[Federal Register Volume 72, Number 131 (Tuesday, July 10, 2007)]
[Rules and Regulations]
[Pages 37439-37453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-13377]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1300 and 1315

[Docket No. DEA-293I]
RIN 1117-AB08


Import and Production Quotas for Certain List I Chemicals

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Interim final rule with request for comment.

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SUMMARY: In March 2006, Congress enacted the Combat Methamphetamine 
Epidemic Act of 2005, which mandates that DEA establish total annual 
requirements, import quotas, individual manufacturing quotas, and 
procurement quotas for three List I chemicals--ephedrine, 
pseudoephedrine, and phenylpropanolamine. DEA is promulgating this rule 
to incorporate the statutory provisions and make its regulations 
consistent with the new requirements.

DATES: Effective Date: July 10, 2007. Comment Date: Written comments 
must be postmarked on or before September 10, 2007.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-293'' on all written and electronic correspondence. 
Written comments being sent 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 directly sent 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 only. DEA will not accept 
any file format other than those specifically listed here.
    Posting of Public Comments: Please note that all comments received 
are considered part of the public record and made available for public 
inspection online at http://www.regulations.gov. Such information 
includes personal identifying information (such as your name, address, 
etc.) voluntarily submitted by the commenter.
    If you want to submit personal identifying information (such as 
your name, address, etc.) as part of your comment, but do not want it 
to be posted online, you must include the phrase ``PERSONAL IDENTIFYING 
INFORMATION'' in the first paragraph of your comment. You must also 
place all the personal identifying information you do not want posted 
online in the first paragraph of your comment and identify what 
information you want redacted.
    If you want to submit confidential business information as part of 
your comment but do not want it to be posted online, you must include 
the phrase ``CONFIDENTIAL BUSINESS INFORMATION'' in the first paragraph 
of your comment. You must also prominently identify confidential 
business information to be redacted within the comment. If a comment 
has so much confidential business information that it cannot be 
effectively redacted, all or part of that comment may not be posted on 
http://www.regulations.gov.
    Personal identifying information and confidential business 
information identified and located as set forth above will be redacted 
and placed in the agency's public docket file, and, where possible, 
posted online. If you wish to inspect the agency's public docket file 
in person by appointment, please see the ``For Additional Information'' 
paragraph.

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:

DEA's Legal Authority

    DEA implements the Comprehensive Drug Abuse Prevention and Control 
Act of 1970, often referred to as the Controlled Substances Act (CSA) 
and the Controlled Substances Import and Export Act (21 U.S.C. 801-
971), as amended. DEA publishes the implementing regulations for these 
statutes in Title 21 of the Code of Federal Regulations (CFR), Parts 
1300 to 1399. These regulations are designed to ensure that there is a 
sufficient supply of controlled substances for legitimate medical, 
scientific, research, and industrial purposes, for lawful exports, and 
for maintenance of reserve stocks while deterring the diversion of 
controlled substances to illegal purposes. The CSA mandates that DEA

[[Page 37440]]

establish a closed system of control for manufacturing, distributing, 
and dispensing controlled substances. Any person who manufactures, 
distributes, dispenses, imports, exports, or conducts research or 
chemical analysis with controlled substances must register with DEA 
(unless exempt) and comply with the applicable requirements for the 
activity. The CSA as amended also requires DEA to regulate the 
manufacture, distribution, import, and export of chemicals that may be 
used to manufacture controlled substances illegally. 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.
    On March 9, 2006, the President signed the Combat Methamphetamine 
Epidemic Act of 2005 (CMEA), which is Title VII of the USA PATRIOT 
Improvement and Reauthorization Act of 2005 (Pub. L. 109-177). The Act 
amends the CSA by adding new provisions related to the importation, 
production, and sale of ephedrine, pseudoephedrine, and 
phenylpropanolamine, their salts, optical isomers, and salts of optical 
isomers, and products that contain any of the three chemicals.

Ephedrine, Pseudoephedrine, and Phenylpropanolamine

    Ephedrine, pseudoephedrine, and phenylpropanolamine are List I 
chemicals because each can be the primary ingredient needed to 
manufacture controlled substances illegally. Ephedrine and 
pseudoephedrine are primary ingredients important in the illicit 
manufacture of methamphetamine, a Schedule II controlled substance, and 
methcathinone, a Schedule I controlled substance; phenylpropanolamine 
is a primary ingredient important in the illicit manufacture of 
amphetamine, also a Schedule II controlled substance. Each of the 
chemicals is also approved as an active pharmaceutical ingredient used 
in products with legitimate medical purposes. Ephedrine is used in 
prescription and over-the-counter (OTC) products as a bronchodilator 
(e.g., for treating asthma). Pseudoephedrine, a decongestant, is a 
common ingredient in both prescription and OTC cold and allergy 
medications. Research by the National Association of Chain Drug Stores 
identified approximately 2,500 OTC products that contain 
pseudoephedrine. The Food and Drug Administration's National Drug Code 
(NDC) online directory of prescription drugs lists 158 products that 
contain ephedrine and about 1,250 that contain pseudoephedrine. In 
November, 2000, the Food and Drug Administration (FDA) issued a public 
health advisory concerning phenylpropanolamine and requested that all 
drug companies discontinue marketing products containing 
phenylpropanolamine due to risk of hemorrhagic stroke. In response, 
many companies voluntarily reformulated their products to exclude 
phenylpropanolamine. Subsequently, on December 22, 2005, FDA published 
a Notice of Proposed Rulemaking (70 FR 75988) proposing to categorize 
all OTC nasal decongestants and weight control drug products containing 
phenylpropanolamine preparations as Category II, nonmonograph, i.e., 
not generally recognized as being safe for human consumption.
    Prior to the enactment of CMEA, ephedrine, pseudoephedrine, and 
phenylpropanolamine were subject to the same requirements as other List 
I chemicals as they apply to manufacture, non-retail distribution, 
import, and export. Any person who manufactured the chemical for 
distribution, distributed, imported, or exported the chemical was 
required to register with DEA and maintain records on transactions at 
or above certain threshold quantities. Bulk manufacturers filed annual 
reports regarding their manufacturing activities with DEA. Importers 
and exporters had to notify DEA in advance of importations or 
exportations unless the transaction was between a regulated person and 
a regular customer abroad or an importation by a regular importer; in 
that case, the importers and exporters had to notify DEA no later than 
the date of the transaction. Sales of OTC drug products containing one 
of the chemicals were subject to sales thresholds above which retail 
distributors were required to maintain records, but certain forms 
(blister packs) were generally not subject to control. Mail order 
sellers of the OTC drugs filed monthly reports. The manufacture, 
distribution, import, export, and retail sale of prescription products 
containing the chemicals were not regulated.

Combat Methamphetamine Epidemic Act of 2005

    The Combat Methamphetamine Epidemic Act of 2005 (CMEA) amends the 
CSA to tighten controls on the manufacture, distribution, import, 
export, and retail sale of three List I chemicals--ephedrine, 
pseudoephedrine, and phenylpropanolamine, and drug products containing 
them. CMEA imposes the following changes:
     Sales limits apply to retail sales of OTC products. 
Regulated sellers are required to store the products behind the counter 
or in locked cabinets and maintain records on each sale, including 
verifying the name of the purchaser against an approved form of 
identification supplied by the purchaser. The exemption for blister 
packs has been removed. Thus, all products sold at retail (except 
individual sales transactions consisting of a single package of 
pseudoephedrine where the package contains not more than 60 milligrams) 
are regulated under the Controlled Substances Act.
     DEA must establish an assessment of the annual needs for 
estimated medical, scientific, research, and industrial needs of the 
United States, for lawful exports, and for reserve stocks, for the 
three chemicals. That assessment will set an upper limit on the 
quantity of the chemicals and products containing the chemicals that 
can be produced in or imported to the United States.
     Bulk manufacturers must obtain a manufacturing quota to 
produce any of the three chemicals.
     Manufacturers who purchase the bulk chemicals to produce 
products must obtain a procurement quota.
     Importers must obtain a quota to import the chemicals in 
bulk or in drug products.
     Importers, exporters, brokers, and traders must provide 
additional information on the persons to whom they intend to sell the 
chemicals prior to the sale. They must also provide a return 
declaration, providing actual information regarding the import, export, 
or international transaction.

    Because the mandated changes affect different business activities, 
DEA is revising its regulations to implement these mandated changes 
through a series of rulemakings. This Interim Final Rule addresses the 
CMEA mandate for establishment of an assessment of annual needs and 
quotas to limit production and importation to those established needs.

Establishing Annual Needs

    CMEA amended the CSA to add ephedrine, pseudoephedrine, and 
phenylpropanolamine to Sec.  826 of the Act, which requires production 
quotas for controlled substances. The amendment essentially requires 
that the three chemicals be treated in the same way as Schedule I and 
II controlled substances. Under the CSA, DEA must limit the quantity of 
Schedule I and II controlled substances to that which is necessary to 
meet the estimated medical, scientific, research, and

[[Page 37441]]

industrial needs of the United States, for lawful export requirements, 
and for the establishment and maintenance of reserve stocks. DEA 
establishes the annual needs for each controlled substance, the 
``aggregate production quota'', and uses that figure to issue 
manufacturing and procurement quotas. With very limited exceptions, 
imports of controlled substances are sold to manufacturers (which 
include repackagers). Because importers can only distribute controlled 
substances to DEA registrants and manufacturers can purchase only the 
amount authorized under their procurement quotas, DEA has not needed to 
issue import quotas to importers. The closed system of control that the 
CSA mandates for controlled substances means that DEA can track the 
importation, manufacture, and distribution of controlled substances.
    The circumstances for the manufacturing and distribution of the 
three List I chemicals are different in a number of ways.
     Most of the bulk ephedrine, pseudoephedrine, and 
phenylpropanolamine used in the United States is imported. DEA is 
notified of these imports, but until now DEA has not obtained 
information on the purchasers of the imported chemicals. (DEA has 
promulgated separate regulations under CMEA that will require importers 
of all listed chemicals to indicate their downstream customers (72 FR 
17401, April 9, 2007).) Although most imported bulk chemicals will be 
sold to manufacturers, it is possible that some bulk materials could be 
sold to distributors or exporters.
     Distributors are required to keep records of transactions 
involving these chemicals, but do not file reports with DEA on 
distributions.
     Dosage units of OTC drugs containing the chemicals are 
imported. Although these may be transferred to repackagers or 
relabelers (who are registered as manufacturers), some may be imported 
already packaged for retail sale and transferred to distributors or 
directly to retailers. Retailers may not be DEA registrants.
     Prescription drugs containing one of the chemicals may be 
imported. Until now, neither the importation, distribution, nor 
manufacture of these drugs has been subject to DEA regulations.

To assess the national needs and limit the quantity of the three 
chemicals to those national needs, DEA must collect information on 
manufacturing, imports, and exports and set production quotas for 
manufacturers and import quotas for importers. Because the chemicals 
are used in approximately 1,400 prescription products, DEA must cover 
the manufacture and import of these products as well as the more than 
2,500 OTC drug products. In another rulemaking, DEA is revising its 
regulations to require that manufacturers and importers of prescription 
drug products containing any of the three chemicals must register with 
DEA. DEA is also revising, in a separate rulemaking, the thresholds 
applied to ephedrine, pseudoephedrine, and phenylpropanolamine so that 
all transactions will be regulated.

Discussion of the Rule

    CMEA amends the CSA by adding ephedrine, pseudoephedrine, and 
phenylpropanolamine to each of the paragraphs in 21 U.S.C. 826, 
Production quotas for controlled substances. Section 826 requires DEA 
to establish total annual needs for each of the three chemicals and to 
limit manufacturing of the chemicals to the amount needed to provide 
for medical, scientific, research, and industrial purposes, for lawful 
exports, and for the maintenance of reserve stocks. In addition, CMEA 
amends 21 U.S.C. 952 (importation of controlled substances) by adding a 
new paragraph (d) to cover the importation of the three chemicals; the 
new paragraph indicates, along with language from the Conference report 
on CMEA, that Congress expected DEA to establish import quotas for the 
chemicals:

    Section 715. Restrictions on importation; authority to permit 
imports for medical, scientific, or other legitimate purposes 
Section 715 of the conference report is a new provision and extends 
the Attorney General's existing authority to set import quotas for 
controlled substances (see 21 U.S.C. Sec. 952) to pseudoephedrine, 
ephedrine, and phenylpropanolamine. This section allows registered 
importers to apply for temporary or permanent increases in a quota 
to meet legitimate needs. The Attorney General is required to act on 
all such applications within 60 days.

    These sections of the CSA are implemented through a new part, 21 
CFR part 1315. Most of the requirements for the assessment of annual 
national needs and for manufacturing and procurement quotas directly 
parallel the requirements for controlled substance quotas provided in 
part 1303.

Production Quotas

    Under part 1315, bulk manufacturers of the three chemicals will be 
required to obtain annual manufacturing quotas. A separate quota is 
required for each chemical. A bulk manufacturer must be registered as a 
manufacturer to handle the chemical for which quota is applied. A bulk 
manufacturer must complete and file a DEA Form 189 by April 1 of each 
year for the following calendar year. The applicant must provide the 
following information on the form:
     For the current and preceding two years, the actual 
quantity manufactured, actual net disposals, and actual inventory as of 
December 31.
     For the next year, the desired quota, the name and 
registration number of each customer and the amount estimated to be 
sold to each, and any additional factors the applicant finds relevant 
to fixing the quota.

DEA notes that the above requirements are consistent with existing 
requirements for controlled substances quotas found in 21 CFR Part 
1303.
    Each manufacturer that purchases the chemicals in bulk or in dosage 
forms will be required to obtain a procurement quota to obtain the bulk 
chemicals or dosage forms. A separate procurement quota is required for 
each chemical. The applicant must apply using DEA Form 250. The 
applicant must provide the following information:
     A statement about the purpose(s) of the requested chemical 
and the quantity which will be used for each purpose during the next 
calendar year. The applicant should provide information about the 
quantities used (acquired, distributed, and inventory) for the current 
and preceding 2 calendar years.
     If the purpose is to manufacture dosage forms, the 
applicant must state the official name, common or usual name, chemical 
name, or brand name of that dosage form, and must include the strength.
     The company must state the type of activity intended: 
product development, repackaging, relabeling, manufacturing OTC 
finished product, manufacturing prescription finished product.
     If the purpose is to manufacture a controlled substance 
listed in Schedule I or II or another List I chemical, the applicant 
must state the quantity of the other substance or chemical that the 
applicant has applied to manufacture under Sec.  1303.22 and the 
quantity of the first chemical needed to manufacture a specified unit 
of the second chemical.

    DEA notes that the above requirements are consistent with existing 
requirements for controlled substances quotas found in 21 CFR Part 
1303.

    DEA recognizes that applicants may not have complete data on 
inventories and records for previous years because DEA has not required 
registrants to keep these records. Most manufacturers of

[[Page 37442]]

OTC products should have the information in the records they maintain 
on regulated transactions. Applicants who manufacture prescription 
products may not have full records for the initial filings. DEA notes 
that the provision of incomplete information as part of an application 
for quota in the initial year of implementation of quotas for 
ephedrine, pseudoephedrine, and phenylpropanolamine may not, in and of 
itself, prevent an applicant from obtaining quota. DEA has significant 
experience regarding the processing of quota applications for which 
incomplete information is present at the initial establishment of quota 
(e.g., a new formulation of a controlled substance). DEA will work with 
quota applicants to obtain information that could be used in the 
processing of the applicant's initial application.

Import Quotas

    To track and control the quantity of each of the chemicals and drug 
products containing the chemicals, DEA must limit imports to a quantity 
consistent with the national needs. CMEA amended 21 U.S.C. 952(a) to 
state that ``It shall be unlawful to import * * * ephedrine, 
pseudoephedrine, and phenylpropanolamine * * * except that such amounts 
of * * * ephedrine, pseudoephedrine, and phenylpropanolamine as the 
Attorney General [DEA by delegation] finds necessary to provide for the 
medical, scientific, or other legitimate purposes * * *.'' Importers 
will be required to obtain an import quota for each chemical covering 
both bulk chemicals and dosage forms. Importers will be required to 
submit an application that includes the following information:
     The type of product (bulk chemical or finished forms to be 
transferred to a manufacturer or product to be sold for distribution).
     The quantity of each type of product.
     For the previous two years, the name, address, and DEA 
registration number (if applicable) of each customer and the amount 
sold; inventory as of December 31 for each form of the product (i.e., 
bulk chemical, in-process material, or finished dosage form); and 
acquisitions (imports).
    DEA recognizes that importers handling prescription products may 
not have historical records for their initial filings. If an importer 
is handling prescription drug products, it is possible that some of its 
customers may not be DEA registrants. DEA notes that the provision of 
incomplete information as part of an application for quota in the 
initial year of implementation of quotas for ephedrine, 
pseudoephedrine, and phenylpropanolamine may not, in and of itself, 
prevent an applicant from obtaining quota. DEA has significant 
experience regarding the processing of quota applications for which 
incomplete information is present at the initial establishment of quota 
(e.g., a new formulation of a controlled substance). DEA will work with 
quota applicants to obtain information that could be used in the 
processing of the applicant's initial application.
    Depending on the activities that a firm engages in, a firm may have 
to apply for multiple quotas. For example, a firm that imports 
ephedrine to bulk manufacture pseudoephedrine would need to obtain an 
import quota and a procurement quota for ephedrine and a manufacturing 
quota for pseudoephedrine. A manufacturer that imports bulk ephedrine 
and pseudoephedrine to produce dosage units of drugs containing the 
chemicals would need to obtain separate import and procurement quotas 
for each chemical.
    DEA will use the information filed in support of the quota 
applications as one factor in the determination of an initial 
assessment of annual needs for each of the chemicals to ensure that the 
United States has sufficient quantities to meet medical, scientific, 
research, industrial, exportation, and reserve stock needs. DEA will 
publish its assessment by May 1 and then revise the assessment based on 
comments and further information before publishing a final assessment 
for the following year. The assessment establishes a ceiling on 
domestic manufacturing and importation of these chemicals. DEA may, at 
its discretion, seek additional information from applicants if needed 
to determine an appropriate level for the annual assessment ceiling. 
For example, because repackagers and relabelers handle products that 
are covered by other procurement or import quotas, DEA may need more 
details on customers from those seeking procurement quotas to ensure 
that it is not double counting quantities. This issue may arise 
particularly in reference to OTC products, where a manufacturer may 
produce dosage units that are repackaged or relabeled to be sold under 
multiple store brand labels.
    DEA is adopting the same process for manufacturing and procurement 
quotas for the three chemicals as it currently applies to those quotas 
for controlled substances. Manufacturers may apply for increases in 
their manufacturing quotas; DEA may reduce individual manufacturing 
quotas to prevent the total amount produced from exceeding the 
assessment of annual needs. Manufacturers may abandon their quota by 
notifying DEA.
    Manufacturers holding a procurement quota may apply for adjustment 
of the quota by applying to DEA with a statement indicating the need 
for an adjustment. Any manufacturer who holds a procurement quota must, 
before giving an order to another manufacturer or importer requiring 
the distribution of a covered chemical, certify in writing that the 
quantity being ordered does not exceed the unused portion of the 
person's procurement quota for the year. The certification must be 
signed by someone who is authorized to sign a DEA registration 
application.
    As specified in the CMEA amendment to section 952 of the CSA, 
importers may apply for an increase in their quota and DEA may approve 
the application if DEA determines that the increase is needed to meet 
medical, scientific, or other legitimate purposes. For changes in the 
import quota, DEA will approve or deny the application within 60 days 
of receiving the application; if DEA does not reach a decision within 
the 60 days, the application is considered to be approved until DEA 
notifies the applicant in writing that the approval is terminated.
    DEA may hold hearings, at the Administrator's sole discretion, to 
obtain factual evidence regarding the assessment of national needs. 
Applicants or quota holders may request hearings on the issuance, 
adjustment, suspension, or denial of a quota. In hearings on the 
assessment of national needs, each interested party has the burden of 
proving any proposition of facts or law that the party asserts. At 
hearings on the issuance, adjustment, suspension, or denial of a quota, 
DEA has the burden of proving that the requirements for issuance, 
adjustment, suspension, or denial of a quota are met.

Changes in Forms

    DEA is amending DEA Form 189 (application for a manufacturing 
quota) and DEA Form 250 (application for a procurement quota). DEA Form 
189 is being amended to include the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine; adding a field to supply an 
e-mail address; and adding a field requesting information regarding the 
authority by which a product may be marketed under the Federal Food, 
Drug and Cosmetic Act (e.g., NDA number or FDA monograph). DEA is 
soliciting comments on this provision. DEA included this requirement in 
the application to assist in making its determination that the

[[Page 37443]]

quota would be utilized for ``medical'' purposes. However, DEA notes 
that there are instances in which applications may not fall within this 
category (e.g., quota used to support bona fide scientific research, 
industrial uses and product development efforts). DEA will consider 
applications for quota to support these activities even though the 
applicant would not be able to complete this portion of the 
application.
    DEA Form 250 is being amended to include the List I chemicals 
ephedrine, pseudoephedrine, and phenylpropanolamine; adding a field to 
supply an e-mail address; permitting the use of List I Chemical Code 
Numbers as well as the DEA Drug Code numbers; and adding a field 
requesting information regarding the authority by which a product may 
be marketed under the Federal Food, Drug, and Cosmetic Act (e.g., NDA 
number or FDA monograph). DEA is soliciting comments on this provision. 
DEA included this requirement in the application to assist in making 
its determination that the quota would be utilized for ``medical 
purposes.'' However, DEA notes that there are instances in which 
applications may not fall within this category (e.g., quota used to 
support bona fide scientific research, industrial uses and product 
development efforts). DEA will consider applications for quota to 
support these activities even though the applicant would not be able to 
complete this portion of the application.
    In addition, DEA has developed a new DEA Form 488 for applying for 
an import quota.

Imports for Personal Use

    CMEA amended 21 U.S.C. 844 to make it unlawful for a person to 
knowingly purchase at retail more than 9 grams of ephedrine base, 
pseudoephedrine base, or phenylpropanolamine base in a scheduled listed 
chemical product in a 30-day period and further stated that no more 
than 7.5 grams of the 9 grams of each chemical may be imported by means 
of shipping through a private or commercial carrier or the Postal 
Service. Imports for personal use below these quantities are not 
subject to import quota requirements. Any person who wishes to import 
more than 7.5 grams of each of the chemicals in a 30-day period would 
have to register as an importer and obtain an import quota.

Section-by-Section Description of the Rule

    DEA is amending the definition of ``regulated transaction'', found 
in 21 CFR Sec.  1300.02, to reference new part 1315.
    Subpart A of new part 1315 provides general information about part 
1315. Section 1315.01 defines the scope of part 1315.
    Section 1315.02 provides definitions. The definition of ``net 
disposal,'' which is in Sec.  1300.01 and applies to controlled 
substances, is included here for the three List I chemicals. The final 
paragraph repeats the statutory provisions that each of the three 
chemicals includes their salts, optical isomers, and salts of optical 
isomers.
    Section 1315.03 provides the personal use exemption from importer 
registration, import declaration, and import quotas.
    Section 1315.05 specifies the persons to whom the part applies.
    Subpart B, Sections 1315.11 and 1315.13 describe the process for 
determining the assessment of annual needs for each of the three 
chemicals and adjusting the assessment. The sections parallel 
Sec. Sec.  1303.11 and 1303.13.
    Subpart C, Sections 1315.21 through 1315.27 cover the requirements 
for individual manufacturing quotas. The sections are taken from 
Sec. Sec.  1303.21 through 1303.27.
    Subpart D addresses procurement and import quotas. Section 1315.30 
describes what procurement and import quotas authorize and serves as an 
introduction to the requirements for these quotas.
    Section 1315.32 specifies the requirements for obtaining a 
procurement quota and is based on Sec.  1303.12.
    Section 1315.34 covers the requirements for obtaining an import 
quota. The section specifies the information that an applicant must 
submit and indicates that DEA may request additional information, if 
necessary.
    Section 1315.36 specifies the procedures for amending an import 
quota, as provided in 21 U.S.C. Sec.  952(d).
    Subpart E, Sec. Sec.  1315.50 through 1315.62 cover the procedures 
for hearings on the assessment of annual needs and the issuance, 
adjustment, suspension, or denial of a quota. These sections are based 
on Sec. Sec.  1303.31 through 1303.37.

Regulatory Certifications

Administrative Procedure Act (5 U.S.C. 553)

    The Administrative Procedure Act (APA) generally requires that 
agencies, prior to issuing a new rule, publish a notice of proposed 
rulemaking in the Federal Register. The APA also provides, however, 
that agencies may be excepted from this requirement when ``the agency 
for good cause finds (and incorporates the finding and a brief 
statement of reasons therefor in the rules issued) that notice and 
public procedure thereon are impracticable, unnecessary, or contrary to 
the public interest.'' 5 U.S.C. 553(b)(B).
    With publication of this Interim Final Rule, DEA is invoking this 
``good cause'' exception to the APA's notice requirement based on the 
combination of several extraordinary factors. The Combat 
Methamphetamine Epidemic Act of 2005 specifically amended 21 U.S.C. 826 
to mandate the establishment of production quotas for the List I 
chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. DEA has 
no discretion in this requirement and is essentially creating the same 
system of production quotas for these three List I chemicals as is 
currently established for controlled substances in Schedules I and II. 
These regulations address the procedures for the implementation of 
these quotas, and DEA has endeavored to use existing procedures 
wherever possible for simplicity and ease of implementation.
    Further, the CMEA amended 21 U.S.C. 952 to prohibit all importation 
of ephedrine, pseudoephedrine, and phenylpropanolamine except such 
amounts as the Attorney General finds to be necessary for medical, 
scientific, or other legitimate purposes. The Act further amended Sec.  
952 regarding import quotas for these three List I chemicals.
    In a separate rulemaking, DEA implemented the retail provisions of 
the CMEA (71 FR 56008, September 26, 2006; corrected at 71 FR 60609, 
October 13, 2006), which included, among others:

 Sales limits
 Product packaging
 Product placement
 Logbook and verification of purchaser identity

    These provisions limit the availability of scheduled listed 
chemical products at the retail level. While these products will be 
available for purchase, their diversion to the illicit production of 
methamphetamine will be more difficult due to the sales limits, logbook 
requirements, and other provisions. Congress, in crafting CMEA, 
recognized that limiting of product availability at the retail level 
could potentially encourage diversion of either drug products or the 
List I chemicals themselves higher in the supply chain--at the import, 
manufacture, and distribution levels. To address its

[[Page 37444]]

concern about ``what immediately moves in behind,'' (Rep. Souder, 
February 28, 2006, CR p. 423) Congress included provisions in CMEA to 
control the import, export, manufacture, and distribution of the three 
chemicals and products containing them. These provisions also will make 
it possible for the United States to meet the recommendations of the 
International Narcotics Control Board, which encouraged its member 
countries to provide for pre-export notifications and an assessment of 
legitimate need for these chemicals.
    In a separate rulemaking (72 FR 17401, April 9, 2007) DEA 
implemented the ``spot market'' provisions of the CMEA related to the 
importation, exportation, and international transactions involving all 
listed chemicals. The provisions of section 716 of the CMEA implemented 
by that rulemaking require importers, exporters, brokers, and traders 
to notify DEA, before the transaction is to take place, of certain 
information regarding the transferee(s) (downstream customer(s)) and 
the listed chemicals to be transferred. Such information provides DEA 
with an opportunity to evaluate the transaction.
    DEA must implement the quota provisions of the CMEA on an interim 
basis to ensure that product upstream from the retail level is not 
diverted for illicit purposes. It would be contrary to the public 
interest to allow the diversion of large amounts of ephedrine, 
pseudoephedrine, and phenylpropanolamine at the wholesale level while 
implementing controls at the retail level to limit sales of these very 
products.
    The CMEA, as evidenced by the number of rulemakings DEA is issuing 
to implement it, sets forth a complex array of statutory requirements, 
with different effective dates, designed to prevent the use of certain 
List I chemicals in the illicit manufacture of methamphetamine and 
amphetamine. In addition, the CMEA, which, among other things, 
essentially reclassifies ephedrine, pseudoephedrine, and 
phenylpropanolamine as scheduled listed chemicals, imposes new retail 
restrictions on these products, and mandates new domestic and import 
quotas, is expansive in its breadth. The broad scope of the new law, as 
well as the expedited effective dates, is a clear reflection of 
Congress' concern about the nation's growing methamphetamine epidemic 
and its desire to act quickly to prevent further illicit use of these 
chemicals.
    The retail and ``spot market'' provisions of the CMEA, which DEA 
has already implemented through separate rulemakings, limit the sale of 
ephedrine, pseudoephedrine, and phenylpropanolamine at retail and 
provide information to DEA regarding downstream customers of United 
States importers, exporters, brokers and traders. They do not, however, 
provide controls at the distribution, manufacturing, and importing 
levels of the distribution chain. To fully implement the CMEA as 
intended by Congress, and to work to combat the methamphetamine 
epidemic the United States is currently experiencing, DEA must utilize 
all tools at its disposal to control the importation, exportation, 
manufacture, and retail sale of ephedrine, pseudoephedrine, 
phenylpropanolamine, and products containing those three List I 
chemicals.
    In light of these factors, DEA finds that ``good cause'' exists to 
issue this interim rule without engaging in traditional notice and 
comment rulemaking. In so doing, DEA recognizes that exceptions to the 
APA's notice and comment procedures are to be ``narrowly construed and 
only reluctantly countenanced.'' Am. Fed'n of Gov't Employees v. Block, 
655 F2d 1153, 1156 (DC Cir. 1981) (quoting New Jersey Dep't of Envtl. 
Prot. v. EPA, 626 F.2d 1038, 1045 (DC Cir. 1980)). Based on the 
totality of the circumstances associated with the CMEA, DEA finds that 
invocation of the ``good cause'' exception is justified.
    Under section 553(d) of the APA, DEA must generally provide a 30-
day delayed effective date for final rules. DEA may dispense with the 
30-day delayed effective date requirement ``for good cause found and 
published with the rule.'' DEA believes that good cause exists to make 
this rule effective upon publication. As DEA noted previously, 
rulemakings have already been implemented to limit the availability of 
scheduled listed chemical products at the retail level. The limiting of 
product availability at the retail level could potentially encourage 
diversion of either drug products or the List I chemicals themselves 
higher in the supply chain--at the import, manufacture, and 
distribution levels. Congress included provisions in CMEA to address 
this circumstance, and the quota provisions set forth in this 
rulemaking work toward that goal. DEA must implement the quota 
provisions of the CMEA upon publication to ensure that product upstream 
from the retail level is not diverted for illicit purposes.

Regulatory Flexibility Act

    The Deputy Administrator hereby certifies that this rulemaking has 
been drafted in accordance with the Regulatory Flexibility Act (RFA) (5 
U.S.C. 605(b)). The RFA applies only to proposed rules that are subject 
to notice and comment (5 U.S.C. 601(2)). Because this rule is codifying 
statutory provisions, DEA has determined, as explained above, that 
public notice and comment are not necessary. Consequently, the RFA does 
not apply.
    DEA has nonetheless considered the impact of the rule on small 
entities. As discussed below, DEA estimates that about 310 firms in the 
manufacturing and wholesale sectors will be affected by this rule. 
About 250 of these may be small entities under the Small Business 
Administration definitions of small entities. For most of these firms 
the impact of the rule will be very small; they will be required to 
file an annual request for import or procurement quotas. DEA estimates 
that the cost of applying for a quota is about $96 for importers and 
$113 for manufacturers, which includes data collection and mailing. 
These costs do not represent a significant economic impact even on the 
smallest repackagers whose average revenues are above $54,000. The 
average revenues of the smallest firms in sectors subject to the rule 
for which the 2002 Economic Census has data are shown in Table 1.

     Table 1.--Average Revenues of Smallest Firms by Affected Sector
------------------------------------------------------------------------
                                                               Average
                                                              revenue of
                           Sector                              smallest
                                                                firms
------------------------------------------------------------------------
Packaging and labeling.....................................      $54,271
Drug wholesalers...........................................      127,367
Chemical wholesalers.......................................      718,697
Pharmaceutical manufacturers...............................      824,268
------------------------------------------------------------------------

    The larger impact of the rule will be in any reduction in sales 
that results from limits imposed by a firm's quotas. Only one firm 
manufactures bulk pseudoephedrine in the United States. This firm is 
owned by an Indian chemical manufacturer and is not a small entity. The 
rest of the firms affected by the rule can be divided into three 
sectors:
     Importers and manufacturers of prescription products 
containing the chemicals.
     Importers and manufacturers of OTC products that are sold 
primarily through drug stores, grocery stores, discount department 
stores, superstores, and electronic mail order houses.
     Importers and manufacturers of OTC products that are sold 
almost exclusively through independent

[[Page 37445]]

convenience stores or other small outlets.
    The three sectors will be affected differently by the quotas. DEA 
will provide importers and manufacturers of prescription products with 
the quantities that they request unless DEA has some reason to believe 
that the prescription product is being diverted. These firms will not 
have a significant economic impact from the rule.
    Importers and manufacturers of OTC products that are sold through 
conventional outlets are likely to receive the quotas requested 
adjusted only to account for general estimates of diversion and 
declines in demand. At this point, DEA has not estimated the adjustment 
needed to account for diversion, but expects that it will be small 
relative to the declines in demand that are resulting from the retail 
sales restrictions. As DEA has discussed in the retail rule (71 FR 
56008, September 26, 2006; corrected at 71 FR 60609, October 13, 2006), 
most of the firms that manufacture these products for sales in 
conventional outlets also manufacture the substitutes. DEA does not 
expect that these firms will see a significant economic impact from the 
quotas, but is seeking comment on this issue.
    DEA anticipates that the third sector will be more severely 
affected. This sector is comprised of a small number of companies that 
import or manufacture products in higher dosages than are normally 
purchased through conventional outlets and sell the product almost 
exclusively through nonconventional outlets, such as independent 
convenience stores, liquor stores, etc. Although some products sold 
mainly in drug stores, grocery stores, and large discount or warehouse 
stores are stolen or bought for illicit purposes, DEA's experience 
indicates that products sold almost exclusively through nonconventional 
outlets are far more likely to be diverted in substantial quantities. 
In investigations, DEA has found some of these stores selling products 
in quantities 20 to 40 times what such stores would be expected to sell 
to meet legitimate needs. Many of these manufacturers have, in the 
past, marketed products in packages that are no longer legal for retail 
sales because they contain more than 3.6 grams of the chemical. DEA has 
issued multiple warning letters to these manufacturers to inform them 
of the diversion of their products.
    An application for a quota from these manufacturers of products 
sold primarily or exclusively through such outlets or from importers 
who sell to these manufacturers will be reviewed using the same 
standards used to review other applications for a quota. However, DEA 
notes that the agency has published many final orders in the Federal 
Register addressing the distribution of these products sold almost 
exclusively to nonconventional outlets, and has found that a 
significant percentage of such products have been diverted. DEA will 
consider the historical uses of such products when determining whether 
the quantities requested in a quota application are required to meet 
the legitimate needs of the market. Consequently, if the manufacturers 
of these products, and the importers supplying those manufacturers, 
request quotas that are consistent with a past pattern of known 
diversion, these firms may not receive quotas in the amounts requested. 
It is also possible that the number of outlets carrying their products 
will decline if these stores decide that CMEA requirements for retail 
sales are too onerous. Some of these firms may experience a significant 
economic impact, particularly if this product line generated a 
substantial portion of their sales. Some of these firms appear, based 
on their web sites, to have added substitutes to their product lines; 
others appear to have dropped the product line altogether. DEA is 
seeking comments on this issue.

Executive Order 12866

    The Deputy Administrator further certifies that this rulemaking has 
been drafted in accordance with the principles in Executive Order 12866 
Section 1(b). It has been determined that this is ``a significant 
regulatory action.'' Therefore, this action has been reviewed by the 
Office of Management and Budget.
    Regulated Entities. The firms subject to this rule are 
manufacturers and importers. At present, only one firm in the United 
States manufactures any of these chemicals in bulk and, therefore, only 
that firm will have to apply for a manufacturing quota. DEA reviewed a 
list of pseudoephedrine OTC and prescription products and ephedrine 
prescription products and identified about 240 firms based on their 
labeler codes. Each of these firms, plus any firms that repackage or 
relabel, will need to obtain procurement quotas. Based on 2005 DEA 
data, DEA estimates that about 69 firms with 91 locations are currently 
registered to import the chemicals; these firms will need to obtain 
import quotas if they are actually importing the chemicals. Although 91 
locations are registered to import these chemicals, import notices 
indicate that many of these locations do not handle the chemicals. If 
other firms import prescription drug products that contain the 
chemicals they will also have to obtain import quotas. Based on these 
data, DEA estimates that 332 locations may apply for quotas if the 
demand for the chemicals and drug products remains the same (1 bulk 
manufacturer, 240 manufacturers, and 91 importers). Table 2 presents 
the number of potential applicants by sector. Registrants must apply 
for quotas for each registered location rather than by firm. 
Consequently, the number of manufacturing locations applying may be 
higher than listed if the firms handle the product at multiple 
locations. The importers are, in some cases, also manufacturers so that 
the total number of affected firms may be reduced. The total number of 
importer registrants includes firms with multiple registered locations.

             Table 2.--Potential Quota Applicants by Sector
------------------------------------------------------------------------
                             Type                                Number
------------------------------------------------------------------------
All Manufacturers............................................        240
Small Manufacturers..........................................        211
Importer Registered Locations................................         91
Small Importer Firms.........................................         42
------------------------------------------------------------------------

    Costs. As detailed in the Regulatory Flexibility Act section, there 
will be some burden associated with applying for quotas. DEA estimates 
that the total cost of the quota application process will be about 
$35,880 a year.
    As noted above, the larger cost of this rule is likely to be based 
on the extent to which the quotas constrain the market for OTC products 
containing ephedrine or pseudoephedrine. DEA assumes that the quotas 
will not affect the prescription drug market. DEA will establish its 
assessment of annual national needs for each of the chemicals, which 
will serve as a ceiling on the quantities for which quotas are granted. 
In setting an assessment of annual national need, DEA will consider the 
likelihood that OTC sales of scheduled listed chemical products may be 
reduced by the new restrictions on retail sales. Domestic demand for 
these products comes from three sources:
     Legitimate medical, scientific, and industrial needs and 
maintenance of reserve stocks.
     Exports.
     Illicit use-clandestine methamphetamine/amphetamine 
laboratories.

To establish the national needs and set individual quotas, DEA must 
first estimate the reduction in the volume of OTC sales due to the new 
retail

[[Page 37446]]

restrictions and the quantity of the chemicals now being diverted to 
illicit use. This information is needed so the degree of supply 
constraint implied by a given assessment can be understood. It will not 
be possible to make accurate estimates of these amounts until 
experience with the retail controls provides sufficient data. 
Similarly, accurate cost estimates cannot be developed until these data 
are available.

    As DEA discussed in its Interim Final Rule on retail sales of 
scheduled listed chemical products (71 FR 56008, September 26, 2006; 
corrected at 71 FR 60609, October 13, 2006), DEA has no reliable 
information on the value of the OTC market for these products. 
Estimates range from $250 million to $1.5 billion annually prior to the 
sales restrictions. The effect of State laws restricting sales and of 
the anticipation of the CMEA restrictions appear to be reducing the 
market considerably, at least for imports of bulk materials. Data from 
the U.S. International Trade Commission on the change in the imports 
from January through August of 2006 over the same period in 2005 are 
shown in Table 3.

 Table 3.--Change in Imports January-August 2005 to January-August 2006
------------------------------------------------------------------------
                                                    Percent     Percent
                                                   change in   change in
                                                     value     quantity
------------------------------------------------------------------------
Ephedrine.......................................       -44.9       -64.1
Pseudoephedrine.................................       -66.2       -70.4
Cough and cold dosage forms.....................        -4.8       -15.9
------------------------------------------------------------------------

    DEA is requesting comments and data from importers and 
manufacturers about the change in their markets and its impact.
    DEA notes that the figures in Table 3 reflect imports for both 
prescription and OTC drugs. Because DEA does not anticipate that quotas 
will have any effect on prescription drugs, it is likely that the 
decline in the retail market is considerable. However, even the highest 
estimate of the market pre-restriction indicates that the total cost of 
quota restrictions will be less than $100 million in any one year, the 
standard for an economically significant rule. If the highest estimate 
of the value of the market, $1.5 billion, were to remain unchanged 
after retail restrictions, quotas would have to restrict that market by 
6.67 percent to reach the $100 million a year level. If, as is far more 
likely, the market is declining significantly absent the quotas, the 
quotas would have to restrict the market by more than 10 percent to 
reach the level of economically significant under the Executive Order. 
At this time, DEA does not believe that the level of diversion is 6.67 
percent of sales on a national basis. Therefore, DEA does not consider 
that this rule will have a significant economic impact. DEA requests 
comments on this issue.
    Benefits. Congress, in CMEA, imposed a set of requirements on the 
manufacture, import, and sale of the three chemicals. These 
requirements, taken together, are intended to limit production and 
sales of these chemicals to that needed for legitimate purposes. The 
reduction in demand for these chemicals that is already occurring will 
limit the world production and make less available for diversion on the 
international market. In terms of societal accounting, the principal 
benefit of quotas that constrain supply will stem from a reduction in 
diversion to domestic illicit production of methamphetamine and 
amphetamine. The reduced volume of diversion will cause a reduction in 
the number of domestic clandestine methamphetamine laboratories and 
domestic illicit production of methamphetamine. Constrained supply is 
expected to raise the price of the chemicals in the domestic market 
and, for the clandestine methamphetamine laboratories, increase the 
cost and difficulty of obtaining them. The constrained-supply effect 
will come from the retail restrictions as well as from the quota 
ceiling; it is difficult to make separate quantitative estimates of the 
results of these two causes.
    Reduction in the number of clandestine methamphetamine laboratories 
reduces costs to Federal, State, and local governments of raiding these 
clandestine operations and cleaning up pollution at clandestine 
methamphetamine laboratory sites. As DEA detailed in its rule on retail 
sales (specifically 71 FR 56020, September 26, 2006), DEA, the States, 
and local governments spent more than $17 million in clean up costs in 
FY 2005. This cost covers only the removal of chemicals that could be 
reused from clandestine laboratory sites; the cost of cleaning up soil 
or property contamination is paid by the land owner, but if the owner 
cannot pay the cost, local governments bear the burden or the 
contamination remains. The costs also do not cover the time State and 
local governments spend investigating, arresting, and trying 
clandestine laboratory operators or the social costs related to 
children and others exposed to hazardous chemicals at these 
laboratories.

Paperwork Reduction Act

    DEA is revising two information collections currently approved 
under the Paperwork Reduction Act of 1998, and establishing a new 
information collection to address new mandates established by the CMEA. 
The two information collections being revised are OMB approval number 
1117-0006: ``Application for Individual Manufacturing Quota for a Basic 
Class of Controlled Substance and for Ephedrine, Pseudoephedrine, and 
Phenylpropanolamine'' (DEA Form 189), and OMB approval number 1117-
0008: ``Application for Procurement Quota for Controlled Substances and 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine'' (DEA Form 250). 
DEA is revising these collections by slightly revising the forms and 
increasing the estimated annual number of respondents and responses. 
Those changes have been discussed above, and are necessary for DEA to 
implement the provisions of the Combat Methamphetamine Epidemic Act of 
2005. DEA is also establishing a new information collection: 
``Application for Import Quota for Ephedrine, Pseudoephedrine, and 
Phenylpropanolamine'' (DEA Form 488).
    The Department of Justice, Drug Enforcement Administration, has 
submitted the following information collection requests to the Office 
of Management and Budget (OMB) for review and clearance in accordance 
with review procedures of the Paperwork Reduction Act of 1995. The 
proposed information collections are published to obtain comments from 
the public and affected agencies.
    All comments and suggestions, or questions regarding additional 
information, to include obtaining a copy of the information collection 
instrument with instructions, should be directed to Mark W. Caverly, 
Chief, Liaison and Policy Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, DC 20537.
    Written comments and suggestions from the public and affected 
agencies concerning the collections of information are encouraged. Your 
comments on the information collection-related aspects of this rule 
should address one or more of the following four points:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;

[[Page 37447]]

    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
    Overview of information collection OMB 1117-0006:
    (1) Type of Information Collection: revision of an existing 
collection.
    (2) Title of the Form/Collection: Application for Individual 
Manufacturing Quota for a Basic Class of Controlled Substance and for 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine.
    (3) Agency form number, if any, and the applicable component of the 
Department of Justice sponsoring the collection:
    Form Number: DEA Form 189.
    Office of Diversion Control, Drug Enforcement Administration, U.S. 
Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: business or other for-profit.
    Other: none.
    Abstract: 21 U.S.C. 826 and 21 CFR 1303.22 and 1315.22 require that 
any person who is registered to manufacture any basic class of 
controlled substances listed in Schedule I or II and who desires to 
manufacture a quantity of such class, or who desires to manufacture 
using the List I chemicals ephedrine, pseudoephedrine, or 
phenylpropanolamine, must apply on DEA Form 189 for a manufacturing 
quota for such quantity of such class or List I chemical.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: Only one firm 
currently manufactures these chemicals in the United States so only one 
additional firm will need to file this form. DEA estimates that each 
form takes 0.5 hours (30 minutes) to complete. Therefore, the burden 
increase for this one firm associated with this rulemaking is 0.5 hours 
annually.
    (6) An estimate of the total public burden (in hours) associated 
with the collection:
    One individual respondent will spend 0.5 hours (30 minutes) 
annually completing this form for the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine. This results in an annual 
public burden of 0.5 hours.
    This form is already used to collect information regarding 
controlled substances quotas. For that aspect of this collection, 36 
respondents submit 297 responses annually, for a public burden of 148.5 
hours annually. DEA notes that the controlled substances aspect of this 
collection is not being adjusted or revised.
    Therefore, in total, 37 firms take 0.5 hours (30 minutes) each to 
complete the form. This results in a total public burden of 149 hours 
annually.
    Overview of information collection OMB 1117-0008:
    (1) Type of Information Collection: revision of an existing 
collection.
    (2) Title of the Form/Collection: Application for Procurement Quota 
for Controlled Substances and Ephedrine, Pseudoephedrine, and 
Phenylpropanolamine.
    (3) Agency form number, if any, and the applicable component of the 
Department of Justice sponsoring the collection:
    Form Number: DEA Form 250, Office of Diversion Control, Drug 
Enforcement Administration, U.S. Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: business or other for-profit.
    Other: none.
    Abstract: 21 U.S.C. 826 and 21 CFR 1303.12 and 1315.32 require that 
U.S. companies who desire to use any basic class of controlled 
substances listed in Schedule I or II or the List I chemicals 
ephedrine, pseudoephedrine, and phenylpropanolamine for purposes of 
manufacturing during the next calendar year shall apply on DEA Form 250 
for procurement quota for such class or List I chemical.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: DEA estimates 
that each form takes 1 hour to complete. DEA estimates that 240 
individual respondents will respond to this form.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: 240 individual respondents will spend one hour 
annually completing this form for the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine. This results in an annual 
public burden of 240 hours.
    This form is already used to collect information regarding 
controlled substances quotas. For that aspect of this collection, 255 
respondents submit 1,106 responses annually, for a public burden of 
1,106 hours annually. DEA notes that the controlled substances aspect 
of this collection is not being adjusted or revised.
    Therefore, the total public burden for this collection is 1,346 
hours annually.
    Overview of new information collection:
    (1) Type of Information Collection: new collection.
    (2) Title of the Form/Collection: Application for Import Quota for 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine.
    (3) Agency form number, if any, and the applicable component of the 
Department of Justice sponsoring the collection:
    Form Number: DEA Form 488, Office of Diversion Control, Drug 
Enforcement Administration, U.S. Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: business or other for-profit.
    Other: none.
    Abstract: 21 U.S.C. 952 and 21 CFR 1315.34 require that persons who 
desire to import the List I chemicals ephedrine, pseudoephedrine, and 
phenylpropanolamine during the next calendar year shall apply on DEA 
Form 488 for import quota for such List I chemicals.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: DEA estimates 
that 91 individual respondents will apply for import quotas. DEA 
estimates that each response will take one hour.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: DEA estimates that this collection will involve 91 
annual public burden hours.
    If additional information is required, contact: Lynn Bryant, 
Department Clearance Officer, Information Management and Security 
Staff, Justice Management Division, Department of Justice, Patrick 
Henry Building, Suite 1600, 601 D Street NW., Washington, DC 20530.

Executive Order 12988

    This regulation meets the applicable standards set forth in 
Sec. Sec.  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

[[Page 37448]]

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

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of 
$120,000,000 or more (adjusted for inflation) 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 rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996 
(Congressional Review Act). This rule will not result in an annual 
effect on the economy of $100,000,000 or more; a major increase in 
costs or prices; or significant adverse effects on competition, 
employment, investment, productivity, innovation, or on the ability of 
United States-based companies to compete with foreign-based companies 
in domestic and export markets.

List of Subjects

21 CFR Part 1300

    Chemicals, Drug traffic control.

21 CFR Part 1315

    Administrative practice and procedure, Chemicals, Drug traffic 
control, Imports, Reporting and recordkeeping requirements.


0
For the reasons set out above, 21 CFR Chapter II is amended as follows:

PART 1300--DEFINITIONS

0
1. The authority citation for part 1300 continues to read as follows:

    Authority: 21 U.S.C. 802, 871(b), 951, 958(f).

0
2. Section 1300.02 is amended by revising paragraph (b)(28)(i)(B) to 
read as follows:


Sec.  1300.02  Definitions related to listed chemicals.

* * * * *
    (b) * * *
    (28) * * *
    (i) * * *
    (B) A delivery of a listed chemical to or by a common or contract 
carrier for carriage in the lawful and usual course of the business of 
the common or contract carrier, or to or by a warehouseman for storage 
in the lawful and usual course of the business of the warehouseman, 
except that if the carriage or storage is in connection with the 
distribution, importation, or exportation of a listed chemical to a 
third person, this paragraph does not relieve a distributor, importer, 
or exporter from compliance with parts 1309, 1310, 1313, and 1315 of 
this chapter;
* * * * *

0
3. Part 1315 is added to read as follows:

PART 1315--IMPORTATION AND PRODUCTION QUOTAS FOR EPHEDRINE, 
PSEUDOEPHEDRINE, AND PHENYLPROPANOLAMINE

Subpart A--General Information
Sec.
1315.01 Scope.
1315.02 Definitions.
1315.03 Personal use exemption.
1315.05 Applicability.
Subpart B--Assessment of Annual Needs
1315.11 Assessment of annual needs.
1315.13 Adjustments of assessment of annual needs.
Subpart C--Individual Manufacturing Quotas
1315.21 Individual manufacturing quotas.
1315.22 Procedure for applying for individual manufacturing quotas.
1315.23 Procedure for fixing individual manufacturing quotas.
1315.24 Inventory allowance.
1315.25 Increase in individual manufacturing quotas.
1315.26 Reduction in individual manufacturing quotas.
1315.27 Abandonment of quota.
Subpart D--Procurement and Import Quotas
1315.30 Procurement and import quotas.
1315.32 Obtaining a procurement quota.
1315.34 Obtaining an import quota.
1315.36 Amending an import quota.
Subpart E--Hearings
1315.50 Hearings generally.
1315.52 Purpose of hearing.
1315.54 Waiver or modification of rules.
1315.56 Request for hearing or appearance; waiver.
1315.58 Burden of proof.
1315.60 Time and place of hearing.
1315.62 Final order.

    Authority: 21 U.S.C. 802, 821, 826, 871(b), 952.

Subpart A--General Information


Sec.  1315.01  Scope.

    This part specifies procedures governing the establishment of an 
assessment of annual needs, procurement and manufacturing quotas 
pursuant to section 306 of the Act (21 U.S.C. 826), and import quotas 
pursuant to section 1002 of the Act (21 U.S.C. 952) for ephedrine, 
pseudoephedrine, and phenylpropanolamine.


Sec.  1315.02  Definitions.

    (a) Except as specified in paragraphs (b) and (c) of this section, 
any term contained in this part shall have the definition set forth in 
section 102 of the Act (21 U.S.C. 802) or part 1300 of this chapter.
    (b) The term net disposal means, for a stated period, the sum of 
paragraphs (b)(1) through (b)(3) of this section minus the sum of 
paragraphs (b)(4) and (b)(5) of this section:
    (1) The quantity of ephedrine, pseudoephedrine, or 
phenylpropanolamine distributed by the registrant to another person.
    (2) The quantity of that chemical used by the registrant in the 
production of (or converted by the registrant into) another chemical or 
product.
    (3) The quantity of that chemical otherwise disposed of by the 
registrant.
    (4) The quantity of that chemical returned to the registrant by any 
purchaser.
    (5) The quantity of that chemical distributed by the registrant to 
a registered manufacturer of that chemical for purposes other than use 
in the production of, or conversion into, another chemical or in the 
manufacture of dosage forms of that chemical.
    (c) Ephedrine, pseudoephedrine, and phenylpropanolamine include 
their salts, optical isomers, and salts of optical isomers.


Sec.  1315.03  Personal use exemption.

    A person need not register as an importer, file an import 
declaration, and obtain an import quota if both of the following 
conditions are met:
    (a) The person purchases scheduled listed chemical products at 
retail and imports them for personal use, by means of shipping through 
any private or commercial carrier or the Postal Service.
    (b) In any 30-day period, the person imports no more than 7.5 grams 
of ephedrine base, 7.5 grams of pseudoephedrine base, and 7.5 grams of 
phenylpropanolamine base in scheduled listed chemical products.


Sec.  1315.05  Applicability.

    This part applies to all of the following:
    (a) Persons registered to manufacture (including repackaging or 
relabeling) or to import ephedrine, pseudoephedrine, or 
phenylpropanolamine as bulk chemicals.
    (b) Persons registered to manufacture (including repackaging or 
relabeling) or

[[Page 37449]]

to import prescription and over-the-counter drug products containing 
ephedrine, pseudoephedrine, or phenylpropanolamine that may be lawfully 
marketed and distributed in the United States under the Federal Food, 
Drug, and Cosmetic Act.

Subpart B--Assessment of Annual Needs


Sec.  1315.11  Assessment of annual needs.

    (a) The Administrator shall determine the total quantity of 
ephedrine, pseudoephedrine, and phenylpropanolamine, including drug 
products containing ephedrine, pseudoephedrine, and 
phenylpropanolamine, necessary to be manufactured and imported during 
the following calendar year to provide for the estimated medical, 
scientific, research, and industrial needs of the United States, for 
lawful export requirements, and for the establishment and maintenance 
of reserve stocks.
    (b) In making his determinations, the Administrator shall consider 
the following factors:
    (1) Total net disposal of the chemical by all manufacturers and 
importers during the current and 2 preceding years;
    (2) Trends in the national rate of net disposal of each chemical;
    (3) Total actual (or estimated) inventories of the chemical and of 
all substances manufactured from the chemical, and trends in inventory 
accumulation;
    (4) Projected demand for each chemical as indicated by procurement 
and import quotas requested pursuant to Sec.  1315.32; and
    (5) Other factors affecting medical, scientific, research, and 
industrial needs in the United States, lawful export requirements, and 
the establishment and maintenance of reserve stocks, as the 
Administrator finds relevant, including changes in the currently 
accepted medical use in treatment with the chemicals or the substances 
which are manufactured from them, the economic and physical 
availability of raw materials for use in manufacturing and for 
inventory purposes, yield and stability problems, potential disruptions 
to production (including possible labor strikes), and recent unforeseen 
emergencies such as floods and fires.
    (c) The Administrator shall, on or before May 1 of each year, 
publish in the Federal Register, general notice of an assessment of 
annual needs for ephedrine, pseudoephedrine, and phenylpropanolamine 
determined by him under this section. A notice of the publication shall 
be mailed simultaneously to each person registered to manufacture or 
import the chemical.
    (d) The Administrator shall permit any interested person to file 
written comments on or objections to the proposed assessment of annual 
needs and shall designate in the notice the time during which the 
filings may be made.
    (e) The Administrator may, but is not required to, hold a public 
hearing on one or more issues raised by the comments and objections 
filed with him. In the event the Administrator decides to hold such a 
hearing, he shall publish a notice of the hearing in the Federal 
Register. The notice shall summarize the issues to be heard and set the 
time for the hearing, which shall not be less than 30 days after the 
date of publication of the notice.
    (f) After consideration of any comments or objections, or after a 
hearing if one is ordered by the Administrator, the Administrator shall 
issue and publish in the Federal Register the final order determining 
the assessment of annual needs for the chemicals. The order shall 
include the findings of fact and conclusions of law upon which the 
order is based. The order shall specify the date on which it shall take 
effect. A notice of the publication shall be mailed simultaneously to 
each person registered as a manufacturer or importer of the chemical.


Sec.  1315.13  Adjustments of the assessment of annual needs.

    (a) The Administrator may at any time increase or reduce the 
assessment of annual needs for ephedrine, pseudoephedrine, or 
phenylpropanolamine that has been previously fixed pursuant to Sec.  
1315.11.
    (b) In determining to adjust the assessment of annual needs, the 
Administrator shall consider the following factors:
    (1) Changes in the demand for that chemical, changes in the 
national rate of net disposal of the chemical, and changes in the rate 
of net disposal of the chemical by registrants holding individual 
manufacturing or import quotas for that chemical;
    (2) Whether any increased demand for that chemical, the national 
and/or changes in individual rates of net disposal of that chemical are 
temporary, short term, or long term;
    (3) Whether any increased demand for that chemical can be met 
through existing inventories, increased individual manufacturing 
quotas, or increased importation, without increasing the assessment of 
annual needs, taking into account production delays and the probability 
that other individual manufacturing quotas may be suspended pursuant to 
Sec.  1315.24(b);
    (4) Whether any decreased demand for that chemical will result in 
excessive inventory accumulation by all persons registered to handle 
that chemical (including manufacturers, distributors, importers, and 
exporters), notwithstanding the possibility that individual 
manufacturing quotas may be suspended pursuant to Sec.  1315.24(b) or 
abandoned pursuant to Sec.  1315.27;
    (5) Other factors affecting medical, scientific, research, 
industrial, and importation needs in the United States, lawful export 
requirements, and reserve stocks, as the Administrator finds relevant, 
including changes in the currently accepted medical use in treatment 
with the chemical or the substances that are manufactured from it, the 
economic and physical availability of raw materials for use in 
manufacturing and for inventory purposes, yield and stability problems, 
potential disruptions to production (including possible labor strikes), 
and recent unforeseen emergencies such as floods and fires.
    (c) In the event that the Administrator determines to increase or 
reduce the assessment of annual needs for a chemical, the Administrator 
shall publish in the Federal Register general notice of an adjustment 
in the assessment of annual needs for that chemical as determined under 
this section. A notice of the publication shall be mailed 
simultaneously to each person registered as a manufacturer or importer 
of the chemical.
    (d) The Administrator shall permit any interested person to file 
written comments on or objections to the proposal and shall designate 
in the notice the time during which such filings may be made.
    (e) The Administrator may, but is not required to, hold a public 
hearing on one or more issues raised by the comments and objections 
filed with him. In the event the Administrator decides to hold such a 
hearing, he shall publish a notice of the hearing in the Federal 
Register. The notice shall summarize the issues to be heard and set the 
time for the hearing, which shall not be less than 10 days after the 
date of publication of the notice.
    (f) After consideration of any comments or objections, or after a 
hearing if one is ordered by the Administrator, the Administrator shall 
issue and publish in the Federal Register the final order determining 
the assessment of annual needs for the chemical. The order shall 
include the

[[Page 37450]]

findings of fact and conclusions of law upon which the order is based. 
The order shall specify the date on which it shall take effect. A 
notice of the publication shall be mailed simultaneously to each person 
registered as a manufacturer or importer of the chemical.

Subpart C--Individual Manufacturing Quotas


Sec.  1315.21  Individual manufacturing quotas.

    The Administrator shall, on or before July 1 of each year, fix for 
and issue to each person registered to manufacture in bulk ephedrine, 
pseudoephedrine, or phenylpropanolamine who applies for a manufacturing 
quota an individual manufacturing quota authorizing that person to 
manufacture during the next calendar year a quantity of that chemical. 
Any manufacturing quota fixed and issued by the Administrator is 
subject to his authority to reduce or limit it at a later date pursuant 
to Sec.  1315.26 and to his authority to revoke or suspend it at any 
time pursuant to Sec. Sec.  1301.36, 1309.43, 1309.44, or 1309.45 of 
this chapter.


Sec.  1315.22  Procedure for applying for individual manufacturing 
quotas.

    Any person who is registered to manufacture ephedrine, 
pseudoephedrine, or phenylpropanolamine and who desires to manufacture 
a quantity of the chemical must apply on DEA Form 189 for a 
manufacturing quota for the quantity of the chemical. Copies of DEA 
Form 189 may be obtained from the Office of Diversion Control Web site, 
and must be filed (on or before April 1 of the year preceding the 
calendar year for which the manufacturing quota is being applied) with 
the Drug & Chemical Evaluation Section, Drug Enforcement 
Administration, Department of Justice, Washington, DC 20537. A separate 
application must be made for each chemical desired to be manufactured. 
The applicant must state the following:
    (a) The name and DEA Chemical Code Number, as set forth in part 
1310 of this chapter, of the chemical.
    (b) For the chemical in each of the current and preceding 2 
calendar years,
    (1) The authorized individual manufacturing quota, if any;
    (2) The actual or estimated quantity manufactured;
    (3) The actual or estimated net disposal;
    (4) The actual or estimated inventory allowance pursuant to Sec.  
1315.24; and
    (5) The actual or estimated inventory as of December 31.
    (c) For the chemical in the next calendar year,
    (1) The desired individual manufacturing quota; and
    (2) Any additional factors that the applicant finds relevant to the 
fixing of the individual manufacturing quota, including any of the 
following:
    (i) The trend of (and recent changes in) the applicant's and the 
national rates of net disposal.
    (ii) The applicant's production cycle and current inventory 
position.
    (iii) The economic and physical availability of raw materials for 
use in manufacturing and for inventory purposes.
    (iv) Yield and stability problems.
    (v) Potential disruptions to production (including possible labor 
strikes).
    (vi) Recent unforeseen emergencies such as floods and fires.


Sec.  1315.23  Procedure for fixing individual manufacturing quotas.

    (a) In fixing individual manufacturing quotas for ephedrine, 
pseudoephedrine, and phenylpropanolamine, the Administrator shall 
allocate to each applicant who is currently manufacturing the chemical 
a quota equal to 100 percent of the estimated net disposal of that 
applicant for the next calendar year, adjusted--
    (1) By the amount necessary to increase or reduce the estimated 
inventory of the applicant on December 31 of the current year to his 
estimated inventory allowance for the next calendar year, pursuant to 
Sec.  1315.24, and
    (2) By any other factors which the Administrator deems relevant to 
the fixing of the individual manufacturing quota of the applicant, 
including:
    (i) The trend of (and recent changes in) the applicant's and the 
national rates of net disposal,
    (ii) The applicant's production cycle and current inventory 
position,
    (iii) The economic and physical availability of raw materials for 
use in manufacturing and for inventory purposes,
    (iv) Yield and stability problems,
    (v) Potential disruptions to production (including possible labor 
strikes), and
    (vi) Recent unforeseen emergencies such as floods and fires.
    (b) In fixing individual manufacturing quotas for a chemical, the 
Administrator shall allocate to each applicant who is not currently 
manufacturing the chemical a quota equal to 100 percent of the 
reasonably estimated net disposal of that applicant for the next 
calendar year, as determined by the Administrator, adjusted--
    (1) By the amount necessary to provide the applicant his estimated 
inventory allowance for the next calendar year, pursuant to Sec.  
1315.24; and
    (2) By any other factors which the Administrator deems relevant to 
the fixing of the individual manufacturing quota of the applicant, 
including any of the following:
    (i) The trend of (and recent changes in) the national rate of net 
disposal.
    (ii) The applicant's production cycle and current inventory 
position.
    (iii) The economic and physical availability of raw materials for 
use in manufacturing and for inventory purposes.
    (iv) Yield and stability problems.
    (v) Potential disruptions to production (including possible labor 
strikes).
    (vi) Recent unforeseen emergencies such as floods and fires.
    (c) On or before March 1 of each year the Administrator shall 
adjust the individual manufacturing quota allocated for that year to 
each applicant in paragraph (a) of this section by the amount necessary 
to increase or reduce the actual inventory of the applicant to December 
31 of the preceding year to his estimated inventory allowance for the 
current calendar year, pursuant to Sec.  1315.24.


Sec.  1315.24  Inventory allowance.

    (a) For the purpose of determining individual manufacturing quotas 
pursuant to Sec.  1315.23, each registered manufacturer shall be 
allowed as a part of the quota an amount sufficient to maintain an 
inventory equal to either of the following:
    (1) For current manufacturers, 50 percent of his average estimated 
net disposal for the current calendar year and the last preceding 
calendar year; or
    (2) For new manufacturers, 50 percent of his reasonably estimated 
net disposal for the next calendar year as determined by the 
Administrator.
    (b) During each calendar year each registered manufacturer shall be 
allowed to maintain an inventory of a chemical not exceeding 65 percent 
of his estimated net disposal of that chemical for that year, as 
determined at the time his quota for that year was determined. At any 
time the inventory of a chemical held by a manufacturer exceeds 65 
percent of his estimated net disposal, his quota for that chemical is 
automatically suspended and shall remain suspended until his inventory 
is less than 60 percent of his estimated net disposal. The 
Administrator may, upon application and for good cause shown, permit a 
manufacturer whose quota is,

[[Page 37451]]

or is likely to be, suspended under this paragraph to continue 
manufacturing and to accumulate an inventory in excess of 65 percent of 
his estimated net disposal, upon such conditions and within such 
limitations as the Administrator may find necessary or desirable.
    (c) If, during a calendar year, a registrant has manufactured the 
entire quantity of a chemical allocated to him under an individual 
manufacturing quota, and his inventory of that chemical is less than 40 
percent of his estimated net disposal of that chemical for that year, 
the Administrator may, upon application pursuant to Sec.  1315.25, 
increase the quota of such registrant sufficiently to allow restoration 
of the inventory to 50 percent of the estimated net disposal for that 
year.


Sec.  1315.25  Increase in individual manufacturing quotas.

    (a) Any registrant who holds an individual manufacturing quota for 
a chemical may file with the Administrator an application on DEA Form 
189 for an increase in the registrant's quota to meet the registrant's 
estimated net disposal, inventory, and other requirements during the 
remainder of that calendar year.
    (b) The Administrator, in passing upon a registrant's application 
for an increase in the individual manufacturing quota, shall take into 
consideration any occurrences since the filing of the registrant's 
initial quota application that may require an increased manufacturing 
rate by the registrant during the balance of the calendar year. In 
passing upon the application the Administrator may also take into 
consideration the amount, if any, by which his determination of the 
total quantity for the chemical to be manufactured under Sec.  1315.11 
exceeds the aggregate of all the individual manufacturing quotas for 
the chemical, and the equitable distribution of such excess among other 
registrants.


Sec.  1315.26  Reduction in individual manufacturing quotas.

    The Administrator may at any time reduce an individual 
manufacturing quota for a chemical that he has previously fixed to 
prevent the aggregate of the individual manufacturing quotas and import 
quotas outstanding or to be granted from exceeding the assessment of 
annual needs that has been established for that chemical pursuant to 
Sec.  1315.11, as adjusted pursuant to Sec.  1315.13. If a quota 
assigned to a new manufacturer pursuant to Sec.  1315.23(b), or if a 
quota assigned to any manufacturer is increased pursuant to Sec.  
1315.24(c), or if an import quota issued to an importer pursuant to 
Sec.  1315.34, causes the total quantity of a chemical to be 
manufactured and imported during the year to exceed the assessment of 
annual needs that has been established for that chemical pursuant to 
Sec.  1315.11, as adjusted pursuant to Sec.  1315.13, the Administrator 
may proportionately reduce the individual manufacturing quotas and 
import quotas of all other registrants to keep the assessment of annual 
needs within the limits originally established, or, alternatively, the 
Administrator may reduce the individual manufacturing quota of any 
registrant whose quota is suspended pursuant to Sec.  1315.24(b) or 
Sec. Sec.  1301.36, 1309.43, 1309.44, or 1309.45 of this chapter or is 
abandoned pursuant to Sec.  1315.27.


Sec.  1315.27  Abandonment of quota.

    Any manufacturer assigned an individual manufacturing quota for a 
chemical pursuant to Sec.  1315.23 may at any time abandon his right to 
manufacture all or any part of the quota by filing with the Drug & 
Chemical Evaluation Section a written notice of the abandonment, 
stating the name and DEA Chemical Code Number, as set forth in part 
1310 of this chapter, of the chemical and the amount which he has 
chosen not to manufacture. The Administrator may, in his discretion, 
allocate the amount among the other manufacturers in proportion to 
their respective quotas.

Subpart D--Procurement and Import Quotas


Sec.  1315.30  Procurement and import quotas.

    (a) To determine the estimated needs for, and to insure an adequate 
and uninterrupted supply of, ephedrine, pseudoephedrine, and 
phenylpropanolamine the Administrator shall issue procurement and 
import quotas.
    (b) A procurement quota authorizes a registered manufacturer to 
procure and use quantities of each chemical for the following purposes:
    (1) Manufacturing the bulk chemical into dosage forms.
    (2) Manufacturing the bulk chemical into other substances.
    (3) Repackaging or relabeling the chemical or dosage forms.
    (c) An import quota authorizes a registered importer to import 
quantities of the chemical for the following purposes:
    (1) Distribution of the chemical to a registered manufacturer that 
has a procurement quota for the chemical.
    (2) Other distribution of the chemical consistent with the 
legitimate medical and scientific needs of the United States.


Sec.  1315.32  Obtaining a procurement quota.

    (a) Any person who is registered to manufacture ephedrine, 
pseudoephedrine, or phenylpropanolamine, or whose requirement of 
registration is waived pursuant to Sec.  1309.24 of this chapter, and 
who desires to use during the next calendar year any ephedrine, 
pseudoephedrine, or phenylpropanolamine for purposes of manufacturing 
(including repackaging or relabeling), must apply on DEA Form 250 for a 
procurement quota for the chemical. A separate application must be made 
for each chemical desired to be procured or used.
    (b) The applicant must state separately all of the following:
    (1) Each purpose for which the chemical is desired.
    (2) The quantity desired for each purpose during the next calendar 
year.
    (3) The quantities used and estimated to be used, if any, for that 
purpose during the current and preceding 2 calendar years.
    (c) If the purpose is to manufacture the chemical into dosage form, 
the applicant must state the official name, common or usual name, 
chemical name, or brand name of that form. If the dosage form produced 
is a controlled substance listed in any schedule, the applicant must 
also state the schedule number and National Drug Code Number, of the 
substance.
    (d) If the purpose is to manufacture another chemical, the 
applicant must state the official name, common or usual name, chemical 
name, or brand name of the substance and the DEA Chemical Code Number, 
as set forth in part 1310 of this chapter.
    (e) DEA Form 250 must be filed on or before April 1 of the year 
preceding the calendar year for which the procurement quota is being 
applied. Copies of DEA Form 250 may be obtained from the Office of 
Diversion Control Web site, and must be filed with the Drug & Chemical 
Evaluation Section, Drug Enforcement Administration, Department of 
Justice, Washington, DC 20537.
    (f) The Administrator shall, on or before July 1 of the year 
preceding the calendar year during which the quota shall be effective, 
issue to each qualified applicant a procurement quota authorizing him 
to procure and use:
    (1) All quantities of the chemical necessary to manufacture 
products that the applicant is authorized to manufacture pursuant to 
Sec.  1315.23; and

[[Page 37452]]

    (2) Such other quantities of the chemical as the applicant has 
applied to procure and use and are consistent with his past use, his 
estimated needs, and the total quantity of the chemical that will be 
produced.
    (g) Any person to whom a procurement quota has been issued may at 
any time request an adjustment in the quota by applying to the 
Administrator with a statement showing the need for the adjustment. The 
application must be filed with the Drug & Chemical Evaluation Section, 
Drug Enforcement Administration, Department of Justice, Washington, DC 
20537. The Administrator shall increase or decrease the procurement 
quota of the person if and to the extent that he finds, after 
considering the factors enumerated in paragraph (f) of this section and 
any occurrences since the issuance of the procurement quota, that the 
need justifies an adjustment.
    (h) Any person to whom a procurement quota has been issued, 
authorizing that person to procure and use a quantity of ephedrine, 
pseudoephedrine, or phenylpropanolamine during the current calendar 
year, must, at or before the time of placing an order with another 
manufacturer or importer requiring the distribution of a quantity of 
the chemical, certify in writing to the other registrant that the 
quantity of ephedrine, pseudoephedrine, or phenylpropanolamine ordered 
does not exceed the person's unused and available procurement quota of 
the chemical for the current calendar year. The written certification 
must be executed by a person authorized to sign the registration 
application pursuant to Sec.  1301.13 or Sec.  1309.32(g) of this 
chapter. Registrants must not fill an order from persons required to 
apply for a procurement quota under paragraph (b) of this section 
unless the order is accompanied by a certification as required under 
this section.
    (i) The certification required by paragraph (h) of this section 
must contain all of the following:
    (1) The date of the certification.
    (2) The name and address of the registrant to whom the 
certification is directed.
    (3) A reference to the purchase order number to which the 
certification applies.
    (4) The name of the person giving the order to which the 
certification applies.
    (5) The name of the chemical to which the certification applies.
    (6) A statement that the quantity (expressed in grams) of the 
chemical to which the certification applies does not exceed the unused 
and available procurement quota of the chemical, issued to the person 
giving the order, for the current calendar year.
    (7) The signature of the individual authorized to sign a 
certification as provided in paragraph (h) of this section.


Sec.  1315.34  Obtaining an import quota.

    (a) Any person who is registered to import ephedrine, 
pseudoephedrine, or phenylpropanolamine, or whose requirement of 
registration is waived pursuant to Sec.  1309.24(c) of this chapter, 
and who desires to import during the next calendar year any ephedrine, 
pseudoephedrine, or phenylpropanolamine or drug products containing 
these chemicals, must apply on DEA Form 488 for an import quota for the 
chemical. A separate application must be made for each chemical desired 
to be imported.
    (b) The applicant must provide the following information in the 
application:
    (1) The applicant's name and DEA registration number.
    (2) The name and address of a contact person and contact 
information (telephone number, fax number, e-mail address).
    (3) Name of the chemical and DEA Chemical Code number.
    (4) Type of product (bulk or finished dosage forms).
    (5) For finished dosage forms, the official name, common or usual 
name, chemical name, or brand name, NDC number, and the authority to 
market the drug product under the Federal Food, Drug and Cosmetic Act 
of each form to be imported.
    (6) The amount requested expressed in terms of base.
    (7) For the current and preceding two calendar years, expressed in 
terms of base:
    (i) Distribution/Sales--name, address, and registration number (if 
applicable) of each customer and the amount sold.
    (ii) Inventory as of December 31 (each form--bulk, in-process, 
finished dosage form).
    (iii) Acquisition--imports.
    (c) For each form of the chemical (bulk or dosage unit), the 
applicant must state the quantity desired for import during the next 
calendar year.
    (d) DEA Form 488 must be filed on or before April 1 of the year 
preceding the calendar year for which the import quota is being 
applied. Copies of DEA Form 488 may be obtained from the Office of 
Diversion Control Web site, and must be filed with the Drug & Chemical 
Evaluation Section, Drug Enforcement Administration, Department of 
Justice, Washington, DC 20537.
    (e) The Administrator may at his discretion request additional 
information from an applicant.
    (f) On or before July 1 of the year preceding the calendar year 
during which the quota shall be effective, the Administrator shall 
issue to each qualified applicant an import quota authorizing him to 
import:
    (1) All quantities of the chemical necessary to manufacture 
products that registered manufacturers are authorized to manufacture 
pursuant to Sec.  1315.23; and
    (2) Such other quantities of the chemical that the applicant has 
applied to import and that are consistent with his past imports, the 
estimated medical, scientific, and industrial needs of the United 
States, the establishment and maintenance of reserve stocks, and the 
total quantity of the chemical that will be produced.


Sec.  1315.36  Amending an import quota.

    (a) An import quota authorizes the registered importer to import up 
to the set quantity of ephedrine, pseudoephedrine, or 
phenylpropanolamine and distribute the chemical or drug products on the 
DEA Form 488. An importer must apply to change the quantity to be 
imported.
    (b) Any person to whom an import quota has been issued may at any 
time request an increase in the quota quantity by applying to the 
Administrator with a statement showing the need for the adjustment. The 
application must be filed with the Drug & Chemical Evaluation Section, 
Drug Enforcement Administration, Department of Justice, Washington, DC 
20537. The Administrator may increase the import quota of the person if 
and to the extent that he determines that the approval is necessary to 
provide for medical, scientific, or other legitimate purposes regarding 
the chemical. The Administrator shall specify a period of time for 
which the approval is in effect or shall provide that the approval is 
in effect until the Administrator notifies the applicant in writing 
that the approval is terminated.
    (c) With respect to the application under paragraph (b) of this 
section, the Administrator shall approve or deny the application within 
60 days of receiving the application. If the Administrator does not 
approve or deny the application within 60 days of receiving it, the 
application is deemed to be approved and the approval remains in effect 
until the Administrator notifies the applicant in writing that the 
approval is terminated.

[[Page 37453]]

Subpart E--Hearings


Sec.  1315.50  Hearings generally.

    The procedures for the hearing related to assessment of annual 
needs or to the issuance, adjustment, suspension, or denial of a 
manufacturing, procurement, or import quota are governed generally by 
the adjudication procedures set forth in the Administrative Procedure 
Act (5 U.S.C. 551-559) and specifically by section 1002 of the Act (21 
U.S.C. 952), by Sec. Sec.  1315.52 through 1315.62 of this part, and by 
the procedures for administrative hearings under the Act set forth in 
Sec. Sec.  1316.41 through 1316.67 of this chapter.


Sec.  1315.52  Purpose of hearing.

    (a) The Administrator may, in his sole discretion, hold a hearing 
for the purpose of receiving factual evidence regarding any one or more 
issues (to be specified by him) involved in the determination or 
adjustment of any assessment of national needs.
    (b) If requested by a person applying for or holding a procurement, 
import, or individual manufacturing quota, the Administrator shall hold 
a hearing for the purpose of receiving factual evidence regarding the 
issues involved in the issuance, adjustment, suspension, or denial of 
the quota to the person, but the Administrator need not hold a hearing 
on suspension of a quota under Sec.  1301.36 or Sec.  1309.43 of this 
chapter separate from a hearing on the suspension of registration under 
that section.
    (c) Extensive argument should not be offered into evidence, but 
rather presented in opening or closing statements of counsel or in 
memoranda or proposed findings of fact and conclusions of law.


Sec.  1315.54  Waiver or modification of rules.

    The Administrator or the presiding officer (with respect to matters 
pending before him) may modify or waive any rule in this part by notice 
in advance of the hearing, if he determines that no party in the 
hearing will be unduly prejudiced and the ends of justice will thereby 
be served. Such notice of modification or waiver shall be made a part 
of the record of the hearing.


Sec.  1315.56  Request for hearing or appearance; waiver.

    (a) Any applicant or registrant entitled to a hearing under Sec.  
1315.52 and who desires a hearing on the issuance, adjustment, 
suspension or denial of a procurement, import, or individual 
manufacturing quota must, within 30 days after the date of receipt of 
the issuance, adjustment, suspension or denial of the application, file 
with the Administrator a written request for a hearing in the form 
prescribed in Sec.  1316.47 of this chapter.
    (b) Any interested person who desires a hearing on the 
determination of an assessment of annual needs must, within the time 
prescribed in Sec.  1315.11(c), file with the Administrator a written 
request for a hearing in the form prescribed in Sec.  1316.47 of this 
chapter, including in the request a statement of the grounds for the 
hearing.
    (c) Any interested person who desires to participate in a hearing 
on the determination or adjustment of an assessment of annual needs, 
which hearing is ordered by the Administrator under Sec.  1315.11(c) or 
Sec.  1315.13(c), may do so by filing with the Administrator, within 30 
days of the date of publication of notice of the hearing in the Federal 
Register, a written notice of his intention to participate in the 
hearing in the form prescribed in Sec.  1316.48 of this chapter.
    (d) Any person entitled to a hearing under Sec.  1315.52 or 
entitled to participate in a hearing under paragraph (c) of this 
section may, within the period permitted for filing a request for a 
hearing or notice of appearance, file with the Administrator a waiver 
of an opportunity for a hearing, together with a written statement 
regarding his position on the matters of fact and law involved in such 
hearing. The statement, if admissible, shall be made a part of the 
record and shall be considered in light of the lack of opportunity for 
cross-examination in determining the weight to be attached to matters 
of fact asserted.
    (e) If any person entitled to a hearing under Sec.  1315.52 or 
entitled to participate in a hearing under paragraph (c) of this 
section fails to file a request for a hearing or notice of appearance 
or if he so files and fails to appear at the hearing, he shall be 
deemed to have waived his opportunity for the hearing unless he shows 
good cause for such failure.
    (f) If all persons entitled to a hearing or to participate in a 
hearing waive or are deemed to waive their opportunity for the hearing 
or to participate in the hearing, the Administrator may cancel the 
hearing, if scheduled, and issue his final order under Sec.  1315.62 
without a hearing.


Sec.  1315.58  Burden of proof.

    (a) At any hearing regarding the determination or adjustment of an 
assessment of annual needs each interested person participating in the 
hearing shall have the burden of proving any propositions of fact or 
law asserted by him in the hearing.
    (b) At any hearing regarding the issuance, adjustment, suspension, 
or denial of a procurement, import, or individual manufacturing quota, 
the Administration shall have the burden of proving that the 
requirements of this part for such issuance, adjustment, suspension, or 
denial are satisfied.


Sec.  1315.60  Time and place of hearing.

    (a) If any applicant or registrant requests a hearing on the 
issuance, adjustment, suspension, or denial of his procurement, import, 
or individual manufacturing quota under Sec.  1315.54, the 
Administrator shall hold a hearing.
    (b) Notice of the hearing shall be given to the applicant or 
registrant of the time and place at least 30 days prior to the hearing, 
unless the applicant or registrant waives such notice and requests the 
hearing be held at an earlier time, in which case the Administrator 
shall fix a date for such hearing as early as reasonably possible.
    (c) The hearing shall commence at the place and time designated in 
the notice given under paragraph (b) of this section or in the notice 
of hearing published in the Federal Register pursuant to Sec.  
1315.11(c) or Sec.  1315.13(c), but thereafter it may be moved to a 
different place and may be continued from day to day or recessed to a 
later day without notice other than announcement by the presiding 
officer at the hearing.


Sec.  1315.62  Final order.

    As soon as practicable after the presiding officer has certified 
the record to the Administrator, the Administrator shall issue his 
order on the determination or adjustment of the assessment of annual 
needs or on the issuance, adjustment, suspension, or denial of the 
procurement, import, or individual manufacturing quota, as the case may 
be. The order shall include the findings of fact and conclusions of law 
upon which the order is based. The order shall specify the date on 
which it shall take effect. The Administrator shall serve one copy of 
his order upon each party in the hearing.

    Dated: June 19, 2007.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E7-13377 Filed 7-9-07; 8:45 am]
BILLING CODE 4410-09-P