[Federal Register Volume 68, Number 121 (Tuesday, June 24, 2003)]
[Rules and Regulations]
[Pages 37411-37414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15788]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1309 and 1310

[Docket No. DEA-198F2]
RIN 1117-AA57


Control of Red Phosphorus, White Phosphorus and Hypophosphorous 
Acid (and Its Salts) as List I Chemicals; Exclusions and Waivers

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.

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SUMMARY: On October 17, 2001, DEA published a Final Rulemaking (66 FR 
52670) in which DEA added red phosphorus, white phosphorus (also known 
as yellow phosphorus) and hypophosphorous acid (and its salts) as List 
I chemicals. This action was taken because of the use and importance of 
these chemicals in the illicit manufacture of methamphetamine (a 
Schedule II controlled substance).
    As List I chemicals, handlers of these materials became subject to 
Controlled Substances Act (CSA) chemical regulatory controls including 
registration, recordkeeping, reporting, and import/export requirements. 
DEA had determined that these controls are necessary to prevent the 
diversion of these chemicals to clandestine drug laboratories.
    In order to provide flexibility for legitimate businesses, the 
October 17, 2001 rule established, on an interim basis, specific 
exclusions and waivers for chemical handlers engaged in certain 
activities. DEA has completed its review of comments pertaining to 
these interim provisions. This rulemaking finalizes these exclusions 
and waivers related to the handling of the listed chemicals red 
phosphorus, white phosphorus, and hypophosphorous acid (and its salts).

EFFECTIVE DATE: This final rule is effective June 24, 2003.

FOR FURTHER INFORMATION CONTACT: Frank L. Sapienza, Chief, Drug and 
Chemical Evaluation Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, DC 20537 at (202) 307-7183.

SUPPLEMENTARY INFORMATION:

Background

    On September 25, 2000, DEA published a Notice of Proposed 
Rulemaking proposing that red phosphorus, white phosphorus, and 
hypophosphorous acid (and its salts) be made List I chemicals (65 FR 
57577). On October 17, 2001, DEA published a Final Rulemaking (66 FR 
52670) in which DEA added red phosphorus, white phosphorus (also known 
as yellow phosphorus) and hypophosphorous acid (and its salts) as List 
I chemicals. This action was taken because of the use and importance of 
these chemicals in the illicit manufacture of methamphetamine (a 
Schedule II controlled substance).
    As List I chemicals, handlers of these materials became subject to 
CSA chemical regulatory controls including registration, recordkeeping, 
reporting, and import/export requirements. DEA had determined that 
these controls are necessary to prevent the diversion of these 
chemicals to clandestine drug laboratories.

[[Page 37412]]

    In order to provide flexibility for legitimate businesses, the 
October 17, 2001 rule also established, on an interim basis, specific 
exclusions and waivers for chemical handlers engaged in certain 
activities. DEA has completed its review of comments pertaining to 
these interim provisions. This rulemaking finalizes these exclusions 
and waivers related to the handling of the listed chemicals red 
phosphorus, white phosphorus, and hypophosphorous acid (and its salts).

What Interim Exclusions and Waivers Did the October 17, 2001 Rule Put 
Into Effect?

    The October 17, 2001 rule established, on an interim basis, an 
exclusion from the definition of regulated transaction for domestic 
transactions involving red phosphorus and white phosphorus which are 
return shipments of residual quantities (from customer to producer) in 
rail cars and intermodal tank containers which conform to International 
Standards Organization specifications (with capacities greater than or 
equal to 2,500 gallons in a single container). The rule also 
established, on an interim basis, a waiver from the registration 
requirement for such activity. Additionally, this final rule 
established, on an interim basis, a waiver from the registration 
requirement for any person whose activities with respect to List I 
chemicals are limited to the distribution of red phosphorus, white 
phosphorus, or hypophosphorous acid (and its salts) to: Another 
location operated by the same firm solely for internal end-use; or an 
EPA or State licensed waste treatment or disposal firm for the purpose 
of waste treatment or disposal.

Why Did the October 17, 2001 Rule Place These Provisions Into Effect on 
an Interim Basis and Solicit Comments Pertaining to These Provisions?

    DEA became aware of the potential need for these provisions via 
comments received in response to the September 25, 2000 Notice of 
Proposed Rulemaking (65 FR 57577) which initially proposed the control 
of red phosphorus, white phosphorus and hypophosphorous acid as List I 
chemicals. Since that original NPRM did not propose the exclusion and 
waivers, the public did not have an opportunity to comment on these 
issues.
    In addition to deciding that exclusion/waivers were warranted, the 
DEA determined that good cause existed under the Administrative 
Procedure Act (5 U.S.C. 553 et seq.)(APA) to forgo a Notice of Proposed 
Rulemaking for the exclusion and waivers. The APA states that an agency 
may forgo a NPRM if it is impracticable, unnecessary, or contrary to 
the public interest. To avoid unnecessary or temporary burdens on 
affected companies during the pendency of proceedings in this matter, 
DEA included as part of the October 17, 2001 rulemaking, an interim 
rule with request for comments regarding these issues.
    The October 17, 2001 rule, therefore solicited comments only on 
those portions of the rule pertaining to the exclusion/waiver issues. 
DEA allowed 60 days for persons to comment on the exclusion and 
waivers. The rulemaking further indicated that after the close of this 
comment period, DEA would publish a final rule in the Federal Register 
to inform interested parties if changes were needed or if the exclusion 
and waivers would be adopted as originally stated.

What Comments, Submitted in Response to the September 25, 2000 NPRM, 
Led DEA To Create the Interim Exclusions and Waivers?

    In response to the September 25, 2000 NPRM, two commentors 
requested clarification regarding the potential applicability of the 
regulation to end-users that utilize red phosphorus in their production 
processes. These commentors expressed concerns that an end-user may 
become subject to regulatory requirements because of distribution of 
excess material off-site for disposal purposes or because of the 
transfer of stock from one company location to another.
    Under the proposed regulations, distributions of red phosphorus, 
white phosphorus and/or hypophosphorous acid (and its salts) for the 
purpose of disposal would be considered regulated transactions subject 
to all CSA chemical regulatory requirements including registration, 
recordkeeping and reporting. Additionally, the transfer of stock from 
one company location to another would require the registration of each 
location.
    The CSA, pursuant to 21 U.S.C. 822(d), provides that the Attorney 
General may, by regulation, waive the requirement of registration of 
certain manufacturers, distributors or dispensers, if consistent with 
the public health and safety. Therefore, in order to reduce any burden 
on end-users of these chemicals, DEA agreed to waive the registration 
requirement for any person whose activities with respect to List I 
chemicals are limited to the distribution of red phosphorus, white 
phosphorus, or hypophosphorous acid (and its salts) to: Another 
location operated by the same firm solely for internal end-use; or an 
EPA or State licensed waste treatment or disposal firm for the purpose 
of waste treatment or disposal.
    This waiver of registration as it pertains to distributions for 
waste treatment or disposal applies only to the registration 
requirement, and all other CSA chemical regulatory controls such as 
recordkeeping and reporting will still apply.
    Additionally, in response to the September 25, 2000 NPRM, two 
producers of elemental phosphorus requested that large transactions be 
exempted when shipped in reusable containers with capacities of 2500 or 
2800 gallons. These commentors stated that these bulk containers are 
exclusively rail cars or large intermodal tank containers specially 
designed to enable safe transport. After unloading, the bulk containers 
are shipped back to the producers (filled with water for safety reasons 
due to the remaining phosphorus in the container) for reuse. Therefore, 
the commentors expressed concerns that their other sites and customers 
would possibly be subject to recordkeeping and registration 
requirements due to the return shipments. The commentors further stated 
that ``safeguards already include recordkeeping, incident reporting, 
tamper-detection, sealed valves, and use of bulk reusable containers''. 
The commentors believe that ``registering and tracking these types of 
shipments back and forth with DEA would provide no additional benefit 
and would impose an undue burden on DEA, our operations and our 
customers.''
    DEA agreed that return shipments of residual quantities should not 
be impacted by this regulation. DEA also recognized the difficulty in 
quantifying the residual amounts of red and white phosphorus contained 
in these rail cars and intermodal tank containers which conform to 
International Standards Organization specifications (with capacities 
greater than or equal to 2500 gallons in a single container). The CSA 
authorizes DEA, pursuant to 21 U.S.C. 802(39)(A)(iii), to remove 
certain transactions in listed chemicals from the definition of 
regulated transaction. Therefore DEA issued an interim rule excluding 
from the definition of regulated transaction (21 CFR 1310.08(j)), 
domestic transactions involving red phosphorus and white phosphorus 
which are return shipments of residual quantities (from customer to 
producer) in rail cars and intermodal tank containers which conform to 
International Standards Organization specifications (with capacities 
greater than or equal to 2500 gallons in a single container). As such, 
these return shipment transactions will not require recordkeeping. 
Additionally, DEA issued an interim rule waiving the

[[Page 37413]]

registration requirement pursuant to 21 CFR 1309.24(g) for any person 
whose distribution of red phosphorus or white phosphorus is limited to 
residual quantities of chemical returned to the producer in reusable 
rail cars and intermodal tank containers which conform to International 
Standards Organization specifications (with capacities greater than or 
equal to 2500 gallons in a single container).
    The October 17, 2001 rulemaking made it clear that the exclusion 
and waiver pertain only to these return shipments. Manufacturers shall 
still be subject to registration, recordkeeping, reporting and other 
CSA chemical regulatory requirements pertaining to the production and 
distribution of listed chemicals to their customers. The customers will 
not be subject to registration or recordkeeping requirements for the 
return of residual quantities in reusable containers to the producer. 
However, should these customers re-distribute any of the received 
material (other than the return of reusable containers to the 
producer), they shall be subject to all CSA chemical regulatory 
requirements.

What Comments Pertaining to the Interim Exclusion and Waivers Were 
Received in Response to the October 17, 2001 Rule? What Final Action Is 
DEA Taking Regarding the Exclusion and Waivers?

    Two comments were received in response to the exclusion from the 
definition of regulated transaction of domestic transactions involving 
red phosphorus and white phosphorus which are return shipments of 
residual quantities (from customer to producer) in rail cars and 
intermodal tank containers which conform to International Standards 
Organization specifications (with capacities greater than or equal to 
2500 gallons in a single container). These two comments requested that 
the exclusion and waiver from registration be expanded to include 
domestic and international shipments.
    DEA does not believe that such international shipments pose a more 
substantial risk of diversion than domestic transactions. Therefore, in 
response to these comments, DEA is expanding the exclusion and waiver 
in 21 CFR 1309.24(g) and 21 CFR 1310.08(j) to include domestic and 
international transactions involving red phosphorus and white 
phosphorus which are return shipments of residual quantities (from 
customer to producer) in rail cars and intermodal tank containers which 
conform to International Standards Organization specifications (with 
capacities greater than or equal to 2500 gallons in a single 
container). The registration requirement for persons engaged in such 
activity will also be waived.
    The proposed regulatory language in 21 CFR 1309.24(g) and 21 CFR 
1310.08(j) utilized the term ``isotainer.'' It is DEA's understanding 
that an isotainer is an intermodal tank container which conforms to 
International Standards Organization specifications. Therefore DEA has 
chosen to modify 21 CFR 1309.24(g) and 21 CFR 1310.08(j) to clarify 
that the provisions pertain to ``intermodal tank containers which 
conform to International Standards Organization specifications.'' This 
change does not modify the intended meaning of these paragraphs.
    Each of these two comments also requested clarification regarding 
the term ``residual quantities.'' In response to these comments, DEA 
understands that when a customer purchases rail cars and intermodal 
tank containers of red phosphorus and white phosphorus, it is not 
possible to remove 100 percent of the material during the unloading 
operation. Therefore, these ``emptied'' containers, in fact, contain 
residual quantities of phosphorus. The term ``residual quantities'' 
refers to those quantities of phosphorus routinely remaining in 
``emptied'' rail cars and intermodal tank containers under normal 
industry unloading procedures and consistent with normal industry 
practice.
    One commentor wanted to ensure that DEA understands that return 
shipments of ``emptied'' rail cars and intermodal tank containers 
holding ``residual quantities'' of phosphorus, also contain widely 
varying amounts of water and/or nitrogen which are added to these rail 
cars and intermodal tank containers as a safety precaution since the 
phosphorus is spontaneously combustible when exposed to air. In 
response to this comment, DEA acknowledges that it understands that 
this is normal industry practice.
    One commentor also stated that the phrase ``whose distribution of 
red and white phosphorus is limited solely to residual quantities of 
chemicals returned to the producer'' could be misinterpreted to mean 
that the waiver does not apply if the person meets all the conditions 
but also is involved in other types of distributions which qualify for 
a waiver of registration (i.e. disposal or intra-company transfers).
    As clarification, DEA wishes to make it clear that if the 
registration requirement has been waived for each and every activity in 
which a person is engaged, then that person is not required to 
register. 21 CFR 1309.24(f) waives the registration requirement for any 
person whose activities with respect to List I chemicals are limited to 
the distribution of red phosphorus, white phosphorus, or 
hypophosphorous acid (and its salts) to: Another location operated by 
the same firm solely for internal end-use; or an EPA or State licensed 
waste treatment or disposal firm for the purpose of waste treatment or 
disposal. 21 CFR 1309.24(g) waives the registration requirement for any 
person whose distribution of red phosphorus or white phosphorus is 
limited solely to residual quantities of chemical returned to the 
producer, in reusable rail cars and intermodal tank containers which 
conform to International Standards Organization specifications (with 
capacities greater than or equal to 2,500 gallons in a single 
container). In providing these waivers, DEA intended to waive the 
registration requirement for persons engaged in any of these waived 
activities, as long as they do not engage in other regulated activities 
which require registration. 21 CFR 1309.24(i) clarifies that ``If any 
person exempted under paragraph (b), (c), (d), (e), (f) or (g) of this 
section also engages in the distribution, importation or exportation of 
a List I chemical, other than as described in such paragraph, the 
person shall obtain a registration for such activities, as required by 
Section 1309.21 of this part.''
    One commentor also requested that DEA omit the term ``residual 
quantities'' completely and therefore provide an exclusion/waiver in 
the case that ``a partial shipment be returned from the customer back 
to the producer.'' DEA wishes to be clear on this point. The exclusion 
and waiver are not intended to exempt any partial shipments from 
customer back to producer. The undocumented transfer of such material 
poses a diversion risk. These transactions shall therefore be subject 
to all chemical regulatory control provisions of the CSA.
    DEA did not receive any comments relating specifically to the 
interim waiver from the registration requirement (as specified in 21 
CFR 1309.24(f)) for any person whose activities with respect to List I 
chemicals are limited to the distribution of red phosphorus, white 
phosphorus, or hypophosphorous acid (and its salts) to: Another 
location operated by the same firm solely for internal end-use; or an 
EPA or State licensed waste treatment or disposal firm for the purpose 
of waste treatment or disposal. Since no comments regarding this waiver 
were received, this waiver is being adopted as originally

[[Page 37414]]

stated in the October 17, 2001 rulemaking.
    DEA is therefore finalizing 21 CFR 1309.24(f) to provide that ``The 
requirement of registration is waived for any person whose activities 
with respect to List I chemicals are limited to the distribution of red 
phosphorus, white phosphorus, or hypophosphorous acid (and its salts) 
to: Another location operated by the same firm solely for internal end-
use; or an EPA or State licensed waste treatment or disposal firm for 
the purpose of waste treatment or disposal''.

Certifications

Regulatory Flexibility Act

    The Administrator hereby certifies that this rulemaking has been 
drafted in accordance with the Regulatory Flexibility Act (5 U.S.C. 
605(b)), has reviewed it, and by approving it certifies that this 
rulemaking will not have a significant economic impact on a substantial 
number of small entities. This final rule finalizes an interim 
exclusion from the definition of regulated transaction for return 
shipments of residual quantities of red phosphorus and white phosphorus 
in rail cars and intermodal tank containers, as well as three waivers 
of the requirement of registration for certain persons handling the 
List I chemicals red phosphorus, white phosphorus, and hypophosphorous 
acid (and its salts). Finalization of the interim exclusion and waivers 
reduces the regulatory burden for those persons.

Administrative Procedure Act

    Under the Administrative Procedure Act (5 U.S.C. 553(d)(1)), an 
agency may make a rulemaking effective before the required 30 days if 
the rule ``grants or recognizes an exemption or relieves a 
restriction.'' DEA finds good cause to make this rule effective 
immediately upon publication. This rule provides an exclusion from the 
definition of regulated transaction and waives the requirement of 
registration for certain persons, thereby reducing the regulatory 
burden for those persons.

Executive Order 12866

    The Administrator further certifies that this rulemaking has been 
drafted in accordance with the principles in Executive Order 12866 
Section 1(b). DEA has determined that this is not a significant 
rulemaking action. Therefore, this action has not been reviewed by the 
Office of Management and Budget.

Executive Order 12988--Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

Executive Order 13132

    This rulemaking does not preempt or modify any provision of state 
law; nor does it impose enforcement responsibilities on any state; nor 
does it diminish the power of any state to enforce its own laws. 
Accordingly, this rulemaking does not have federalism implications 
warranting the application of Executive Order 13132.

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 
$100,000,000 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 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 $100,000,000 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 1309

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

21 CFR Part 1310

    Drug traffic control, Reporting and recordkeeping requirements.


0
For reasons set out above, 21 CFR parts 1309 and 1310 are amended as 
follows:

PART 1309--[AMENDED]

0
1. The authority citation for Part 1309 continues to read as follows:

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

0
2. In Sec. 1309.24, paragraph (g) is revised to read as follows:


Sec.  1309.24  Waiver of registration requirement for certain 
activities.

* * * * *
    (g) The requirement of registration is waived for any person whose 
distribution of red phosphorus or white phosphorus is limited solely to 
residual quantities of chemical returned to the producer, in reusable 
rail cars and intermodal tank containers which conform to International 
Standards Organization specifications (with capacities greater than or 
equal to 2,500 gallons in a single container).
* * * * *

PART 1310--[AMENDED]

0
1. The authority citation for Part 1310 continues to read as follows:

    Authority: 21 U.S.C. 802, 830, 871(b).


0
2. Section 1310.08 is amended by revising paragraph (j) to read as 
follows:


Sec.  1310.08  Excluded transactions.

* * * * *
    (j) Domestic and international return shipments of reusable 
containers from customer to producer containing residual quantities of 
red phosphorus or white phosphorus in rail cars and intermodal tank 
containers which conform to International Standards Organization 
specifications (with capacities greater than or equal to 2,500 gallons 
in a single container).

    Dated: May 28, 2003.
William B. Simpkins,
Acting Administrator.
[FR Doc. 03-15788 Filed 6-23-03; 8:45 am]
BILLING CODE 4410-09-P