[Federal Register Volume 85, Number 51 (Monday, March 16, 2020)]
[Proposed Rules]
[Pages 14810-14837]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05159]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1301

[Docket No. DEA-501]
RIN 1117-AB51


Registration and Reregistration Fees for Controlled Substance and 
List I Chemical Registrants

AGENCY: Drug Enforcement Administration, Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Drug Enforcement Administration proposes adjusting the fee 
schedule for registration and reregistration fees necessary to recover 
the costs of its Diversion Control Program relating to the registration 
and control of the manufacture, distribution, dispensing, importation 
and exportation of controlled substances and list I chemicals as 
mandated by the Controlled Substances Act.

[[Page 14811]]


DATES: Electronic comments must be submitted, and written comments must 
be postmarked, on or before May 15, 2020. Commenters should be aware 
that the electronic Federal Docket Management System will not accept 
comments after 11:59 p.m. Eastern Time on the last day of the comment 
period.

ADDRESSES: To ensure proper handling of comments, please reference 
``RIN 1117-AB51/Docket No. DEA-501'' on all correspondence, including 
any attachments.
     Electronic Comments: The Drug Enforcement Administration 
(DEA) encourages that all comments be submitted electronically through 
the Federal eRulemaking Portal, which provides the ability to type 
short comments directly into the comment field on the web page or 
attach a file for lengthier comments. Please go to https://www.regulations.gov and follow the online instructions at that site for 
submitting comments. Upon completion of your submission, you will 
receive a Comment Tracking Number for your comment. Please be aware 
that submitted comments are not instantaneously available for public 
view on https://www.regulations.gov. If you have received a Comment 
Tracking Number, your comment has been successfully submitted, and 
there is no need to resubmit the same comment.
     Paper Comments: Paper comments that duplicate the 
electronic submission are not necessary and are discouraged. Should you 
wish to mail a paper comment in lieu of an electronic comment, it 
should be sent via regular or express mail to: Drug Enforcement 
Administration, Attn: DEA Federal Register Representative/DPW, 8701 
Morrissette Drive, Springfield, VA 22152.
     Paperwork Reduction Act Comments: All comments concerning 
collections of information under the Paperwork Reduction Act must be 
submitted to the Office of Information and Regulatory Affairs, Office 
of Management and Budget, Attention: Desk Officer for DOJ, Washington, 
DC 20503. Please state that your comment refers to RIN 1117-AB51/Docket 
No. DEA-501.

FOR FURTHER INFORMATION CONTACT: Scott A. Brinks, Diversion Control 
Division, Drug Enforcement Administration; Mailing Address: 8701 
Morrissette Drive, Springfield, Virginia 22152; Telephone: (571) 362-
3261.

SUPPLEMENTARY INFORMATION:

Posting of Public Comments

    Please note that all comments received, including attachments and 
other supporting materials, are considered part of the public record. 
They will be made available by DEA for public inspection online at 
https://www.regulations.gov. Additionally, the Freedom of Information 
Act applies to all comments received. Confidential information or 
personal identifying information, such as account numbers or Social 
Security numbers, or names of other individuals, should not be 
included. Submissions will not be edited to remove any identifying or 
contact information.
    For comments with confidential or personal identifying information, 
which should not be made available to the public, submit the comment as 
a written/paper submission. Two written/paper copies should be 
submitted. One copy will include the confidential information with a 
heading or cover note that states ``CONTAINS CONFIDENTIAL 
INFORMATION.'' DEA will review this copy, including the claimed 
confidential information, in its consideration of comments. The second 
copy should have the claimed confidential information redacted/blacked 
out. DEA will make this copy available for public viewing online at 
https://www.regulations.gov. Other information, such as name and 
contact information, which should not be made available, may be 
included on the cover sheet but not in the body of the comments. Such 
information must be identified as ``confidential.'' Any information 
marked as ``confidential'' will not be disclosed.
    An electronic copy of this document and supplemental information, 
including the Registration Fee Calculation Methodology, to this notice 
of proposed rulemaking are available in their entirety under the tab 
``Supporting Documents'' of the public docket of this action at https://www.regulations.gov under [FDMS Docket ID: DEA-501 (RIN 1117-AB51/
Docket Number DEA-501)] for easy reference.

I. Executive Summary

The Diversion Control Program

    DEA's Diversion Control Program (DCP) is administered by the 
Diversion Control Division (DC). DC ensures the availability of 
controlled substances and listed chemicals for legitimate use in the 
United States (U.S.). The DCP is responsible for maintaining a closed 
system of distribution by preventing diversion of controlled substances 
and listed chemicals in the U.S. and enforcing the provisions of the 
Controlled Substances Act (CSA) for DEA. The DCP regulates over 1.8 
million registrants, ensuring their compliance with the CSA.

Proposed Changes to the Fees and Regulations

    With this Notice of Proposed Rulemaking (NPRM), DEA proposes 
amendments to the following sections in the Code of Federal Regulations 
(CFR): 21 CFR 1301.13, 1309.11, 1309.12, and 1309.21. The proposed 
amendments would codify new registration fees for business activities 
involving controlled substances, as well as list I chemicals and drug 
products containing ephedrine, pseudoephedrine, or phenylpropanolamine. 
The proposed amendments would also codify existing practices of when 
DEA will issue refunds for application fees. As detailed in the ``Fee 
Calculation'' section of this NPRM, DEA evaluated three fee structure 
options (including the current fee structure) and chose the most 
reasonable option.
    For manufacturers of controlled substances, DEA proposes a fee of 
$3,699 per year. For distributors, reverse distributors, importers, and 
exporters of controlled substances, DEA proposes a fee of $1,850 per 
year. For controlled substance business activities involving 
dispensing, the proposed fee would be $888 per 3 year cycle. For all 
other business activities of controlled substances (research, narcotic 
treatment programs, and chemical analysis), the proposed fee is $296 
per year. For manufacturers of list I chemicals, DEA proposes a fee of 
$3,699 per year. For distributors, importers, and exporters of list I 
chemicals, DEA proposes a fee of $1,850 per year.
    In developing this proposed rule, DEA examined three alternative 
methodologies to calculate the registration and reregistration fees: 
Flat Fee Option, Past-Based Option, and Weighted-Ratio Option (current 
and proposed method). In examining each alternative methodology, DEA 
considered whether the fee calculation (1) was reasonable and (2) could 
fully fund the costs of operating the various aspects of the DCP.
    A detailed analysis of these three options can be found under 
section heading ``Proposed Methodology for New Fee Calculation.''

Legal Authority

    The DCP is a strategic component of DEA's law enforcement mission 
which regulates the registration and control of the manufacture, 
distribution, dispensing, importation, and exportation of 
pharmaceutical controlled substances and listed chemicals. It is 
primarily the DCP

[[Page 14812]]

within DEA that implements and enforces Titles II and III of the 
Comprehensive Drug Abuse Prevention and Control Act of 1970, often 
referred to as the CSA and the Controlled Substances Import and Export 
Act (CSIEA) (21 U.S.C. 801-971), as amended (hereinafter, ``CSA'').\1\
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    \1\ The Attorney General's delegation of authority to DEA may be 
found at 28 CFR 0.100.
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    Under the CSA, DEA is authorized to charge reasonable fees relating 
to the registration and control of the manufacture, distribution, 
dispensing, import, and export of controlled substances and listed 
chemicals. 21 U.S.C. 821 and 958(f). DEA must set fees at a level that 
ensures the recovery of the full costs of operating the various aspects 
of its DCP. 21 U.S.C. 886a. Each year, DEA is required by statute to 
transfer the first $15 million of fee revenues into the general fund of 
the Treasury and the remainder of the fee revenues is deposited into a 
separate fund of the Treasury called the Diversion Control Fee Account 
(DCFA). 21 U.S.C. 886a(1). On at least a quarterly basis, the Secretary 
of the Treasury is required to reimburse DEA an amount from the DCFA 
``in accordance with estimates made in the budget request of the 
Attorney General for those fiscal years'' for the operation of the 
DCP.\2\ 21 U.S.C. 886a(1)(B) and (D). The first $15 million of fee 
revenues that are transferred to the Treasury do not support any DCP 
activities.
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    \2\ The DCP consists of the pharmaceutical controlled substance 
and listed chemical diversion control activities of DEA. These 
activities are related to the registration and control of the 
manufacture, distribution, dispensing, importation, and exportation 
of controlled substances and listed chemicals (21 U.S.C. 886a(2)).
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Benefits, Costs, and Transfers

    The DCP is a strategic component of U.S. law and policy aimed at 
preventing, detecting, and eliminating the diversion of controlled 
substances and listed chemicals into the illicit market while ensuring 
a sufficient supply of controlled substances and listed chemicals for 
legitimate medical, scientific, research, and industrial purposes. The 
absence of or significant reduction in this program would result in 
enormous costs for the citizens and residents of the U.S. due to the 
diversion of controlled substances and listed chemicals into the 
illicit market. This proposed rule would fund the continued operation 
of the DCP.
    The total proposed fee increase is $318 million over the three year 
period, fiscal year (FY) 2021-FY 2023. Specifically, the difference in 
the fees projected to be collected under the current fee rates and in 
the fees projected to be collected under the proposed new fee rates is 
$102 million, $105 million, and $110 million in FY 2021, FY 2022, and 
FY 2023, respectively. (Figures are rounded.)

II. Background

History of Fees

    In October 1992, Congress passed the Departments of Commerce, 
Justice, and State, the Judiciary and Related Agencies Appropriations 
Act of 1993 (Pub. L. 102-395), which changed the source of funding for 
DEA's DCP from being part of DEA's annual Congressional appropriation 
to full funding by registration and reregistration fees through the 
establishment of the DCFA.\3\ The Appropriations Act of 1993 required 
that ``[f]ees charged by the Drug Enforcement Administration under its 
diversion control program shall be set at a level that ensures the 
recovery of the full costs of operating the various aspects of that 
program.'' The legislation did not, however, provide clarification on 
what constituted the ``Diversion Control Program,'' thus leaving open 
the issue as to what fee-setting criteria should be used to determine 
which costs could be reimbursed from the DCFA.
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    \3\ 21 U.S.C. 886a(1)(C).
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    In response to the Appropriations Act of 1993, DEA published an 
NPRM in December 1992 to adjust the registration and reregistration 
fees for controlled substance registrants (57 FR 60148, December 18, 
1992). In the absence of guidelines from Congress regarding the 
specific criteria to be followed in identifying costs and setting the 
fees, DEA relied on the plain language of the Appropriations Act of 
1993 and proposed fees necessary to cover the costs of the activities 
that were identified within the budget decision unit known as the 
``Diversion Control Program.''
    At the time that the Appropriations Act of 1993 was passed, 21 
U.S.C. 821 did not extend to chemical control activities; accordingly, 
there were no registration or fee requirements for handlers of list I 
chemicals. DEA therefore excluded chemical control costs from its Final 
Rule implementing the requirements of the Appropriations Act of 1993 
(58 FR 15272, March 22, 1993). Congress amended 21 U.S.C. 821 on 
December 17, 1993 to require reasonable fees relating to ``the 
registration and control of regulated persons and of regulated 
transactions'' (Domestic Chemical Diversion Control Act of 1993, 3(a), 
Pub. L. 103-200, 107 Stat. 2333); however, despite this amendment, DEA 
continued to endeavor to maintain separate funding for its controlled 
substances diversion control and its chemical diversion control 
activities.
    Following publication of DEA's Final Rule, the American Medical 
Association (AMA) and others filed a lawsuit objecting to the increase 
in registration and reregistration fees on the grounds that DEA had 
failed to provide adequate information as to what activities were 
covered by the fees and how they were justified. The district court 
issued its final order granting DEA's motion for summary judgment and 
disposing of all claims on July 5, 1994.\4\ The AMA appealed. Upon 
appeal, the U.S. Court of Appeals for the District of Columbia Circuit 
remanded, without vacating, the rule to DEA, requiring the agency to 
provide an opportunity for meaningful notice and comment on the fee-
funded components of the DCP. In doing so, the court confirmed the 
boundaries of the DCP that DEA can fund by registration fees, finding 
that the current statutory scheme (21 U.S.C. 821 and 958) required DEA 
to set reasonable registration fees to recover the full costs of the 
DCP. See AMA v. Reno, 57 F.3d 1129, 1135 (D.C. Cir. 1995). DEA 
responded to the remand requirement through a notice and comment in the 
Federal Register on December 30, 1996, describing the fee-funded 
components and activities of the DCP with an explanation of how each 
satisfies the statutory requirements for fee-funding (61 FR 68624-32, 
December 30, 1996).
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    \4\ AMA v. Reno, 857 F. Supp. 80 (D.D.C. 1994).
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    Thus, in the absence of a simple, objective measure by which DCP 
costs could be identified and the appropriate fees calculated, both DEA 
and the courts have looked to 21 U.S.C. 821 and 958 to define the 
guidelines for determining what costs should be included in the 
calculation of the fees and from whom the fees might be collected.
    The Departments of Commerce, Justice, and State, the Judiciary, and 
Related Agencies Appropriations Act of 2005 was signed into law on 
December 8, 2004, as Division B of the Consolidated Appropriations Act 
of 2005 (Pub. L. 108-447). Title IV, Section 634 of the Appropriations 
Act of 2005 provided clarification as to the activities constituting 
the DCP. The Appropriations Act of 2005 amended 21 U.S.C. 886a(2)(A) to 
define the Diversion Control Program as ``the controlled substance and 
chemical diversion control activities of the Drug Enforcement 
Administration,'' which

[[Page 14813]]

are further defined as the ``activities related to the registration and 
control of the manufacture, distribution and dispensing, importation 
and exportation of controlled substances and listed chemicals.'' It 
also amended 21 U.S.C. 886a(1)(B) to provide that reimbursements from 
the DCFA ``shall be made without distinguishing between expenses 
related to controlled substances activities and expenses related to 
chemical activities.'' Finally, the Appropriations Act of 2005 amended 
21 U.S.C. 821 and 958(f) to make the language of those sections 
consistent with the definition of the DCP (Pub. L. 108-447). The net 
effect of the amendments was to allow the DEA to deposit all 
registration and reregistration fees (controlled substance and 
chemical) into the DFCA and fund all controlled substance and chemical 
diversion control activities from the account without distinguishing as 
to the type of activity (controlled substance or chemical) being 
funded.
    Independent of the passage of the Appropriations Act of 2005, DEA 
undertook an internal reorganization to increase operational 
efficiencies and overall effectiveness. As discussed in detail in DEA's 
Final Rule published on August 29, 2006 (71 FR 51105), the resulting 
internal reorganization removed the focus from the single business 
decision unit of the DCP to a focus on diversion control activities 
irrespective of the business decision unit. That is, the diversion 
control activities of DEA are no longer contained in a single business 
decision unit identified as the Diversion Control Program. Thus, in 
identifying the activities that constitute the DCP, DEA looks across 
the agency at all functions related to the registration and control of 
the manufacture, distribution, dispensing, importation, and exportation 
of controlled substances and listed chemicals. This approach adheres 
both to the language contained in 21 U.S.C. 821 and 958 and to the 
court's requirement that there must be a nexus between the DCP 
activities funded through fees and the registration and control of the 
manufacture, distribution, and dispensing of controlled substances and 
listed chemicals of regulated persons and regulated transactions.
    In keeping with this organizational and functional change, DEA 
continues to identify the diversion control activities to be funded by 
the DCFA. Accordingly, this NPRM describes the activities that 
constitute the DCP irrespective of organizational structure within the 
agency and in compliance with 21 U.S.C. 821 and 958, and 21 U.S.C. 
886a, that require that the DEA charge reasonable fees relating to the 
registration and control of the manufacture, distribution, dispensing, 
importation, and exportation of controlled substances and listed 
chemicals and that DEA collect fees adequate to fully fund the 
controlled substances and listed chemical diversion control activities 
that constitute the DCP, as defined by DEA.
    The Department of Justice's (DOJ) Office of the Inspector General 
(OIG) completed a review of DEA's use of the DCFA in 2008 and did not 
find any misused DCFA funds for non-diversion control activities 
between FY 2004 and FY 2007. To the contrary, the OIG found that DEA 
did not fully fund all diversion control costs with the DCFA as 
required by law.\5\ Therefore, in 2011 DEA published an NPRM to 
continue efforts to fully fund the DCP. The 2011 NPRM included 
additional DCP costs which were identified in the OIG report and 
resulted in an approximately 33 percent fee increase across all 
registrant groups. The 2011 NPRM was finalized in 2012, and this was 
the last time DEA adjusted the fees prior to the current proposed 
increase.
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    \5\ ``Review of the Drug Enforcement Administration's Use of the 
Diversion Control Fee Account,'' I-2008-002, February 2008, http://www.usdoj.gov/oig/reports/DEA/e0802/final.pdf.
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III. Diversion Control Program

Scope of the Diversion Control Program

    The mission of DEA's DC is to prevent, detect, and investigate the 
diversion of pharmaceutical controlled substances and listed chemicals 
from legitimate channels while ensuring an adequate and uninterrupted 
supply of pharmaceutical controlled substances and listed chemicals to 
meet legitimate medical, commercial, and, scientific needs. This 
Division administers the DCP, which is responsible for enforcing the 
provisions of the CSA, as they pertain to ensuring the availability of 
controlled substances and listed chemicals for legitimate uses in the 
U.S., while exercising controls to prevent the diversion of these 
substances and chemicals for illegal uses. This Division maintains an 
overall geographic picture of drug and chemical diversion and abuse 
problems to identify new trends or patterns in diversion and abuse, 
which enables it to appropriately direct resources.
    The DCP is executed by maintaining a closed system of distribution 
by regulating and managing over 1.8 million DEA registrants and 
investigating activity related to the diversion of pharmaceutical 
controlled substances and listed chemicals. To ensure accountability 
within the closed system of distribution, the DCP administers, 
maintains, and oversees DEA's registration system. This entails 
processing, reviewing, and, if necessary, investigating all 
applications for registration and reregistration, collecting fees, and, 
when appropriate, proposing to take administrative action on 
registrations or applications for registration, such as restriction, 
revocation, suspension, or denial of an application.
    The DCP's regulatory function is accomplished by registering those 
entities that handle controlled substances or listed chemicals, 
conducting regulatory inspections, providing information and guidance 
to registrants, and controlling and monitoring the manufacture, 
distribution, dispensing, import, and export of controlled substances 
and listed chemicals. The DCP determines the appropriate procedures 
necessary for ordering and distributing schedule I and II controlled 
substances, using DEA Form 222 or its electronic equivalent.\6\ This 
enables the DCP to monitor the flow of certain controlled substances 
from their point of manufacture through commercial distribution. The 
DCP also executes its regulatory functions by fulfilling its U.S. 
treaty obligations pertaining to the CSA, such as the preparation of 
periodic reports for submission to the United Nations (UN) as mandated 
by U.S. international drug control treaty obligations on the 
manufacture and distribution of narcotic and psychotropic substances, 
as well as determining the anticipated future needs for narcotic and 
psychotropic substances.
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    \6\ 21 U.S.C. 828, 21 CFR part 1305.
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    The DCP ensures that registrants are in compliance with the 
safeguards of the CSA. This allows for the identification and the 
prevention of diversion of pharmaceutical controlled substances and 
listed chemicals into illicit markets. Registrant compliance is 
determined primarily through pre-registration, scheduled, and complaint 
investigations. DCP regulatory activities have an inherent deterrent 
function, and they are designed to ensure that those businesses and 
individuals registered with DEA to handle controlled substances or 
listed chemicals have sufficient measures in place to prevent the 
diversion of these substances. These investigations also help 
registrants understand and comply with the CSA, identify those 
registrants who violate the CSA, and implement regulations. Pre-
registration investigations reduce the possibility of registering

[[Page 14814]]

unauthorized entities, ensure that the means to prevent diversion are 
in place, and determine whether registration is consistent with the 
public interest.
    Not only does the DCP exercise authority and control over the 
registrant population, the DCP exercises authority over the 
classification of substances.\7\ This is accomplished by evaluating 
drugs and chemicals to determine whether these substances are being 
abused or potentially involved in illicit traffic, and to evaluate 
whether any substances should be scheduled as a controlled substance or 
regulated as a listed chemical. This requires the collection and 
analysis of a large amount of data from various sources. These 
evaluations are used by DEA as a basis for developing appropriate drug 
control policies; determining the status of controlled, excluded, or 
exempted drugs and drug products; and supporting U.S. initiatives in 
international forums.
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    \7\ 21 U.S.C. 811-814.
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    The DCP's authority over controlled substances and listed chemicals 
requires its support of domestic and foreign investigations of these 
substances. As such, the DCP serves as the competent national authority 
for the U.S. regarding listed chemicals and international treaties. The 
DCP works with the international community to identify and seize 
international shipments of listed chemicals destined for the United 
States. The DCP also works on a bilateral basis to urge international 
partners to take effective action, in cooperation with chemical 
companies, to establish controls and prevent the diversion of listed 
chemicals from legitimate trade. In addition to its other oversight and 
regulatory responsibilities in this area, the DCP reviews the 
importation and exportation notifications of listed chemicals.
    The DCP also controls the manufacture of controlled substances by 
setting the aggregate production quotas, individual manufacturing 
quotas, and procurement quotas for basic classes of schedule I and II 
controlled substances. Similarly, the DCP controls the manufacture of 
list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine by 
setting the assessment of annual needs, individual manufacturing 
quotas, procurement quotas and import quotas for these three list I 
chemicals. As such, the DCP maintains and monitors the Year-End 
Reporting System/Quota Management System (YERS/QMS), which provides 
information on entities manufacturing schedule I and II controlled 
substances and list I chemicals ephedrine, pseudoephedrine, and 
phenylpropanolamine. Furthermore, the DCP issues import and export 
registrations and permits, and monitors declared imports, exports, and 
transshipments of these substances. The DCP must ensure that all 
imports and exports of controlled substances and listed chemicals meet 
the requirements of the CSA. As such, the DCP maintains and monitors 
many electronic reporting systems, such as the Chemical Handlers 
Enforcement Management System (CHEMS), which provides information on 
entities manufacturing, distributing, and exporting and importing 
regulated chemicals, and encapsulating and tableting machines.\8\
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    \8\ See 21 U.S.C. 830, 957-58.
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    To effectively execute its regulatory functions, the DCP reviews 
legislation pertinent to the availability of controlled substances and 
listed chemicals for legitimate uses in the U.S. and controls to 
prevent the diversion of these substances and chemicals. The DCP drafts 
and implements regulations to keep DEA in compliance with legislation 
enacted by Congress. The DCP constantly reviews its own regulations and 
develops and implements regulations designed to enhance DEA's diversion 
control efforts. The DCP's regulatory activities also require education 
and outreach to ensure understanding of and compliance with the CSA and 
applicable regulations, and to ensure registrants have sufficient 
measures in place to prevent diversion. The DCP's outreach efforts 
include establishing and maintaining liaison and working relationships 
with other federal agencies, the regulated community, and foreign, 
state, and local governments. Other efforts include developing and 
maintaining manuals and other publications; organizing and conducting 
national conferences on current issues, policies, and initiatives; and 
providing scientific support for policy guidance, expert witness 
testimony, and conference presentations.
    The DCP continues to address the growing threat of synthetic 
substances through the collection and evaluation of pharmacological, 
medical, epidemiological and other scientific data for new drugs of 
abuse and when appropriate, initiate the necessary administrative 
procedures to place these substances under regulatory control.

Increased Need for Diversion Control

Opioid Crisis
    The misuse of and addiction to opioids is a serious national crisis 
affecting the public health and welfare of all Americans. Furthermore, 
in 2018, there were 67,367 overdose deaths in the United States. The 
rate of opioid overdose deaths increased by over 70 percent from 2016 
through 2018.\9\ Some prescription pain relievers are opioids, which 
are classified by DEA as controlled substances and placed in schedules 
II-IV.
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    \9\ Centers for Disease Control and Prevention. ``Drug Overdose 
Deaths in the United States, 1999-2018.'' Accessed February 11, 
2020. https://www.cdc.gov/nchs/products/databriefs/db356.htm.
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    The misuse of prescription drugs is a serious concern. Misuse 
occurs when a medication is taken in a manner other than how 
prescribed, or when the medication is taken by a person, other than the 
person to whom it was prescribed. Opioids are one of the most common 
types of misused medication.\10\ Statistics show that 21 to 29 percent 
of patients who are prescribed an opioid misuse it, resulting in 8 to 
12 percent of them developing an opioid use disorder.\11\ During the 
past 15 years, there has been an increase in emergency visits, overdose 
deaths, and treatment admissions for misuse disorders because of the 
increase in prescription drug misuse. In 2018, the percentage of 
involvement of prescription opioids in overdose deaths in the United 
States was over three times higher than in 1999.\12\ In 2018, an 
estimated 2.0 million people in the U.S. were dealing with substance 
use disorders involving prescription opioids.\13\ It is estimated that 
the misuse of prescription opioids has an economic burden of $78.5 
billion annually on the United States.\14\
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    \10\ Substance Abuse and Mental Health Services Administration 
(SAMHSA). ``The National Survey on Drug Use and Health: 2018.'' 
Accessed February 11, 2020. https://www.samhsa.gov/data/release/2018-national-survey-drug-use-and-health-nsduh-releases.
    \11\ Id.
    \12\ Centers for Disease Control and Prevention. ``Drug Overdose 
Deaths in the United States, 1999-2018.'' Accessed February 11, 
2020. https://www.cdc.gov/nchs/products/databriefs/db356.htm.
    \13\ Substance Abuse and Mental Health Services Administration 
(SAMHSA). ``The National Survey on Drug Use and Health: 2018.'' 
Accessed February 11, 2020. https://www.samhsa.gov/data/release/2018-national-survey-drug-use-and-health-nsduh-releases.
    \14\ Id.
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    Due to the rise in prescription opioid abuse and the grave concern 
for public safety, Congress, as well as DEA, have had to take 
significant measures to protect citizens. In October 2017, President 
Trump called the opioid epidemic a ``national health emergency.'' \15\ 
Furthermore, the

[[Page 14815]]

Department of Health and Human Services (HHS) formally determined there 
was a public health emergency nationwide in October 2017, which was 
most recently renewed in January 2020. The overdose and abuse ``has 
reached epidemic levels and currently shows no signs of abating, 
affecting large portions of the United States.'' \16\ As such, the 
opioid crisis requires and continues to receive a magnitude of 
attention from the DC.
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    \15\ Centers for Medicare & Medicaid Services. ``Opioid 
Crisis.'' Ongoing emergencies & disasters. Accessed October 4, 2019. 
https://www.cms.gov/About-CMS/Agency-Information/Emergency/EPRO/Current-Emergencies/Ongoing-emergencies.html.
    \16\ 2018 National Drug Threat Assessment. Drug Enforcement 
Administration. October 2018.
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Increased Registrant Population
    At the time of the last fee increase, there were 1.4 million DEA 
registrants. Currently, the DCP regulates over 1.8 million registrants. 
DEA's regulated industry increases approximately 3 percent per year 
annually. It is estimated that there will be over 2 million registrants 
by 2023. The DCP must continue to effectively manage and support this 
growing registrant population through inspections, improvements to the 
registration process, enhanced information technology tools, and 
providing informative education and outreach forums.
Changes to the CSA Since the Last Fee Rule
    Since implementation of the last fee rule in 2012, Congress has 
made several changes to the CSA that impact how the DCP operates. These 
changes have expanded the responsibility and scope of the DCP. 
Congress' expansion of the CSA aids the DCP in addressing diversion 
threats and the national opioid crisis. While DEA may not have yet 
finalized implementing regulations for the CSA amendments, they are 
Federal law and therefore, followed by DEA. The implementation of these 
CSA amendments requires a commensurate increase in regulatory and 
enforcement activities which must be funded by the DCFA in order to 
fully fund activities related to the DCP.

Designer Anabolic Steroid Control Act of 2014

    The Designer Anabolic Steroid Control Act (DASCA) of 2014 \17\ 
became law on December 18, 2014, with the purpose of regulating 
anabolic steroids more effectively.\18\ DASCA amended the CSA by 
revising and adding specified substances to the definition of 
``anabolic steroid.'' DASCA provided a new mechanism for temporary and 
permanent scheduling of anabolic steroids, and added specific labeling 
requirements for products containing anabolic steroids. This amendment 
increased the number of schedule III controlled substances, by adding 
22 new substances. As such, the manufacture, import, export, 
distribution, or sale of the 22 anabolic steroids or a substance 
meeting the revised definition of an anabolic steroid is a violation of 
the CSA, unless done by a DEA registrant. These additions have now been 
brought under the scope of the DCP together with the performance of the 
applicable regulatory and enforcement functions.
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    \17\ ``Designer Anabolic Steroid Control Act,'' Public Law 113-
260 (128 Stat. 2929).
    \18\ H.R. Rep. No. 113-587, Part 2.
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Comprehensive Addiction and Recovery Act of 2016

    The Comprehensive Addiction and Recovery Act (CARA) of 2016 \19\ 
became law on July 22, 2016. CARA amended the CSA by temporarily \20\ 
expanding the type of practitioners who may, under certain conditions, 
dispense a narcotic drug in schedule III, IV, or V for the purpose of 
maintenance treatment or detoxification treatment, through October 1, 
2021. In particular, the CARA amended the CSA to temporarily permit 
certain nurse practitioners and physician assistants to be considered a 
``qualifying other practitioner,'' allowing them to meet the 
requirements for who can dispense a narcotic drug for the purposes of 
maintenance treatment or detoxification treatment, without requiring a 
separate registration. This is known as being a DATA-Waived Physician. 
Under the authorization of the CSA, the DCP conducts periodic on-site 
inspections of all registrants, including those who are DATA-waived.
---------------------------------------------------------------------------

    \19\ ``Comprehensive Addiction and Recovery Act of 2016,'' 
Public Law 114-198.
    \20\ While CARA temporarily expanded the type of practitioners 
who could dispense, the ``Substance Use-Disorder Prevention that 
Promotes Opioid Recovery Treatment for Patients and Communities 
Act,'' (Pub. L. 115-271) has eliminated the time limit for some of 
the practitioners and increased the temporary expansion for other 
practitioners.
---------------------------------------------------------------------------

The Protecting Patient Access to Emergency Medications Act of 2017

    The ``Protecting Patient Access to Emergency Medications Act of 
2017,'' \21\ which became law on November 17, 2017, amended the CSA to 
create a new registration category for emergency medical services 
agencies that handle controlled substances. It also established 
standards for registering emergency medical services agencies, and set 
forth new requirements for delivery, storage, and recordkeeping related 
to their handling of controlled substances. In addition, the Act allows 
emergency medical services professionals to administer controlled 
substances outside the physical presence of a medical director or 
authorizing medical professional pursuant to a valid standing or verbal 
order. In particular, through this amendment, a registered Emergency 
Medical Service (EMS) agency is allowed to obtain a single registration 
for each State in which the agency administers controlled substances, 
rather than requiring the agency to obtain a separate registration for 
each location at which it operates within that State. The CSA was also 
amended to allow DEA to issue regulations regarding the delivery and 
storage of controlled substances by EMS agencies. The issuance of these 
regulations, as well as the processing of the registrations, fall 
within the scope of the DCP's functions.
---------------------------------------------------------------------------

    \21\ ``Protecting Patient Access to Emergency Medications Act of 
2017,'' Public Law 115-83 (131 Stat. 1267).
---------------------------------------------------------------------------

Substance Use-Disorder Prevention That Promotes Opioid Recovery and 
Treatment for Patients and Communities Act

    On October 24, 2018, the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment for Patients and Communities Act 
(SUPPORT Act),\22\ was signed into law, addressing the opioid epidemic. 
The SUPPORT Act affected many of the DCP's regulatory and enforcement 
functions, falling under the purview of the DCFA. To prevent diversion, 
the CSA was amended requiring DEA to establish a centralized database 
for collecting reports of suspicious orders. The SUPPORT act also added 
the term ``suspicious order'' to the CSA, as well as defined it. Also, 
the SUPPORT Act's amendments require drug manufacturers and 
distributors be given access to anonymized Automated Reports and 
Consolidated Ordering System (ARCOS) data, regarding: (1) The total 
number of competitors that sold a particular controlled substance to a 
prospective customer (pharmacy or practitioner); and (2) the quantity 
and type of opioids distributed. This provision required DEA to launch 
a new tool to help more than 1,500 drug manufacturers and distributors 
nationwide to more effectively identify, report, and stop suspicious 
orders of opioids and reduce diversion rates through the use of ARCOS.
---------------------------------------------------------------------------

    \22\ ``Substance Use-Disorder Prevention that Promotes Opioid 
Recovery Treatment for Patients and Communities Act,'' Public Law 
115-271.
---------------------------------------------------------------------------

    The SUPPORT Act also amended the CSA to allow a pharmacy to deliver 
a controlled substance to a practitioner at the location listed on the 
practitioner's

[[Page 14816]]

certificate of registration for the purpose of maintenance or 
detoxification treatment. Further, the SUPPORT Act allows a hospice 
employee to handle lawfully-dispensed controlled substances of a 
hospice patient to assist with the on-site disposal of the controlled 
substances in three specific circumstances: (1) The disposal occurs 
after the death of a person receiving hospice care; (2) the controlled 
substance is expired; or (3) change of care of the patient only, in 
instances where the employee is a DEA registrant and practitioner of 
the patient.
    Through the SUPPORT Act, DEA gained the authority to establish 
procurement quotas in terms of pharmaceutical dosage form to avoid 
overproductions, shortages, or diversion of a controlled substance. 
This also amended the statutory deadline for manufacturing quotas to be 
fixed by changing from October 1 to December 1. Further, it is now 
required that DEA estimate the diversion of the five covered controlled 
substances--fentanyl, oxycodone, hydrocodone, oxymorphone, and 
hydromorphone--and make appropriate quota reductions. If the aggregate 
production quotas (APQ) of any covered controlled substance exceeds the 
APQ of the previous year, it must be explained why the benefits of 
higher quota outweigh the risks.
    The CSA was also amended through the SUPPORT Act to allow for more 
flexibility with respect to more medication-assisted treatment for 
opioid use disorders. The provisions expand the type of practitioners 
that may obtain a DATA-waiver. It eliminated the time limitation for 
nurse practitioners and physician assistants to become qualifying 
practitioners and imposed a five-year time limitation on clinical nurse 
specialists, registered nurse anesthetists, and certified nurse 
midwives to become a qualifying practitioner. The provisions also 
permanently codify the 275 patient limit for DATA-waived practitioners, 
which the DCP added to its regulations in January, 2018.\23\ A new 
accreditation option for a qualifying physician was added, making a 
physician eligible for a waiver if they graduated in good standing from 
a medical school within five years of the date of notification to the 
Secretary to be DATA-waived, and during the practitioner's curriculum 
or medical residency, the practitioner completed at least eight hours 
of training on treating and managing opioid-dependent patients.
---------------------------------------------------------------------------

    \23\ ``Implementation of the Provision of the Comprehensive 
Addiction and Recovery Act of 2016 Relating to the Dispensing of 
Narcotic Drugs for Opioid Use Disorder.'' (83 FR 3071, January 23, 
2018).
---------------------------------------------------------------------------

    Last, the SUPPORT Act required the promulgation of regulations to 
specify the procedure for obtaining a special registration for 
telemedicine and the limited circumstances in which a special 
registration may be issued. The SUPPORT Act also required the updating 
of regulations for the biometric component of multifactor 
authentication in electronic prescriptions for controlled substances.

Conclusion

    Since the last fee increase in 2012, the nature of the diversion 
control problem has increased in size and complexity. The increased 
diversion threats and changing diversion schemes such as the opioid 
epidemic, as well as amendments to the CSA, have necessitated the need 
to increase DEA registration fees in order to fully fund all aspects of 
the DCP.
    Although DEA has been fiscally responsible and has not increased 
registration fees since 2012, a registration fee increase is needed. 
This proposed increase will fund personnel and operations supporting 
the DCP mission to prevent and detect diversion, protect the closed 
system of distribution of the United States, and combat the nation's 
opioid crisis. Without an increase in registration fees, DEA will be 
unable to continue current operations and will be in violation of the 
statutory mandate that fees charged ``shall be set at a level that 
ensures the recovery of the full costs of operating the various aspects 
of [the diversion control program].'' 21 U.S.C. 886a(1)(C).
    The Diversion Control Division manages the DCP to maintain the 
integrity of the closed system of distribution which is essential in 
combatting the opioid epidemic. DC continues to face unique challenges 
including supporting a customer base of over 1.8 million DEA 
registrants, as well as combating the alarming increase in opioid drug 
abuse. The aforementioned statutory changes, as well as the expanding 
threat of diversion, required the DCP to implement program and 
organizational changes funded through the DCFA.

Operational Changes Within the Diversion Control Program Since 2012

Elevation to Division
    In October 2016, the Office of Diversion Control was elevated from 
an Office to a Division, and was renamed the Diversion Control 
Division. This change was made with the purpose of continuing to 
enhance operational effectiveness, strengthen internal controls, and 
support a stronger focus on the agency's mission. Two offices were 
established when the Division was created: The Office of Diversion 
Control Regulatory (DR), and the Office of Diversion Control Operations 
(DO). In 2018, the Office of Diversion Control Policy (DP) was added to 
the Division to accommodate continued and projected growth of the DCP. 
The restructure resulted in the increase of regulatory, enforcement, 
and outreach efforts to allow DEA to minimize diversion opportunities 
through more regulatory inspections of various registrant groups; 
increased education and outreach opportunities; and identifying more 
sources of diversion and taking administrative, civil, and/or criminal 
action against those operating outside the normal course of medical 
practice/registrant business. The DCP reorganized to optimize its 
resources and to improve the ability to identify and respond to 
diversion threats. Additionally, DEA expanded its resources and 
targeted its investigation strategies to collaborate with state and 
local entities and enhance the effectiveness of its diversion 
investigations. In addition, DEA expanded its use of Tactical Diversion 
Squads (TDS) to more effectively respond to criminal investigations 
involving controlled pharmaceuticals.
DEA 360 Strategy
    In response to the rising number of opioid-related deaths, DEA 
launched its 360 Strategy in 2015 with the purpose of ending the deadly 
cycle of prescription opioid misuse through coordinated law 
enforcement, diversion control, and community outreach efforts. The DEA 
360 Strategy involves coordinated law enforcement operations targeting 
all levels of drug trafficking organizations and violent gangs 
supplying drugs to our neighborhoods; engaging drug manufacturers, 
wholesalers, practitioners, and pharmacists through diversion control 
to increase awareness of the opioid epidemic and encourage responsible 
prescribing practices throughout the medical community; and community 
outreach and partnership with local organizations following enforcement 
operations, equipping and empowering communities to fight the opioid 
epidemic.
    The DCP's efforts to support this initiative are geared toward 
preventing the non-medical abuse of controlled pharmaceutical 
substances through scheduled investigations and by providing education 
and training within the pharmaceutical and medical

[[Page 14817]]

community and to pursue those practitioners who are operating outside 
of reasonable medical standards. The DCP continues to engage with 
industry, practitioners, and government health organizations to 
facilitate an honest discussion about prescription drug abuse. Since FY 
2015, there has been a significant increase in the total number of 
outreach activities. These activities are 80 percent funded by the DCFA 
and 20 percent of the project receives appropriated funding. The number 
of total outreach activities has increased from 191 in FY 2015 to 2,394 
in FY 2019, an increase of 1,153.40 percent, the costs of which must be 
funded by the DCFA.
National Take-Back Initiative
    The DCP continues to be proactive in its efforts to prevent 
diversion and focus on enhancing outreach efforts as they relate to 
controlled substances and listed chemicals. As of October 26, 2019, a 
total of 18 separate National Prescription Drug Take-Back Initiative 
(NTBI) events have collected a total of 9,964,714 pounds (4,982.357 
tons) of unused pharmaceuticals from the medicine cabinets of U.S. 
citizens across the country and its territories, at 75,283 collection 
sites, in conjunction with 66,013 law enforcement partners.
    The diversion of pharmaceutical controlled substances is a 
significant problem in the United States, as all reliable studies 
indicate that the abuse (non-medical use) of these drugs has reached 
alarming levels in recent years. One potential factor that may 
contribute to the increase in abuse is the availability of these drugs 
in household medicine cabinets. In many cases, dispensed controlled 
pharmaceutical drugs remain in household medicine cabinets well after 
medication therapy has been completed, thus providing easy access to 
non-medical users for abuse or accidental ingestion. Before DEA began 
NTBI, most U.S. communities did not routinely offer opportunities to 
properly dispose of expired, unused, or unwanted pharmaceutical 
controlled substances. As a result, many people kept these drugs 
because they do not know how to dispose of them.
    The NTBI effort is an example of the DCP's commitment to community 
outreach efforts and the extreme need for options for the disposal of 
controlled substances. This collaborative effort between DEA and state 
and local law enforcement agencies is focused on removing potentially 
dangerous controlled pharmaceutical substances from our nation's 
medicine cabinets to reduce opportunities for diversion.
Tactical Diversion Squads
    To respond to the increasing rate of criminal diversion and a 
growing registrant population, DEA has expanded its resources and 
targeted investigation strategies in ways to collaborate with state and 
local entities and enhance the effectiveness of its Diversion Control 
Program. Specifically, DEA has expanded its use of TDSs, which work 
with DEA's state, local, and other federal partners, to maximize 
resources and improve efforts to investigate, disrupt, and dismantle 
individuals or organizations involved in diversion schemes related to 
controlled substances and listed chemicals.
    TDSs were established to investigate the criminal actions of DEA 
registrants. In 2011, there were 40 operational TDSs in the DCP. As of 
FY 2020, there were 86 operational TDSs in 48 states, the District of 
Columbia, and Puerto Rico.
    TDSs investigate suspected violations of the CSA and other Federal 
statutes pertaining to the diversion of controlled substance 
pharmaceuticals and listed chemicals. The TDS program has been a 
successful tool employed by the DCP to combat the illegal diversion of 
controlled substances. Combining the criminal drug investigative 
experience of DEA Special Agents, the subject matter expertise of 
Diversion Investigators (DIs), and the local knowledge and law 
enforcement abilities of deputized Task Force Officers, the TDSs can 
effectively confront the diversion problem on multiple levels.
    Since the initial deployment, TDSs have initiated an average of 
more than 1,500 cases per year and have made more than 2,100 arrests 
per year.
Regulatory
    DEA continues its focus on regulatory oversight of the more than 
1.8 million DEA registrants to ensure registrants comply with the CSA 
and its implementing regulations. DEA accomplishes this by conducting 
scheduled investigations of DEA registrants that are registered to 
handle controlled prescription drugs and listed chemicals. This 
proactive approach is designed to identify and prevent diversion of 
controlled substances and listed chemicals into the illicit market. 
Registrant compliance is determined primarily through the conduct of 
pre-registration, scheduled, and complaint investigations. DCP's 
regulatory activities also have an inherent deterrent function; they 
are designed to ensure that those businesses and individuals registered 
with DEA to handle controlled substances or listed chemicals have 
sufficient measures in place to prevent the diversion of these 
substances. These investigations also help registrants understand and 
comply with the CSA and identify those registrants who violate the CSA 
and implementing regulations. Pre-registration investigations reduce 
the possibility of registering unauthorized entities, ensure that the 
means to prevent diversion are in place, and help determine whether 
registration is consistent with the public interest.
Scheduling
    The DCP continues to evaluate diversion trends, patterns, routes, 
and techniques in order to appropriately focus its administrative, 
regulatory, civil, and criminal enforcement activities. The continued 
spread of synthetic drugs to include synthetic cannabinoids, 
cathinones, phenethylamines, and opioids remains a considerable concern 
across the U.S. The trafficking and abuse of these dangerous and often 
deadly substances is a significant concern for public health and law 
enforcement.
    DCP's efforts to identify and establish controls over dangerous 
drugs of abuse involves collecting scientific information to evaluate 
the substances for possible scheduling actions. Since the last fee 
rule, 23 temporary scheduling actions have been issued to control 74 
new drugs of abuse and a control of fentanyl-related substances. Since 
2011, 61 substances have been permanently controlled, one precursor 
chemical has been controlled, rulemaking has been initiated to control 
six precursor chemicals, and two substances have been decontrolled.
Quotas
    To address prescription drug abuse and increased production and use 
of chemicals that contribute to the public health emergency, the DCP 
increased its ability to respond to diversion threats by establishing 
quotas and monitoring imports of narcotic raw materials, which are 
critical to ensuring an adequate and uninterrupted supply of legitimate 
medicines containing controlled substances and listed chemicals without 
creating an oversupply. The APQ and annual assessment of needs (AAN) 
are established each calendar year to provide for the estimated 
medical, scientific, research, and industrial needs of the U.S., for 
lawful export requirements, and for the establishment and maintenance 
of reserve stocks. Information provided by industry (e.g., import 
permits and declarations, sales, distributions, inventory, 
manufacturing schedules, losses, and product

[[Page 14818]]

development needs) and corroborated by consumption of these substances 
(e.g., prescriptions, distributions to retail levels, and input from 
the Food and Drug Administration (FDA) on new products and indications) 
is utilized when determining the APQ and AAN and individual 
manufacturing quotas. APQs and AANs for individual substances cannot be 
trended and can either increase, decrease, or remain constant within a 
calendar year or over years, depending on any number of factors, 
including product development, research needs, FDA requirements for 
manufacturers, or changes in export requirements.
    Once the APQ and AAN are established, DEA issues three different 
quota types (manufacturing, procurement, and import quotas) to DEA-
registered manufacturers and importers for substances with the highest 
abuse potential (schedule I and II controlled substances and certain 
list I chemicals used for the production of cough and cold medicines 
and clandestine methamphetamine). Annually, DEA allocates over 4,000 
separate quotas to over 300 different DEA bulk manufacturers and dosage 
form manufacturers. The quota system ensures an adequate and 
uninterrupted supply for the medical, scientific, research, and 
industrial needs of the United States, while preventing the diversion 
of the drugs to the illicit market.
    Additionally, prior to and building upon the 2012 Food and Drug 
Administration Safety and Innovation Act (FDASIA), DEA continues to 
work with FDA and industry on anticipating and mitigating the potential 
for drug shortages. In addition to the domestic quota program, DCP is 
responsible for the annual establishment of the UN estimates and 
assessments for legitimate imports and exports of all internationally 
controlled substances.
    In accordance with changes made to the scope of the DCP to address 
the opioid epidemic public health emergency, DEA finalized the 
Controlled Substance Quotas rule in June 2018 to strengthen the process 
for setting controls over controlled substances and to make 
improvements in the quota management regulatory system for the 
production, manufacturing, and procurement of controlled substances.
    The final rule made two additions to the list of factors that must 
regularly be considered in setting the APQ. First, it added the extent 
of any diversion of the controlled substance in the class. Second, the 
final rule amended the list of factors to be considered in establishing 
these quotas to include relevant information from HHS, FDA, Centers for 
Disease Control and Prevention (CDC), Centers for Medicare & Medicaid 
Services (CMS), and the states. The amendment will ensure that 
information will be requested from the relevant HHS components and will 
be considered in setting the aggregate production quotas.
    DEA has published proposed rules to improve its ability to oversee 
the production of drugs scheduled under the CSA and limit excess 
quantities of medications that might be vulnerable to diversion for 
illicit distribution and use at the height of the national opioid 
crisis. DEA is proposing important and necessary changes to DEA's quota 
regulations resulting from the SUPPORT Act, which requires that 
appropriate quota reductions be made after estimating potential for 
diversion. This estimate is based on rates of overdose deaths and 
abuse, as well as the overall public health impact related to specific 
controlled substances, and it may include other factors as appropriate.
    DEA also proposes to amend the manner in which DEA grants quotas to 
manufacturers for maintaining inventories. These proposed levels align 
with current manufacturing standards aimed at promoting quality and 
efficiency, while also ensuring that the country has sufficient 
quantities of schedule II substances necessary for the medical, 
scientific, research and industrial needs of patients nationwide.
    DEA has also proposed several new types of quotas that DEA would 
grant to certain DEA-registered manufacturers. If finalized, these use-
specific quotas include quantities of controlled substances for use in 
commercial sales, product development, packaging/repackaging and 
labeling/relabeling, or replacement for quantities destroyed. These 
use-specific quotas will greatly improve the timeliness of DEA's 
responses to applications filed by manufacturers while simultaneously 
improving DEA's ability to respond quickly to drug shortages.
Community Outreach Efforts
    DCP's regulatory activities require education and outreach to 
ensure understanding of, and compliance with, the CSA and other 
applicable policies and regulations. Providing such guidance to 
registrants is also necessary to reduce the likelihood of diversion 
from the closed system of distribution outlined in the CSA. One aspect 
of DCP's outreach efforts is establishing and maintaining working 
relationships with other federal agencies, foreign, state, and local 
governments, industry, and the registrant population. Other educational 
efforts include developing and maintaining manuals and other 
publications; organizing and conducting national conferences on current 
issues, policies, and initiatives; and providing guidance to the 
general public. Since the last fee rule, DCP has drafted 2,700 policy 
letters; answered over 23,400 policy inquiries from the public, 
regulated industry, and DEA field personnel; and responded to 16,380 
emails primarily from the public, regulated community, and DEA field 
personnel.
    Additionally, the DCP has hosted conferences designed to educate 
pharmacists and pharmacy technicians regarding the growing problem of 
diversion and subsequent abuse of pharmaceutical controlled substances 
as well as proactive steps they can take towards preventing diversion. 
Pharmacy Diversion Awareness Conferences (PDACs) give pharmacy 
personnel the tools they need to identify and respond to potential 
diversion activity. There have been a total of 100 conferences, at 54 
separate locations, in 50 states, and two territories, with over 13,401 
pharmacists, pharmacy technicians, and loss prevention specialists in 
attendance.
    As a result of the success of the PDACs, in response to the 
persistent opioid drug crisis, and a recognition of the need for a 
comparable conference for DEA registered practitioners, DEA has 
designed, developed, and implemented a similar type of conference for 
practitioners--Practitioner Diversion Awareness Conferences.
    Since May 2018, DEA has held a total of 35 Practitioner Diversion 
Awareness Conferences, in 19 different states, with over 7,354 
physicians, dentists, physician assistants, nurse practitioners, and 
veterinarians in attendance. To continue to support and grow these 
efforts, the DCP must rely on increased funding available through 
collection of DCFA fees.
Personnel
    The DCP must maintain staffing levels sufficient to carry out its 
regulatory and enforcement missions and perform education and outreach 
activities to combat the opioid crisis and effectively respond to 
emerging diversion threats in order to protect public health and 
safety. Personnel are hired specifically into DCFA-funded positions for 
the sole purpose of supporting DCP activities. Obligations have 
increased since the last fee rule to keep pace with a growing 
registrant population and the need to expand the DCP footprint across 
the

[[Page 14819]]

nation to meet its regulatory and enforcement mission. The DCP has 
continued to control costs since the last fee increase; however, the 
DCP's mission has been expanded by changing diversion schemes and laws 
passed by Congress, which require an increase in registrant fees in 
order to maintain operations and protect public health and safety.
    DEA has taken steps to ensure that the cost of diversion work in 
DEA Headquarters (HQs) is fully funded by the DCFA. In 2016, DEA 
realigned 161 HQs Professional/Administrative and Technical/Clerical 
(PATCO) positions from the Salaries & Expenses (S&E) account to the 
DCFA. In February 2018, DEA took a similar action with Special Agent 
positions and determined that the DCFA should fund 57 additional 
Special Agent positions in DEA Headquarters.
    The cost impact of such efforts to fully fund DCP-related 
activities totals $124.3 million as summarized below:

                                    Table 1--Summary of Rightsized Positions
----------------------------------------------------------------------------------------------------------------
              Rightsized positions                    FY 2016         FY 2017         FY 2019         FY 2019
----------------------------------------------------------------------------------------------------------------
161 PATCO.......................................     $23,699,057     $23,699,057     $24,172,523     $24,617,315
57 Special Agents...............................  ..............  ..............       9,379,236      18,758,472
                                                 ---------------------------------------------------------------
    Total Costs to DFCA.........................      23,699,057      23,699,057      33,551,759      43,375,787
----------------------------------------------------------------------------------------------------------------

    As mandated by 21 U.S.C. 886a(1)(C), DEA is required to collect 
fees adequate to fully fund the controlled substance and chemical 
diversion control activities of the DCP. In 2008, the DOJ's Office of 
the Inspector General, reported the results of its review of the DCP 
(I-2008-002) Review of the Drug Enforcement Administration's Use of the 
Diversion Control Fee Account, stating that the ``review concluded that 
DEA did not fully fund all Diversion Control Program salary costs with 
the Fee Account, as required by 21 U.S.C. 886a(1)(C).''
    In FY 2016, Diversion Program Manager (DPM) positions were 
established in all field division offices. The role of the DPM is to 
serve as the subject matter expert on all regulatory matters and is 
responsible for establishing and implementing the division's strategic 
objectives and priorities related to the DCP. Each DPM plans and leads 
its division's efforts to prevent, detect, and disrupt diversion 
activities within its area of responsibility, ensuring consistent 
implementation of agency policy and priorities. The nature of the 
diversion control problem has increased in size and complexity making 
the role of the DPM increasingly critical and demanding than in 
previous years. With a registrant population of over 1.8 million, DPMs 
maintain an intricate knowledge of the registrant community in the 
division's area of responsibility as well as the various relevant state 
and local laws. DPMs lead outreach and education efforts to establish 
and maintain liaison and working relationships with other federal 
agencies; foreign, state, and local governments; industry and 
associations; community organizations; and the regulated community. 
Outreach is critical to increasing awareness of the diversion trends 
and methods to ensure understanding of and compliance with the CSA and 
applicable policies and regulations, and reduce the likelihood of 
diversion. The standardization of the DPM positions nationwide 
strengthened the DCP's ability to combat diversion and prescription 
drug abuse by optimizing the unique skill set of DPMs.
Technology Enhancements
    The scope of the DCP has been expanded by Congress, continued 
diversion threats and schemes, and the opioid crisis. Ensuring 
availability of critical infrastructures requires comprehensive 
planning, investment in resources, and the ability to respond to the 
regulated community with appropriate remediation actions in a timely 
manner.
    In February 2018, DEA launched a new tool in its ARCOS Online 
Reporting System to assist drug manufacturers and distributors with 
their regulatory obligations under the CSA. The enhancement allows DEA-
registered manufacturers and distributors to view and download the 
number of distributors and the amount (anonymized data in both grams 
and dosage units) each distributor sold to a prospective customer in 
the last available six months of data. This resource is one of many 
steps DEA is taking to collaborate with its 1.8 million registrants to 
combat the ongoing opioid epidemic in the United States.
    Additionally, the DCP determines the appropriate procedures 
necessary to order and distribute all schedule I and II controlled 
substances and schedule III narcotics. This enables the DCP to monitor 
the flow of those controlled substances from their point of manufacture 
through commercial distribution. It also monitors registrant compliance 
through reporting systems such as the ARCOS and manages the cataloging 
of controlled substances based on the National Drug Code (NDC) system, 
including the Drug Ingredients, Trade Name, DEA Generic Name, UN Code/
Name, and the conversion factor to calculate the base weight of the 
controlled substance within product. Other oversight activities include 
maintaining the Controlled Substance Ordering System (CSOS), monitoring 
CSOS activities through the initial certification process, and periodic 
auditing of registrant systems. CSOS provides registrants with an 
electronic platform that reduces costs to registrants while ensuring a 
more efficient and effective ordering process. The DCP has also made 
improvements by streamlining the application process for registrants 
and implementing an online system for new applications and renewal 
applications for registrations. These technological advancements are 
crucial to the furtherance of DEA's mission to support registrants, 
which would be funded by the increase in registrant fees.
    To improve customer support to registrants, the DCP is changing the 
technology infrastructure of its service center's phone system to 
implement a new Interactive Voice Response (IVR) system. This will 
provide enhanced call flows and interactive features to registrants and 
provide efficiencies within the service center daily activities.
    In support of the International Trade Data System (ITDS), as 
mandated by Executive Order 13659, the DCP has successfully implemented 
the online versions of its import and export applications for 
controlled substances and listed chemicals (DEA Form 161, 236, 357, and 
486). The DCP has also enhanced its communications system to allow 
interconnectivity between many different systems. Data connectivity was 
established with U.S. Customs and Border Protection (CBP) and all 
Import

[[Page 14820]]

and Export declarations and permits are now electronically transmitted 
to CBP. The online DEA Form 161R and 161EEA are in the process of being 
adjusted due to the passage of recent legislation that will require 
modifications to the form.
    The DCP continues to improve the quality and accessibility of its 
registration and reporting systems, such as the CSA, Combat 
Methamphetamine Epidemic Application (CMEA), Quota Management System, 
ARCOS, Bulk Chemical Manufacturer Reports, Drug Theft/Loss, NTBI, and 
the Online Conferencing Registration System. These systems generate 
timely, accurate, and actionable data that provide the DCP's registrant 
population an efficient means for online submissions of their 
regulatory obligations and improve the DCP's enforcement and control 
efforts.
    For purposes of efficiency, to reduce the cost of maintaining the 
equipment, and to allow DEA registrants greater ease of ordering 
schedule I and/or II controlled substances electronically, DEA 
implemented a single-sheet Form 222 for order forms. The new single-
sheet format is expected to lower labor burden to government employees 
due to efficiencies gained from having more lines per form, anticipated 
reduction of instances of form failure, allowing the use of a printer, 
and general ease of use for registrants. Additionally, it removes the 
requirement for ARCOS-reporting suppliers to mail completed order forms 
to DEA field offices.

IV. Provisions of the Proposed Rule

Proposed New Fees

    Based on thorough analysis of the identified fee calculation 
options--including the anticipated economic impact on registrants--DEA 
has determined that the proposed option represents the most reasonable 
approach to calculate registrant fees sufficient to fully fund the DCP.
    The proposed fee schedule would replace the current fee schedule 
for controlled substance and chemical registrants in order to recover 
the full costs of the DCP so that it may continue to meet the 
programmatic responsibilities set forth by statute, Congress, and the 
President. As discussed, without an adjustment to fees, the DCP will be 
unable to continue current operations, necessitating dramatic program 
reductions, and possibly weakening the closed system of distribution. 
Accordingly, DEA proposes the following new fees for the FY 2021-FY 
2023 period.

                   Table 2--Proposed Registration and Reregistration Fees by Business Activity
----------------------------------------------------------------------------------------------------------------
                                                                   Current fees    Proposed fees
                        Business activity                               ($)             ($)       Difference ($)
----------------------------------------------------------------------------------------------------------------
Registrants on Three Year Registration Cycle *:
    Pharmacy....................................................             731             888             157
    Hospital/Clinic.............................................             731             888             157
    Practitioner................................................             731             888             157
    Teaching Institution........................................             731             888             157
    Mid-level Practitioner (MLP)................................             731             888             157
Registrants on Annual Registration Cycle:
    Manufacturer................................................           3,047           3,699             652
    Distributor.................................................           1,523           1,850             327
    Researcher/Canine Handler...................................             244             296              52
    Analytical Lab..............................................             244             296              52
    Importer....................................................           1,523           1,850             327
    Exporter....................................................           1,523           1,850             327
    Reverse Distributor.........................................           1,523           1,850             327
    Narcotic Treatment Program..................................             244             296              52
    Chemical Manufacturer.......................................           3,047           3,699             652
    Chemical Importer...........................................           1,523           1,850             327
    Chemical Distributor........................................           1,523           1,850             327
    Chemical Exporter...........................................           1,523           1,850             327
----------------------------------------------------------------------------------------------------------------
* Pharmacy, hospital/clinic, practitioner, teaching institution, and mid-level practitioner registration fees
  are for a three-year period. This current three-year fee is $731. The proposed fee for the three-year
  registration period is $888. The three-year difference is $157 or an annual difference of $52.

    The proposed fees are estimated to fund the full cost of the DCP--
to include the increased programmatic and personnel requirements 
currently in place or expected to be in place--from FY 2021-FY 2023 and 
have an end-of-year balance of $50 million.

                           Table 3--Overview of Proposed Diversion Control Fee Account
----------------------------------------------------------------------------------------------------------------
                                                                                                      3-Years
                                                   FY 2021 ($M)    FY 2022 ($M)    FY 2023 ($M)    combined ($M)
----------------------------------------------------------------------------------------------------------------
DCFA Balance Carried Forward From Prior Year....              69              96              86              69
Total Collections...............................             576             596             625           1,797
Treasury Amount.................................            (15)            (15)            (15)            (45)
Other Collections (OGV, CMEA)...................               1               1               1               3
                                                 ---------------------------------------------------------------
    Net Collections.............................             562             582             611           1,755
Total Obligations...............................             555             613             670           1,838
Recoveries from Deobligations...................            (20)            (22)            (24)            (65)
                                                 ---------------------------------------------------------------
    Net Obligations.............................             535             591             647           1,773
        End of Year DCFA Balance................              96              86              50              50
----------------------------------------------------------------------------------------------------------------


[[Page 14821]]

Refund of Registration Fees

    DEA proposes amending 21 CFR 1301.13(e) and 1309.12(b) to codify 
existing practices of the issuance of refunds by DEA for applicant 
registration fees. Generally, registration fees are not refundable. 
This regulation was implemented when registration fees were nominal. 
Now that registration fees have been increasing, DEA recognizes that 
the issuance of refunds in limited circumstances is warranted. These 
provisions of the proposed rule will give DEA's Administrator 
discretionary authority to refund registration fees in limited 
circumstances, such as: Applicant error, DEA error, and death of a 
registrant within the first year of the three-year registration cycle. 
Refunds will be given for applicant error when there has been a 
duplicate payment for the same renewal, incorrect billing or incorrect 
transposing of credit card digits, or payment for incorrect business 
activity or when they are fee-exempt. Refunds will be issued based on 
DEA error when DEA caused the error, for example when DEA advised a new 
application is needed or advised a registration to submit payment for a 
wrong business activity. While these proposed provisions will have no 
economic costs or benefits, DEA believes there are benefits to 
accurately codify existing practices.

V. Need for a New Fee Calculation

    DEA last adjusted the fee schedule in March 2012, with collections 
beginning April 2012.\24\ This fee schedule was intended to be 
sufficient to cover the ``full costs'' of the DCP for FY 2012 through 
FY 2014 or October 1, 2011 through September 30, 2014. The DCP has 
continued to operate under this fee schedule by being fiscally 
responsible, optimizing its organizational structure, maximizing the 
use of technological enhancements, as well as unforeseen delays in 
hiring. As indicated by the above-referenced 2008 OIG report, indirect 
pay, rightsizing, additional salary, and other costs attributable to 
diversion control activities were incorporated into the DCP since the 
last fee increase. In addition, DCP's responsibility has been expanded 
by Congress and by the need to address the opioid epidemic public 
health emergency. The DEA's 360 Strategy was launched with the purpose 
of ending the deadly cycle of prescription opioid misuse through 
coordinated law enforcement, diversion control, and community outreach 
efforts.
---------------------------------------------------------------------------

    \24\ 77 FR 15234, March 15, 2012.
---------------------------------------------------------------------------

    Due to increased diversion and prescription drug abuse, as well as 
an increase in the production and use of chemicals that contribute to 
the health emergency, the DCP has increased its use of TDS groups to 
meet its enforcement mission and hired more DIs working in Diversion 
Groups (DG) and Diversion Staffs (DS) across the nation to support its 
increased regulatory mission. In April 2012, there were 48 TDSs, 65 
DGs, and 17 DSs. At the end of FY 2019, there were 86 TDSs, 87, DG, 15 
DSs, and 16 TDS-Extensions.\25\
---------------------------------------------------------------------------

    \25\ A TDS-Extension is an extension of a TDS into a location, 
usually staffed by two Special Agents to provided law enforcement 
coverage while not incurring the full cost of a TDS.
---------------------------------------------------------------------------

    The DCP continues to draw technical expertise from DIs, and the DCP 
has incorporated greater numbers of Special Agents, Chemists, 
Information Technology Specialists, Attorneys, Intelligence Research 
Specialists, and state and local personnel to achieve its increased 
responsibilities. Corresponding with increases in field groups, in 
April 2012, there were 1,167 employees in DCFA funded positions, and at 
end of FY 2019, there were 1,681. To continue to meet diversion control 
challenges and to staff and support the increased number of regulatory 
and enforcement groups, DEA must expand the DCP's enforcement and 
regulatory capacity, as well as its support functions. From an 
estimated full-time-equivalent (FTE) staffing level of 1,782 in FY 
2020, DEA plans to increase FTEs by 90, 147, and 134 in FY 2021, FY 
2022, and FY 2023, respectively, for a total of 2,153 FTEs in FY 2023. 
The estimated increase for the three year period is 371 FTEs.
    DEA has been, and will continue to be fiscally responsible and will 
remain vigilant toward identifying methods to improve efficiencies or 
identifying other cost saving measures. As discussed above, however, a 
new fee calculation is needed. Without an adjustment in the 
registration fees, DEA will be unable to continue current operations 
and will be in violation of the statutory mandate that fees charged 
``shall be set at a level that ensures the recovery of the full costs 
of operating the various aspects of [the diversion control program].'' 
21 U.S.C. 886a(1)(C). For example, collections under the current fee 
schedule will require the DCP to significantly cut existing and planned 
DCP operations vital to its mission. DEA relies on the DCP to maintain 
the integrity of the closed system for pharmaceutical controlled 
substances and listed chemicals, particularly at this time of dramatic 
increases in abuse and diversion.

Fee Calculation

    DEA is delegated the task of determining the details of fulfilling 
the statutory requirements of ensuring the recovery of the full costs 
of operating the DCP as described above, while charging registrants 
participating in the closed system of distribution reasonable fees 
relating to the registration and control ``of the manufacture, 
distribution, dispensing'' \26\ and ``importers and exporters'' \27\ of 
controlled substances and listed chemicals. For the DCP to have funds 
to function, DEA must determine, in advance of actual expenditures, a 
reasonable fee to be charged. As a result, historical data and 
projections, together with actual and current costs are used to project 
the annual costs of the DCP. Additionally, a reasonable fee must be 
calculated that will fully recover the costs of the DCP based on the 
variability over time of the number of registrants in the different 
categories of registration (e.g., manufacturers, distributors, 
importers, exporters, reverse distributors, practitioners, and 
individual researchers). Since the fees collected must be available to 
fully fund the DCFA and to reimburse DEA for expenses incurred in the 
operation of the DCP (21 U.S.C. 886a), there must always be more 
collected than is actually spent to avoid running a deficit and being 
in violation of federal fiscal law.\28\ In operating the DCP, DEA must 
be prepared for changes in investigative priorities, diversion trends, 
and emerging drugs or chemicals posing new threats to the public health 
and safety. By definition, it is an inexact effort. Given that fact, 
the agency must select a single methodology that it consistently 
follows throughout any given fee cycle.
---------------------------------------------------------------------------

    \26\ 21 U.S.C. 821.
    \27\ 21 U.S.C. 958(f).
    \28\ In general, no officer or employee of the United States 
Government may make or authorize an expenditure or obligation in 
excess of an amount available in an appropriation or fund. 31 U.S.C. 
1341.
---------------------------------------------------------------------------

    Since the inception of the fee, the agency has selected a weighted-
ratio method to determine a reasonable fee for each category of 
registrants. Under this method, registrants are assigned to a business 
activity or category (e.g., researcher, practitioner, distributor, 
manufacturer, etc.) based on the statutory fee categories and the 
projected population is calculated for each category or business 
activity. Then, the full cost of the DCP is estimated for the analysis 
period, generally three

[[Page 14822]]

years. While maintaining a difference in registration fees for each 
category by a ratio of 1.0 for researchers, 3.0 for practitioners (for 
administrative convenience, the fee is collected every three years for 
practitioners), 6.25 for distributors, and 12.5 for manufacturers, the 
registration fees required to pay the full cost of DCP for the analysis 
period is calculated. These are long-established ratios, utilized in 
previous fee increases, as repeatedly determined to be reasonable.\29\ 
By utilizing these different ratios, the agency recognizes the 
statutory need to charge reasonable fees relating to the registration 
and control of the manufacture, distribution, dispensing, importation, 
and exportation of controlled substances and listed chemicals.
---------------------------------------------------------------------------

    \29\ 77 FR 15234 (March 15, 2012); 71 FR 51105 (August 29, 
2006).
---------------------------------------------------------------------------

    Thus, the current fees, some of which are paid annually and some of 
which are paid every three years, range from $244 for ratio 1 to $3,047 
for ratio 12.5 depending upon the particular registrant category. 
Specifically, practitioners, mid-level practitioners, dispensers, 
researchers, and narcotic treatment programs pay an annual registration 
fee of $244. For administrative convenience for both the collection and 
the payment, practitioners pay a combined registration fee of $731 
every three years. Distributors, importers, and exporters pay an annual 
fee of $1,523 and manufacturers pay an annual fee of $3,047. 21 CFR 
1301.13 and 1309.11.
    Since the last fee schedule adjustment in March 2012,\30\ DEA 
continued to review possible alternative methodologies for 
differentiating registration fees between various registration business 
activities. In developing this proposed rule, DEA examined three 
alternative methodologies to calculate the registration and 
registration fees: Flat Fee Option, Past-Based Option, and Weighted-
Ratio Option (current and proposed method). In examining each 
alternative methodology, DEA considered whether the fee calculation (1) 
was reasonable and (2) could fully fund the costs of operating the 
various aspects of the DCP. DEA has determined that the current 
``weighted-ratio'' fee structure is the most reasonable. Therefore, DEA 
proposes the current weighted-ratio method for calculating fees and 
differentiating fees between registrant groups. A detailed discussion 
of the alternatives is provided below. Additionally, the proposed fee 
calculation method is summarized below and detailed in ``Proposed 
Registration Fee Schedule Calculation'' in the rulemaking docket at 
https://www.regulations.gov.
---------------------------------------------------------------------------

    \30\ 77 FR 15234, March 15, 2012.
---------------------------------------------------------------------------

Projected Costs for the Diversion Control Program

    In calculating fees to recover the mandated full costs of operating 
the DCP, DEA estimated the cost of operating the DCP for the next three 
fiscal years. To develop the DCFA budget request estimates for FY 2021 
to FY 2023, DEA compiled: (1) The DCFA Budget for FY 2020, which forms 
a base spending level for the current level of service, (2) the 
estimated additional required funds for FY 2021 to FY 2023, and (3) the 
required annual $15 million transfer to the United States Treasury as 
mandated by the CSA (21 U.S.C. 886a). The following paragraphs explain 
the annual revenue calculations and how the total amount to be 
collected for the FY 2021 to FY 2023 period was calculated. In 
developing this figure, DEA begins with annual projected DCP 
obligations, including payroll, operational expenses, and necessary 
equipment. The DCP budget has increased due to inflationary adjustments 
for rent and payroll and adding staffing resources that support the 
regulatory and law enforcement activities of the program. The fees have 
not been adjusted to reflect these factors as the basis of the last fee 
adjustment was to fund the DCP for the time period of FY 2012 to 2014. 
Specific details on the DCP budget are available in the annual 
President's Budget Submission and supplemental budget justification 
documents provided to Congress.\31\
---------------------------------------------------------------------------

    \31\ See this rulemaking docket found at www.regulations.gov.
---------------------------------------------------------------------------

    DEA needs to set fees to recover the full cost of the DCP. 
Therefore, the estimated budget for FY 2021 to FY 2023 forms the basis 
for required collections (target collections) from registration fees. 
The process for estimating the budget for each year is the same. 
Generally, the budget for a particular year is set by starting from the 
previous year (base year), adjusting for inflation, and then adding 
enhancements (growth) to the budget. DCP personnel growth is the key 
factor in formulating the budget.
    The estimated budget is based on two estimated components: (1) 
Payroll obligations based on estimated FTEs, and (2) non-payroll 
obligations based on changes to payroll obligations. The estimated 
payroll obligations are based on the payroll cost of the FTEs described 
earlier. The estimates also account for the difference in payroll cost 
between personnel leaving the program, usually at a higher grade level, 
and personnel entering the program. Additionally, the payroll 
obligations include a yearly inflation factor of 2 percent to cover 
Within-Grade Increases, Career Ladders,\32\ Cost of Living Adjustment, 
and increased benefits costs. Non-payroll obligations generally follow 
payroll obligations. As FTE and payroll obligations increase, non-
payroll obligations also increase correspondingly. Non-payroll 
obligations include items such as rent, communications, utilities, 
services, equipment, travel, etc.\33\ DEA believes its methodology 
supports the estimate amount for the three-year period, FY 2021 to FY 
2023. The estimated payroll obligations and non-payroll obligations are 
added to obtain the estimated total obligations.
---------------------------------------------------------------------------

    \32\ The position is structured to allow for entry at a lower 
grade level and allows for progression at predetermined GS-grade 
level (usually multi-level) interval to the full performance grade 
level.
    \33\ The full list of non-payroll obligations is available in 
the FY 2020 Congressional Budget Submission, Exhibits: Diversion 
Control Fee Account (DCFA). https://www.justice.gov/doj/fy-2020-congressional-budget-submission.
---------------------------------------------------------------------------

    In April 2012, when the last fee increase was made effective, there 
were 48 TDSs, 65 DGs, and 17 DSs. At end of FY 2019 there were 86 TDSs, 
87 DGs, 15 DSs, and 16 TDS-Extensions. To continue to meet diversion 
control challenges, DEA continues to increase its field regulatory and 
enforcement groups. DEA anticipates having 88 TDSs, 89 DGs, 17 DSs, and 
14 TDS-Extensions by end of FY 2020 (beginning of FY 2021), expanding 
to 94 TDSs, 95 DGs, 10 DSs, and 10 TDS-Extensions by end of FY 2023. 
Table 4 summarizes the estimated number of field groups by year.

[[Page 14823]]



                                     Table 4--Number of Field Groups by Year
----------------------------------------------------------------------------------------------------------------
                                                                                   Estimated EOY   Estimated EOY
                Regulatory and enforcement groups                  As of 4/2012       FY 2020         FY 2023
----------------------------------------------------------------------------------------------------------------
TDS.............................................................              48              88              94
DG..............................................................              65              89              95
DS..............................................................              17              13              10
TDS-Extension...................................................  ..............              14              10
----------------------------------------------------------------------------------------------------------------

    Corresponding with increases in field groups, in April 2012, there 
were 1,167 employees in DCFA funded positions, and at the end of FY 
2020, there will be an estimated 1,803 employees. To continue to meet 
diversion control challenges, and to staff and support the increased 
number of regulatory and enforcement groups described above, DEA plans 
to expand DCP's enforcement and regulatory capacity, as well as its 
support functions. From an estimated FTE of 1,782 in FY 2020, DEA plans 
to increase FTEs by 90, 147, and 134 in FY 2021, FY 2022, and FY 2023, 
respectively, for a total of 2,153 FTEs in FY 2023. The estimated 
increase for the three year period is 371 FTEs.
    The estimated payroll obligations are based on the payroll cost of 
the FTEs described above. The estimates also account for the difference 
in payroll cost between personnel leaving the program, usually at 
higher grade level, and personnel entering the program. Additionally, 
the payroll obligations include a yearly inflation factor to cover 
Within-Grade Increases, Career Ladders,\34\ Cost of Living Adjustment, 
and increased benefits costs. From an estimated base of $289,450,003 in 
FY 2020, estimated payroll obligations increase as projected net hiring 
increases to an estimated $311,587,162, $344,462,812, and $376,513,554 
in FY 2021, FY 2022, and FY 2023, respectively.
---------------------------------------------------------------------------

    \34\ Position structured to allow for entry at a lower grade 
level that allows for progression at predetermined GS-grade level 
(usually multi-level) interval to the full performance grade level.
---------------------------------------------------------------------------

    Non-payroll obligations include items such as: Rent, 
communications, utilities, services, equipment, travel, etc.\35\ Non-
payroll obligations generally follow payroll obligations. As FTE and 
payroll obligations increase, non-payroll obligations also increase. 
Year-over-year increase in payroll increase is 7.6 percent, 10.6 
percent, and 9.3 percent in FY 2021, 2022, and FY 2023, respectively. 
From an estimated base of $225,747,874 non-payroll obligations in FY 
2020, increasing non-payroll obligations at the same rate as payroll 
obligations results in estimated non-payroll obligations of 
$243,013,089, $268,653,469, and $293,650,487 in FY 2021, FY 2022, and 
FY 2023, respectively.
---------------------------------------------------------------------------

    \35\ Full list of non-payroll obligations is available in the FY 
2020 Congressional Budget Submission, Exhibits: Diversion Control 
Fee Account (DCFA). https://www.justice.gov/doj/fy-2020-congressional-budget-submission.

                                      Table 5--Estimated Total Obligations
                                                    [Budget]
----------------------------------------------------------------------------------------------------------------
                                                      FY 2020         FY 2021         FY 2022         FY 2023
----------------------------------------------------------------------------------------------------------------
Payroll Obligations ($).........................     289,450,003     311,587,162     344,462,812     376,513,554
Non-payroll Obligations ($).....................     225,747,874     243,013,089     268,653,469     293,650,487
                                                 ---------------------------------------------------------------
    Total Obligations ($).......................     515,197,876     554,600,250     613,116,281     670,164,040
                                                 ---------------------------------------------------------------
FTE.............................................           1,782           1,872           2,019           2,153
----------------------------------------------------------------------------------------------------------------

    In addition to the budget for each of the fiscal years, the cost 
components outlined below are also considered in determining required 
registration fee collections.

Recoveries From Money Not Spent as Planned (Deobligation of Prior Year 
Obligations)

    At times, DEA enters into an obligation to purchase a product or 
service that is not delivered immediately, such as in a multi-year 
contract, or not at all. Changes in obligations can occur for a variety 
of reasons (i.e., changes in planned operations, delays in staffing, 
implementation of cost savings, changes in vendor capabilities, etc). 
When DEA does not spend the obligated money as planned, that obligation 
is ``deobligated.'' The ``deobligated'' funds are ``recovered,'' and 
the funds become available for DCP use. Based on historical trends, the 
recovery of money not spent as planned (deobligation of prior year 
obligations) is estimated at 3.5 percent of obligations.

Payment to Treasury

    In the 1993 appropriations for DEA, Congress determined that the 
DCP would be fully funded by registration fees and no longer by 
appropriations.\36\ Congress established the DCFA as a separate account 
of the Treasury to ``ensure the recovery of the full costs of operating 
the various aspects of [the Diversion Control Program]'' by those 
participating in the closed system established by the CSA. 21 U.S.C. 
886a(1)(C). Fees collected are deposited into a separate Treasury 
account. Each fiscal year, the first $15 million is transferred to the 
Treasury and is not available for use by the DCP. Therefore, DEA needs 
to collect an additional $15 million per year beyond estimated costs 
for payment to the Treasury.
---------------------------------------------------------------------------

    \36\ Departments of Commerce, Justice, and State, the Judiciary 
and Related Agencies Appropriations Act of 1993, Public Law 102-395, 
codified in relevant part at 21 U.S.C. 886a.
---------------------------------------------------------------------------

DCFA Balance

    DEA maintains a DCFA balance, as working capital, to maintain DCP 
operations during low collection periods.\37\ Monthly collections and 
obligations fluctuate throughout the year. There are times when 
obligations

[[Page 14824]]

(spending) exceed collections. This can happen consecutively for 
several months. Therefore, a DCFA balance is maintained to avoid 
operational disruptions due to these fluctuations and monthly 
differences in collections and obligations (spending). The estimated 
DCFA balance at beginning of FY 2021 is $69 million. Based on history, 
DEA has determined that an end-of-year DCFA balance of $50 million is 
adequate. Therefore, the target DCFA balance at the end of FY 2023 is 
$50 million.
---------------------------------------------------------------------------

    \37\ ``DCFA balance'' was called the ``Operational Continuity 
Fund (OCF)'' in the last fee schedule adjustment in March 2012.
---------------------------------------------------------------------------

Other Collections

    DEA derives revenue from the sale/salvage of official government 
vehicles dedicated for use in the DCP. Additionally, under the Combat 
Methamphetamine Epidemic Act of 2005 (CMEA), DEA collects a self-
certification fee of $21 for regulated sellers of scheduled listed 
chemical products. 21 CFR 1314.42(a). The fee is waived for any person 
holding a current DEA registration in good standing, such as a pharmacy 
authorized to dispense controlled substances. 21 CFR 1314.42(b). DEA's 
estimate for these other collections is $1 million per year.

Estimated Total Required Collections (Target Collections)

    Based on the estimated total obligations and other financial 
components above, DEA calculated the total amount required to be 
collected for the FY 2021-FY 2023 period, for purposes of calculating 
the fee levels, as follows. Using the estimated collections under the 
current fee schedule as baseline, DEA determined a 21 percent increase 
in total collections is required to fund the DCP for the three-year 
period and have a $50 million in DCFA balance at the end of FY 2023.
    The target collections are $576 million, $596 million, and $624 
million for FY 2021, FY 2022, and FY 2023, respectively. In total, DEA 
needs to collect $1.8 billion (or $1,796 million) in registration fees 
over the three-year period, FY 2021-FY 2023, to fully fund the DCP.

                        Table 6--Estimated DCFA Cash Flow Under Proposed Fee Calculation
----------------------------------------------------------------------------------------------------------------
                                                                                                      3-Years
                                                   FY 2021 ($M)    FY 2022 ($M)    FY 2023 ($M)    combined ($M)
----------------------------------------------------------------------------------------------------------------
DCFA Balance Carried Forward From Prior Year....              69              95              86              69
Total Collections...............................             576             596             624           1,796
Treasury Amount.................................            (15)            (15)            (15)            (45)
Other Collections (OGV, CMEA)...................               1               1               1               3
                                                 ---------------------------------------------------------------
    Net Collections.............................             562             582             610           1,755
Total Obligations...............................             555             613             670           1,838
Recoveries from Deobligations...................            (20)            (22)            (24)            (65)
                                                 ---------------------------------------------------------------
    Net Obligations.............................             535             591             647           1,773
                                                 ---------------------------------------------------------------
        End of Year DCFA Balance................              95              86              50              50
----------------------------------------------------------------------------------------------------------------
Note: This projection is based on the ``target'' collections for the purposes of calculated fees. To end with
  exactly $50 million DCFA Balance, the calculated fees will need to have many decimal places. When fees are
  rounded to the nearest whole dollar, the projected cash flow will vary slightly.

    Without a fee increase, under current fee structure, the estimated 
collection is $474 million, $491 million, and $514 million for FY 2021, 
FY 2022, and FY 2023, respectively, for a total of $1.5 billion (or 
$1,479 million) for the three-year period. Without a fee increase, the 
costs associated with the anticipated increases in programmatic and 
personnel responsibilities would place DEA in the position of having 
obligations that would exceed the collections and DCFA balance carried 
forward. DEA would realize this DCFA deficit in FY 2021.

                          Table 7--Estimated DCFA Cash Flow Under Current Fee Structure
                                [If no actions are taken to reduce obligations *]
----------------------------------------------------------------------------------------------------------------
                                                                                                      3-Years
                                                   FY 2021 ($M)    FY 2022 ($M)    FY 2023 ($M)    combined ($M)
----------------------------------------------------------------------------------------------------------------
DCFA Balance Carried Forward From Prior Year....              69             (6)           (121)              69
Total Collections (at Current Fee)..............             474             491             514           1,479
Treasury Amount.................................            (15)            (15)            (15)            (45)
Other Collections (OGV, CMEA)...................               1               1               1               3
                                                 ---------------------------------------------------------------
    Net Collections.............................             460             477             500           1,437
Total Obligations...............................             555             613             670           1,838
Recoveries from Deobligations...................            (20)            (22)            (24)            (65)
                                                 ---------------------------------------------------------------
    Net Obligations.............................             535             591             647           1,773
                                                 ---------------------------------------------------------------
        End of Year DCFA Balance................             (6)           (121)           (267)           (267)
----------------------------------------------------------------------------------------------------------------
* This is a hypothetical scenario. DEA would not allow DCFA balance to go negative.


[[Page 14825]]

Proposed Methodology for New Fee Calculation

    As shown in Table 6 above, the target collections are $576 million, 
$596 million, and $624 million for FY 2021, FY 2022, and FY 2023, 
respectively. In total, DEA needs to collect $1.8 billion (or $1,796 
million) in registration fees over the three-year period, FY 2021 to FY 
2023, to fully fund the DCP. DEA needs to propose a method for 
determining fees for various business activities that would generate 
the target collections.
    In developing this proposed rule, DEA examined alternative 
methodologies to calculate the registration and registration fees. DEA 
analyzed alternative methodology approaches keeping in mind its 
statutory obligations under the CSA. First, pursuant to statute, DEA is 
authorized to charge reasonable fees relating to the registration and 
control of the manufacture, distribution, dispensing, importation, and 
exportation of controlled substances and listed chemicals. 21 U.S.C. 
821 and 958(f). Second, DEA must set fees at a level that ensures the 
recovery of the full costs of operating the various aspects of its DCP. 
21 U.S.C. 886a. Accordingly, in examining each alternative methodology, 
DEA considered whether the fee calculation (1) was reasonable and (2) 
could fully fund the costs of operating the various aspects of the DCP.
    Moreover, the CSA establishes a specific regulatory requirement 
that DEA charge fees to fully fund the DCP, but that the fees collected 
by DEA are to be expended through the budget process only. 
Specifically, each year DEA is required by statute to transfer the 
first $15 million of fee revenues into the general fund of the Treasury 
and the remainder of the fee revenues is deposited into a separate fund 
of the Treasury called the DCFA. 21 U.S.C. 886a(1). On at least a 
quarterly basis, the Secretary of the Treasury is required to refund 
DEA an amount from the DCFA ``in accordance with estimates made in the 
budget request of the Attorney General for those fiscal years'' for the 
operation of the DCP. 21 U.S.C. 886a(1)(B) and (D). For that reason, 
DEA is only considering alternative methodologies to calculate the 
registration and reregistration fees, not alternative approaches to 
expend fees collected, because those decisions are governed by the CSA 
and the budget process.
    In developing this rule, DEA considered three methodologies to 
calculate registration and reregistration fees: Flat Fee Option, Past-
Based Option, and Weighted-Ratio Option (current and proposed method). 
Although the increase in the fees may be passed down to the 
registrants' customers, the alternatives are analyzed on the worst-case 
scenario where the increase in the fee is absorbed fully by the 
registrants.
    For each of the alternatives considered, the calculated fees are 
analyzed for reasonableness by examining: (1) The absolute amount of 
the fee increase, (2) the change in fee as a percentage of revenue from 
2012-2021, and (3) the relative fee increase across registrant groups. 
Additionally, each calculation methodology is re-evaluated for its 
overall strengths and weaknesses.

Flat Fee Option

    Option 1 is called the Flat Fee Option. The flat fee option would 
provide equal fees across all registrant groups regardless of the 
proportion of DCP costs and resources the registrant group may require 
(e.g., investigation resources). The fee calculation is 
straightforward: The total amount needed to be collected over the 
three-year period is divided by the total number of registration fee 
transactions over the three year period, adjusting for registrants on 
the three year registration cycle (so that the fees for a three-year 
period are three times the annual fee).
    DEA calculated the annual registration fees under Option 1 and 
compared these fees to the current fees.

                                Table 8--Registration Fees Under Flat Fee Option
----------------------------------------------------------------------------------------------------------------
                                                   Current fees   Option 1: Flat                   Increase over
                Business activity                       ($)           fee ($)     Difference ($)    current (%)
----------------------------------------------------------------------------------------------------------------
Registrants on Three Year Registration Cycle: *
    Pharmacy....................................             731             896             165              23
    Hospital/Clinic.............................             731             896             165              23
    Practitioner................................             731             896             165              23
    Teaching Institution........................             731             896             165              23
    Mid-level Practitioner (MLP)................             731             896             165              23
Registrants on Annual Registration Cycle:
    Manufacturer................................           3,047             299         (2,748)             -90
    Distributor.................................           1,523             299         (1,224)             -80
    Researcher/Canine Handler...................             244             299              55              23
    Analytical Lab..............................             244             299              55              23
    Importer....................................           1,523             299         (1,224)             -80
    Exporter....................................           1,523             299         (1,224)             -80
    Reverse Distributor.........................           1,523             299         (1,224)             -80
    Narcotic Treatment Program..................             244             299              55              23
    Chemical Manufacturer.......................           3,047             299         (2,748)             -90
    Chemical Importer...........................           1,523             299         (1,224)             -80
    Chemical Distributor........................           1,523             299         (1,224)             -80
    Chemical Exporter...........................           1,523             299         (1,224)             -80
----------------------------------------------------------------------------------------------------------------
* Pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners currently pay
  a fee for a three-year period. This current three-year fee is $731. The fee under the flat fee scenario for
  the three year registration period would be $896. The three-year difference is $165 or an annual difference of
  $55.

    In the flat fee option, the registration fee for practitioners 
increases by 23 percent to $299 on an annual basis. The registration 
fees for manufacturers and distributors are reduced significantly, from 
$3,047 for manufacturers and $1,523 for distributors to $299 for both. 
This reduction represents a 90 percent and 80 percent reduction for 
manufacturers and distributors, respectively.

[[Page 14826]]

    The calculation considered in Option 1 results in a disparity in 
fee change among registrant groups. From current fees, to arrive at the 
same flat fee, the registration fee for practitioners increases by 23 
percent, while registration fees for manufacturers and distributors 
decrease 90 percent and 80 percent, respectively.
    The flat-fee option has positive and negative aspects. The 
calculation is simple and straight-forward. The fee that DEA is 
required to charge registrants is based on a statutory requirement--it 
is not a user fee. A user fee calculation would require a calculation 
of the direct and indirect costs associated with each of the registrant 
groups and set fees to recover the costs associated with each of these 
groups. Since the registration fee is not a user fee, DEA is not 
required to calculate fees according to its costs by registrant groups. 
However, general historical costs of regulatory and enforcement 
activities support different fees among the categories. DEA believes 
that setting the same fees for all registrants, from multi-national 
corporations to mid-level practitioners, is unreasonable.

Conclusion

    After consideration of the flat fee option, DEA did not select this 
option to calculate the proposed new fees. The fee disparity among 
registrant groups caused by this calculation alternative is too great. 
Under this option, the calculation would result in reduced fees for 
manufacturers and distributors by 90 percent and 80 percent 
respectively, while practitioner fees would increase by 23 percent. 
Setting the fees at the same level across all registrant groups is 
therefore not ``reasonable'' as required by statute. DEA registrants 
include some of the largest corporations in the world although the vast 
majority of registrants are practitioners, such as physicians and 
nurses. To satisfy the ``reasonable'' standard, registration fees 
should be different among the categories to account for cost and 
economic differences among the registrant categories. Option 1 did not 
satisfy this requirement.

Past-Based Option

    Option 2 is called the Past-Based Option, and is based on historic 
investigation work hour data to set the apportionment of cost to each 
registrant category. In considering Option 2, DEA used historic 
investigation work hour data from FY 2016-2018. DEA's records permit an 
accurate apportionment of work hours for certain types of diversion 
control activities (e.g., investigations) among classes of registrants. 
DEA estimates that approximately 3 percent of costs can be directly 
linked to pre-registration and scheduled investigations. Although some 
criminal investigations can be attributed to registrant groups, DEA did 
not include the cost of criminal investigations for the fee calculation 
under the Past-Based Option. While DEA develops annual work plans for 
the number of scheduled investigations by registrant type, DEA does not 
develop such plans for criminal investigations. Therefore, the cost of 
criminal investigations is allocated equally across all registrant 
groups, regardless of business activity. The remaining costs associated 
with DCP activities and components benefit all registrants (e.g., 
policy, registration, and legal activities); however, DEA records 
cannot attribute these costs by registrant class. Under Option 2, pre-
registration and scheduled investigation costs are assigned to 
registrant classes and all other costs are recovered on an equal, per-
registrant basis.
    DEA calculated the annual registration fees under Option 2 and 
compared these fees to the current fees. Although distributors and 
importers/exporters are in the same fee class in the current fee 
structure (Weighted-Ratio Option), in this analysis, distributors are 
separated from importers and exporters based on the available historic 
work hour data and reported work hours by type of registrant.

                               Table 9--Registration Fees Under Past-Based Option
----------------------------------------------------------------------------------------------------------------
                                                                                                    % Increase
                Business activity                  Current fees   Option 2: Past- Difference ($)   over current
                                                        ($)          based ($)                          (%)
----------------------------------------------------------------------------------------------------------------
Registrants on Three Year Registration Cycle:
    Pharmacy....................................             731           1,030             299              41
    Hospital/Clinic.............................             731             872             141              19
    Practitioner................................             731             873             142              19
    Teaching Institution........................             731           1,694             963             132
    Mid-level Practitioner (MLP)................             731             868             137              19
Registrants on Annual Registration Cycle:
    Manufacturer................................           3,047           4,212           1,165              38
    Distributor.................................           1,523           3,303           1,780             117
    Researcher/Canine Handler...................             244             565             321             132
    Analytical Lab..............................             244             565             321             132
    Importer....................................           1,523           1,906             383              25
    Exporter....................................           1,523           1,906             383              25
    Reverse Distributor.........................           1,523           3,303           1,780             117
    Narcotic Treatment Program..................             244           2,332           2,088             856
    Chemical Manufacturer.......................           3,047           1,703         (1,344)             -44
    Chemical Importer...........................           1,523           1,386           (137)              -9
    Chemical Distributor........................           1,523           1,824             301              20
    Chemical Exporter...........................           1,523           1,386           (137)              -9
----------------------------------------------------------------------------------------------------------------

    In the past-based option, the percent change in fees from current 
fees ranges from negative 44 percent (reduction of 44 percent) for list 
I chemical manufacturers to an increase of 856 percent for narcotic 
treatment programs. The increase for a large majority of registrations, 
practitioners, mid-level practitioners, and hospital/clinics is 19 
percent.
    While Option 2 is based on accurate historical data, it does not 
allow for future needs, demands and shifting responsibilities of the 
DCP, such as agency priorities, new legislation, control of substances, 
new investigative requirements, and other program needs.

[[Page 14827]]

Conclusion

    DEA does not propose the past-based option for two key reasons. 
First, the fee increase is disproportionately burdensome to a small 
number of registrants. Narcotic treatment program fees would increase 
by 856 percent, while the change for the remaining registrant groups 
range from a decrease of 44 percent to an increase of 131 percent. DEA 
deemed this option unreasonable. Second, the past-based option is 
backward looking and implicitly assumes that the future will be similar 
to the past. DEA cannot assume that future workload will reflect past 
DEA work hour data. For example, DEA plans to conduct more scheduled 
investigations in accordance with the new scheduled investigation work 
plan. As a result, DEA has concluded that past data is not the best 
basis for the calculation of proposed fees.

Weighted Ratio Option (Current and Proposed Method)

    The Weighted-Ratio Option is the method that has been used since 
the inception of the fee. This option distinguishes among the 
categories to establish a ``reasonable'' fee for each category. In this 
option, fees are assigned to different registrant categories based on 
DEA's general historical cost data expressed as weighted ratios. The 
different fees are expressed in ratios: 1 for researchers, canine 
handlers, analytical labs, and narcotics treatment programs; 3 for 
registrants on three-year registration cycles, pharmacies, hospitals/
clinics, practitioners, teaching institutions, and mid-level 
practitioners; 6.25 for distributors and importers/exporters; and 12.5 
for manufacturers. The adopted ratios are applied for administrative 
convenience since historically costs vary and a fee must be set in 
advance. To determine the fee, a weighted ratio is assigned based on 
registrant group, and the amount needed to be collected over the FY 
2021--FY 2023 period is divided by the weighted number of estimated 
registrations to determine the fees.

                             Table 10--Registration Fees Under Weighted-Ratio Option
----------------------------------------------------------------------------------------------------------------
                                                                     Option 3:
                Business activity                  Current fees   Weighted ratio  Difference ($)   Increase over
                                                        ($)             ($)                         current (%)
----------------------------------------------------------------------------------------------------------------
Registrations on Three Year Registration Cycle:
 *
    Pharmacy....................................             731             888             157              21
    Hospital/Clinic.............................             731             888             157              21
    Practitioner................................             731             888             157              21
    Teaching Institution........................             731             888             157              21
    Mid-level Practitioner (MLP)................             731             888             157              21
Registrations on Annual Registration Cycle:
    Manufacturer................................           3,047           3,699             652              21
    Distributor.................................           1,523           1,850             327              21
    Researcher/Canine Handler...................             244             296              52              21
    Analytical Lab..............................             244             296              52              21
    Importer....................................           1,523           1,850             327              21
    Exporter....................................           1,523           1,850             327              21
    Reverse Distributor.........................           1,523           1,850             327              21
    Narcotic Treatment Program..................             244             296              52              21
    Chemical Manufacturer.......................           3,047           3,699             652              21
    Chemical Importer...........................           1,523           1,850             327              21
    Chemical Distributor........................           1,523           1,850             327              21
    Chemical Exporter...........................           1,523           1,850             327              21
----------------------------------------------------------------------------------------------------------------
* Pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners currently pay
  a fee for a three-year period. This current three-year fee is $731. The fee under the weighted ratio scenario
  for the three-year registration period would be $888. The three-year difference is $157, or an annual
  difference of $52.

    In the Weighted-Ratio Option, the registration fees for all 
registrant groups increase by 21 percent from current fees, although 
the absolute dollar amount may differ. The registration fees range from 
$296 annually (or annual equivalent) to $3,699. These registration fee 
increases range from $52 annually (or annual equivalent) to $652. 
Registration fees are collected by location and by registered business 
activity. Registration fees for all registrant groups increase by 21 
percent, and as a result, there is no disparity in the percentage fee 
increase among registrant groups. Furthermore, a 21 percent increase 
($731 to $888) over nine years, from FY 2012 to FY 2021, equates to a 
2.2 percent annual rate (on a compound annual growth rate basis), which 
is similar to the inflation rate. The same increase equates to 1.8 
percent annual rate over 11 years, FY 2012 to FY 2023.
    The weighted-ratio methodology, much like the flat fee, is 
straightforward and easy to understand, but unlike the flat fee, this 
applies historic weighted ratios to differentiate fees among registrant 
groups. While differentiating fees based on historic weighted ratios, 
this methodology does not create a disproportionate fee increase in any 
registrant group.

Conclusion

    DEA selected this option to calculate the proposed new fees. This 
approach has been used since Congress established registrant fees and 
continues to be a reasonable reflection of differing costs. The 
registration fees under the weighted-ratio option result in 
differentiated fees among registrant groups, where registrants with 
generally larger revenues and costs pay higher fees than registrants 
with lower revenues and costs. Furthermore, the weighted-ratio does not 
create a disparity in the relative increase in fees from the current to 
the proposed fees. The weighted ratios used by DEA to calculate the 
current fee have proven effective and reasonable over time. 
Additionally, the weighted ratio methodology generally reflects the 
differences in activity level, notably in inspections, scheduled 
investigations and other control and monitoring, by registrant 
category; for example, these costs are higher for manufacturers. DEA

[[Page 14828]]

selected this option because it is the only option that resulted in 
``reasonable'' fees for all registrant groups.

Regulatory Analyses

Executive Orders 12866 (Regulatory Planning and Review), 13563 
(Improving Regulation and Regulatory Review), and 13771 (Reducing 
Regulation and Controlling Regulatory Costs)

    This rule has been developed in accordance with the principles of 
Executive Orders 12866 and 13563. Executive Order 12866 directs 
agencies to assess all costs and benefits of available regulatory 
alternatives and when regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
public health and safety, and environmental advantages, distributive 
impacts, and equity). Executive Order 13563 is supplemental to and 
reaffirms the principles, structures, and definitions governing 
regulatory review as established in Executive Order 12866. The 
Executive Order classifies a ``significant regulatory action'' 
requiring review by the Office of Management and Budget (OMB) as any 
regulatory action that is likely to result in a rule that may: (1) Have 
an annual effect on the economy of $100 million or more, or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, environment, public health or safety, 
or State, local, or tribal governments or communities; (2) create a 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency; (3) materially alter the budgetary impact of 
entitlements, grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    DEA expects that this proposed rule will have an annual effect, in 
the form of transfers, on the economy of $100 million or more and, 
therefore, is an economically significant regulatory action. Fees paid 
to DEA are considered transfer payments and not costs.\38\ The analysis 
of benefits and transfers is below. The economic, interagency, 
budgetary, legal, and policy implications of this proposed rule have 
been examined and it has been determined to be a significant regulatory 
action under Executive Order 12866, and therefore has been reviewed by 
the OMB.
---------------------------------------------------------------------------

    \38\ OMB Circular A-4.
---------------------------------------------------------------------------

a. Need for the Rule
    Under the CSA, DEA is authorized to charge reasonable fees relating 
to the registration and control of the manufacture, distribution, 
dispensing, import, and export of controlled substances and listed 
chemicals. 21 U.S.C. 821 and 958(f). DEA must set fees at a level that 
ensures the recovery of the full costs of operating the various aspects 
of the DCP. 21 U.S.C. 886a(1)(C).
    DEA continually monitors the anticipated budget and collections to 
determine whether the registration fees need to be adjusted. DEA has 
determined that the fees need to increase in beginning October 1, 2020, 
FY 2021, to the amounts indicated above in order to fully fund the DCP 
as required by statute. Therefore, this rulemaking is required for DEA 
to recover the full costs of operating the DCP.
b. Alternative Approaches
    As described in detail above, DEA examined three alternative 
methodologies to calculate the registration and registration fees: Flat 
Fee Option, Past-Based Option, and Weighted-Ratio Option (current and 
proposed method).
    For each of the alternatives considered, the calculated fees are 
analyzed for reasonableness by examining: (1) The absolute amount of 
the fee increase; (2) the change in fee as a percentage of revenue from 
2012 to 2021; and (3) the relative fee increase across registrant 
groups. Additionally, each calculation methodology is re-evaluated for 
its overall strengths and weaknesses.
Flat Fee Option
    Option 1 is called the Flat Fee Option. The flat fee option would 
provide equal fees across all registrant groups regardless of the 
proportion of DCP costs and resources the registrant group may require 
(e.g., investigation resources). The calculation results in a dramatic 
disparity in fee change among registrant groups. After consideration of 
the flat fee option, DEA did not select this option to calculate the 
proposed new fees. The fee disparity among registrant groups caused by 
this calculation alternative is too great. Under this option, the 
practitioner fees would increase by 23 percent to $299 on an annual 
basis, while manufacturer and distributor fees would decrease by 90 
percent and 80 percent respectively, to an annual fee of $299. Setting 
the fees at the same level across all registrant groups is therefore 
not ``reasonable'' as required by statute. DEA registrants include some 
of the largest corporations in the world although the vast majority of 
registrants are practitioners, such as physicians and nurses. To 
satisfy the ``reasonable'' standard, registration fees should be 
different among the categories to account for cost and economic 
differences among the registrant categories. This option did not 
satisfy this requirement.
Past-Based Option
    Option 2 is called the Past-Based Option, and is based on historic 
investigation work hour data to set the apportionment of cost to each 
registrant category. Under Option 2, pre-registration and scheduled 
investigation costs are assigned to registrant classes and all other 
costs are recovered on an equal, per-registrant basis. In the past-
based option, the percent change in fees from current fees range from 
negative 44 percent (reduction of 44 percent) for list I chemical 
manufacturers to an increase of 856 percent for narcotic treatment 
programs. The increase for a large majority of registrations, 
practitioners, mid-level practitioners, and hospital/clinics, is 19 
percent. DEA does not propose the past-based option for two key 
reasons. First, the fee increase is disproportionately burdensome to a 
small number of registrants. Narcotic treatment program fees would 
increase by 856 percent. Second, the past-based option is backward 
looking and implicitly assumes that the future will be similar to the 
past. The past may not necessarily be a bad estimated. However, DEA 
develops a work plan for scheduled investigations annually and 
investigation frequency may be modified based on need or diversion 
risk. DEA cannot assume that future workload will reflect past DEA work 
hour data. As a result, DEA has concluded that past data is not the 
best basis for the calculation of proposed fees.
Weighted Ratio Option (Current and Proposed Method)
    The Weighted-Ratio Option is the method that has been used since 
the inception of the fee. This option distinguishes among the 
categories to establish a ``reasonable'' fee for each category. In this 
option, fees are assigned to different registrant categories based on 
DEA's general historical cost data expressed as weighted ratios. The 
weighted-ratio methodology, much like the flat fee, is straightforward 
and easy to understand, but unlike the flat fee, this method applies 
historic weighted ratios to

[[Page 14829]]

differentiate fees among registrant groups. This method would result in 
across-the-board 21 percent increase in fees for all registrations.
    DEA selected this option to calculate the proposed new fees. This 
approach has been used since Congress established registrant fees and 
continues to be a reasonable reflection of differing costs. The 
registration fees under the weighted-ratio option result in 
differentiated fees among registrant groups, where registrants with 
generally larger revenues and costs pay higher fees than registrants 
with lower revenues and costs. Furthermore, the weighted-ratio does not 
create a disparity in the relative increase in fees from the current to 
the proposed fees. The weighted-ratios used by DEA to calculate the 
current fee have proven effective and reasonable over time. 
Additionally, the weighted-ratio methodology generally reflects the 
differences in activity level, notably in inspections, scheduled 
investigations and other control and monitoring, by registrant 
category; for example, these costs are higher for manufacturers. DEA 
selected this option because it is the only option that resulted in 
``reasonable'' fees for all registrant groups.
c. Summary of Impact of Proposed New Fee Relative to Current Fee
Affected Entities
    As of September 2019, there were a total of 1,840,501 controlled 
substances and chemical registrations (1,839,556 controlled substances 
registrations and 945 chemical registrations), as shown in Table 11.

         Table 11--Number of Registrations by Business Activity
                            [September 2019]
------------------------------------------------------------------------
                                            Controlled
        Registrant class/business           substances       Chemicals
------------------------------------------------------------------------
Pharmacy................................          70,851  ..............
Hospital/Clinic.........................          18,305  ..............
Practitioner............................       1,324,438  ..............
Teaching Institute......................             264  ..............
Mid-Level Practitioner..................         408,468  ..............
Researcher..............................          11,986  ..............
Analytical Labs.........................           1,514  ..............
Narcotic Treatment Program..............           1,738  ..............
Manufacturer............................             570             207
Distributor.............................             843             370
Reverse Distributor.....................              68  ..............
Importer................................             253             209
Exporter................................             258             159
                                         -------------------------------
    Total...............................       1,839,556             945
                                         -------------------------------
        Grand Total (all registrations).             1,840,501
------------------------------------------------------------------------
* Includes fee-paying and fee-exempt registrations.

    Not all registrants listed in Table 11 are subject to the fees. Any 
hospital or other institution operated by an agency of the United 
States, of any state, or any political subdivision of an agency 
thereof, is exempt from the payment of registration fees. Likewise, an 
individual who is required to obtain a registration in order to carry 
out his/her duties as an official of a federal or state agency is also 
exempt from registration fees.\39\ Fee-exempt registrants are not 
affected by the proposed fees.
---------------------------------------------------------------------------

    \39\ See 21 CFR 1301.21 for complete fee exemption requirements.
---------------------------------------------------------------------------

    Based on historical registration data and estimated growth trends, 
DEA estimates the average total registration population over the three-
year period, FY 2021- FY 2023, will be 2,004,358 as shown in Table 12. 
Estimated annual growth in fee-paying registrations is approximately 
3.8 percent. The largest growth is in the MLPs. Approximately 8 percent 
of all registrations are fee-exempt.

  Table 12--Estimated Average Fee-Paying Registrations, FY 2021-FY 2023
------------------------------------------------------------------------
                                            Controlled
        Registrant class/business           substances       Chemicals
------------------------------------------------------------------------
Pharmacy................................          80,199  ..............
Hospital/Clinic.........................          16,638  ..............
Practitioner............................       1,356,876  ..............
Teaching Institute......................             130  ..............
Mid-Level Practitioner..................         539,899  ..............
Researcher..............................           5,038  ..............
Analytical Labs.........................             908  ..............
Narcotic Treatment Program..............           1,978  ..............
Manufacturer............................             114              39
Manufacturer (small)....................             464             169
Distributor.............................             221             112
Distributor (small).....................             445             217
Reverse Distributor.....................              24  ..............
Reverse Distributor (small).............              49  ..............

[[Page 14830]]

 
Importer................................              74              68
Importer (small)........................             148             134
Exporter................................              88              51
Exporter (small)........................             176              99
                                         -------------------------------
    Total...............................       2,003,469             889
                                         -------------------------------
        Grand Total (all registrations).             2,004,358
------------------------------------------------------------------------

    The CSA requires a separate registration for each location where 
controlled substances are handled and a separate registration for each 
business activity; that is, a registration for activities related to 
the handling of controlled substances and a registration for activities 
related to the handling of list I chemicals. Some registrants may 
conduct multiple activities under a single registration (e.g., 
manufacturers may distribute substances they have manufactured without 
being registered as a distributor), but firms may hold multiple 
registrations for a single location. Individual practitioners who 
prescribe, but do not store controlled substances, may use a single 
registration at multiple locations within a state, but need separate 
registrations for each state in which they practice and are authorized 
to dispense controlled substances. Firms with multiple locations must 
have separate registrations for each location.
Characteristics of Entities
    This proposed rule affects those manufacturers, distributors, 
dispensers, importers, and exporters of controlled substances and list 
I chemicals that are required to obtain and pay a registration fee with 
DEA pursuant to the CSA. As of September 2019, there were a total of 
1,840,501 controlled substances and chemical registrations (1,839,556 
controlled substances registrations and 945 chemical registrations), as 
shown above in Table 11. DEA estimates an average total fee-paying 
population of 2,004,358 over the three-year period, FY 2021-FY 2023, as 
shown in Table 12.
    The registrations on a three-year cycle, pharmacies, hospitals/
clinics, practitioners, teaching institutions, and mid-level 
practitioners, make up 99.5 percent of all registrations not exempt 
from paying registration applications fees. All other categories of 
registration (manufacturer, distributor, reverse distributor, importer, 
exporter, chemical manufacturer, chemical distributor, chemical 
importer, and chemical exporter) maintain an annual registration. 
Registration and reregistration costs vary by registrant category as is 
described in more detail in the sections below.
    The proposed fees would affect a wide variety of entities. Table 13 
indicates the sectors, as defined by the North American Industry 
Classification System (NAICS), affected by the proposed rule and their 
enterprise average annual revenue, provided by the U.S. Census Bureau, 
Statistics of U.S. Businesses (SUSB). Most DEA registrants are or are 
employed by small entities under Small Business Administration (SBA) 
standards.

                                 Table 13--Industrial Sectors of DEA Registrants
----------------------------------------------------------------------------------------------------------------
                                                                                                 Average annual
             Business activity                NAICS code          NAICS code description          revenue  ($)
----------------------------------------------------------------------------------------------------------------
Manufacturer..............................          325411  Medicinal and Botanical                   33,905,094
                                                             Manufacturing.
                                                    325412  Pharmaceutical Preparation               148,265,482
                                                             Manufacturing.
Distributor, Importer, Exporter...........          424210  Drugs and Druggists' Sundries            103,097,459
                                                             Merchant Wholesalers.
Reverse Distributor.......................            5621  Waste Collection.................          5,168,825
                                                      5622  Waste Treatment and Disposal.....         11,553,838
Pharmacy..................................          445110  Supermarkets and Other Grocery            12,740,365
                                                             (except Convenience) Stores.
                                                    446110  Pharmacies and Drug Stores.......         12,533,279
                                                  * 452210  Department Stores................      2,899,338,610
                                                  * 452311  Warehouse Clubs and Supercenters.     13,159,528,688
Analytical Labs...........................          541380  Testing Laboratories.............          3,031,746
Teaching institute........................          611310  Colleges, Universities and                97,657,501
                                                             Professional Schools.
Researcher................................        * 541715  Research and Development in the           11,331,597
                                                             Physical, Engineering, and Life
                                                             Sciences (except Nanotechnology
                                                             and Biotechnology).
Canine Handler............................          561612  Security Guards and Patrol                 3,740,383
                                                             Services.
Practitioner, Mid-level Practitioner,**             541940  Veterinary Services..............          1,067,601
 Narcotic Treatment Program, Hospital/
 Clinic.
                                                    621111  Offices of Physicians (except              2,299,354
                                                             Mental Health Specialists).
                                                    621112  Offices of Physicians, Mental                476,408
                                                             Health Specialists.
                                                    621210  Offices of Dentists..............            836,911
                                                    621330  Offices of Mental Health                     393,471
                                                             Practitioners (except
                                                             Physicians).
                                                    621391  Offices of Podiatrists...........            550,257
                                                    621420  Outpatient Mental Health and               2,982,804
                                                             Substance Abuse Centers.
                                                    621491  HMO Medical Centers..............         68,506,712
                                                    621493  Freestanding Ambulatory Surgical           5,844,323
                                                             and Emergency Centers.
                                                    622110  General Medical and Surgical             284,660,783
                                                             Hospitals.
                                                    622210  Psychiatric and Substance Abuse           48,476,596
                                                             Hospitals.

[[Page 14831]]

 
                                                    622310  Specialty (except Psychiatric and         97,844,233
                                                             Substance Abuse) Hospitals.
Chemical Manufacturer.....................             325  Chemical Manufacturing...........         80,834,558
Chemical Distributor, Chemical Importer,            424690  Other Chemical and Allied                 26,492,119
 Chemical Exporter.                                          Products Merchant Wholesalers.
----------------------------------------------------------------------------------------------------------------
Source: SUSB, 2012 SUSB Annual Datasets by Establishment Industry. (latest available) https://www.census.gov/data/datasets/2012/econ/susb/2012-susb.html (accessed 10/5/2019).
* NAICS code was updated in the 2017 NAICS. The annual revenue figures for these industries are based on
  corresponding 2012 SUSB industry data.
** Practitioners and mid-level practitioners are generally employed in one of these industries.

    Additionally, while many practitioner and mid-level practitioner 
registration application fees may be paid by the employer, some may pay 
out-of-pocket. Table 14 indicates the labor categories and average 
annual wages, as provided by the U.S. Department of Labor, Bureau of 
Labor Statistics (BLS), affected by the proposed rule.

              Table 14--Labor Categories of DEA Registrants
------------------------------------------------------------------------
                                                            Annual mean
        Occupation code              Occupation title          wage
------------------------------------------------------------------------
29-1021........................  Dentists, General......        $175,840
29-1060........................  Physicians and Surgeons         210,980
29-1071........................  Physician Assistants...         108,430
29-1171........................  Nurse Practitioners....         110,030
------------------------------------------------------------------------
Source: BLS, May 2018 National Occupational Employment and Wage
  Estimates, United States. https://www.bls.gov/oes/current/oes_nat.htm
  (accessed 10/5/2019).

    The listing of industry sectors and labor categories in Tables 13 
and 14 are not intended to be exhaustive but to generally represent DEA 
registrants.
Economic Impact Analysis of Proposed Fee
    The proposed fee, if implemented, is expected to have two levels of 
impact. Initially, the increase in the fee will impact the registrants. 
Then the fee increase or portion of the fee increase is expected to be 
eventually passed on to the general public. To be analytically 
conservative, the analysis below assumes that the impact of the fee 
increase is absorbed entirely by the registrants.
    DEA assumes that the registration fees are business expenses for 
all registrants. As a result, the increase in the fee will be dampened 
by reduced tax liability, as a result of the increase in registration 
fee expense. For example, if a practitioner pays an additional $52 per 
year in registration fees and the combined federal and state income tax 
is 35 percent, the net cash impact is $34, not $52. The additional 
expense of $52 causes income/profit to decrease by $52, decreasing the 
tax liability by $18. The net cash outlay is $34.\40\ Again, to be 
analytically conservative, the analysis does not consider the impact of 
reduced tax liability.
---------------------------------------------------------------------------

    \40\ This example is for illustration purposes only. Each entity 
should seek competent tax advice for tax consequences of the 
proposed rule.
---------------------------------------------------------------------------

    As individual practitioners and small businesses are expected to 
experience the greatest effect, DEA examined the proposed fees as a 
percentage of income for physicians, dentists, physician assistants, 
nurse practitioners, and small businesses. Physicians, dentists, 
physician assistants, and nurse practitioners reflect a representative 
sub-group of the practitioner and mid-level practitioner registrant 
groups. The proposed fee for practitioners and mid-level practitioner 
of $888 per 3 years represents a $157 increase over the current fee of 
$731 per 3 years. The annual increase is $52, representing 0.025 
percent, 0.030 percent, 0.048 percent, and 0.048 percent of average 
annual income for physicians, dentists, physician assistants, and nurse 
practitioners, respectively. Table 15 indicates the annual effect as a 
percentage of income. The impact on small businesses is discussed in 
the Regulatory Flexibility Act section.

                        Table 15--Proposed Fee Increase as Percentage of Annual Mean Wage
----------------------------------------------------------------------------------------------------------------
                                                                                                    Annual fee
                                                                                    Annual mean     increase of
              Occupation code                          Occupation title                wage         annual mean
                                                                                                     wage (%)
----------------------------------------------------------------------------------------------------------------
29-1060....................................  Physicians and Surgeons............        $210,980           0.025
29-1021....................................  Dentists, General..................         175,840           0.030
29-1071....................................  Physician Assistants...............         108,430           0.048
29-1171....................................  Nurse Practitioners................         110,030           0.048
----------------------------------------------------------------------------------------------------------------


[[Page 14832]]

    Additionally, the effect of the fee increase is diminished by an 
estimated increase in registrant income. The table below describes the 
annual-equivalent fee as a percentage of income in 2012, year of the 
last fee increase, and 2021. This analysis assumes that the fee 
increase is absorbed personally by each practitioner/mid-level 
practitioner. In 2012, the new fee of $244 (on an annual basis) 
represented approximately 0.15 percent, 0.13 percent, 0.26 percent, and 
0.27 percent of annual income for dentists, physicians, physician 
assistants, and nurse practitioners, respectively. While proposed fees 
are 21 percent above the current fees implemented in 2012, average 
incomes for dentists, physicians, physician assistants, and nurse 
practitioners are estimated to increase 12 percent, 17 percent, 26 
percent, and 30 percent, respectively.\41\ This estimated increase in 
average income lessens the effect of the fee increase as a percentage 
of average income. The proposed fees are estimated to represent 
approximately 0.16 percent, 0.13 percent, 0.25 percent, and 0.25 
percent of annual income for dentists, physicians, physician 
assistants, and nurse practitioners, respectively. Furthermore, a 21 
percent increase ($731 to $888) over nine years, from FY 2012 to FY 
2021, equates to 2.2 percent annual rate (on compound annual growth 
rate basis), which is similar to the inflation rate. The same increase 
equates to 1.8 percent annual rate over 11 years, FY 2012 to FY 2023. 
This analysis ignores the dampening effect of registration fees as a 
business expense and the potential that the fee increase might be 
passed on to customers. Table 16 represents fees as percentage of 
average income.
---------------------------------------------------------------------------

    \41\ From Table 15, the increase in annual mean wages from 2012 
to 2021 are for dentists 12 percent (182,140/163,240-1), physicians 
17 percent (221,440/190,060-1), physician assistants 26 percent 
(116,415/92,460-1), and nurse practitioners 30 percent (119,320/
91,450-1).

                                            Table 16--Fees as Percentage of Annual Mean Wage in 2012 and 2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2012            2018                                            2021
                                         ---------------------------------------------------------------------------------------------------------------
            Occupation title                Annual mean   Annual fee ($)    Fee of wage     Annual mean     Annual mean   Annual fee ($)    Fee of wage
                                             wage ($)            *              (%)          wage ($)       wage ($) **         ***             (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dentists, General.......................         163,240             244            0.15         175,840         182,140             296            0.16
Physicians and Surgeons.................         190,060             244            0.13         210,980         221,440             296            0.13
Physician Assistants....................          92,460             244            0.26         108,430         116,415             296            0.25
Nurse Practitioners.....................          91,450             244            0.27         110,030         119,320             296            0.25
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: BLS. https://www.bls.gov/oes/tables.htm (accessed 10/5/2019).
* The current fee is $731 per 3 years, annual-equivalent of $244.
** Annual mean wage data for 2012 and 2018 is provided by the Bureau of Labor Statistics. The 2021 annual mean wage figures are estimated based on
  linear extrapolation, where an average annual increase is calculated from years 2012 to 2018, then extending out the increase for 3 more years to
  2021.
*** The proposed fee is $888 per 3 years, annual-equivalent of $296.

    Exempt from the payment of registration fees are any hospital or 
other institution that is operated by an agency of the United States, 
of any State, or any political subdivision of an agency thereof. 
Likewise, an individual who is required to obtain a registration in 
order to carry out his/her duties as an official of a federal or State 
agency is also exempt from registration fees.\42\ Fee exempt 
registrants are not affected by the proposed fees.
---------------------------------------------------------------------------

    \42\ See 21 CFR 1301.21 for complete fee exemption requirements.
---------------------------------------------------------------------------

d. Analysis of Benefits, Costs, and Transfers
Benefits
    Benefits of the proposed rule are an extension of the benefits of 
the DCP, without the need for any additional congressional 
appropriations. The DCP is a strategic component of United States law 
and policy aimed at preventing, detecting, and eliminating the 
diversion of controlled substances and listed chemicals into the 
illicit market while ensuring a sufficient supply of controlled 
substances and listed chemicals for legitimate medical, scientific, 
research, and industrial purposes. The absence of or significant 
reduction in this program would result in enormous costs for the 
citizens and residents of the U.S. due to the diversion of controlled 
substances and listed chemicals into the illicit market as discussed 
earlier in this document.
Costs
    This proposed rule has little or no cost, as fees to DEA are 
transfer payments.
Transfers
    The difference between the current fees and the proposed new fee--
the fee increase--is $318 million over the three year period, FY 2021-
FY 2023, or approximately $106 million annually. Specifically, the 
difference in the fees projected to be collected under the current fee 
rates and in the fees projected to be collected under the proposed new 
fee rates is $102 million, $105 million, and $110 million in FY 2021, 
FY 2022, and FY 2023, respectively. Table 17 summarizes the estimated 
collections under the current fee, estimated collections under the 
proposed fee, and the difference between the current and the proposed 
fees.

                         Table 17--Estimated Collections under Current and Proposed Fees
----------------------------------------------------------------------------------------------------------------
              Estimated Collections                FY 2021  ($M)   FY 2022  ($M)   FY 2023  ($M)    Total ($M)
----------------------------------------------------------------------------------------------------------------
Current Fee.....................................             474             491             514           1,479
Proposed Fee....................................             576             596             625           1,797
Difference......................................             102             105             110             318
----------------------------------------------------------------------------------------------------------------


[[Page 14833]]

    The present value of the transfer is $299 million at 3 percent 
discount rate and $277 million at 7 percent discount rate.
    Executive Order 13771 was issued on January 30, 2017, and published 
in the Federal Register on February 3, 2017. 82 FR 9339. This proposed 
rule is not expected to be subject to the requirements of Executive 
Order 13771 because this proposed rule is expected to result in no more 
than de minimis costs.
Executive Order 12988, Civil Justice Reform
    This rulemaking meets the applicable standards set forth in 
Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice 
Reform to eliminate ambiguity, minimize litigation, establish clear 
legal standards, and reduce burden.
Executive Order 13132, Federalism
    This rulemaking does not preempt or modify any provision of State 
law, nor does it impose enforcement responsibilities on any State, nor 
does it diminish the power of any State to enforce its own laws. 
Accordingly, this rulemaking does not have federalism implications 
warranting the application of Executive Order 13132.
Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments
    This rule does not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
the distribution of power and responsibilities between the Federal 
Government and Indian tribes.
Regulatory Flexibility Act
    The Acting Administrator, in accordance with the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601-602, has reviewed this proposed 
rule and by approving it, certifies that it will not, if promulgated, 
have a significant economic impact on a substantial number of small 
entities.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities unless it can certify that the rule will not have a 
significant impact on a substantial number of small entities. For 
purposes of the RFA, small entities include small businesses, nonprofit 
organizations, and small governmental jurisdictions. DEA evaluated the 
impact of this rule on small entities, and discussions of its findings 
are below.
    As discussed above and in the Economic Analysis section above, DEA 
analyzed three fee calculation methodologies--Flat Fee, Past-Based, and 
Weighted-Ratio. DEA selected the Weighted-Ratio (current) methodology 
to calculate the proposed new fee structure. This approach has been 
used since Congress established registration fees and continues to be a 
reasonable reflection of differing costs. The registration fees under 
the weighted-ratio option result in differentiated fees among 
registrant groups, where registrants with larger revenues pay higher 
fees than registrants with lower revenues. Furthermore, the weighted-
ratio does not create a disparity in the relative increase in fees from 
the current to the proposed fees. The weighted ratios used by DEA to 
calculate the current fee have proven effective and reasonable over 
time. Additionally, the weighted-ratio calculation methodology 
generally reflects the differences in activity level, notably in 
inspections, scheduled investigations and other control and monitoring, 
by registrant category; for example, these costs are greatest for 
manufacturers. DEA selected this option because it is the only option 
that results in reasonable fees for all registrant groups.
    This approach would increase fees proportionally (21 percent) 
across all registrant groups, maintaining the weighted ratio of 1, 3, 
6.25, and 12.5. The annual increase in fees are $52, $327, and $652 
based on business activity. The table below summarizes the difference 
in fees between the proposed and current fees.

                          Table 18--Difference in Fees Under Current and Proposed Fees
----------------------------------------------------------------------------------------------------------------
                                       Total                                           Total
                                   registrations   Current fees    Proposed fees    collections    Difference in
        Business activity           (FY 2021-FY         ($)             ($)       under proposed    fees ($) *
                                       2023)                                         fees ($)
----------------------------------------------------------------------------------------------------------------
Registrants on Three Year
 Registration Cycle:
    Pharmacy....................          80,199             731             888      71,216,712             157
    Hospital/Clinic.............          16,638             731             888      14,774,544             157
    Practitioner................       1,356,876             731             888   1,204,905,888             157
    Teaching Institution........             130             731             888         115,440             157
    Mid-level Practitioner (MLP)         539,899             731             888     479,430,312             157
Registrants on Annual
 Registration Cycle:
    Manufacturer................           1,733           3,047           3,699       6,410,367             652
    Distributor.................           1,999           1,523           1,850       3,698,150             327
    Researcher/Canine Handler...          15,113             244             296       4,473,448              52
    Analytical Lab..............           2,724             244             296         806,304              52
    Importer....................             666           1,523           1,850       1,232,100             327
    Exporter....................             792           1,523           1,850       1,465,200             327
    Reverse Distributor.........             219           1,523           1,850         405,150             327
    Narcotic Treatment Program..           5,935             244             296       1,756,760              52
    Chemical Manufacturer.......             624           3,047           3,699       2,308,176             652
    Chemical Importer...........             606           1,523           1,850       1,121,100             327
    Chemical Distributor........             988           1,523           1,850       1,827,800             327
    Chemical Exporter...........             450           1,523           1,850         832,500             327
                                 -------------------------------------------------------------------------------
        Total...................       2,025,591             N/A             N/A   1,796,779,951             N/A
----------------------------------------------------------------------------------------------------------------
* The difference for registrations on a three-year cycle is $157 or $52 on annual basis.


[[Page 14834]]

    As shown in Table 13, the proposed fees would affect a wide variety 
of entities across many industry sectors. As some industry sectors are 
expected to consist primarily of DEA registrants, (i.e., 446110-
Pharmacies and Drug Stores, 622110-General Medical and Surgical 
Hospitals, etc), this proposed rule is expected to affect a substantial 
number of small entities.
    DEA compared the annual increase in fees from current fees to 
proposed fees for the smallest of small businesses in each industry 
sectors. For each of the affected industry sectors, the annual increase 
was not more than 0.1 percent of average annual revenue. The table 
below summarizes the results.

                                             Table 19--Proposed Fee Increase as Percentage of Annual Revenue
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Average revenue
                                                                        Enterprise        Number of            per         Fee increase    Fee increase
              NAICS code                   NAICS code description      size (number    establishments     establishment         ($)       of revenue (%)
                                                                       of employees)                           ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
325..................................  Chemical Manufacturing.......             0-4             3,148         1,938,546             652          0.0319
325411...............................  Medicinal and Botanical                   0-4               108           727,444             652          0.0851
                                        Manufacturing.
325412...............................  Pharmaceutical Preparation              * 5-9               129         2,639,287             652          0.0235
                                        Manufacturing.
424210...............................  Drugs and Druggists' Sundries             0-4             3,630         1,367,131             327          0.0239
                                        Merchant Wholesalers.
424690...............................  Other Chemical and Allied                 0-4             3,352         2,007,996             327          0.0154
                                        Products Merchant
                                        Wholesalers.
445110...............................  Supermarkets and Other                    0-4            23,710           453,787              52          0.0108
                                        Grocery (except Convenience)
                                        Stores.
446110...............................  Pharmacies and Drug Stores...             0-4             6,360         1,069,655              52          0.0046
452112...............................  Discount Department Stores...             0-4                 6           266,167              52          0.0184
452910...............................  Warehouse Clubs and                       0-4                12           326,333              52          0.0150
                                        Supercenters.
541380...............................  Testing Laboratories.........             0-4             2,415           297,737              52          0.0165
541712...............................  Research and Development in               0-4             5,013           427,790              52          0.0115
                                        the Physical, Engineering,
                                        and Life Sciences (except
                                        Biotechnology).
541940...............................  Veterinary Services..........             0-4             8,881           292,166              52          0.0168
561612...............................  Security Guards and Patrol                0-4             2,162           114,198              52          0.0429
                                        Services.
5621.................................  Waste Collection.............             0-4             3,853           365,902             327          0.0844
5622.................................  Waste Treatment and Disposal.             0-4               616           461,159             327          0.0670
611310...............................  Colleges, Universities, and               0-4               372           913,078              52          0.0054
                                        Professional Schools.
621111...............................  Offices of Physicians (except             0-4            95,648           447,715              52          0.0109
                                        Mental Health Specialists).
621112...............................  Offices of Physicians, Mental             0-4             8,980           253,837              52          0.0193
                                        Health Specialists.
621210...............................  Offices of Dentists..........             0-4            50,781           330,868              52          0.0148
621320...............................  Offices of Optometrists......             0-4            10,939           269,348              52          0.0182
621330...............................  Offices of Mental Health                  0-4            16,149           145,005              52          0.0338
                                        Practitioners (except
                                        Physicians).
621391...............................  Offices of Podiatrists.......             0-4             5,300           288,546              52          0.0170
621420...............................  Outpatient Mental Health and              0-4             1,810           211,249              52          0.0232
                                        Substance Abuse Centers.
621491...............................  HMO Medical Centers..........           * 5-9                16           620,188              52          0.0079
621493...............................  Freestanding Ambulatory                   0-4             1,011           549,974              52          0.0089
                                        Surgical and Emergency
                                        Centers.
622110...............................  General Medical and Surgical              0-4                39        10,621,308              52          0.0005
                                        Hospitals.
622210...............................  Psychiatric and Substance             * 20-99                27         5,142,444              52          0.0010
                                        Abuse Hospitals.
622310...............................  Specialty (except Psychiatric             0-4                21         8,561,238              52          0.0006
                                        and Substance Abuse)
                                        Hospitals.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Where the revenue figure for the smallest size category is unavailable, the next size up with available revenue figure is used.

    While this rule affects a substantial number of small businesses, 
because the economic impact for the smallest of small businesses is not 
significant, the proposed rule will not have a significant impact on 
small entities as a whole. In summary, DEA's evaluation of economic 
impact by size category indicates that the rule, if promulgated, will 
not have a significant economic impact on a substantial number of small 
entities.
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 
$154,000,000 or more (adjusted for inflation) in any one year, and will 
not significantly or uniquely affect small governments. Therefore, no 
actions were deemed subject to the provisions of the Unfunded Mandates 
Reform Act of 1995, 2 U.S.C. 1532.
Paperwork Reduction Act of 1995
    This rulemaking does not create or modify a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 
et seq.). This rulemaking would not impose additional recordkeeping or 
reporting requirements on State or local governments, individuals, 
businesses, or other organizations. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a valid OMB control number.
Congressional Review Act
    This proposed rule is a major rule as defined by the Congressional 
Review Act, 5 U.S.C. 804. This rule will result in an annual effect on 
the economy of $100,000,000 or more in the form of

[[Page 14835]]

transfers, as fees paid to DEA are considered transfer payments and not 
costs. However, this rule will not cause 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. If this rule remains a major rule in the 
final rule, DEA will submitted a copy of the final rule to both Houses 
of Congress and to the Comptroller General.

List of Subjects

21 CFR Part 1301

    Administrative practice and procedure, Drug traffic control, 
Security measures.

21 CFR Part 1309

    Administrative practice and procedure, Drug traffic control, 
Exports, Imports, Security measures.

    For the reasons set forth above, DEA proposes to amend 21 CFR parts 
1301 and 1309 as follows:

PART 1301--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS AND 
DISPENSERS OF CONTROLLED SUBSTANCES

0
1. The authority citation for part 1301 continues to read as follows:

    Authority: 21 U.S.C. 821, 822, 823, 824, 831, 871(b), 875, 877, 
886a, 951, 952, 956, 957, 958, 965.

0
2. Amend Sec.  1301.13 by revising the fourth sentence and adding a new 
fifth sentence in paragraph (e) introductory text and revising 
paragraph (e)(1) to read as follows:


Sec.  1301.13  Application for registration; time for application; 
expiration date; registration for independent activities; application 
forms, fees, contents and signature; coincident activities.

* * * * *
    (e) * * * Generally, the application fees are not refundable; 
however, they may be issued in limited circumstances at the discretion 
of the Administrator. These circumstances include: Applicant error, 
such as duplicate payments, payment for incorrect business activities, 
or payments made by persons who are exempt under this section from 
application or renewal fees; DEA error; and death of a registrant 
within the first year of the three-year registration cycle. * * *
    (1) Summary of registration requirements and limitations:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Application    Registration
          Business activity              Controlled substances     DEA application forms         fee       period (years)  Coincident activities allowed
--------------------------------------------------------------------------------------------------------------------------------------------------------
(i) Manufacturing....................  Schedules I-V...........  New--225................          $3,699               1  Schedules I-V: May distribute
                                                                 Renewal--225a...........                                   that substance or class for
                                                                                                                            which registration was
                                                                                                                            issued; may not distribute
                                                                                                                            or dispose any substance or
                                                                                                                            class for which not
                                                                                                                            registered.
                                                                                                                           Schedules II-V: May conduct
                                                                                                                            chemical analysis and
                                                                                                                            preclinical research
                                                                                                                            (including quality control
                                                                                                                            analysis) with substances
                                                                                                                            listed in those schedules
                                                                                                                            for which authorization as a
                                                                                                                            mfr. was issued.
(ii) Distributing....................  Schedules I-V...........  New--225................           1,850               1  May acquire Schedules II-V
                                                                 Renewal--225a...........                                   controlled substances from
                                                                                                                            collectors for the purposes
                                                                                                                            of destruction.
(iii) Reverse distributing...........  Schedules I-V...........  New--225................           1,850               1  .............................
                                                                 Renewal--225a...........
(iv) Dispensing or instructing         Schedules II-V..........  New--224................             888               3  May conduct research and
 (includes Practitioner, Hospital/                               Renewal--224a...........                                   instructional activities
 Clinic, Retail Pharmacy, Central                                                                                           with those substances for
 fill pharmacy, Teaching Institution).                                                                                      which registration was
                                                                                                                            granted, except that a mid-
                                                                                                                            level practitioner may
                                                                                                                            conduct such research only
                                                                                                                            to the extent expressly
                                                                                                                            authorized under state
                                                                                                                            statute. A pharmacist may
                                                                                                                            manufacture an aqueous or
                                                                                                                            oleaginous solution or solid
                                                                                                                            dosage form containing a
                                                                                                                            narcotic controlled
                                                                                                                            substance in Schedule II-V
                                                                                                                            in a proportion not
                                                                                                                            exceeding 20% of the
                                                                                                                            complete solution, compound
                                                                                                                            or mixture. A retail
                                                                                                                            pharmacy may perform central
                                                                                                                            fill pharmacy activities.
(v) Research.........................  Schedule I..............  New--225................             296               1  A researcher may manufacture
                                                                 Renewal--225a...........                                   or import the basic class of
                                                                                                                            substance or substances for
                                                                                                                            which registration was
                                                                                                                            issued, provided that such
                                                                                                                            manufacture or import is set
                                                                                                                            forth in the protocol
                                                                                                                            required in Sec.   1301.18
                                                                                                                            and to distribute such class
                                                                                                                            to persons registered or
                                                                                                                            authorized to conduct
                                                                                                                            research with such class of
                                                                                                                            substance or registered or
                                                                                                                            authorized to conduct
                                                                                                                            chemical analysis with
                                                                                                                            controlled substances.

[[Page 14836]]

 
(vi) Research........................  Schedules II-V..........  New--225................             296               1  May conduct chemical analysis
                                                                 Renewal--225a...........                                   with controlled substances
                                                                                                                            in those schedules for which
                                                                                                                            registration was issued;
                                                                                                                            manufacture such substances
                                                                                                                            if and to the extent that
                                                                                                                            such manufacture is set
                                                                                                                            forth in a statement filed
                                                                                                                            with the application for
                                                                                                                            registration or
                                                                                                                            reregistration and provided
                                                                                                                            that the manufacture is not
                                                                                                                            for the purposes of dosage
                                                                                                                            form development; import
                                                                                                                            such substances for research
                                                                                                                            purposes; distribute such
                                                                                                                            substances to persons
                                                                                                                            registered or authorized to
                                                                                                                            conduct chemical analysis,
                                                                                                                            instructional activities or
                                                                                                                            research with such
                                                                                                                            substances, and to persons
                                                                                                                            exempted from registration
                                                                                                                            pursuant to Sec.   1301.24;
                                                                                                                            and conduct instructional
                                                                                                                            activities with controlled
                                                                                                                            substances.
(vii) Narcotic Treatment Program       Narcotic Drugs in         New--363................             296               1  .............................
 (including compounder).                Schedules II-V.          Renewal--363a...........
(viii) Importing.....................  Schedules I-V...........  New--225................           1,850               1  May distribute that substance
                                                                 Renewal--225a...........                                   or class for which
                                                                                                                            registration was issued; may
                                                                                                                            not distribute any substance
                                                                                                                            or class for which not
                                                                                                                            registered.
(ix) Exporting.......................  Schedules I-V...........  New--225................           1,850               1  .............................
                                                                 Renewal--225a...........
(x) Chemical Analysis................  Schedules I-V...........  New--225................             296               1  May manufacture and import
                                                                 Renewal--225a...........                                   controlled substances for
                                                                                                                            analytical or instructional
                                                                                                                            activities; may distribute
                                                                                                                            such substances to persons
                                                                                                                            registered or authorized to
                                                                                                                            conduct chemical analysis,
                                                                                                                            instructional activities, or
                                                                                                                            research with such
                                                                                                                            substances and to persons
                                                                                                                            exempted from registration
                                                                                                                            pursuant to Sec.   1301.24;
                                                                                                                            may export such substances
                                                                                                                            to persons in other
                                                                                                                            countries performing
                                                                                                                            chemical analysis or
                                                                                                                            enforcing laws related to
                                                                                                                            controlled substances or
                                                                                                                            drugs in those countries;
                                                                                                                            and may conduct
                                                                                                                            instructional activities
                                                                                                                            with controlled substances.
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *

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

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

    Authority: 21 U.S.C. 802, 821, 822, 823, 824, 830, 871(b), 875, 
877, 886a, 952, 953, 957, 958.
0
4. Revise Sec.  1309.11 to read as follows:


Sec.  1309.11  Fee amounts.

    (a) For each application for registration or reregistration to 
manufacture for distribution the applicant shall pay an annual fee of 
$3,699.
    (b) For each application for registration or reregistration to 
distribute (either retail distribution or non-retail distribution), 
import, or export a list I chemical, the applicant shall pay an annual 
fee of $1,850.
0
5. Amend Sec.  1309.12 by revising the last sentence and adding a new 
last sentence in paragraph (b) to read as follows:


Sec.  1309.12  Time and method of payment; refund.

* * * * *
    (b) * * * Generally, the application fees are not refundable; 
however, they may be issued in limited circumstances at the discretion 
of the Administrator. These circumstances include: applicant error, 
such as duplicate payments, payment for incorrect business activities, 
or payments made by persons who are exempt under this section from 
application or renewal fees; DEA error; and death of a registrant 
within the first year of the three-year registration cycle.
0
6. Amend Sec.  1309.21 by revising the table in paragraph (c) to read 
as follows:


Sec.  1309.21  Persons required to register.

* * * * *
    (c) * * *

[[Page 14837]]



                              Summary of Registration Requirements and Limitations
----------------------------------------------------------------------------------------------------------------
                                                                                                    Coincident
      Business activity           Chemicals        DEA forms       Application    Registration      activities
                                                                       fee       period (years)      allowed
----------------------------------------------------------------------------------------------------------------
(1) Manufacturing............  List I,........  New--510.......           3,699               1  May distribute
                               Drug products    Renewal--510a..                                   that chemical
                                containing                                                        for which
                                ephedrine,                                                        registration
                                pseudoephedrin                                                    was issued;
                                e,                                                                may not
                                phenylpropanol                                                    distribute any
                                amine.                                                            chemical for
                                                                                                  which not
                                                                                                  registered.
(2) Distributing.............  List I,........  New--510.......           1,850               1  ...............
                               Scheduled        Renewal--510a..
                                listed
                                chemical
                                products.
(3) Importing................  List I,........  New--510.......           1,850               1  May distribute
                               Drug Products    Renewal--510a..                                   that chemical
                                containing                                                        for which
                                ephedrine,                                                        registration
                                pseudoephedrin                                                    was issued;
                                e,                                                                may not
                                phenylpropanol                                                    distribute any
                                amine.                                                            chemical for
                                                                                                  which not
                                                                                                  registered.
(4) Exporting................  List I,........  New--510.......           1,850               1  ...............
                               Scheduled        Renewal--510a..
                                listed
                                chemical
                                products.
----------------------------------------------------------------------------------------------------------------


    Dated: March 9, 2020.
Uttam Dhillon,
Acting Administrator.
[FR Doc. 2020-05159 Filed 3-12-20; 8:45 am]
 BILLING CODE 4410-09-P