[Federal Register Volume 72, Number 126 (Monday, July 2, 2007)]
[Rules and Regulations]
[Pages 35920-35931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12736]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1309 and 1310

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


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

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.

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SUMMARY: This rulemaking changes the regulation of the listed chemical 
iodine under the chemical regulatory provisions of the Controlled 
Substances Act (CSA). The Drug Enforcement Administration (DEA) 
believes that this action is necessary to remove deficiencies in the 
existing regulatory controls, which have been 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 rulemaking moves iodine from List 
II to List I; reduces the iodine threshold from 0.4 kilograms to zero 
kilograms; adds import and export regulatory controls; and controls

[[Page 35921]]

chemical mixtures containing greater than 2.2 percent iodine.
    This rulemaking establishes regulatory controls that will apply to 
iodine crystals and iodine chemical mixtures that contain greater than 
2.2 percent iodine. This regulation therefore controls 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. Additionally, the final rule exempts 
transactions of up to one-fluid-ounce (30 ml) of Lugol's Solution.
    Persons handling regulated iodine materials are required to 
register with DEA, are subject to the import/export notification 
requirements of the CSA, and are required to maintain records of all 
regulated transactions involving iodine regardless of size.

DATES: This rulemaking becomes effective on August 1, 2007. Persons 
seeking registration must apply on or before August 31, 2007 in order 
to continue their business pending final action by DEA on their 
application.

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

    This rulemaking finalizes an August 11, 2006, Notice of Proposed 
Rulemaking (NPRM) [71 FR 46144] in which DEA proposed (1) the movement 
of 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 action is 
being taken because of the continued use of iodine for the illicit 
production of the schedule II controlled substances amphetamine and 
methamphetamine. Methamphetamine is the leading controlled substance 
clandestinely manufactured 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 increasing the regulatory controls on 
iodine in an effort to prevent the diversion of iodine to clandestine 
drug laboratories.

Need for Increased Regulation

    This rulemaking changes the regulatory control of iodine in an 
effort to prevent the diversion of iodine for the illicit production of 
methamphetamine and amphetamine. The August 11, 2006, NPRM went into 
great detail regarding the scope of the domestic and international 
clandestine laboratory problem, use of iodine in the production of 
methamphetamine/amphetamine, and the need to increase regulatory 
controls on iodine.
    As stated in the NPRM, 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.
    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 
Pub. L. 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 (solutions of 
iodine and iodide in alcohol), 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.
    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.

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. 
These large-scale laboratories often rely upon a ready source of 
iodine. 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

[[Page 35922]]

has greatly facilitated their ability to produce large amounts of 
methamphetamine. DEA, therefore, believes that enhanced controls on 
iodine are necessary to prevent the diversion of iodine (in the form of 
iodine crystals and iodine tincture) for the illicit production of 
methamphetamine/amphetamine in clandestine drug laboratories.

Comments

    In response to the August 11, 2006, NPRM, DEA received comments 
from thirteen interested parties. While commenters were generally 
supportive of DEA's need to prevent the diversion of iodine for the 
illicit production of methamphetamine, the comments raised concerns 
regarding the potential adverse impact upon the availability of 
specific iodine products intended for legitimate use.

Comments Regarding Iodine Products Used for Nutritional Supplementation

    Twelve comments expressed concerns that the proposed regulations 
would adversely impact the availability of products for use as a 
dietary source of iodine. These comments detailed the use of iodine 
products as part of a nutritional program to supplement iodine levels 
for various health purposes (e.g., the normalization of thyroid 
function, prevention of breast cancer recurrence, or supplementation 
during pregnancy as a program to prevent autism in offsprings.)
    Eleven of these comments expressed concern that the regulation 
would adversely impact the availability of a specific formulation known 
as Lugol's Solution. Lugol's Solution is a 5 percent aqueous solution 
of iodine in combination with 10 percent potassium iodide.
    Most of these comments detailed the importance of Lugol's Solution 
as a source of milligram doses of iodine as part of a daily health 
program of disease prevention. Commenters noted how several drops of 
Lugol's Solution per day served as an inexpensive source of dietary 
iodine. Commenters detailed multiple uses for Lugol's Solution and 
expressed concerns that such material should remain available to end 
users in small quantities.
    In response to comments, DEA conducted further review of the 
legitimate uses for Lugol's Solution. These uses include (1) the 
staining of slides in microbiology, (2) the staining of cervical and 
esophageal tissue in diagnosis of disease, (3) use in aquariums, (4) 
use in pre-treating the thyroid gland prior to ingestion of 
radiolabeled I\131\ so that the thyroid gland will not take up large 
quantities of radioactive material, (5) use as a dietary source of 
iodine, and (6) use in educational science test kits for identification 
of starches. For each of these uses, the quantities of Lugol's Solution 
needed are small. In most cases, the Lugol's Solution is used in small 
8 milliliter (ml) bottles or in one-fluid-ounce (30 ml) bottles. 
Because of the numerous legitimate uses and small quantities involved, 
DEA is adding a provision to this final rule that will exempt Lugol's 
Solution when packaged in bottles/containers of one-fluid-ounce (30 ml) 
or smaller, and involve distribution of only a single package per 
transaction. While this final rule provides an exemption for Lugol's 
Solution when packaged in small bottles, larger packages are subject to 
regulatory controls. DEA is aware of the availability of 16 fluid ounce 
bulk packages of Lugol's Solution. These larger bulk packages are 
subject to regulatory control provisions including registration, 
import/export notification, and recordkeeping.
    DEA review indicates that only 2-6 drops a day of Lugol's Solution 
are used for nutritional purposes. Additionally, the quantities used in 
the healthcare field, microbiology, and in the testing of starches, 
require only very small amounts of Lugol's Solution and the sale of 8 
ml and one-fluid-ounce (30 ml) bottles is common. When used in an 
aquarium, the labeled directions indicate that only 1 drop of Lugol's 
Solution per 25 gallons should be used weekly. Therefore, one-fluid-
ounce package of Lugol's Solution should be adequate for most 
legitimate purposes. A one-fluid-ounce (30 ml) package size contains 
1.5 grams of iodine and has potential utility for use in the illicit 
manufacture of methamphetamine. Therefore, DEA is adding the provision 
to exempt individual transactions involving one one-fluid-ounce (30 ml) 
package/bottle. Individuals that distribute more than one package/
bottle of Lugol's Solution (of any size) per transaction, are subject 
to CSA recordkeeping and import/export requirements.
    This final rulemaking includes a waiver of the registration 
requirement under 21 CFR 1309.24 for ``Lugol's Solution (consisting of 
5 percent iodine and 10 percent potassium iodide in an aqueous 
solution) in original manufacturer's packaging of one-fluid-ounce (30 
ml) or less per package.'' Additionally, this rulemaking includes an 
exclusion from the definition of regulated transaction under 21 CFR 
1310.08 for ``Domestic and international transactions of Lugol's 
Solution (consisting of 5 percent iodine and 10 percent potassium 
iodide in an aqueous solution) in original manufacturer's packaging of 
one-fluid-ounce (30 ml) or less, and no greater than one package/bottle 
per transaction.''
    DEA currently has no evidence that Lugol's Solution is diverted as 
a source of iodine for illicit purposes. However, should clandestine 
laboratory operators begin to exploit the exemption for small packages 
of Lugol's Solution as a source of iodine for the manufacture of 
methamphetamine, DEA may remove these exemption provisions.
    One comment received from a physician expressed concerns regarding 
the possible control of an iodine product (Iodoral) that contains 5 
milligrams iodine and 7.5 milligrams potassium iodide per tablet. The 
physician stated that this product is used in patients with thyroid 
disease and therefore requested that this product remain exempt from 
CSA regulatory provisions. In response to this comment, DEA obtained 
samples of Iodoral and determined that the concentration of iodine in 
the product is below the 2.2 percent concentration level for chemical 
mixtures as specified in 21 CFR 1310.12. Therefore, Iodoral 5 mg 
tablets are not subject to CSA regulatory control provisions following 
implementation of this final rule.

Comment Relating to Commercial Use of Iodine

    One comment was received from a manufacturer of injectable products 
and medical delivery systems. The commenter expressed support for the 
proposed exemption of iodophor products (iodine complexes), but 
requested clarification that the exemption includes organically bound 
iodine products which are non-ionic complexes. The commenter provided 
specific examples of organically bound products (e.g., iopamidol, 
iohexol and amiodarone.)
    The proposed exemption for iodophors was intended to include 
organically bound iodine compounds. DEA has evaluated these products 
and determined that these organically bound compounds cannot serve as a 
source of iodine for methamphetamine laboratories and therefore are not 
at risk of diversion. As clarification, DEA has added a new paragraph 
under 21 CFR 1310.12(d)(5) which specifies that ``Iodine products that 
consist of organically bound iodine (a non-ionic complex) (e.g., 
iopamidol, iohexol, and amiodarone)'' are chemical mixtures that are 
automatically exempt from CSA regulatory provisions.

[[Page 35923]]

    This commenter also requested that certain laboratory reagents 
(e.g., Karl Fischer Reagent and Aquastar Composite 5), be considered 
for exemption from regulation. The commenter stated it was not the 
manufacturer or distributor of such products, but used these reagents 
frequently for laboratory testing. The commenter expressed concern that 
the new regulation would potentially subject such reagents to CSA 
regulatory control. DEA conducted a review of such laboratory reagents, 
but the iodine concentration in these chemical mixtures appears to be 
proprietary and was not disclosed on product labeling.
    DEA wishes to clarify that end users of such material are not 
subject to CSA regulatory requirements, except the requirement to 
provide identification for purchase of List I chemicals (21 CFR 
1310.06), as long as they do not distribute regulated material. Such 
laboratory reagents would only be considered regulated material if they 
are chemical mixtures containing greater than 2.2 percent iodine, and 
not considered either an iodophor or organically bound iodine.
    DEA recognizes that the 2.2 percent iodine concentration criteria 
cannot identify all mixtures that should receive exemption status. DEA 
notes that an application process already exists to exempt additional 
mixtures (21 CFR 1310.13). This application process was finalized in a 
previous final rule regarding chemical mixtures (68 FR 23195, 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)(vi)). Under these provisions, the manufacturer of 
these reagents may apply for exemption if their products are above the 
2.2 percent iodine level.
    Additionally, the commenter expressed concern regarding the ability 
to obtain iodine crystals for laboratory analytical use following 
implementation of this final rule. However, transactions involving 
iodine crystals have been regulated as List II chemicals since 
implementation of the Comprehensive Methamphetamine Control Act (MCA) 
in 1996. This final rule only requires that handlers of such material 
register with DEA and maintain records of transactions. Most of the 
chemical houses that supply high-grade material to analytical 
laboratories are already registered with DEA to handle List I 
chemicals. The regulatory requirement only pertains to distribution of 
regulated material. DEA does not believe that these regulations will 
adversely impact the availability of such material.

Iodine Products Subject to This Final Rule

    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, will 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 the end 
user's 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 may also 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 in 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
----------------------------------------------------------------------------------------------------------------
Source: U.S. Pharmacopoeia (U.S.P.)

    As shown in 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 in water. 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 
concentration. The target concentration of iodine is 2 percent. Strong 
iodine tincture is defined by the U.S.P. 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 are not subject to this 
regulation. In contrast, iodine crystals and iodine chemical mixtures 
containing over 2.2 percent iodine have no household use

[[Page 35924]]

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 (e.g., Lugol's Solution) are 
used in saltwater aquariums, used as a dietary source of iodine, used 
to test for the presence of starch, and as stains in some laboratory 
tests. This rulemaking exempts small transactions of these chemical 
mixtures, as discussed elsewhere 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 use 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 rulemaking, these 
products will be subject to control.

Iodine Products Not Regulated Under This Rulemaking

    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 delivered continuously. 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 exempting 
these products in 21 CFR 1310.12(d)(4). This provision will 
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.''
    Additionally, DEA wishes to clarify that organically bound iodine 
products that are non-ionic complexes (e.g., iopamidol, iohexol and 
amiodarone) are not subject to CSA regulatory controls. These 
organically bound compounds cannot serve as a source of iodine for 
methamphetamine laboratories and therefore are not at risk of 
diversion. As clarification, DEA has added a new paragraph under 21 CFR 
1310.12(d)(5), which specifies that ``Iodine products that consist of 
organically bound iodine (a non-ionic complex) (e.g., iopamidol, 
iohexol, and amiodarone)'' are chemical mixtures that are automatically 
exempt from CSA regulatory provisions.
    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 under 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), and in general 
scientific research. 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 rulemaking. As such, the regulatory controls of the CSA 
do not apply to any of these iodide salts or radiolabeled iodine/iodide 
salts. Additionally, these regulatory controls do not apply to any 
iodide material commonly dispensed under a prescription. Instead, this 
regulation is limited only to iodine crystals and chemical mixtures 
that contain iodine in the form of the iodine tinctures and iodine 
solutions described above.
    This rulemaking implements regulatory controls that apply to iodine 
crystals and iodine chemical mixtures that contain greater than 2.2 
percent iodine. The vast majority of products having household 
application are not adversely impacted by this regulation.

II. Changes to the Regulation of Iodine as a Result of This Rulemaking

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(34) and (35) and 21 CFR 
1310.02, provide the Attorney General with the authority to specify, by 
regulation, the addition or deletion of any chemicals as listed 
chemicals. Listed chemicals that are classified as List I chemicals are 
important to the manufacture of controlled substances. Those classified 
as List II chemicals may be used to manufacture controlled substances 
in violation of the Act. 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, Sec.  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.''
    In this final rule, the DEA is removing iodine from 21 CFR 
1310.02(b) (List II) and placing it in 1310.02(a) (List I) because, 
based on the information provided above, and discussed in greater 
detail in the Notice of Proposed Rulemaking for this rule, iodine is a 
chemical that is important to the manufacture of the controlled 
substances methamphetamine and amphetamine in violation of the Act. 
Placement 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 dictate that handlers of iodine, including 
persons who manufacture, import, export, or distribute iodine, must 
register with DEA. Retail and wholesale outlets that sell iodine 
crystals and covered tinctures/solutions are also required to register.
    Prior to receiving a DEA chemical registration, applicants are 
subject to a pre-registration investigation by DEA to determine whether 
their registration is consistent with the public interest pursuant to 
the criteria set forth in 21 U.S.C. 823(h). Registration also provides 
the DEA with the identity of all businesses that handle List I 
chemicals. A business that sells a List I chemical in violation of the 
law or regulations can have its registration revoked and be

[[Page 35925]]

prevented from handling List I chemicals.

Regulation of Import and Export Transactions

    When iodine was controlled as a List II chemical by the 
Comprehensive Methamphetamine Control Act of 1996 (MCA), the law 
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 Pub. L. 104-237, Sec.  204. 
Because of the international commerce in iodine, and iodine's 
documented use in the clandestine production of methamphetamine, DEA 
has determined that the addition of import and export controls on 
iodine is necessary. Therefore, 21 CFR 1310.08 is amended to remove 
imports and exports of iodine as excluded transactions. Thus, iodine 
will 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.'' Historically, the threshold 
for iodine has been 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 to prevent 
diversion. Thus, DEA is removing the threshold for iodine under this 
final rule. Therefore, all transactions of regulated iodine products 
are considered regulated transactions regardless of size, unless 
specifically exempted.

Iodine 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 chemicals 
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.

Regulation of Chemical Mixtures

    The Domestic Chemical Diversion Control Act of 1993 (DCDCA), 
enacted in April 1994, amended 21 U.S.C. 802(39)(A)(v) [current 21 
U.S.C. 802(39)(A)(vi)] 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 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.'' As 
noted previously, 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 final rule implements regulations that identify which iodine 
chemical mixtures qualify for automatic exemption because they meet the 
requirements of 21 U.S.C. 802(39)(A)(vi). Those iodine chemical 
mixtures that do not qualify for automatic exemption are regulated 
chemicals, unless the manufacturer applies for, and is granted, 
specific exemption for their product(s) by DEA via an application 
process (21 CFR 1310.13).
    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 is not regulating the two percent iodine tincture or 
solution at this time.
    As discussed previously, DEA is also aware of other materials that 
contain iodine. Examples include iodophor complexes such as poloxamer-
iodine and povidone-iodine and organically bound iodine complexes such 
as iopamidol, iohexol, and amiodarone. These materials are not of 
concern to DEA as a source of iodine for clandestine laboratories. This 
final rule specifies that these materials be specifically exempted from 
CSA chemical regulatory controls under 21 CFR 1310.12 by adding new 
paragraphs (d)(4) and (d)(5).

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 a final rule (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)(vi)). An application may be for a single or a 
multiple number of formulations. All chemical mixtures that are granted 
exemption via the application process will be listed in 21 CFR 
1310.13(i).

III. Requirements That Apply to Regulated List I Chemicals and Their 
Regulated Chemical Mixtures as a Result of This Rulemaking

    Any chemical mixture that is regulated because it contains greater 
than 2.2 percent iodine is treated as a List I chemical. Therefore, the 
same requirements for registration, records and reports, imports/
exports, and administrative inspection, as outlined below, apply to 
handlers of regulated chemical mixtures.
    In light of the placement of 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

[[Page 35926]]

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, are 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 manufacturing, distribution, 
importing, and exporting. Different locations operated by a single 
entity require separate registration if any location is involved with 
the manufacture, distribution, import, or export of a List I chemical. 
Any person manufacturing, 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 manufacture, 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 establishing in 21 CFR 
1310.09 a temporary exemption from the registration requirement for 
persons desiring to manufacture, distribute, import, or export iodine, 
provided that DEA receives a properly completed application for 
registration on or before August 31, 2007. 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 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.
    Section 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 
part 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) where original 
or other records or documents required under the Act, are kept or 
required to be kept. The CSA (21 U.S.C. 880) allows for administrative 
inspections of these controlled premises as provided in 21 CFR part 
1316 subpart A.
    The goal of this rulemaking is to deny traffickers 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 rule will have a significant economic impact on 
a substantial number of small entities. If an agency finds that there 
is a significant economic impact on a substantial number of small 
entities, 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 this rulemaking could have a 
significant economic impact on a substantial number of small entities.
    The majority of firms potentially subject to this rulemaking are 
considered small entities under the Small Business Administration 
definitions for the affected sectors.\1\ The only firms for which the 
rulemaking would have a significant economic impact are those with 
revenues or sales of less than about $125,000 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 $125,000 a year 
level.\2\ Consequently, DEA concludes that this rulemaking will not 
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 alternative products. DEA sought 
comments on whether there could be a significant economic impact on a 
substantial number of small entities in the NPRM. DEA did not receive 
any comments on this issue from any distributors of such products.
---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

[[Page 35927]]

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 will be covered by 
this 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 for which MSDSs are not 
publicly available.\4\ DEA sought comments on whether such information 
exists that could help in further identifying the entities this final 
rule will potentially impact. The only comments received were from end-
users.
---------------------------------------------------------------------------

    \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. Distributors of science kits will still 
need to keep records if quantities exceed a single one-fluid-ounce 
package of Lugol's Solution per transaction.
    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 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's Solution), it may not be handled by a large number 
of wholesalers. DEA has exempted distributors of Lugol's Solution in 
the manufacturers' packages containing 1 fluid ounce (30 ml) or less 
from registration, so these distributors will simply have to retain 
normal sales records.
    Census classifications do not cover camping goods at the wholesale 
level. The web site for Polar Pure, a water purification system 
involving iodine regulated by this rule, lists only two wholesale 
distributors. Overall, DEA estimates that the number of wholesalers may 
range from 300 to 1,400.
    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. Since DEA 
has provided for the unregulated sale of single small packages of 
Lugol's Solution, the potential impact upon pet stores should be 
greatly reduced or eliminated.
    The Census listed about 1,524 sporting good specialty stores that 
carry camping supplies. DEA has included 5 percent to 10 percent of 
them in its estimates regarding the impact of this rule. 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 are subject to this rule. The regulated 
universe will likely be smaller (especially for pet supplies, given 
that DEA has provided the exemption for single small packages of 
Lugol's Solution in this final 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 this rule; this information is necessary for them 
to ship the product. Other than the registration fees, the rulemaking 
would not impose a burden on them

[[Page 35928]]

although it is possible that some of these outlets may elect to drop 
iodine products rather than be subject to DEA regulations.
    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 collect all of the information DEA requires 
for these transactions routinely. 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
------------------------------------------------------------------------
                                                     Av. sales/smallest
                                  Size standard          firms\**\
------------------------------------------------------------------------
Inorganic chemical              1,000 FTE*.......  $4.25 million.
 manufacturers.
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.

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 will be classified as small and did not receive 
any comments 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 Will Impact Small Entities
    Firms that handle iodine will be required to register with DEA. At 
present, the registration fee for manufacturers is $2,293 and for 
distributors is $1,147. 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 will 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 application, which can be done online, and a half 
hour to become familiar with the rule. 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 May 2005 
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...................................................            $126            $126          $2,419
Wholesale.......................................................              98              98           1,245
Retail..........................................................              62              62           1,209
Mail order/Electronic...........................................              93              93           1,240
----------------------------------------------------------------------------------------------------------------

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 slightly lower (a half hour of labor plus the registration fee). 
DEA estimates that completing the advance notification (Form 486) for 
imports and exports requires less than 15 minutes.

[[Page 35929]]

Reporting and Recordkeeping Requirements
    Firms subject to this rulemaking 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. 
Retailers that have cash sales will 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 other than 
exempted quantities of Lugol's Solution.
    Importers and exporters will 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 Regulatory Flexibility Account, 
DEA evaluated alternatives to this rulemaking and determined that no 
reasonable alternatives exist. This rulemaking establishes 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 this rulemaking would eliminate the regulatory 
objective behind the rule. DEA has explored ways to lessen the 
regulations' economic impact on all entities covered by the rule. This 
rulemaking establishes regulatory controls that 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\ DEA, after 
reviewing comments, has also provided an exemption for individual 
transactions involving small packages of Lugol's Solution. 
Additionally, this rulemaking allows manufacturers to seek exemption 
for additional mixtures of iodine that do not qualify for automatic 
exemption under 21 CFR 1310.13. DEA sought comments on reasonable 
alternatives to this rulemaking that would 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. DEA has incorporated new the 
exemption for individual transactions involving one-fluid-ounce (30 ml) 
packages of Lugol's Solution in response to these comments.
---------------------------------------------------------------------------

    \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 will 
not be subject to the rule. DEA considered whether the loss of product 
sales would have a significant economic impact on retailers. These 
products make up a very small part of the sales of any 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 
online 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 the impact on sales at the 
retail level will be minimal. Where cost effective substitutes were not 
available DEA has provided an exemption (i.e., individual transactions 
involving one-fluid-ounce (30 ml) packages of Lugol's Solution, where 
certain alternative products cost more than ten times that of Lugol's 
Solution).
    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 online. Because the sales records required under 
the rules are the same records the companies create for mail order or 
online sales, there is 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 online sales, the rulemaking 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 rulemaking is a ``significant regulatory 
action''. Therefore, this action has been reviewed by the Office of 
Management and Budget.
    This final rule imposes 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 final rule ranges from $430,000 to $1.21 million; 
annual costs thereafter range from $416,000 to $1.16 million.
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 2005 National Survey on Drug Use and Health, 
approximately 10.36 million Americans ages 12 and older reported trying 
methamphetamine at least once during their lifetimes, representing 4.3% 
of the population ages 12 and older. Approximately 1.3 million (0.5%) 
reported past year methamphetamine use and 512,000 (0.2%) reported past 
month methamphetamine use. In 2005, the Monitoring the Future Study 
which assesses the extent of drug use among

[[Page 35930]]

adolescents indicated that 3.1 percent of 8th graders, 4.1 percent of 
10th graders and 4.5 percent of 12th graders reported some prior 
lifetime use of methamphetamine. The Drug Abuse Warning Network (DAWN) 
data indicate that the estimated number of emergency department (ED) 
visits for methamphetamine was 108,905 in 2005.
    The El Paso Intelligence Center (EPIC) reports that there were 
12,484 methamphetamine laboratories seized (including laboratories, 
dump sites and equipment seizures) in the U.S. in CY2005 (as reported 
through November 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 
cleaned up and chemicals seized at clandestine laboratories must be 
removed, and that removal is very expensive. During FY 2005, DEA 
administered 8,639 state and local clandestine laboratory cleanups at a 
cost of $17 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.

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 rulemaking implements changes in the regulation of iodine and 
implements regulations to identify iodine chemical mixtures that are 
exempt from CSA regulatory controls pertaining to chemicals. Under this 
rulemaking, 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 rulemaking will require persons handling iodine crystals, 
strong iodine tinctures and chemical mixtures containing iodine to 
register with DEA and to report import and export transactions 
involving regulated transactions in these chemicals to DEA.
    For purposes of this 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. DEA notes 
that it solicited, but did not receive, comment regarding the number of 
persons who would be required to register with DEA as a result of this 
rule. Accordingly, by separate notice, DEA is 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''] to increase 
the burden associated with this collection by 275 respondents annually.
    Further, this rulemaking will require persons importing and 
exporting products containing iodine crystals, tinctures, and chemical 
mixtures controlled by this rulemaking to report such imports and 
exports to DEA. DEA sought comment from the regulated industry 
regarding the impact of this regulation; however, no comments addressed 
this issue. Therefore by separate notice DEA is amending its 
information collection regarding the reporting of import and export 
transactions [OMB information collection 1117-0023 ``Import/Export 
Declaration: List I and List II Chemicals''] to estimate that DEA will 
receive new DEA Forms 486 annually. DEA notes that DEA already receives 
DEA Forms 486 for the importation and exportation of iodine; the only 
new reporting results from chemical mixtures containing over 2.2 
percent iodine.
    DEA also solicited 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. The 
majority of comments addressed these issues. In response, DEA is 
providing an exemption for individual transactions involving Lugol's 
Solution in small packages so that such product will remain available 
to end-users.

Unfunded Mandates Reform Act of 1995

    This rulemaking will not result in the expenditure by state, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$118,000,000 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.

Congressional Review Act

    This rulemaking is not a major rule as defined by Section 804 of 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(Congressional Review Act). This rulemaking 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

21 CFR Part 1309

    Administrative practice and procedure, Drug Traffic Control, List I 
and List II chemicals, Reporting and recordkeeping requirements.

21 CFR Part 1310

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

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

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

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

    Authority: 21 U.S.C. 821, 822, 823, 824, 830, 871(b), 875, 877, 
886a, 958.


0
2. Sec.  1309.24 is amended by redesignating paragraphs (h) through (k) 
as paragraphs (i) through (l) and by adding a new paragraph (h) to read 
as follows:

[[Page 35931]]

Sec.  1309.24  Waiver of registration requirement for certain 
activities.

* * * * *
    (h) The requirement of registration is waived for any person whose 
activities with respect to List I chemicals are limited solely to the 
distribution of Lugol's Solution (consisting of 5 percent iodine and 10 
percent potassium iodide in an aqueous solution) in original 
manufacturer's packaging of one fluid ounce (30 ml) or less.
* * * * *

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

0
3. The authority citation for part 1310 continues to read as follows:

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


0
4. Sec.  1310.02 is amended by adding a new paragraph (a)(28), removing 
paragraph (b)(11), and redesignating paragraph (b)(12) as paragraph 
(b)(11) to read as follows:


Sec.  1310.02  Substances covered.

* * * * *
    (a) * * *

(28) Iodine.....................................................    6699
 

* * * * *

0
5. Sec.  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
* * * * *

0
6. Sec.  1310.08 is amended by revising paragraph (f) to read as 
follows:


Sec.  1310.08  Excluded transactions.

* * * * *
    (f) Domestic and international transactions of Lugol's Solution 
(consisting of 5 percent iodine and 10 percent potassium iodide in an 
aqueous solution) in original manufacturer's packaging of one-fluid-
ounce (30 milliliters) or less, and no greater than one package per 
transaction.
* * * * *

0
7. Sec.  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 manufacture, 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 the Administration receives a 
proper application for registration or application for exemption for a 
chemical mixture containing iodine on or before August 31, 2007. 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 the Administration must obtain a registration with the 
Administration. A temporary exemption from the registration requirement 
will also be provided for these persons, provided that the 
Administration receives a properly completed application for 
registration on or before 30 days following the date of official 
Administration notification that the application for exemption has not 
been approved. The temporary exemption for such persons will remain in 
effect until the Administration takes final action on their 
registration application.


0
8. Sec.  1310.12 is amended by adding an entry for ``iodine'' in 
alphabetical order in the table of paragraph (c), and adding new 
paragraphs (d)(4) and (d)(5) to read as follows:


Sec.  1310.12  Exempt chemical mixtures.

* * * * *
    (c) * * *

                                          Table of Concentration Limits
----------------------------------------------------------------------------------------------------------------
                                DEA chemical      Concentration
      List I chemicals            code No.          (percent)                   Special conditions
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Iodine......................              6699               2.2  Calculated as weight/volume (w/v).
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

    (d) * * *
    (4) Iodine products classified as iodophors that 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.
    (5) Iodine products that consist of organically bound iodine (a 
non-ionic complex) (e.g., iopamidol, iohexol, and amiodarone.)
* * * * *

    Dated: June 19, 2007.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E7-12736 Filed 6-29-07; 8:45 am]
BILLING CODE 4410-09-P