[Federal Register Volume 71, Number 155 (Friday, August 11, 2006)]
[Proposed Rules]
[Pages 46144-46155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12353]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1310

[Docket No. DEA-257P]
RIN 1117-AA93


Changes in the Regulation of Iodine Crystals and Chemical 
Mixtures Containing Over 2.2 Percent Iodine

AGENCY: Drug Enforcement Administration (DEA), U.S. Department of 
Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This Notice of Proposed Rulemaking (NPRM) proposes changes in 
the regulation of the listed chemical iodine pursuant to the chemical 
regulatory provisions of the Controlled Substances Act (CSA). The Drug 
Enforcement Administration (DEA) believes that this action is necessary 
in order to remove deficiencies in the current regulatory controls, 
which are being exploited by drug traffickers who divert iodine (in the 
form of iodine crystals and iodine tincture) for the illicit production 
of methamphetamine in clandestine drug laboratories. This NPRM proposes 
(1) the movement of

[[Page 46145]]

iodine from List II to List I; (2) a reduction in the iodine threshold 
from 0.4 kilograms to zero kilograms; (3) the addition of import and 
export regulatory controls; and (4) the control of chemical mixtures 
containing greater than 2.2 percent iodine.
    This NPRM proposes regulatory controls that will apply to iodine 
crystals and iodine chemical mixtures that contain greater than 2.2 
percent iodine. This regulation will therefore control iodine crystals 
and strong iodine tinctures/solutions (e.g., 7 percent iodine) that do 
not have common household uses and instead have limited application in 
livestock, horses and for disinfection of equipment. Household products 
such as 2 percent iodine tincture/solution and household disinfectants 
containing iodine complexes will not be adversely impacted by this 
regulation.
    If finalized as proposed, persons conducting regulated transactions 
involving iodine would need to be registered with the DEA, would be 
subject to import/export notification requirements of the CSA, and 
would be required to maintain records of all regulated transactions 
involving iodine regardless of size.

DATES: Written comments must be postmarked, and electronic comments 
must be sent, on or before October 10, 2006.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-257P'' on all written and electronic correspondence. 
Written comments via regular mail should be sent to the Deputy 
Administrator, Drug Enforcement Administration, Washington, DC 20537, 
Attention: DEA Federal Register Representative/ODL. Written comments 
sent via express mail should be sent to DEA Headquarters, Attention: 
DEA Federal Register Representative/ODL, 2401 Jefferson-Davis Highway, 
Alexandria, VA 22301. Comments may be sent directly to DEA 
electronically by sending an electronic message to 
[email protected]. Comments may also be sent 
electronically through http://www.regulations.gov using the electronic 
comment form provided on that site. An electronic copy of this document 
is also available at the http://www.regulations.gov Web site. DEA will 
accept attachments to electronic comments in Microsoft Word, 
WordPerfect, Adobe PDF, or Excel file formats. DEA will not accept any 
file format other than those specifically listed here.

FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, Ph.D., Chief, 
Drug and Chemical Evaluation Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, DC 20537 at (202) 307-7183.

SUPPLEMENTARY INFORMATION: 

I. Background Information on Iodine

    Congress placed iodine in List II by amending Section 102(35) of 
the CSA (21 U.S.C. 802(35)) by passage of Public Law 104-237, the 
Comprehensive Methamphetamine Control Act of 1996 (MCA) on October 3, 
1996. Iodine became a regulated chemical because of its use in the 
clandestine manufacture of the Schedule II controlled substances 
amphetamine and methamphetamine. Methamphetamine is the leading 
clandestinely manufactured controlled substance in the United States.
    Faced with the growing threat of methamphetamine abuse in the 
United States and the ease with which methamphetamine is clandestinely 
produced using iodine, the DEA is proposing to increase the regulatory 
controls on iodine in an effort to prevent the diversion of iodine to 
clandestine drug laboratories.

Legitimate Uses of Iodine

    Iodine is important to the chemical and allied industries primarily 
as a chemical intermediate used to make new chemical products for 
industry and research. These products have application in sanitation 
(as disinfectants), animal feed, pharmaceuticals, as catalysts, heat 
stabilizers, and in various other industrial applications. Most iodine 
is consumed by industry. Those who purchase iodine for end use, whether 
they are individuals or businesses, would be subject to CSA chemical 
regulatory controls to the extent that they must present identification 
and provide other information that helps assure the seller that his or 
her proposed use of the chemical is legitimate. See 21 U.S.C. 830 and 
21 CFR 1310.07.
    Iodine has powerful bactericidal action and is used for 
disinfecting unbroken skin before surgery. Iodine also may be employed 
as a weak solution for the first-aid treatment of small wounds and 
abrasions.
    The standard definition for iodine topical solutions, and other 
iodine containing products, is specified in the United States 
Pharmacopeia (U.S.P.). The U.S.P. lists two strengths of iodine 
solution and two strengths of iodine tincture. The U.S.P. specifies 
formulations for iodine topical solution, strong iodine solution, 
iodine tincture, and strong iodine tincture in the official monographs.
    Commercially available iodine solutions and tinctures are 
summarized in the following table:

                                   Concentration of Iodine Products Per 100 ml
----------------------------------------------------------------------------------------------------------------
                                                                                  Sodium  Iodide     Potassium
                                                                   Iodine  (gm.)       (gm.)       Iodide  (gm.)
----------------------------------------------------------------------------------------------------------------
Iodine Topical (w/ water).......................................         1.8-2.2         2.1-2.6  ..............
Strong Iodine (w/ water)........................................         4.5-5.5  ..............        9.5-10.5
Iodine Tincture (w/ alcohol @ 44-50%)...........................         1.8-2.2         2.1-2.6  ..............
Strong Iodine Tincture (w/ alcohol @ 82.5-88.5%)................         6.8-7.5  ..............         4.7-5.5
----------------------------------------------------------------------------------------------------------------

    As shown on the table, the solutions are formulated in two 
concentrations of iodine. They are specifically named as iodine topical 
solution and strong iodine solution. Iodine topical solution two 
percent U.S.P. is defined as having in each 100 ml, not less than 1.8 
grams and not more than 2.2 grams of iodine, and not less than 2.1 
grams and not more than 2.6 grams of sodium iodide. Only water is used 
as the solvent. Strong iodine solution U.S.P. contains in each 100 ml, 
not less than 4.5 grams and not more than 5.5 grams of iodine and not 
less than 9.5 grams and not more than 10.5 grams of potassium iodine.
    The U.S.P. defines iodine tincture as containing, in each 100 ml, 
not less than 1.8 grams and not more than 2.2 grams of iodine, and not 
less than 2.1 grams and not more than 2.6 grams of sodium iodide. The 
same weight amounts of iodine and sodium iodide are used as in the 
iodine topical solution except that alcohol is used in 44 to 50 percent

[[Page 46146]]

concentration. The target concentration of iodine is 2 percent. Strong 
iodine tincture is defined as containing, in each 100 ml, not less than 
6.8 grams and not more than 7.5 grams of iodine and not less than 4.7 
grams and not more than 5.5 grams of potassium iodide. The alcohol 
content is between 82.5 and 88.5 percent. The target iodine 
concentration is 7 percent.
    Iodine two percent tincture and solution U.S.P. are sold at a wide 
variety of retail outlets and have household application as antiseptic 
and antimicrobial products. These products will not become regulated 
under the proposed regulation. In contrast, however, iodine crystals 
and iodine chemical mixtures containing over 2.2 percent iodine have no 
household use and are available only from specialty retailers. Iodine 
solutions (in excess of 2.2 percent iodine) are used as an antiseptic 
in the care of livestock and horses and as disinfectants for equipment 
and areas where livestock are kept. Some iodine solutions are used in 
saltwater aquariums, to test for the presence of starch, and as stains 
in some laboratory tests. This NPRM proposes regulating these chemical 
mixtures, but provides for the possibility of exemption as discussed 
later in this rule.
    Iodine crystals have also been historically used by campers to 
purify water. Today, however, most of the water treatment products 
available to campers utilize iodide salts and are not the subject of 
this regulation. DEA, however, has identified two marketed products 
that contain iodine for water purification. Under this NPRM, these 
products would be subject to control.
    There are other iodine containing products that have household use 
and are widely sold in retail settings. Iodine products classified as 
iodophors consist of iodine complexed with surfactant compounds (e.g. 
poloxamer-iodine complex) or with nonsurfactant compounds (e.g. 
polyvinyl pyrrolidone-iodine complex (povidone-iodine)). These 
complexes allow the iodine to be continually delivered. Such complex 
solutions in water or alcohol are better tolerated than iodine tincture 
and solutions with comparable efficacy. Considering the necessary time 
of application and the correct dilution, these complexes are used for 
general disinfection, hand disinfection, as well as for skin 
disinfection prior to surgery or venipuncture. Some of these iodine 
complexes are also used for the treatment of burns and of different 
skin lesions. Since these complex products do not have applicability as 
a source of iodine at clandestine drug laboratories, DEA is proposing 
that these products be specifically exempted in 21 CFR 1310.12(d)(4). 
This provision would be automatically exempt from CSA controls ``Iodine 
products classified as iodophors which exist as an iodine complex to 
include poloxamer-iodine complex, polyvinyl pyrrolidone-iodine complex 
(i.e. povidone-iodine), undecoylium chloride iodine, nonylphenoxypoly 
(ethyleneoxy) ethanol-iodine complex, iodine complex with phosphate 
ester of alkylaryloxy polyethylene glycol, and iodine complex with 
ammonium ether sulfate/polyoxyethylene sorbitan monolaurate.''
    DEA is aware that the element iodine is a constituent in certain 
pharmaceutical products (e.g. potassium iodide and others) sold over-
the-counter or pursuant to a prescription. Potassium iodide is 
available for use in the event of a nuclear incident to protect the 
thyroid gland of exposed individuals. The element iodine is also a 
constituent in products sold as radioisotopes (e.g. radioactive iodine) 
which find widest use in the treatment of hyperthyroidism and in the 
diagnosis of certain disorders (e.g. thyroid dysfunction). The greatest 
use has been made of sodium iodide I\131\. DEA is also aware of other 
radiolabeled material, such as sodium iodide I\123\, which is available 
for scanning/imaging purposes in disease diagnosis. Note that these 
iodide compounds are not the subject of this NPRM. As such, the 
proposed regulatory controls will not apply to any of these iodide 
salts or radiolabeled iodine. Additionally, these proposed regulatory 
controls will not apply to any iodide material commonly dispensed 
pursuant to a prescription. Instead, this NPRM is limited only to the 
regulation of iodine crystals and chemical mixtures that contain iodine 
in the form of the iodine tinctures and iodine solutions described 
above.
    This NPRM proposes regulatory controls that will apply to iodine 
crystals and iodine chemical mixtures that contain greater than 2.2 
percent iodine. The vast majority of products having household 
application will not be adversely impacted by this regulation.

Why Traffickers Use Iodine

    Due to the regulatory controls placed on the listed chemical 
hydriodic acid, drug traffickers began using iodine as a substitute 
chemical in the illicit production of methamphetamine and amphetamine, 
both Schedule II controlled substances. Hydriodic acid became a 
regulated chemical upon enactment of the Chemical Diversion and 
Trafficking Act of 1988 (Pub. L. 100-690). Hydriodic acid, like iodine, 
was initially regulated as a List II chemical. Hydriodic acid was 
reclassified as a List I chemical by enactment of the Crime Control Act 
of 1990 (Pub. L. 101-647).
    The Domestic Chemical Diversion Control Act of 1993 (DCDCA) (Pub. 
L. 103-200) required that handlers of List I chemicals be registered. 
This increased regulatory control and made it more difficult for 
traffickers to acquire hydriodic acid. Faced with this difficulty, 
traffickers began to substitute iodine for hydriodic acid for the 
illicit production of methamphetamine and amphetamine.
    Iodine is commonly used with the List I chemicals phosphorus or 
hypophosphorous acid and ephedrine or pseudoephedrine to manufacture 
methamphetamine, which is now the most prevalent method used by 
traffickers. The List I chemicals phenylpropanolamine or 
norpseudoephedrine can be made into amphetamine by the same method.

Current Regulatory Controls on Iodine and Need for Increased Regulation

    In response to the increased use of iodine in clandestine drug 
laboratories, Congress controlled iodine as a List II chemical by 
amending Section 102(35) of the CSA (21 U.S.C. 802(35)) by passage of 
Public Law 104-237, the Comprehensive Methamphetamine Control Act of 
1996 (MCA) on October 3, 1996.
    Although iodine became subject to CSA chemical regulatory controls, 
traffickers have exploited certain deficiencies in these controls to 
divert iodine. Only certain domestic distributions are regulated 
transactions, and distributions below the 0.4 kilogram cumulative 
threshold (about one pound), within a calendar month, are not regarded 
as regulated transactions. Import and export transactions of iodine are 
not regulated, regardless of the quantity distributed. Additionally, 
because iodine is a List II chemical, handlers of iodine are not 
required to register with DEA. These loopholes have been exploited by 
drug traffickers and the businesses that supply them.
    While the regulatory controls placed on iodine apply to iodine 
crystals, they have not pertained to iodine tinctures (which are 
considered chemical mixtures). Drug traffickers are currently 
circumventing CSA regulatory controls via the diversion of iodine 
tinctures. Traffickers have learned that the tinctures can serve as a 
ready source of iodine crystals when the tincture is subjected to the 
appropriate chemical reaction.

[[Page 46147]]

    Existing regulations pertaining to iodine have proved to be 
inadequate to prevent diversion. Traffickers have been able to make 
undocumented purchases of iodine crystals (up to the existing threshold 
of 0.4 kilograms), make unlimited purchases of iodine tincture, and 
make undocumented import and export shipments of iodine. Additionally, 
because iodine is a List II chemical and distributors are not 
registered, it is difficult for DEA to identify all handlers of 
regulated material.
    This NPRM proposes changes to the regulatory control of iodine in 
an effort to prevent the diversion of iodine for the illicit production 
of methamphetamine and amphetamine.

Use of Iodine in Clandestine Drug Laboratories

    Iodine is a major chemical used in the illicit manufacture of 
methamphetamine and amphetamine. DEA's El Paso Intelligence Center 
(EPIC) maintains the official U.S. database of clandestine laboratories 
seized by Federal, State, and local law enforcement. As reported by 
EPIC, the number of clandestine methamphetamine laboratories using 
iodine was 2243, 2774, 4015, 4326, and 4904 for the calendar years 
1999, 2000, 2001, 2002, and 2003, respectively. The number of 
laboratories reported to have used hydriodic acid over the same years 
was 644, 661, 735, 746, and 650, respectively. The increased use of 
iodine over hydriodic acid is seen going back to 1997, the earliest 
year that such information is available from EPIC's database.
    The data for clandestine labs seized only by federal authorities 
show similar trends. STRIDE (System to Retrieve Information on Drug 
Evidence) is a DEA maintained database that includes reports of 
clandestine laboratory seizures made primarily by DEA. STRIDE reports 
that between 1990 and 1994, the number of clandestine laboratories that 
used hydriodic acid was much greater than those using iodine. Although 
hydriodic acid became a List I chemical in 1990, handlers were not 
required to register until 1993. By 1994, the number of DEA cases 
involving iodine surpassed the number for hydriodic acid, and this has 
continued to the present time. This trend indicates that regulatory 
controls governing the handling of hydriodic acid were effective in 
causing traffickers to seek an alternate to hydriodic acid, in the form 
of iodine, which had less stringent regulatory controls.
    Commercial iodine chemical mixtures, reported as iodine tincture, 
have also been identified as significant sources of iodine in 
clandestine methamphetamine laboratories. The number of iodine tincture 
seizures reported by EPIC has steadily increased from 71 seizures in 
calendar year 1999, 397 seizures in calendar year 2000, 1154 seizures 
in calendar year 2001, 1679 seizures in calendar year 2002, to 2252 
seizures in calendar year 2003. Thus, iodine and iodine tincture have 
increasingly been used as chemicals in the illicit production of 
controlled substances within the United States.

International Scope of Problem

    The illicit production of methamphetamine is also an international 
problem. Mexican drug trafficking organizations operating out of Mexico 
and California began to dominate the illicit production and 
distribution of methamphetamine in the United States around 1994. This 
followed years of control by independent, regional outlaw motorcycle 
gangs, supplemented by numerous independent, smaller-scale producers. 
Mexican organizations now produce and supply the majority of the 
methamphetamine illicitly available in the United States, using large-
scale laboratories based in Mexico and the Southwestern United States. 
Outlaw motorcycle gangs and small independent producers remain active 
in domestic methamphetamine production, but not on the same scale as 
the Mexican traffickers. The Mexican organizations' ready access to 
essential chemicals on the international market has greatly facilitated 
their ability to produce large amounts of methamphetamine.
    Seizures along the Mexican border illustrate the need for import/
export control of iodine. The United States Bureau of Immigration and 
Customs Enforcement (ICE) reports seizures at Southern California ports 
of entry. In Calendar Year 2001, ICE reported that there were 26 
seizures of iodine totaling 2140 kilograms. In Calendar Year 2002, 
there were 20 seizures totaling 1605 kilograms, and in Calendar Year 
2003, there were 19 seizures totaling 971 kilograms. The smuggling of 
iodine illustrates the need for additional international controls. 
Although iodine seizures have been declining, these quantities remain 
significant. The decrease may reflect a changing pattern of production 
by large methamphetamine manufacturing organizations, which have 
shifted some production, via large capacity clandestine labs, from 
California to Mexico.

II. Proposed Changes to the Regulation of Iodine

Moving Iodine Into 21 CFR 1310.02(a) (List I)

    The Controlled Substances Act (CSA) and its implementing 
regulations, specifically 21 U.S.C. 802(35) and 21 CFR 1310.02(c), 
provide the Attorney General with the authority to specify, by 
regulation, the addition or deletion of any chemicals as listed 
chemicals if they are used in the manufacture of a controlled substance 
in violation of the CSA. This authority has been delegated to the 
Administrator of DEA by 28 CFR 0.100 and redelegated to the Deputy 
Administrator by 28 CFR 0.104 Appendix to Subpart R Section 12.
    The definition in 21 CFR 1300.02 (b)(19), defines ``List II 
chemical'' as a chemical, other than a List I chemical, specifically 
designated by the Administrator in 21 CFR 1310.02(b), that ``is used in 
manufacturing a controlled substance in violation of the Act.'' 21 CFR 
1300.02(b)(18) defines the term ``List I chemical'' to mean ``a 
chemical specifically designated by the Administrator in 21 CFR 
1310.02(a) * * * that * * * is used in manufacturing a controlled 
substance in violation of the Act and is important to the manufacture 
of a controlled substance.''
    The DEA is proposing to remove iodine from 21 CFR 1310.02(b) (List 
II) and to place it in 1310.02(a) (List I) because, based on the 
information provided above, iodine is a chemical that is important to 
the manufacture of the controlled substances methamphetamine and 
amphetamine. If placed in List I, 21 U.S.C. 822(a)(1) requires that 
persons who distribute iodine must be registered with DEA. Based on its 
experience with hydriodic acid and other List I chemicals, DEA believes 
that List I regulatory controls for iodine will help curtail its 
widespread use in the clandestine manufacture of methamphetamine and 
amphetamine. List I regulatory controls would dictate that handlers of 
iodine, including persons who manufacture, import, export, or 
distribute iodine, would be required to register with DEA. Retail and 
wholesale outlets that sell iodine crystals and covered tinctures/
solutions would also be required to register.
    Prior to receiving a DEA chemical registration, handlers are 
subject to a pre-registration investigation by DEA in order to 
determine the legitimacy of the business per criteria specified under 
21 U.S.C. 823(h). Registration also provides the DEA with the identity 
of all businesses that handle List I chemicals.

[[Page 46148]]

A business that sells a List I chemical in violation of the law or 
regulations can have its registration revoked and be prevented from 
handling List I chemicals. The registration requirement is a 
disincentive to casual handlers of iodine, who might be used 
unwittingly by methamphetamine cooks.

Regulation of Import and Export Transactions

    When iodine was controlled as a listed chemical by the 
Comprehensive Methamphetamine Control Act of 1996, the bill 
specifically exempted it from import and export controls. The MCA, 
however, also explicitly provided that Congress was not limiting the 
authorization of the Attorney General to impose the import and export 
provisions of the CSA on iodine. See Public Law 104-237, Sec. 204. 
Because of the international flow of iodine in the production and 
distribution of methamphetamine, DEA has determined that the addition 
of import and export controls on iodine is necessary. Therefore, 21 CFR 
1310.08 is proposed to be amended to remove imports and exports of 
iodine as excluded transactions. Thus, iodine would become subject to 
the import and export notification provisions of the CSA.

Elimination of the Iodine Threshold

    Transactions involving listed chemicals--including cumulative 
transactions in a single calendar month--below a quantity threshold, 
specified pursuant to 21 U.S.C. 802(39)(A), are excluded from the 
definition of ``regulated transaction.'' Currently, the threshold for 
iodine is 400 grams (0.4 kilograms). Thresholds denote a quantity below 
which regulation is not necessary for law enforcement purposes. 
However, DEA has determined that the regulation of all transactions of 
regulated iodine products is necessary in order to prevent diversion. 
Thus, DEA is proposing to remove the threshold for iodine. Therefore, 
all transactions of regulated iodine products would be considered 
regulated transactions regardless of size.
    Household uses for the regulated iodine products proposed to be 
controlled as List I chemicals by this NPRM are very limited. These 
regulated iodine materials (i.e. iodine crystals and tinctures and 
solution of greater than 2.2 percent iodine) are used in specialized 
applications, such as antiseptics in the care of large animals, 
sanitation for dairies, chemical lab tests, and as a source of iodine 
in saltwater aquariums. For some of the uses, two ounces can last 
several months.
    DEA considered adjusting the threshold to exclude transactions of 
two ounces or below from regulatory control. However, the most common 
smaller size iodine container that DEA identified in clandestine 
laboratories is two ounces, which contains 56 grams of iodine. DEA 
estimates that 56 grams of iodine can produce over 50 grams of pure 
methamphetamine. Therefore, DEA determined that a 2-ounce quantity is 
useful to traffickers and should be regulated.

III. Proposed Regulation To Identify Exempt Iodine Chemical Mixtures

Definition of Chemical Mixtures

    The CSA (21 U.S.C. 802(40)) defines the term ``chemical mixture'' 
as ``a combination of two or more chemical substances, at least one of 
which is not a List I chemical or a List II chemical, except that such 
term does not include any combination of a List I chemical or a List II 
chemical with another chemical that is present solely as an impurity.'' 
Therefore, a chemical mixture contains any one or more listed chemical 
along with any number of non-listed chemicals.
    DEA does not consider a chemical mixture to mean the combination of 
a listed chemical with an inert carrier. An inert carrier can be any 
chemical that does not interfere with the listed chemical's function 
but is present to aid in the delivery of the listed chemical so it can 
be used in some chemical process. Examples include, but are not limited 
to, solutions of listed chemicals such as methylamine in water or 
hydrogen chloride dissolved in water or alcohol.
    Iodine tinctures and solutions are considered chemical mixtures 
because they require the addition of iodine and an iodide salt into a 
water or water/alcohol solution. It is not simply iodine dissolved in 
an inert carrier. These iodine tinctures and solutions are therefore 
chemical mixtures in the regulatory sense.

Regulation of Chemical Mixtures

    The Chemical Diversion and Trafficking Act of 1988 (Pub. L. 100-
690)(CDTA) created the definition of ``chemical mixture'' (21 U.S.C. 
802(40)), and exempted chemical mixtures from regulatory control. The 
CDTA established 21 U.S.C. 802(39)(A)(v) to exclude ``any transaction 
in a chemical mixture'' from the definition of a ``regulated 
transaction.'' This exemption of all chemical mixtures provided 
traffickers with an unregulated source for obtaining listed chemicals 
for use in the illicit manufacture of controlled substances.
    The Domestic Chemical Diversion Control Act of 1993 (DCDCA), 
enacted in April 1994 subjected chemical mixtures containing listed 
chemicals to CSA regulatory requirements, unless specifically exempted 
by regulation. These requirements include recordkeeping, reporting, and 
security for all regulated chemical mixtures with the requirement added 
by the DCDCA of registration for handlers of regulated List I chemical 
mixtures.
    The DCDCA also amended 21 U.S.C. 802(39)(A)(v) to provide the 
Attorney General with the authority to establish regulations exempting 
chemical mixtures from the definition of a ``regulated transaction.'' 
However, exclusion from this definition can only be made ``based on a 
finding that the mixture is formulated in such a way that it cannot be 
easily used in the illicit production of a controlled substance and 
that the listed chemical or chemicals contained in the mixture cannot 
be readily recovered.'' DEA has established the following three-tiered 
approach to identify which chemical mixtures qualify for automatic 
exemption: (1) The mixture contains a listed chemical at or below an 
established concentration limit; or (2) the mixture falls within a 
specifically defined category; or (3) the manufacturer of the mixture 
applies for and is granted a specific exemption for the product (68 FR 
23195, May 1, 2003.)
    This NPRM proposes regulations that identify which iodine chemical 
mixtures qualify for automatic exemption because they meet the 
requirements of 21 U.S.C. 802(39)(A)(v). Once finalized, those iodine 
chemical mixtures that do not qualify for automatic exemption would be 
regulated chemicals, unless the manufacturer has been granted specific 
exemption for their product(s) by DEA via an application process (21 
CFR 1310.13).

Federal Register Publications Addressing Iodine Chemical Mixtures

    Regulations regarding the exemption of chemical mixtures, including 
those containing iodine, were initially proposed by DEA on October 13, 
1994, as part of its proposed regulations to implement the DCDCA (59 FR 
51888). In response to industry concerns, the proposed regulations 
regarding the exemption process for chemical mixtures were withdrawn on 
December 9, 1994 (59 FR 63738). DEA proposed new regulations regarding 
the exemption of chemical mixtures by publishing a new NPRM entitled 
``Exemption of Chemical Mixtures'' in

[[Page 46149]]

the Federal Register (63 FR 49506, September 16, 1998).
    Iodine chemical mixtures, including iodine tinctures and solutions, 
were not a serious concern to law enforcement at the time DEA was 
drafting the 1998 proposed regulations regarding chemical mixtures. 
Therefore, a 20 percent concentration limit was proposed for iodine.
    In addition to information obtained from DEA investigations, open 
sources, and communication with the regulated community, DEA also 
relies on comments to the NPRM to help establish final regulations. 
Comments to the NPRM ``Exemption of Chemical Mixtures'' informed DEA 
that seven percent iodine chemical mixtures are being used in the 
illicit manufacture of methamphetamine. Based on this information and 
the mounting evidence gathered by DEA that iodine is being extracted 
from these chemical mixtures for illicit purposes, DEA determined that 
the proposed concentration limit of 20 percent for iodine is too high 
compared to the concentration of iodine contained in mixtures being 
diverted by traffickers. Therefore, the final chemical mixture 
rulemaking published on December 15, 2004 [69 FR 74957], withdrew the 
iodine portion. Instead, DEA decided to address the iodine chemical 
mixture issue separately and is doing so under this NPRM. Since seven 
percent iodine tincture and solutions are the predominant iodine-
containing chemical mixtures diverted by traffickers, DEA has 
determined that these chemical mixtures should be subject to CSA 
chemical regulatory controls. Two percent iodine tincture and solutions 
are also diverted, but DEA has not documented the frequent diversion of 
these materials at clandestine laboratories. Therefore, DEA does not 
intend to regulate the two percent iodine tincture or solution at this 
time.
    DEA is also aware of other materials that contain iodine. Examples 
include iodophor complexes such as poloxamer-iodine and povidone-
iodine. These materials are not of concern to DEA as a source of iodine 
for clandestine laboratories. This NPRM proposes that these materials 
be specifically exempted from CSA chemical regulatory controls pursuant 
to 21 CFR 1310.12 by adding a new paragraph (d)(4) which will exempt 
``Iodine products classified as iodophors which exist as an iodine 
complex to include poloxamer-iodine complex, polyvinyl pyrrolidone-
iodine complex (i.e. povidone-iodine), undecoylium chloride iodine, 
nonylphenoxypoly (ethyleneoxy) ethanol-iodine complex, iodine complex 
with phosphate ester of alkylaryloxy polyethylene glycol, and iodine 
complex with ammonium ether sulfate/polyoxyethylene sorbitan 
monolaurate.''

Exemption by Application Process

    DEA recognizes that the 2.2 percent iodine concentration limit and 
category exemption criteria cannot identify all mixtures that should 
receive exemption status. DEA has implemented an application process to 
exempt additional mixtures (21 CFR 1310.13). This application process 
was finalized in the Federal Register Notice (68 FR 23195) published 
May 1, 2003. Under the application process, manufacturers may submit an 
application for exemption for those mixtures that do not qualify for 
automatic exemption. Exemption status can be granted if DEA determines 
that the mixture is formulated in such a way that it cannot be easily 
used in the illicit production of a controlled substance and the listed 
chemical cannot be readily recovered (i.e., it meets the conditions in 
21 U.S.C. 802(39)(A)(v)). An application may be for a single or a 
multiple number of formulations. All chemical mixtures which are 
granted exemption via the application process will be listed in 21 CFR 
1310.13(i).

Specific Requirements That Will Apply to Regulated Chemical Mixtures 
Containing Iodine

    DEA is proposing that a chemical mixture that is regulated because 
it contains greater than 2.2 percent iodine will be treated as a List I 
chemical. Therefore, the same requirements for registration, records 
and reports, imports/exports (except that pertaining to 21 U.S.C. 957), 
and administrative inspection, as outlined below, apply to handlers of 
regulated chemical mixtures.

Requirements That Apply to Regulated List I Chemicals and Their 
Regulated Chemical Mixtures

    In light of the proposal to place iodine in 21 CFR 1310.02(a) (List 
I) and to control chemical mixtures containing greater than 2.2 percent 
iodine, the following requirements for List I chemicals are outlined. 
Chemical mixtures that are not exempt or excluded under any provision 
of these regulations, either by concentration limit, general category 
or as a result of DEA action on a specific application for exemption, 
shall be considered regulated chemical mixtures. Persons interested in 
handling List I chemicals, including regulated chemical mixtures 
containing List I chemicals, must comply with the following:
    1. Registration. Any person who manufactures or distributes a List 
I chemical, or proposes to engage in the manufacture or distribution of 
a List I chemical, must obtain a registration pursuant to the CSA (21 
U.S.C. 822). Regulations describing registration for List I chemical 
handlers are set forth in 21 CFR part 1309.
    Separate registration is required for distribution, importing, and 
exporting. Different locations operated by a single entity require 
separate registration if any location is involved with the 
distribution, import, or export of a List I chemical. Any person 
distributing, importing, or exporting a regulated List I chemical 
mixture is subject to the registration requirement under the CSA. DEA 
recognizes, however, that it is not possible for persons who 
distribute, import, or export iodine, upon its placement in List I, to 
immediately complete and submit an application for registration and for 
DEA to issue registrations immediately for those activities. Therefore, 
to allow continued legitimate commerce in iodine, DEA is proposing to 
establish in 21 CFR 1310.09 a temporary exemption from the registration 
requirement for persons desiring to distribute, import, or export 
iodine, provided that DEA receives a properly completed application for 
registration on or before 60 days from the date of publication of a 
final rule. The temporary exemption for such persons will remain in 
effect until DEA takes final action on their application for 
registration.
    The temporary exemption applies solely to the registration 
requirement; all other chemical control requirements, including 
recordkeeping and reporting, will remain in effect. Additionally, the 
temporary exemption does not suspend applicable federal criminal laws 
relating to iodine, nor does it supersede state or local laws or 
regulations. All handlers of iodine must comply with their state and 
local requirements in addition to the CSA and other federal regulatory 
controls.
    2. Records and Reports. The CSA (21 U.S.C. 830) requires that 
certain records be kept and reports be made that involve listed 
chemicals. Regulations describing recordkeeping and reporting 
requirements are set forth in 21 CFR Part 1310. A record must be made 
and maintained for two years after the date of a transaction involving 
a listed chemical, provided the transaction is a regulated transaction.
    Each regulated bulk manufacturer of a regulated mixture shall 
submit manufacturing, inventory and use data on an annual basis (21 CFR 
1310.05(d)). Bulk manufacturers producing the

[[Page 46150]]

mixture solely for internal consumption, e.g., formulating a non-
regulated mixture, are not required to submit this information. 
Existing standard industry reports containing the required information 
are acceptable, provided the information is readily retrievable from 
the report.
    Title 21 CFR 1310.05 requires that each regulated person shall 
report to DEA any regulated transaction involving an extraordinary 
quantity of a listed chemical, an uncommon method of payment or 
delivery, or any other circumstance that the regulated person believes 
may indicate that the listed chemical will be used in violation of the 
CSA.
    3. Import/Export. All imports/exports of a listed chemical shall 
comply with the CSA (21 U.S.C. 957 and 971). Regulations for 
importation and exportation of List I chemicals are described in 21 CFR 
1313. Separate registration is necessary for each activity (21 CFR 
1309.22).
    4. Security: All applicants and registrants shall provide effective 
controls against theft and diversion of chemicals as described in 21 
CFR 1309.71.
    5. Administrative Inspection. Places, including factories, 
warehouses, or other establishments and conveyances, where regulated 
persons may lawfully hold, manufacture, or distribute, dispense, 
administer, or otherwise dispose of a regulated chemical/chemical 
mixture or where records relating to those activities are maintained, 
are controlled premises as defined in 21 CFR 1316.02(c). The CSA (21 
U.S.C. 880) allows for administrative inspections of these controlled 
premises as provided in 21 CFR 1316 Subpart A.
    The goal of this rulemaking is to deny traffickers unregulated 
access to iodine while minimizing the burden on legitimate industry. 
Persons who obtain a regulated chemical but do not distribute the 
chemical are end users. End users are not subject to CSA chemical 
regulatory control provisions such as registration or recordkeeping 
requirements. Some examples of end users are those who chemically react 
iodine and change it into a non-listed chemical, formulate iodine into 
an exempt chemical mixture or consume it in some industrial process, or 
use it for water treatment or sanitation.

Regulatory Certifications

Regulatory Flexibility and Small Business Concerns
    The Regulatory Flexibility Act (5 U.S.C. 600-612) requires agencies 
to determine whether a proposed rule will have a significant economic 
impact on a substantial number of small entities (SEISNOSE). If an 
agency finds that there is a SEISNOSE, the agency must consider whether 
alternative approaches could mitigate the impact on small entities. The 
size criteria for small entities are defined by the Small Business 
Administration (SBA) in 13 CFR 121.201. As discussed below, DEA has 
researched the production and marketing of iodine to determine whether 
the proposed rule could have a SEISNOSE.
    The majority of firms potentially subject to the proposed rule are 
considered small entities under the Small Business Administration 
definitions for the affected sectors.\1\ The only firms for which the 
rule would have a significant economic impact are those with revenues 
or sales of less than about $100,000 a year; the initial registration 
time and fee would represent one percent of their revenues. Economic 
Census data indicate that even the smallest firms in the affected 
sectors have sales well above the $100,000 a year level.\2\ 
Consequently, DEA concludes the proposed rule is unlikely to have a 
significant economic impact on a substantial number of small entities. 
DEA recognizes, however, that there may be a very small number of firms 
marketing specialty products that may be adversely affected because 
they offer no other products. DEA is seeking comment on whether there 
could be a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \1\ See Table 3 for the SBA size standards for affected 
entities.
    \2\ See Table 3 for the average revenue for the smallest firms.
---------------------------------------------------------------------------

Initial Regulatory Flexibility Analysis

Potential Universe of All Affected Entities
    In broad terms, three companies produce iodine in bulk and 
distribute it to other companies that either use it in chemical 
manufacturing, purify it and repackage it, or simply repackage it for 
further sale. There may be a third step at the manufacturing level 
where iodine crystals or solutions are purchased in bulk from companies 
that purified it and are then repackaged for retail sales. Although 
some iodine products are likely to follow the normal distribution chain 
of manufacturer to wholesaler to retailer, others do not. Most chemical 
manufacturers are likely to purchase iodine directly from other 
manufacturers. Some of the ``manufacturers'' of iodine products appear 
to sell both to retail outlets and directly to consumers. Many of the 
manufacturers offer catalogue and Internet sales.
    In addition to the three manufacturers that produce iodine as a 
bulk chemical, DEA identified 43 firms that have developed material 
safety data sheets (MSDSs) for iodine products that would be covered by 
the proposed rule; five of these are already registered as chemical 
manufacturers. It is not possible to determine whether the DEA 
registrants produce iodine at registered locations or whether any of 
the 43 firms produce iodine products at multiple locations.\3\ Eight 
other chemical manufacturers list iodine as a product; one of these is 
registered as a chemical importer and exporter. There may be other 
firms producing iodine for industrial uses whose MSDSs are not publicly 
available.\4\ DEA is seeking comments on whether such information 
exists that could help in further identifying the entities the rule 
will potentially impact.
---------------------------------------------------------------------------

    \3\ The CSA requires that each location where a controlled 
substance or List I chemical is handled have a separate 
registration.
    \4\ OSHA requires the manufacturer of a chemical to develop an 
MSDS. Other firms that package or distribute the chemical must 
provide the MSDS, but generally use the MSDS acquired from the 
original manufacturer. MSDSs must be made available to employees and 
to firms that purchase the chemical, but publishing them for the 
general public is not required.
---------------------------------------------------------------------------

    DEA identified 15 other manufacturers of iodine products. It is 
likely that these firms purchase iodine crystals and repackage them or 
purchase crystals or concentrated solutions and dilute them prior to 
repackaging. Because some of these firms may operate at multiple 
locations and because it is likely that not all manufacturers have been 
identified, the analysis estimates that there are between 75 and 90 
manufacturers of iodine products.
    Iodine products may be handled by a variety of wholesalers. The 
livestock and science kit products could be handled by drug, chemical, 
or agricultural wholesalers. Current Duns data indicate that 267 
wholesalers distribute animal medicines; these are the wholesalers most 
likely to be distributing iodine products for horses. Some of these 
distributors may already be registered to handle controlled substances. 
The 2002 Economic Census for the wholesale industry indicated that 
about 1,115 agricultural wholesalers/retailers may carry tack shop 
materials. It is possible that other chemical wholesalers may be 
providing iodine to manufacturers of iodine products, but DEA considers 
it more likely that these manufacturers purchase iodine in bulk 
directly from chemical manufacturers. DEA has not identified

[[Page 46151]]

any data that indicate the number of wholesalers who distribute 
aquarium chemicals, but as there appears to be only one such covered 
product marketed specifically for aquariums (Kent Marine Lugol 
solution), it may not be handled by a large number of wholesalers. 
Similarly, Census classifications do not cover camping goods or science 
kits at the wholesale level. The Web site for Polar Pure lists only two 
wholesale distributors. Overall, DEA estimates that the number of 
wholesalers may range from 300 to 1,400. DEA seeks comments on such 
approximation.
    At the retail level, tinctures are sold by tack shops; 2005 Duns 
data list about 4,080 such retailers. Agricultural retailers may also 
sell these products for livestock, but these are included in the 
wholesale estimate because the Census combines agricultural wholesalers 
and retailers in a single classification. Veterinarians may also sell 
the products, but would not be subject to registration because they are 
already registered to handle controlled substances.
    The 2002 Census indicated that there were 5,039 pet stores that 
sold aquarium supplies. A check of two large chains, which have more 
than 1,400 stores between them, indicates that although both stock some 
iodine supplements, neither stock Lugol's solution. DEA estimates that 
between one percent and five percent of pet stores would carry iodine 
either as crystals or strong tinctures. Although nursery/garden 
retailers and building supplies/garden retailers sell pet supplies, it 
is unlikely that any of them carry covered iodine products.
    The Census listed about 1,524 sporting good specialty stores that 
carry camping supplies. DEA has included 5 percent to 10 percent of 
them. Mail order and Internet outlets sell all of the iodine products. 
DEA has no basis for estimating how many of these outlets sell iodine 
products without being associated with either wholesale or retail 
outlets that would be included in other counts. DEA has included 50 to 
100 of these, but recognizes that these numbers could be either too low 
or too high. Table 1 presents the estimated low to high range of 
potentially regulated entities.

                Table 1.--Potentially Regulated Universe
------------------------------------------------------------------------
                                                    Low          High
------------------------------------------------------------------------
New manufacturers.............................           75           90
Wholesalers...................................          300        1,400
Tack shops....................................        2,040        4,080
Pet supplies..................................           50          250
Camping supplies..............................           75          150
Other.........................................           50          100
                                               -------------------------
    Total.....................................        2,590        6,070
------------------------------------------------------------------------

    The estimates in Table 1 represent the number of outlets that may 
currently handle products that would be subject to the proposed rule. 
In estimating the number of new registrants, however, DEA has to 
consider whether these outlets will elect to register and continue 
selling the products. For almost all of the entities listed in Table 1, 
iodine products are a minor item. The manufacturers, wholesalers, and 
mail order/Internet suppliers routinely collect the information DEA 
would require under the proposed rule; this information is necessary 
for them to ship the product. Other than the registration fees, the 
rule would not impose a burden on them although it is possible that 
some of these outlets may elect to drop iodine products rather than be 
subject to DEA rules.
    Store retailers face a different situation. Not only are their 
revenues usually lower than those of manufacturers and wholesalers, but 
they are also unlikely to routinely collect all of the information DEA 
requires for these transactions. Because the cost of the iodine 
products is low ($5 to $20), many of the transactions may be in cash. 
To teach their clerks what is required, explain to customers why the 
information is needed, transcribe the data, and maintain the record may 
be too great a burden for a specialty product that is unlikely to be in 
high demand and for which reasonable substitutes exist. DEA expects, 
therefore, that most store retailers will stop carrying these products 
and direct their customers to substitutes or to mail order or Internet 
sources. This shift would, in turn, likely reduce the number of 
wholesale distributors handling the products. Table 2 provides a more 
likely estimate of the potential number of new registrants, but even 
these estimates are likely to be high because most wholesale and retail 
outlets may elect to avoid DEA regulation.

                Table 2.--Potential Number of Registrants
------------------------------------------------------------------------
                                                    Low          High
------------------------------------------------------------------------
New manufacturers.............................           75           90
Chemical wholesalers..........................          150          700
Other.........................................           50          100
                                               -------------------------
    Total.....................................          275          890
------------------------------------------------------------------------

Small Entities Likely To Be Affected by This Rule
    The SBA standards for the potentially affected sectors are shown in 
Table 3 as are the average sales or value of shipments (for 
manufacturers) for the smallest firms reported in the 2002 Economic 
Census:

                                 Table 3.--Small Business Standards for Sectors
----------------------------------------------------------------------------------------------------------------
                                                 Size standard               Average sales/smallest firms**
----------------------------------------------------------------------------------------------------------------
Inorganic chemical manufacturers.......  1,000 FTE*...................  $4.25 million.
Pharmaceutical manufacturers...........  750 FTE......................  $824,000.
Miscellaneous manufacturers............  500 FTE......................
Chemicals wholesalers..................  100 FTE......................  $1 million.
Sporting goods and pet stores..........  $6.5 million.................  $345,000 (sporting)
                                                                        $274,000 (pet).
Electronic/mail order shopping.........  $23 million..................  $528,000 (electronic)
                                                                        $497,000 (mail).
----------------------------------------------------------------------------------------------------------------
* FTE is an abbreviation for Full Time Equivalent (Employees).
** 1 to 4 FTE except for inorganic chemical, where data available only for 5-9 FTE.


[[Page 46152]]

    Because of the size standards, it is highly likely that a 
substantial number of the firms that will be regulated will be 
considered small businesses. DEA has no information on the number of 
potentially regulated entities that would be classified as small and is 
seeking comment on this issue.
    The three main manufacturers of iodine are large firms; two of the 
three are also foreign-owned and the third is a joint venture with 
foreign firms.
Specific Requirements Imposed That Would Impact Small Entities
    Firms that handle iodine will be required to register with DEA. At 
present, the registration fee is $595; the reregistration fee is $477. 
Each of the firms will also be required to become familiar with DEA's 
regulations, to maintain records of each sale, and to report to DEA on 
unusual sales and thefts/losses. Bulk manufacturers must file annual 
reports, but these reports already apply to iodine as a List II 
chemical, so impose no new burden. DEA specifies that normal business 
records may be used to meet the requirements of records of sales. 
Importers and exporters would be required to file an advance 
notification for each importation or exportation.
    DEA estimates that it takes a firm a half hour to complete and 
submit a registration, which can be done online. In addition, DEA 
estimates that it will take four hours to become familiar with the 
regulations that apply. DEA assumes that rule familiarization and 
registration will be done by managerial staff. The cost for initial 
compliance for firms in manufacturing, wholesale, and retail sectors is 
shown in Table 4. Wage rates are based on November 2004 BLS industry 
data and loaded with fringe and overhead. Fringe rates are based on BLS 
``Employer Costs for Employee Compensation--December 2005'' for 
management for goods producing and service industries, as applicable. 
Overhead is loaded at 56 percent of compensation, based on the most 
recent Grant Thornton survey.

                                   Table 4.--Initial Compliance Cost per Firm
----------------------------------------------------------------------------------------------------------------
                                                                                                    Total cost
                             Sector                                  Wage rate      Total labor      with fee
----------------------------------------------------------------------------------------------------------------
Manufacturing...................................................            $127            $573          $1,168
Wholesale.......................................................              98             442           1,037
Retail..........................................................              60             269             864
Mail order/Electronic...........................................              91             408           1,003
----------------------------------------------------------------------------------------------------------------

    A comparison of the initial compliance costs in Table 4 with the 
annual revenues or sales of the smallest firms shown in Table 3 
indicates that the costs do not approach one percent of sales or 
revenues of the smallest firms in each sector and, therefore, do not 
impose a significant economic burden on firms. The recurring costs for 
renewal are lower (a half hour of labor plus the reregistration fee). 
DEA estimates that completing the advance notification (Form 486) for 
imports and exports requires less than 15 minutes. DEA is seeking 
comments on these estimates.
Reporting and Recordkeeping Requirements
    Firms subject to the rule will be required to maintain records of 
sales. The records required include the date of the sale; the name, 
quantity, and form of packaging of the chemical; the method of 
transfer; and the type of identification used by the purchaser and any 
unique number on that identification. Routine sales records for credit 
card or mail order sales will include the required information. 
Manufacturers and wholesalers, which normally sell products through 
purchase orders, will not have to create any additional records. As 
noted above, retailers that have cash sales would have to create new 
records if they continue to sell the products. Because these products 
represent such a small percentage of any store's sales and there are 
products that can be substituted for them, DEA considers that it is 
unlikely that retailers will register and continue to sell iodine 
products.
    Importers and exporters would have to file a Form 486 15 days in 
advance of any importation or exportation. If the importer meets the 
requirements to be a regular importer, the person must file the form on 
or before the date of importation, but does not require DEA approval. 
Similarly, exporters that have an established business relationship 
with a foreign customer need to file the form by the date of 
exportation.
Alternatives
    Pursuant to the requirements of the RFA, DEA has evaluated 
alternatives to this proposed rule and determined that no reasonable 
alternatives exist. This NPRM proposes changes to the regulatory 
control of iodine in an effort to prevent the diversion of iodine for 
the illicit production of methamphetamine and amphetamine. Providing 
small businesses with alternatives and/or exemptions from the proposed 
rule would eliminate the regulatory objective behind the rule. DEA has 
proposed ways to lessen the regulations' economic impact on all 
entities covered by the rule. This NPRM proposes regulatory controls 
that will apply to iodine crystals and iodine chemical mixtures that 
contain greater than 2.2 percent iodine thereby eliminating the 
majority of products that use iodine from the requirements of this 
regulation.\5\ Also, this proposed rule allows manufacturers to seek 
exemption for additional mixtures of iodine that do not qualify for 
automatic exemption under 21 CFR 1310.13. DEA seeks comments on 
reasonable alternatives to this rule that will serve to lessen its 
impact on small businesses while maintaining the regulatory objective 
of regulating iodine crystals and strong tinctures and chemical 
mixtures containing over 2.2 percent iodine.
---------------------------------------------------------------------------

    \5\ See the section in this regulation on the legitimate uses of 
iodine.
---------------------------------------------------------------------------

Additional Impact Issues Raised
    DEA expects that most store retailers will elect not to sell iodine 
crystals or strong tinctures rather than registering and maintaining 
sales records. Most iodine products with household applications would 
not be subject to the rule. DEA considered whether the loss of product 
sales would have a significant economic impact on retailers. DEA will 
seek comment on this issue, but in general does not expect an impact. 
These products make up a very small part of the sales of any pet or 
sporting goods store. Eliminating the product line is unlikely to have 
a noticeable effect on sales even if customers continue to seek the 
products from on line or mail order sources. In most cases, customers 
will be able to purchase substitutes that are no more expensive, and in 
some cases, are less expensive. DEA, therefore, expects that

[[Page 46153]]

the impact on sales at the retail level will be minimal.
    The impact on manufacturers, with one possible exception, is also 
likely to be minimal. DEA's research indicates that the manufacturers 
who produce iodine tinctures and crystals for use with livestock and 
fish also produce and market the substitutes. If sales of these iodine 
products decline, it is likely that the sales of substitutes will 
increase. Many of these companies also sell directly to customers 
through catalogues and on line. Because the sales records required 
under the rules are the same records the companies create for mail 
order or on line sales, there would be no burden beyond registration 
for these firms to meet these requirements. The one exception is a 
small company that apparently markets a single product using iodine 
crystals. To the extent that in-store sales of its product decline and 
are not replaced with on line sales, the rule could have a significant 
impact on the firm.

Executive Order 12866

    The Deputy Administrator hereby certifies that this rulemaking has 
been drafted in accordance with Executive Order 12866, Section 1(b). It 
has been determined that this rule is a ``significant regulatory 
action''. Therefore, this action has been reviewed by the Office of 
Management and Budget.
    This proposed rule would impose new regulatory requirements on 
businesses choosing to handle iodine tinctures, iodine crystals and 
chemical mixtures containing iodine including registration with DEA, 
recordkeeping, the submission of certain reports regarding import and 
export transactions to DEA, and security requirements. DEA believes 
that the requirement of recordkeeping for regulated transactions 
involving iodine tinctures, crystals and chemical mixtures containing 
iodine are already accomplished through the maintenance of business 
records as a usual and customary business practice. Likewise, security 
occurs as a normal part of good business practice. DEA believes these 
new regulatory requirements are necessary to prevent the diversion of 
iodine to the illicit production of methamphetamine and amphetamine.
    Based on the costs and number of regulated entities discussed in 
the previous section, DEA estimates that the total cost of initial 
compliance with the proposed rule would range from $293,000 to 
$931,000; annual costs thereafter could range from $146,000 to 
$469,000.
Costs of Methamphetamine Abuse/Benefits of Rulemaking
    Methamphetamine is the most prevalent controlled substance 
illicitly synthesized in the United States. The clandestine 
manufacture, distribution and abuse of methamphetamine are serious 
public health problems. Despite considerable efforts by Federal, state, 
and local law enforcement, the illicit trafficking and abuse of 
methamphetamine continue.
    According to the 2003 National Survey on Drug Use and Health, 
approximately 12.3 million Americans ages 12 and older reported trying 
methamphetamine at least once during their lifetimes, representing 5.2% 
of the population ages 12 and older. Approximately 1.3 million (0.6%) 
reported past year methamphetamine use and 607,000 (0.3%) reported past 
month methamphetamine use. In 2004, the Monitoring the Future Study 
which assesses the extent of drug use among adolescents (8th, 10th and 
12th graders) indicated that 6.2 percent of high school seniors 
reported some prior lifetime use of methamphetamine, statistically 
unchanged from 2003. Some prior lifetime use of methamphetamine was 
reported by 5.3 percent of 10th grade students.
    The consequences of methamphetamine use appear to be trending 
upward. The Drug Abuse Warning Network (DAWN) data indicate that the 
estimated number of emergency department (ED) mentions for 
methamphetamine increased steadily, from 10,447 in 1999, to 13,505 in 
2000, to 14,923 in 2001, and to 17,696 in 2002, although the percentage 
increase from 2001 to 2002 is not statistically significant. Similarly, 
the estimated rate of ED mentions per 100,000 population has increased 
from 4 in 1999, to 5 in 2000, to 6 in 2001, to 7 in 2002. Statistically 
significant increases in methamphetamine ED mentions were reported by 
San Francisco (19.4%), Seattle (35.3%), and Atlanta (39.0%) between 
2001 and 2002. (Note: A visit to the emergency department is referred 
to as an episode, and every time a drug is involved in an episode it is 
counted as a mention.) According to the DAWN 2002 mortality data, areas 
with the highest number of methamphetamine drug-related deaths were 
those in the Midwest and Western areas, including Phoenix (132), San 
Diego (81), Las Vegas (72), Dallas (46), and San Francisco (38).
    The El Paso Intelligence Center (EPIC) reports that there were 
10,349 methamphetamine laboratories seized in the U.S. in FY 2004 (as 
reported through April 12, 2006). Another rising cost of the 
methamphetamine problem is the cost of cleaning up the toxic side 
effects of methamphetamine production. Clandestine laboratory sites 
must be remediated and chemicals seized at clandestine laboratories 
must be removed, and that removal is very expensive. During FY 2004, 
DEA administered 10,061 state and local clandestine laboratory cleanups 
at a cost of $18.6 million.
    The total social and monetary costs from trafficking and abuse of 
methamphetamine are abundant. Costs include those incurred to treat 
medical consequences of abuse, loss of life and injury to users and by 
users to bystanders, abandonment of the children of methamphetamine 
abusers (and corresponding cost of social services), theft and property 
damage resulting from abuse, loss of employment and productivity, 
increased costs to law enforcement, cost of prosecution and 
incarceration for crimes associated with drug use, and increased costs 
due to cleanups of lab sites. Benefits obtained from implementation of 
iodine controls, to counter illicit methamphetamine production, greatly 
exceed costs necessary to implement such controls. However, DEA is 
seeking public comment on any effect this rule may have on markets.

Executive Order 12988

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

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.

Paperwork Reduction Act

    This rule proposes changes to the regulation of iodine and proposes 
regulations to identify iodine chemical mixtures that are exempt from 
CSA regulatory controls pertaining to chemicals. Under this proposal, 
persons who handle chemical mixtures with concentration levels of 
iodine 2.2 percent and less will not be subject to CSA regulatory 
controls, including the requirement to register with DEA.
    This Notice of Proposed Rulemaking would require persons handling 
iodine crystals, strong iodine tinctures and chemical mixtures 
containing iodine to

[[Page 46154]]

register with DEA and to report import and export transactions 
involving regulated transactions in these chemicals to DEA.
    For purposes of this proposed rulemaking, DEA has estimated the 
population of persons potentially required to register with DEA to 
handle iodine and its chemical mixtures to be between 275 and 890. 
However, some of these persons may already be registered with DEA and 
others may decide to no longer handle such products rather than 
registering. Therefore, DEA is specifically seeking input from industry 
regarding the number of persons who might be affected by this 
rulemaking. DEA will not be amending its information collection 
regarding chemical registration [OMB information collection 1117-0031 
``Application for Registration under Domestic Chemical Diversion 
Control Act of 1993 and Renewal Application for Registration under 
Domestic Chemical Diversion Control Act of 1993''] pending receipt of 
comments regarding the impact of this regulation. DEA will amend its 
information collection, as warranted, based on the public comment 
received.
    Further, this NPRM would require persons importing and exporting 
products containing iodine crystals, tinctures and chemical mixtures 
controlled by this rule to report such imports and exports to DEA. DEA 
cannot accurately estimate how many such transactions occur annually 
and, thus, the impact of this reporting requirement to the regulated 
industry. DEA is seeking comment from the regulated industry regarding 
the impact of this proposed regulation and will amend its information 
collection regarding the reporting of import and export transactions 
[OMB information collection 1117-0023 ``Import/Export Declaration: 
Precursor and Essential Chemicals''], as warranted, based on the public 
comment received.
    DEA is also soliciting comments on the impact of recordkeeping 
requirements upon handlers of regulated iodine products and any 
potential impact upon public health given any reduction in availability 
of regulated products, especially where it can be quantified.

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 
$114,000,000 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 cost 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 in 21 CFR Part 1310

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

    For the reasons set out above, 21 CFR part 1310 is proposed to be 
amended as follows:

PART 1310--RECORDS AND REPORTS OF LISTED CHEMICALS AND CERTAIN 
MACHINES [AMENDED]

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

    Authority: 21 U.S.C. 802, 827(h), 830, 871(b), 890.

    2. Section 1310.02 is amended by adding a new paragraph (a)(28) and 
removing paragraph (b)(11) to read as follows:


Sec.  1310.02  Substances covered.

* * * * *
    (a) * * *
    (28) Iodine 6699
* * * * *
    3. Section 1310.04 is amended by removing paragraph (f)(2)(ii)(H); 
redesignating (f)(2)(ii)(I) as (f)(2)(ii)(H); and adding a new 
paragraph (g)(1)(vi) to read as follows:


Sec.  1310.04  Maintenance of records.

* * * * *
    (g) * * *
    (1) * * *
    (vi) iodine
* * * * *


Sec.  1310.08  [Amended]

    4. Section 1310.08 is amended by removing paragraph (f) and 
redesignating paragraphs (g) through (l) as paragraphs (f) through (k).
    5. Section 1310.09 is amended by adding new paragraph (h) to read 
as follows:


Sec.  1310.09  Temporary exemption from registration.

* * * * *
    (h) Each person required by section 302 of the Act (21 U.S.C. 822) 
to obtain a registration to distribute, import, or export regulated 
iodine, including regulated iodine chemical mixtures pursuant to 
Sec. Sec.  1310.12 and 1310.13, is temporarily exempted from the 
registration requirement, provided that DEA receives a proper 
application for registration or application for exemption for a 
chemical mixture containing iodine on or before [60 days from date of 
publication of a final rule]. The exemption will remain in effect for 
each person who has made such application until the Administration has 
approved or denied that application. This exemption applies only to 
registration; all other chemical control requirements set forth in the 
Act and parts 1309, 1310, and 1313 of this chapter remain in full force 
and effect. Any person who distributes, imports or exports a chemical 
mixture containing iodine whose application for exemption is 
subsequently denied by DEA must obtain a registration with DEA. A 
temporary exemption from the registration requirement will also be 
provided for these persons, provided that DEA receives a properly 
completed application for registration on or before 30 days following 
the date of official DEA notification that the application for 
exemption has not been approved. The temporary exemption for such 
persons will remain in effect until DEA takes final action on their 
registration application.
    6. Section 1310.12 is amended by revising the introductory text of 
paragraph (c), by adding an entry for ``Iodine'' in alphabetical order 
in the table of paragraph (c), and adding new paragraph (d)(4) to read 
as follows:


Sec.  1310.12  Exempt chemical mixtures.

* * * * *
    (c) Mixtures containing a listed chemical in concentrations equal 
to or less than those specified in the ``Table of Concentration 
Limits'' are designated as exempt chemical mixtures for the purpose set 
forth in this section. The concentration is determined for liquid-
liquid mixtures by using the volume or weight and for mixtures 
containing solids or gases by using the unit of weight.

[[Page 46155]]



                                          Table of Concentration Limits
----------------------------------------------------------------------------------------------------------------
                                           DEA chemical    Concentration
            List I chemicals                code number      (percent)              Special  conditions
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Iodine..................................            6699             2.2
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

    (d) * * *
* * * * *
    (4) Iodine products classified as iodophors which exist as an 
iodine complex to include poloxamer-iodine complex, polyvinyl 
pyrrolidone-iodine complex (i.e. povidone-iodine), undecoylium chloride 
iodine, nonylphenoxypoly (ethyleneoxy) ethanol-iodine complex, iodine 
complex with phosphate ester of alkylaryloxy polyethylene glycol, and 
iodine complex with ammonium ether sulfate/polyoxyethylene sorbitan 
monolaurate.

    Dated: July 6, 2006.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E6-12353 Filed 8-10-06; 8:45 am]
BILLING CODE 4410-09-P