with 
respect to returns, registered to dispense controlled substances, 
provided that the notice required by Sec. 1301.12(b)(4) of Part 1301 of 
this chapter has been submitted and approved. For purposes of this 
definition, a distributing registrant is a person who is registered 
with the Administration as a manufacturer, distributor, and/or 
importer.

PART 1301--[AMENDED]

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

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


    2. Section 1301.12 is amended by adding a new paragraph (b)(4) to 
read as follows:


Sec. 1301.12  Separate registrations for separate locations.

* * * * *
    (b) * * *
    (4) A freight forwarding facility, as defined in Sec. 1300.01 of 
this part, provided that the distributing registrant operating the 
facility has submitted written notice of intent to operate the facility 
by registered mail, return receipt requested (or other suitable means 
of documented delivery) and such notice has been approved. The notice 
shall be submitted to the Special Agent in Charge of the 
Administration's offices in both the area in which the facility is 
located and each area in which the distributing registrant maintains a 
registered location that will transfer controlled substances through 
the facility. The notice shall detail the registered locations that 
will utilize the facility, the location of the facility, the hours of 
operation, the individual(s) responsible for the controlled substances, 
the security and recordkeeping procedures that will be employed, and 
whether controlled substances returns will be processed through the 
facility. The notice must also detail what state licensing requirements 
apply to the facility and the registrant's actions to comply with any 
such requirements. The Special Agent in Charge of the DEA Office in the 
area where the freight forwarding facility will be operated will 
provide written notice of approval or disapproval to the person with 
thirty days after confirmed receipt of the notice. Registrants that are 
currently operating freight forwarding facilities under a memorandum of 
understanding with the Administration must provide notice as required 
by this section no later than September 18, 2000 and receive written 
approval from the Special Agent in Charge of the DEA Office in the area 
in which the freight forwarding facility is operated in order to 
continue operation of the facility.
    3. Part 1301 is amended by adding a new Sec. 1301.77 to read as 
follows:


Sec. 1301.77  Security controls for freight forwarding facilities.

    (a) All Schedule II-V controlled substances that will be 
temporarily stored at the freight forwarding facility must be either:
    (1) stored in a segregated area under constant observation by 
designated responsible individual(s); or
    (2) stored in a secured area that meets the requirements of Section 
1301.72(b) of this Part. For purposes of this requirement, a facility 
that may be locked down (i.e., secured against physical entry in a 
manner consistent

[[Page 44679]]

with requirements of Section 1301.72(b)(3)(ii) of this part) and has a 
monitored alarm system or is subject to continuous monitoring by 
security personnel will be deemed to meet the requirements of Section 
1301.72(b)(3) of this Part.
    (b) Access to controlled substances must be kept to an absolute 
minimum number of specifically authorized individuals. Non-authorized 
individuals may not be present in or pass through controlled substances 
storage areas without adequate observation provided by an individual 
authorized in writing by the registrant.
    (c) Controlled substance being transferred through a freight 
forwarding facility must packed in sealed, unmarked shipping 
containers.

PART 1304--[AMENDED]

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

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


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


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

* * * * *
    (g) A distributing registrant who utilizes a freight forwarding 
facility shall maintain records to reflect transfer of controlled 
substances through the facility. These records must contain the date, 
time of transfer, number of cartons, crates, drums or other packages in 
which commercial containers of controlled substances are shipped and 
authorized signatures for each transfer. A distributing registrant may, 
as part of the initial request to operate a freight forwarding 
facility, request permission to store records at a central location. 
Approval of the request to maintain central records would be implicit 
in the approval of the request to operate the facility. Otherwise, a 
request to maintain records at a central location must be submitted in 
accordance with Sec. 1304.04 of this part. These records must be 
maintained for a period of two years.

PART 1307--[AMENDED]

    1. The authority citation for Part 1307 continues to read as 
follows:

    Authority: 21 U.S.C. 821, 822(d), 871(b), unless otherwise 
noted.


    2. Section 1307.12 is revised to read as follows:


Sec. 1307.12  Distribution to supplier.

    (a) Any person lawfully in possession of a controlled substance 
listed in any schedule may distribute (without being registered to 
distribute) that substance to the person from whom he obtained it or to 
the manufacturer of the substance, provided that a written record is 
maintained which indicates the date of the transaction, the name, form, 
and quantity of the substance, the name, address, and registration 
number, if any, of the person making the distribution, and the name, 
address, and registration number, if known, of the supplier or 
manufacturer. In the case of returning a controlled substance in 
Schedule I or II, an order form shall be used in the manner prescribed 
in part 1305 of this chapter and be maintained as the written record of 
the transaction. Any person not required to register pursuant to 
sections 302(c) or 1007(b)(1) of the Act (21 U.S.C. 822(c) or 957(b)(1) 
shall be exempt from maintaining the records required by this section.
    (b) Distributions referred to in paragraph (a) may be made through 
a freight forwarding facility operated by the person to whom the 
controlled substance is being returned provided that prior arrangement 
has been made for the return and the person making the distribution 
delivers the controlled substance directly to an agent or employee of 
the person to whom the controlled substance is being returned.

    Dated: July 13, 2000.
John H. King,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 00-18147 Filed 7-18-00; 8:45 am]
BILLING CODE 4410-09-M