[Federal Register Volume 68, Number 227 (Tuesday, November 25, 2003)]
[Proposed Rules]
[Pages 66052-66059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29236]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1309, 1310

[Docket No. DEA-189P]
RIN 1117-AA67


Chemical Registration Waivers; Exemption From Chemical 
Registration Fees for Certain Persons

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: DEA is proposing amending its regulations to waive the 
requirement of registration for contract processors, medical/first aid 
kit providers, distributors of sample packages of drug products, and 
distributors of research/reference standards pursuant to 21 U.S.C. 
822(d). These actions are being taken in response to industry comments 
and suggestions. DEA has determined that requiring registration for 
these activities is not necessary for effective enforcement under the 
Controlled Substances Act (CSA), and waiving the requirement of 
registration will ease regulatory burdens for the affected industries. 
DEA is also proposing exempting charitable organizations and 
governmental entities from initial and renewal registration fees. These 
fee exemptions will bring the chemical regulations into conformance 
with the controlled substances regulations (21 CFR 1301.21).

DATES: Written comments must be postmarked on or before January 26, 
2004.

ADDRESSES: Comments should be submitted 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 M. Good, Chief, Liaison and 
Policy Section, Office of Diversion Control, Drug Enforcement 
Administration, Washington, DC 20537, Telephone (202) 307-7297.

Supplementary Information:

Special Notice

    Due to concerns regarding possible harmful side effects, the Food 
and Drug Administration (FDA) initiated action in November, 2000, to 
remove phenylpropanolamine from the market. As a result, many firms 
voluntarily discontinued marketing products containing 
phenylpropanolamine and removed them from the shelves for disposal. 
However, since some products containing phenylpropanolamine are still 
available, DEA has written these proposed regulations to include drug 
products containing phenylpropanolamine, where appropriate, as well as 
drug products containing pseudoephedrine.

I. Background

What Legislation Permits DEA to Regulate the Chemicals Industry, and 
What Laws Allow DEA To Waive Registration Requirements?

    The Domestic Chemical Diversion Control Act of 1993 (DCDCA) 
established that persons distributing, importing, or exporting List I 
chemicals must register with DEA. In addition, it removed the exemption 
of single-entity ephedrine drug products from the chemical regulations. 
The Comprehensive Methamphetamine Control Act of 1996 (MCA) expanded on 
the registration requirement of the DCDCA by removing the exemption for 
pseudoephedrine, phenylpropanolamine and combination ephedrine drug 
products. Persons distributing, importing or exporting these drug 
products must register with DEA (21 U.S.C. 822, 957).
    The registration requirement is not absolute. Section 302(c) of the 
CSA (21 U.S.C. 822(c)) provides that certain persons, including common 
or contract carriers and warehousemen, are not subject to the 
registration requirement. Further, section 302(d) of the CSA (21 U.S.C. 
822(d)) provides that the Attorney General may waive the registration 
requirement for certain persons if it is consistent with the public 
health and safety.
    As DEA has worked to implement the DCDCA and MCA, a number of 
issues have been raised regarding waiving the requirement of 
registration for persons engaged in certain activities under the 
regulations. In some cases there are parallels between identified 
activities and activities previously exempted from the registration 
requirement. DEA has reviewed the requests received from industry and 
has determined that the requirement of registration is not necessary 
for contract processors, medical/first aid kit providers, distributors 
of sample packages, and distributors of research/reference standards as 
discussed below. Further, DEA has determined that charitable 
organizations and governmental entities should be exempted from payment 
of the application fee for registration and reregistration, but that 
the requirement of registration itself must remain in effect for 
effective diversion control. These proposed fee exemptions are also 
discussed below.

How Will These Proposed Waivers and Exemptions Benefit the Regulated 
Industry?

    Current DEA regulations require that any person who manufactures, 
distributes, imports, or exports a List I chemical must first register 
with DEA annually as a List I chemicals handler and pay a registration 
fee. DEA has recognized that, for certain industries, registration is 
unnecessary for effective enforcement of the law, and has accommodated 
the waiver of registration through Memoranda of Understanding (MOUs) 
between DEA and affected persons. In this rulemaking, DEA is proposing 
to waive the requirement of registration for contract processors, 
medical/first aid kit providers, distributors of sample packages, and 
distributors of research/reference standards. Were DEA not to propose 
these regulations, thereby codifying present Administration policy, 
each affected person would be required to register with DEA annually 
and pay an initial registration fee of $595 and annual reregistration 
fees of $477. If finalized, these proposed regulations will require 
exempt persons to notify DEA only once of their activities, at a cost 
of mailing one letter, as opposed to an annual registration fee. 
Industry would benefit from a significant cost savings as no fee would 
be charged for the one-time notification. Further, in this rulemaking 
DEA is proposing to exempt charitable organizations and governmental 
entities from payment of the application fee for registration and 
reregistration as List I chemical handlers. These exemptions will 
reduce regulatory requirements for the applicable industry, creating a 
cost savings for affected persons.

What Chemicals Would Be Affected by These Proposed Regulations?

    The proposed waiver of the requirement of registration or 
reregistration for contract processors will affect all List I 
chemicals. List I chemicals have legitimate uses within commercial 
industry, being used for research and manufacturing purposes. List I 
chemicals include, but are not

[[Page 66053]]

limited to, ephedrine, pseudoephedrine and phenylpropanolamine (used in 
the manufacture of pharmaceutical products), benzaldehyde (used in the 
manufacture of perfumes and dyes), hydriodic acid (a disinfectant and 
chemical reagent), nitroethane (a solvent), and white phosphorus (used 
in the production of other phosphoric compounds). As a rule, with the 
exception of pseudoephedrine, phenylpropanolamine, and ephedrine, which 
are distributed to the public in regulated form as over-the-counter 
medications, List I chemicals in regulated form are usually distributed 
in commercial transactions between businesses and only rarely to the 
public in retail transactions. It is within this commercial arena that 
contract processors operate; they do not distribute at retail to the 
public.
    The proposed waiver of the requirement of registration or 
reregistration for distributors of research/reference standards would 
affect the List I chemicals ephedrine, pseudoephedrine and 
phenylpropanolamine. The proposed waiver of the requirement of 
registration or reregistration for medical/first aid kit providers and 
distributors of sample packages would affect the List I chemical 
pseudoephedrine. Pseudoephedrine, a chemical widely used in over-the-
counter medications, is a decongestant used for the temporary relief of 
nasal congestion due to the common cold, hay fever or other upper 
respiratory allergies. Products containing pseudoephedrine are widely 
available in a variety of dosage forms as a single entity or in 
combination with antihistamines, antitussives, analgesics, 
expectorants, and/or vitamins. Ephedrine is used for the temporary 
relief of shortness of breath, tightness of chest, and wheezing due to 
bronchial asthma.
    The majority of the products purchased by the public containing 
pseudoephedrine are commonly used medications and are easily accessible 
at pharmacies, grocery stores, discounted department stores, and a 
variety of other retail stores. These products are available to the 
public without a prescription. A few products containing 
pseudoephedrine or ephedrine are prescription products and require a 
prescription issued by a practitioner prior to being dispensed to a 
patient. This proposed regulation will not adversely impact the 
public's ability to easily access these products.

II. Waivers of the Requirement of Registration

A. Contract Processors

What Are Contract Processors?
    Contract processors, sometimes referred to within the industry as 
``tollers'', are those persons who, through a legally binding agreement 
with a registrant, take physical possession of a listed chemical for 
the purpose of providing a processing service to the registrant. Such 
processes may include, but are not limited to, packaging a product and 
adding chemicals to a mixture. The contract processor never has legal 
ownership or control of the chemicals; legal title remains with the 
registrant. Following processing, the contract processor either returns 
all of the chemicals received to the registrant, or distributes them as 
required by the registrant.
Why Is DEA Waiving the Requirement of Registration for Contract 
Processors?
    In reviewing this situation, DEA has noted that activities of 
certain contract processors parallel those of a warehouse at which 
chemicals are stored, for which an exemption from registration has been 
provided under 21 U.S.C. 822(c) (21 CFR 1309.23(b)(1)). As with the 
warehouseman, the contract processor merely carries out the processing 
requirements of the registrant; the contract processor does not have, 
at any time, legal title to or legal control of the chemicals. The 
registrant provides the material to the contract processor for a 
specific function, after which the material is returned to the 
registrant, thus maintaining a closed-loop system. DEA has determined 
that, under such circumstances, the requirement of registration is not 
necessary for effective chemical control. Therefore, DEA is proposing 
to amend the regulations to waive the requirement of registration for 
contract processors provided that chemicals are distributed only back 
to the registrant. As with warehousemen, a registrant utilizing a 
contract processor's services would be responsible for exercising due 
care in selection of the processor (21 CFR 1309.71, 21 CFR 1309.72). 
The registrant would have to ensure that the contract processor has in 
place appropriate procedures and safeguards to protect chemicals from 
diversion.
What Circumstances Are Not Permitted Under This Waiver?
    Contract processors do not always operate within a closed-loop 
system. In some cases, a contract processor may receive chemicals from 
an outside source, process them, and distribute the chemicals to the 
registrant. In other cases, a registrant may provide the chemicals to 
the contract processor which processes them and, per the registrant's 
instructions, distributes the chemicals to other persons. These 
activities deviate from the closed-loop system between the registrant 
and contract processor and involve distributions to or from other 
registrants. Therefore, these types of activities will remain subject 
to the registration requirements under the law. DEA is proposing that, 
as with the existing provisions for warehouses, the waiver will apply 
only to those circumstances in which a registrant distributes directly 
to a contract processor which, in turn, will distribute only back to 
the registrant from which it received the chemicals.

B. Medical/First Aid Kit Providers

What Are Medical/First Aid Kit Providers?
    Medical/first aid kit providers distribute small amounts of 
pseudoephedrine drug products, in individual transactions, to medical/
first aid kits maintained by businesses for the personal medical use of 
employees in the workplace. The distributions are usually conducted in 
face-to-face transactions (an agent or employee of the distributor 
delivers the products directly to the customer), the products are 
distributed for the personal medical use of the employees of the 
customer, and are less than the retail threshold per transaction. [As 
used in this document and referenced in the Methamphetamine Anti-
Proliferation Act of 2000 (Section XXXVI of Pub.L. 106-310), the term 
``transaction'' is defined to mean the provision of regulated drug 
products to a specific location, not the provision of regulated drug 
products to a specific medical/first aid kit within a location. Thus, 
under the terms of this proposed waiver, if a location had multiple 
medical/first aid kits, the medical/first aid kit provider would be 
permitted to supply the location with a quantity of product below the 
retail per-transaction limit during each visit to that specific 
location. Product may be allocated to multiple medical/first aid kits 
throughout a specific location, without the medical/first aid kit 
provider being required to register with DEA, so long as the amount of 
product distributed does not exceed the retail per-transaction 
threshold.]

[[Page 66054]]

Why is DEA Waiving the Requirement of Registration for Medical/First 
Aid Kit Providers?
    Medical/first aid kit provider activities closely parallel those of 
retail distributors; sales involve retail below-threshold amounts of 
the products, are made in face-to-face transactions, and are intended 
for the personal medical use of the employees of the business. DEA has 
determined that, where a medical/first aid provider's activities are 
restricted to retail below-threshold, face-to-face transactions to 
supply/replenish medical or first aid kits maintained for the personal 
medical use of employees in the workplace, application of the 
registration requirement is not necessary for effective enforcement of 
the chemical control program. Instead, the providers must submit 
written notice to DEA certifying that their activities will be limited 
to distribution of retail below-threshold quantities of a drug product 
containing pseudoephedrine that is regulated pursuant to Sec.  
1300.02(b)(28)(i)(D) for purposes of supplying/replenishing medical or 
first aid kits maintained by businesses for the use of their employees. 
(A model of the notice to be used may be found in proposed 1309.24(i).) 
Notice must be provided on official company letterhead to the Drug 
Enforcement Administration, Chemical Control Section, Washington, D.C. 
20537.
    Those medical/first aid kit providers currently operating pursuant 
to Memoranda of Understanding (MOU) with DEA will be required to 
request a waiver of the requirement of registration once the Final Rule 
implementing these regulations is published in the Federal Register.
    Although medical/first aid kit providers conduct individual 
transactions in retail below-threshold quantities, they may store large 
quantities of drug products containing list I chemicals that are 
regulated pursuant to Sec.  1300.02(b)(28)(i)(D) at any one time. 
Because of this, the issue of theft or loss of these drug products is 
of concern to DEA. It is extremely important that persons supplying/
replenishing medical or first aid kits maintained by businesses for the 
use of their employees take adequate and appropriate measures to ensure 
the security of these drug products in their possession (21 CFR 
1309.71-1309.73). Persons receiving a waiver of the requirement of 
registration should pay special attention to the storage and security 
of the regulated drug products. Further, waiver of the registration 
requirement does not obviate the need for complete and accurate 
recordkeeping and reporting to DEA (21 CFR 1310, 1313). The waiver of 
the requirement of registration may be revoked or suspended under the 
terms discussed in Section II.E. of this preamble and the proposed 
regulations.

C. Distributors of Sample Packages of Drug Products

What Are Sample Packages, and When May the Requirement of Registration 
Be Waived for Distributions of Sample Packages?
    It is not unusual for manufacturers of drug products containing 
retail below-threshold amounts of pseudoephedrine that are regulated 
pursuant to Sec.  1300.02(b)(28)(i)(D) to distribute free samples of 
their products directly to the public as part of marketing campaigns. 
The samples may be distributed through mass distributions in 
newspapers, magazines, or through the mail. A sample package contains 
not more than two solid dosage units of the product, or the equivalent 
of two dosage units in liquid form, not to exceed 10 milliliters of 
liquid per package. DEA has determined that application of the specific 
registration requirement is not necessary for effective enforcement of 
chemical controls, provided that the sampler does not distribute more 
than one sample package of a drug product containing retail below-
threshold amounts of pseudoephedrine that is regulated pursuant to 
Sec.  1300.02(b)(28)(i)(D) to an individual or residential address in 
any 30-day time period. Instead, DEA will require that the sampler must 
submit written notice to DEA certifying that their activities will be 
limited to individual distributions of sample packages containing not 
more than two solid dosage units of the product, or the equivalent of 
two dosage units in liquid form, not to exceed 10 milliliters of liquid 
per package, and that distributions will not exceed one per individual 
or residential address per 30-day time period. Notice must be provided 
on official company letterhead to the local field office of the Drug 
Enforcement Administration. Contact information for local DEA field 
offices may be obtained from the Drug Enforcement Administration Web 
site at http://www.dea.gov. Once notification has been received, the 
local field office will provide instruction on handling the product.
    Those persons distributing sample packages currently operating 
pursuant to Memoranda of Understanding (MOU) with DEA will be required 
to request a waiver of the requirement of registration once the final 
rule implementing these regulations is published in the Federal 
Register.
    Although distributors of sample packages may distribute only one 
sample package to an individual or residential address in a 30-day time 
period, they may store very large quantities of regulated drug 
products. The issue of theft or loss of these drug products is of 
concern to DEA. It is extremely important that persons making 
distributions of these sample packages take adequate and appropriate 
measures to ensure the security of these drug products in their 
possession (21 CFR 1309.71-1309.73). Persons receiving a waiver of the 
requirement of registration should pay special attention to the storage 
and security of the sample packages. Further, waiver of the requirement 
of registration does not obviate the need for accurate recordkeeping 
and reporting to DEA (21 CFR 1310, 1313). The waiver of the requirement 
of registration may be revoked or suspended under the terms discussed 
in Section II.E. of this preamble and the proposed regulations.

D. Distribution of Research/Reference Standards

What Are Distributions of Research/Reference Standards, and When May 
the Requirement of Registration Be Waived for These Distributions?
    DEA registered manufacturers of regulated drug products sometimes 
maintain separate locations at which ephedrine, pseudoephedrine, and 
phenylpropanolamine research/reference standards are manufactured and 
distributed to other locations operated by the registrant for use in 
manufacturing processes. DEA has determined that requiring registration 
for such distributions is not necessary for effective enforcement of 
the chemical control program provided that the distributions are less 
than five (5) grams per transaction, not to exceed fifty (50) grams 
cumulatively per calendar month, and are made solely between locations 
operated by the same regulated person. The small amounts of material 
involved and the closed system within which the material is distributed 
do not present significant potential for diversion. Further, because 
these samples are used for research purposes, the controls surrounding 
these chemicals, as well as their chain of custody, are very strict. 
These added safeguards lessen the potential for diversion. Therefore, 
DEA is proposing the amendment of 21 CFR 1309.24 to waive the 
requirement of registration for the distribution of research/reference 
standards. The waiver of the

[[Page 66055]]

requirement of registration may be revoked or suspended under the terms 
discussed in Section II.E. of this preamble and the proposed 
regulations.

E. Waiver Revocations and Suspensions

    Any waiver granted to any medical/first aid kit provider, 
distributor of sample packages, or distributor of research/reference 
standards under the provisions of this Notice of Proposed Rulemaking 
may be revoked or suspended. If the Administrator of DEA finds that 
continuation of the waiver of the requirement of registration for any 
person granted a waiver pursuant to these regulations would not be in 
the public interest, or would be subject to suspension or revocation 
pursuant to any other ground under Section 304 of the Act (21 U.S.C. 
824), the Administrator shall serve upon the person an order to show 
cause why the waiver of registration should not be revoked or suspended 
as set forth in 21 CFR 1309.46(b), and, if applicable, why any pending 
applications for List I chemical registration should not be denied as 
set forth in 21 CFR 1309.46(a).

III. Fee Exemptions

A. Charitable Organizations

    It is not unusual for charitable organizations to receive donations 
of drug products containing a List I chemical that are regulated 
pursuant to Sec.  1300.02(b)(28)(i)(D) as part of their normal course 
of business. These donations may be received from a variety of sources 
including retail distributors, wholesale distributors and 
manufacturers. The charitable organizations distribute the products 
either directly to the ultimate users or to other foreign or domestic 
charitable organizations.
    For purposes of these proposed regulations, DEA is defining a 
charitable organization as one meeting the requirements of the Internal 
Revenue Service Code (26 U.S.C. 501(c)(3)). When seeking an exemption 
from payment of application fees for registration or reregistration, 
such charitable organizations must present to DEA, along with their 
application for registration or reregistration, a copy of their advance 
determination letter or determination letter issued by the Internal 
Revenue Service as proof of their tax-exempt status under the 
provisions of 26 U.S.C. 508 and its implementing regulations.
    Distributions made by charitable organizations directly to ultimate 
users are retail distributions; products are distributed in face-to-
face transactions for personal medical use, and involve below-threshold 
amounts of listed chemicals. As retail transactions, they are not 
subject to the registration requirement.
    However, distributions to other charitable organizations, whether 
domestic distribution or exportation, are subject to the registration 
requirement. Because the volume of drug products containing a List I 
chemical that are regulated pursuant to Sec.  1300.02(b)(28)(i)(D) 
being distributed by these organizations can be significant, 
registration with DEA remains necessary, as well as the recordkeeping 
and reporting requirements. However, it is not DEA's intent that these 
organizations be financially penalized for their activities. Therefore, 
DEA is proposing amendments to the regulations exempting charitable 
organizations from registration fees.

B. Federal, State, and Local Agencies

    It has been general practice and tradition that DEA does not assess 
other governmental entities--Federal, state or local--the fees required 
for registration or reregistration. This provision, which does exist 
for controlled substances registrants, was inadvertently not included 
in the chemical regulations. Therefore, to provide consistent 
registration fee requirements, DEA is proposing the amendment of the 
chemical regulations to exempt governmental entities from fees.

IV. Clarification of the Waiver of the Requirement of Registration for 
Certain Controlled Substances Registrants

    Title 21 CFR 1309.24 provides that persons registered with DEA to 
distribute or dispense controlled substances are not required to obtain 
a separate chemical registration to distribute drug products containing 
a List I chemical that are regulated pursuant to Sec.  
1300.02(b)(28)(i)(D).
    This provision is intended to allow controlled substances 
manufacturers, distributors, and dispensers to engage in activities 
with regulated drug products that are similar or equivalent to their 
activities with controlled substances, i.e., manufacturers and 
distributors may engage in wholesale transactions and dispensers, such 
as retail pharmacies, may engage in retail transactions.
    However, DEA has become aware of instances in which controlled 
substances dispensers, in particular retail pharmacies, have been 
engaging in listed chemical activities inconsistent with their 
controlled substances activities. DEA intended that the waiver for 
dispensers would apply to retail type transactions, i.e., distributions 
of below-threshold amounts to individual customers for personal medical 
use, and not to distributions of above-threshold quantities or 
distributions not intended for the personal medical use of the 
customer. For example, a retail pharmacy may distribute retail 
quantities of drug products containing a List I chemical that are 
regulated pursuant to 21 CFR 1300.02(b)(28) under the chemical 
registration waiver, but must obtain a separate chemical registration 
for distributions above the retail threshold or distributions not 
intended for the personal medical use of the customer. Similarly, a 
controlled substances distributor would be exempt from obtaining a 
registration for distributing, but not manufacturing, regulated drug 
products. It was not DEA's intent to permit controlled substances 
registrants to use the waiver of the requirement of chemical 
registration to conduct activities inconsistent with their controlled 
substances activities. Therefore, DEA proposes to amend its regulations 
to clarify that controlled substances manufacturers, distributors, and 
dispensers may conduct similar or equivalent activities involving drug 
products containing a List I chemical that are regulated pursuant to 
Sec.  1300.02(b)(28)(i)(D) without having to obtain a chemical 
registration.

V. Technical Corrections

What Technical Corrections Are Proposed in This Rulemaking?

    While preparing this notice, DEA noted inaccurate citations for the 
definition of ``regulated transaction'' in 21 CFR Part 1310. Therefore, 
DEA is proposing the correction of these inaccurate citations.
    Further, it was noted that Sections 1310.14 and 1310.15 have been 
superceded by the Comprehensive Methamphetamine Control Act of 1996 
(MCA) which regulates all products containing ephedrine, whether single 
entity or combination ephedrine. Therefore, DEA is proposing the 
removal of Sections 1310.14 and 1310.15.

VI. Office of Management and Budget Information Collection Requirements

    DEA is proposing two new collections of information: Report of 
Medical/First Aid Kit Provider Business Activities and Report of 
Distribution of Sample Packages under the Paperwork Reduction Act of 
1995. This process is conducted in accordance with 5 CFR 1320.11.
    These proposed information collections are published to obtain

[[Page 66056]]

comments from the public and affected agencies. Comments are encouraged 
and will be accepted until January 26, 2004. Written comments and 
suggestions are requested from the public and affected agencies 
concerning the proposed collections of information.
    Comments should address one or more of the following four points:
    1. Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    2. Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
    3. Enhance the quality, utility, and clarity of the information to 
be collected; and
    4. Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
    If you have comments, especially on the estimated public burden or 
associated response time, suggestions, or need a copy of the proposed 
information collection instrument(s) with instructions, if applicable, 
or additional information, please contact Patricia M. Good, Chief, 
Liaison and Policy Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, DC 20537, Telephone (202) 307-
7297.
    Overview of Report of Medical/First Aid Kit Provider Business 
Activities Information Collection:
    (1) Type of information collection: new collection.
    (2) The title of the form/collection: Report of Medical/First Aid 
Kit Provider Business Activities.
    (3) The agency form number, if any, and the applicable component of 
the Department sponsoring the collection:
    Form No.: None.
    Applicable component of the Department sponsoring the collection: 
Office of Diversion Control, Drug Enforcement Administration, U.S. 
Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: Business or other for-profit.
    Other: None.
    Abstract: The collection of this information is necessary to 
maintain appropriate oversight of the distribution of regulated drug 
products containing List I chemicals by requiring notification from 
businesses of their intent to distribute retail subthreshold quantities 
of pseudoephedrine drug products for the purpose of supplying/
replenishing medical/first aid kits.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond/reply: 600 
Respondents. 600 responses per year x 1 hour per response = 600 hrs.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: 600 annual burden hours. 600 respondents x 1 hour 
per respondent per year.
    Overview of Report of Distribution of Sample Packages Information 
Collection:
    (1) Type of information collection: new collection.
    (2) The title of the form/collection: Report of Distribution of 
Sample Packages.
    (3) The agency form number, if any, and the applicable component of 
the Department sponsoring the collection:
    Form No.: None.
    Applicable component of the Department sponsoring the collection: 
Office of Diversion Control, Drug Enforcement Administration, U.S. 
Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: Business or other for-profit.
    Other: None.
    Abstract: The collection of this information is necessary to 
maintain appropriate oversight of the distribution of regulated drug 
products containing retail below-threshold amounts of pseudoephedrine. 
By requiring notification from businesses of their intent to distribute 
sample packages containing not more than two solid dosage units, or the 
equivalent of two dosage units in liquid form, not to exceed 10 
milliliters of liquid per package, to the general public. Distributions 
are limited to not more than one package distributed to an individual 
or residential address in any 30-day time period. Notice provides the 
business name and address and acknowledges distribution restrictions, 
compliance with the requirements of Title 21, Code of Federal 
Regulations (CFR), part 1310, the reporting and recordkeeping 
requirements, and the fact that exemption from the registration 
requirement applies to this activity only.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond/reply:1,000 
respondents. 1,000 responses per year x 1 hour per response = 1,000 
hours.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: 1,000 annual burden hours. 1,000 respondents x 1 
hour per respondent per year.
    If additional information is required regarding these collections 
of information, contact: Brenda E. Dyer, Deputy Clearance Officer, 
Policy and Planning Staff, Justice Management Division, United States 
Department of Justice, Patrick Henry Building, Suite 1600, 601 D Street 
NW., Washington, DC 20530.

Regulatory Certifications

Regulatory Flexibility Act

    The Deputy Assistant Administrator hereby certifies that this 
rulemaking has been drafted in accordance with the Regulatory 
Flexibility Act (5 U.S.C. 605(b)), and by approving it certifies that 
this regulation will not have a significant economic impact on a 
substantial number of small business entities. These proposed 
regulations would ease registrants', primarily small businesses, 
regulatory burdens including waiving the requirement of registration 
and exempting certain regulated persons from the imposition of 
registration fees.

Executive Order 12866

    The Deputy Assistant 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 a 
significant regulatory action. Therefore, this action has been reviewed 
by the Office of Management and Budget. Further, the proposed 
information collections, ``Report of Medical/First Aid Kit Provider 
Business Activities'' and ``Report of Distributions of Sample 
Packages'', have been submitted for review. This rulemaking eases the 
regulatory burden for registrants by waiving the requirement of 
registration for certain activities, as well as exempting certain 
regulated persons from the registration fees. Were DEA not to propose 
these regulations, thereby codifying present Administration policy, 
each affected person would be required to register with DEA annually 
and pay an initial registration fee of $595 and annual reregistration 
fees of $477. If finalized, these proposed regulations will require 
exempt persons to notify DEA only once of their activities, at a cost 
of mailing one letter, as opposed to an annual registration fee. 
Industry would benefit

[[Page 66057]]

from a significant cost savings as no fee would be charged for the one-
time notification.

Executive Order 12988

    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, Security measures.

21 CFR Part 1310

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

    For the reasons set out above, 21 CFR parts 1309 and 1310 are 
proposed to be amended as follows:

PART 1309--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, IMPORTERS 
AND EXPORTERS OF LIST I CHEMICALS

    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.

    2. Section 1309.13 is proposed to be added to read as follows:


Sec.  1309.13  Exemptions from fees.

    (a) The Administrator shall exempt from payment of an application 
fee for registration or reregistration any hospital or other 
institution which is operated by an agency of the United States 
(including the U.S. Army, Navy, Marine Corps, Air Force, and Coast 
Guard), of any State, or any political subdivision or agency thereof.
    (b) The Administrator shall exempt from payment of an application 
fee for registration or reregistration any charitable organization as 
specified under Internal Revenue Service Code Title XXVI, United States 
Code, section 501(c)(3) which obtains a drug product containing a List 
I chemical that is regulated pursuant to Sec.  1300.02(b)(28)(i)(D), 
and which distributes or exports the drug product to other charitable 
organizations as specified under Title XXVI, United States Code, 
section 501(c)(3) for ultimate distribution to the end user. Charitable 
organizations seeking an exemption from the payment of application fees 
for registration or reregistration must present to the Administration, 
along with their application for registration or reregistration, a copy 
of their advance determination letter or determination letter issued by 
the Internal Revenue Service as proof of tax-exempt status under the 
provisions of Title XXVI, United States Code, section 508 and its 
implementing regulations.
    (c) Exemption from payment of an application fee for registration 
or reregistration does not relieve the registrant of any other 
requirements or duties prescribed by law.
    3. Section 1309.23 is proposed to be amended by revising paragraph 
(b) to read as follows:


Sec.  1309.23  Separate registration for separate locations.

* * * * *
    (b) The following locations shall be deemed to be places not 
subject to the registration requirement:
    (1) A warehouse where List I chemicals are stored by or on behalf 
of a registered person, unless such chemicals are distributed directly 
from such warehouse to locations other than the registered location 
from which the chemicals were originally delivered;
    (2) An office used by agents of a registrant where sales of List I 
chemicals are solicited, made, or supervised but which neither contains 
such chemicals (other than chemicals for display purposes) nor serves 
as a distribution point for filling sales orders; and
    (3) A contract processor where List I chemicals are processed by or 
on behalf of a registered person, unless such chemicals are distributed 
directly from such contract processor to locations other than the 
registered location from which the chemicals were originally delivered.
    4. Section 1309.24 is proposed to be revised to read as follows:


Sec.  1309.24  Waiver of registration requirement for certain 
activities.

    (a) The requirement of registration is waived for any agent or 
employee of a person who is registered to engage in any group of 
independent activities, if such agent or employee is acting in the 
usual course of his or her business or employment.
    (b) The requirement of registration is waived for any person who 
distributes a product containing a List I chemical that is regulated 
pursuant to 21 CFR 1300.02(b)(28)(i)(D), if that person is registered 
with the Administration to manufacture, distribute or dispense a 
controlled substance.
    (c) The requirement of registration is waived for any person 
registered with the Administration to manufacture, distribute, or 
dispense controlled substances who is conducting similar or equivalent 
activities with a drug product containing a List I chemical that is 
regulated pursuant to 21 CFR 1300.02(b)(28)(i)(D). However, a separate 
chemical registration must be obtained for dissimilar activities. (For 
example, a retail pharmacy may distribute below-threshold retail 
quantities of drug products containing List I chemicals that are 
regulated pursuant to 21 CFR 1300.02(b)(28) to an individual for 
personal medical use under its retail distribution exemption, but must 
obtain a separate chemical registration for distributions of above-
threshold quantities or distributions not intended for the personal 
medical use of an individual customer. Further, a controlled substances 
distributor may distribute drug products containing List I chemicals 
that are regulated pursuant to 21 CFR 1300.02(b)(28) under its 
controlled substances distribution registration, but must obtain a 
separate chemical registration to manufacture drug products containing 
List I

[[Page 66058]]

chemicals that are regulated pursuant to 21 CFR 1300.02(b)(28).)
    (d) The requirement of registration is waived for any person who 
distributes a prescription drug product containing a List I chemical 
that is regulated pursuant to 21 CFR 1300.02(b)(28)(i)(D) of this 
chapter.
    (e) The requirement of registration is waived for any retail 
distributor whose activities with respect to List I chemicals are 
limited to the distribution of below-threshold quantities of 
pseudoephedrine, phenylpropanolamine, or combination ephedrine product 
that is regulated pursuant to 21 CFR 1300.02(b)(28)(i)(D) of this 
chapter, in a single transaction to an individual for legitimate 
medical use, irrespective of whether the form of packaging of the 
product meets the definition of ``ordinary over-the-counter 
pseudoephedrine or phenylpropanolamine product'' under 21 CFR 
1300.02(b)(31) of this chapter.
    (f) 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 disposal.
    (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).
    (h) The requirement of registration is waived for any manufacturer 
of a List I chemical, if that chemical is produced solely for internal 
consumption by the manufacturer and there is no subsequent distribution 
or exportation of the List I chemical.
    (i) The requirement of registration under this part is waived for 
any medical/first aid kit provider whose activities consist of 
distributing, in face-to-face transactions, a drug product containing 
retail below-threshold amounts of pseudoephedrine that is regulated 
pursuant to 21 CFR 1300.02(b)(28)(i)(D) to businesses for the sole 
purpose of supplying/replenishing a medical/first aid kit maintained 
for the personal use of employees in the workplace. For purposes of 
this paragraph, the term transaction is defined to mean the provision 
of regulated drug products to a specific location, not the provision of 
regulated drug products to a specific medical/first aid kit within a 
location.
    (1) Persons requesting a waiver of the requirement of registration 
must submit a notification of this business activity on official 
company letterhead to the Drug Enforcement Administration, Office of 
Diversion Control, Chemical Control Section, Washington, DC 20537.
    (2) Notification of this business activity should be in the 
following form:

    I, ---------- the ---------- (title) of ---------- (name of 
company) located at ---------- (street address) ---------- (city) --
-------- (state)---------- (ZIP code) am writing to request a waiver 
of the Drug Enforcement Administration (DEA) chemical registration 
requirement for ---------- (name of company)'s activities involving 
the distribution of drug products containing pseudoephedrine that 
are regulated pursuant to Title 21, Code of Federal Regulations, 
Sec.  1300.02(b)(28)(i)(D) to businesses for the purpose of 
supplying/replenishing medical or first aid kits maintained by those 
businesses for the personal medical use of their employees.
    This is to certify that ---------- (name of company) will comply 
with the provisions of Title 21, Code of Federal Regulations, Part 
1309, namely:
    1. The distribution of retail below-threshold amounts of drug 
products containing pseudoephedrine that are regulated pursuant to 
Sec.  1300.02(b)(28)(i)(D) are to individual customers;
    2. The distributions are made only in face-to-face transactions; 
and
    3. The distributions are only for the purpose of supplying/
replenishing medical or first aid kits maintained by businesses for 
the personal medical use of their employees.
    ---------- (name of company) distributes an average of --------
-- dosage units of pseudoephedrine products per year.
    I understand that the waiver of the registration requirement 
applies only to those activities; any distribution of the products 
other than as described above is subject to the registration 
requirement.
    Further, I understand that the waiver applies only to the 
registration requirement. The recordkeeping and reporting 
requirements set forth in Title 21, Code of Federal Regulations, 
Part 1310, still apply to both receipts and distributions of 
products containing a List I chemical that are regulated pursuant to 
Title 21, Code of Federal regulations, Sec.  1300.02(b)(28)(i)(D). I 
understand that if I receive more than a non-retail threshold amount 
of pseudoephedrine, either singly or cumulatively, in a calendar 
month from a supplier, then I must keep a record of such receipt(s).
    I understand that I will receive a written decision regarding my 
request for a waiver of the requirement of registration. I further 
understand that to engage in the distribution of drug products 
containing pseudoephedrine that are regulated pursuant to Title 21, 
Code of Federal Regulations, Sec.  1300.02(b)(28)(i)(D) to medical/
first aid kits I must either be registered with the Drug Enforcement 
Administration as a List I chemical handler or have received a 
written waiver of the requirement of registration. A copy of this 
letter will be kept in my records.
-----------------------------------------------------------------------
(signature)
-----------------------------------------------------------------------
(title)
-----------------------------------------------------------------------

(date)
    (3) The request for a waiver of the requirement of registration 
will be evaluated based on compliance with the above criteria and on 
public interest criteria as defined in 21 U.S.C. 823(h). Once a 
determination has been made regarding the request for waiver, DEA will 
notify the requestor in writing of the decision.
    (4) Public reporting burden for collection of this information is 
estimated to average 1 hour per response, including the time to review 
instructions, write the request, and send it to the appropriate 
location. Send comments regarding this burden estimate or any other 
aspect of this collection of information, including suggestions for 
reducing this burden to the Drug Enforcement Administration, Records 
Management Section, Washington, DC 20537; and to the Office of 
Management and Budget, Paperwork Reduction Project No. 1117-00xx, 
Washington, DC 20503.
    (j) The requirement of registration under this part is waived for 
persons distributing sample packages of a product containing retail 
below-threshold amounts of pseudoephedrine that is regulated pursuant 
to 21 CFR 1300.02(b)(28)(i)(D) containing not more than two solid 
dosage units, or the equivalent of two dosage units in liquid form, not 
to exceed 10 milliliters of liquid per package. Distributions are 
limited to not more than one package distributed to an individual or 
residential address in any 30-day period.
    (1) Persons requesting a waiver of the requirement of registration 
must submit a notification of this business activity on official 
company letterhead to the Special Agent in Charge of the Administration 
in the area in which the person is located.
    (2) The Special Agent in Charge shall authorize and instruct the 
person distributing the sample packages on handling and security of the 
product.
    (3) Public reporting burden for collection of this information is 
estimated to average 1 hour per response, including the time to review 
instructions, write the notification, and send it to the appropriate 
location. Send comments regarding this burden

[[Page 66059]]

estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden to the Drug Enforcement 
Administration, Records Management Section, Washington, DC 20537; and 
to the Office of Management and Budget, Paperwork Reduction Project No. 
1117-00??, Washington, DC 20503.
    (k) For any person who manufactures ephedrine, pseudoephedrine or 
phenylpropanolamine at a registered location and also manufactures 
research/reference standards containing ephedrine, pseudoephedrine or 
phenylpropanolamine at a separate location, the requirement of 
registration under this part is waived for the location at which 
research/reference standards containing ephedrine, pseudoephedrine or 
phenylpropanolamine are manufactured and distributed, so long as the 
research/reference standards are distributed only to other locations 
operated by the same registered manufacturer. Distributions may not 
exceed five grams per transaction and fifty grams cumulatively per 
calendar month.
    (l) If any person exempted under paragraph (b), (c), (d), (e), (f), 
(g) or (k) 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 Sec.  1309.21 of this part.
    (m) The Administrator may, upon finding that continuation of the 
waiver would not be in the public interest, suspend or revoke a waiver 
granted under paragraph (b), (c), (d), (e), (f), (g), (h), (i), (j) or 
(k) of this section pursuant to the procedures set forth in Sec. Sec.  
1309.43 through 1309.46 and 1309.51 through 1309.55 of this part. In 
considering the revocation or suspension of a person's waiver granted 
pursuant to paragraph (b) or (c) of this section, the Administrator 
shall also consider whether action to revoke or suspend the person's 
controlled substance registration pursuant to 21 U.S.C. 824 is 
warranted.
    (n) Any person exempted from the registration requirement under 
this section shall comply with the security requirements set forth in 
Sec. Sec.  1309.71 through 1309.73 of this part and the recordkeeping 
and reporting requirements set forth under parts 1310 and 1313 of this 
chapter.


Sec.  1309.62  [Amended]

    5. In Section 1309.62(a) remove the word ``cases'' and add the word 
``ceases'' in its place.

PART 1310--RECORDS AND REPORTS OF LISTED CHEMICALS AND CERTAIN 
MACHINES

    6. The authority citation for 21 CFR Part 1310 continues to read as 
follows:

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

Sec.  1310.05  [Amended]

    7. In Sec.  1310.05(d), remove the reference to Sec.  
1310.01(f)(1)(iv) or Sec.  1310.01(f)(1)(v) and add the reference Sec.  
1300.02(b)(28)(i)(D) or Sec.  1300.02(b)(28)(i)(E)'' in its place.


Sec.  1310.06  [Amended]

    8. In Sec.  1310.06(h)(5), remove the reference to Sec.  
1310.01(f)(1)(iv) or Sec.  1310.01(f)(1)(v) and add the reference 
``Sec.  1300.02(b)(28)(i)(D) or Sec.  1300.02(b)(28)(i)(E) in its 
place.


Sec.  1310.10  [Amended]

    9. In Sec.  1310.10(a), remove the reference to ``Sec.  
1310.01(b)(28)(i)(D)'' and add the reference ``Sec.  
1300.02(b)(28)(i)(D)'' in its place.


Sec.  1310.14  [Removed]

    10. Remove Sec.  1310.14.


Sec.  1310.15  [Removed]

    11. Remove Sec.  1310.15.

    Dated: November 14, 2003.
Laura M. Nagel,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 03-29236 Filed 11-24-03; 8:45 am]
BILLING CODE 4410-09-P