[Federal Register Volume 85, Number 143 (Friday, July 24, 2020)]
[Rules and Regulations]
[Pages 44710-44734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16169]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1301 and 1309

[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: Final rule.

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SUMMARY: The Drug Enforcement Administration (DEA) is 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 (CSA). This final rule adopts 
the notice of proposed rulemaking published on March 16, 2020, to 
change the fee schedule and codify existing practices of the issuance 
of refunds by DEA for applicant registration fees, without change.

DATES: This final rule is effective October 1, 2020. The new fee 
schedule will be in effect for all new applications submitted on or 
after October 1, 2020, and for all renewal applications submitted on or 
after October 1, 2020.

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

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. The DCP is responsible for maintaining a closed system 
of distribution by preventing diversion of controlled substances and 
listed chemicals in the United States and enforcing the provisions of 
the CSA for DEA. The DCP regulates over 1.8 million registrants, 
ensuring their compliance with the CSA.

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. The DCP 
implements and enforces the CSA to help prevent, detect, and eliminate 
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.\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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The Proposed Rule

    DEA published a notice of proposed rulemaking (NPRM) on March 16, 
2020, in the Federal Register, proposing new registration and 
reregistration fees for registrants, as well as proposing to codify 
existing practices of issuing refunds for these fees in limited

[[Page 44711]]

circumstances. 85 FR 14810. In the NPRM, DEA proposed to amend 21 CFR 
1301.13, 1309.11, 1309.12, and 1309.21 within the Code of Federal 
Regulations.
    In the NPRM, DEA proposed a new fee of $3,699 per year for 
manufacturers of controlled substances. For distributors, reverse 
distributors, importers, and exporters of controlled substances, DEA 
proposed a new fee of $1,850 per year. For controlled substance 
business activities involving dispensing, a new fee of $888 per three 
year cycle was proposed. For all other business activities of 
controlled substances (research, narcotic treatment programs (NTPs), 
and chemical analysis), the proposed new fee was $296 per year. For 
manufacturers of list I chemicals, DEA proposed a new fee of $3,699 per 
year. For distributors, importers, and exporters of list I chemicals, 
DEA proposed a new fee of $1,850 per year.
    This final rule adopts the March 16, 2020, NPRM proposal to change 
the fee schedule and codify existing practices of the issuance of 
refunds by DEA for applicant registration fees, without change.

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\ Upon AMA's 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 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 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 DCP. Thus, in identifying the 
activities that constitute the DCP, DEA looks across the agency

[[Page 44712]]

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's 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, which require that 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 Fiscal Year (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 a 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 fee 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 
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 U.S. 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

[[Page 44713]]

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, 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.
    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 increase will fund personnel and operations supporting the DCP's 
mission to prevent and detect diversion, protect the closed system of 
distribution in the U.S., 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).

IV. Discussion of Comments

    Following publication of the NPRM on March 16, 2020, 85 FR 14810-
14837, DEA received twelve comments in response to the rule. Of these 
comments, five comments are out of scope in their entirety, and did not 
address the fee calculation or the issuance of refunds by DEA for 
applicant registration fees. Two comments supported the proposed rule 
in part. The remainder of the comments expressed concern about the fee 
increase, as further described below.

Support for the Fee Increase and Proposal To Grant Registration Refunds

    Issue: An association agreed with DEA's proposed methodology for 
the new fee calculation and the proposal to grant registration fee 
refunds under certain circumstances. The commenter expressed its 
appreciation for DEA's acknowledgement that there will be a certain 
amount of honest errors either on the part of the registrant or on 
DEA's part. This commenter wrote that the proposed rule provides a 
useful explanation of the three alternative methodologies to calculate 
the new registration fees and agreed with DEA's selection of the 
weighted-ratio method. The commenter wrote that because all supply 
chain trading partners share a responsibility for helping to avoid the 
misuse/abuse of the controlled substances and other products that DEA 
regulates, adopting a method that applies an equivalent increase to all 
registrants is reasonable.
    Another association also supported the proposal to allow the 
Administrator to refund registration fees under certain circumstances. 
They requested that information regarding the refund process be easily 
accessible, and that an efficient process be established to issue the 
refunds.
    DEA Response: DEA appreciates the support for the selected fee 
calculation methodology, and the codification of DEA policy regarding 
refunding of registration fees in certain circumstances. In developing 
the fee schedule, DEA conducted a thorough analysis of the identified 
fee calculation options--including the anticipated economic impact on 
registrants--and determined that the weighted-ratio option represents 
the most reasonable approach to calculate registrant fees sufficient to 
fully fund the DCP.
    Based on the Administrator's discretionary authority, the refunds 
for fees will be issued under limited circumstances, to include 
applicant error, DEA error, and death of a registrant within the first 
year of the three-year registration cycle. The process for obtaining a 
refund will be made available on DEA Diversion Control's website 
(www.deadiversion.usdoj.gov).

Objection to the Fee Increase

Auditing Mechanisms
    Issue: Two commenters, one of whom is a physician, the other of 
whom is anonymous, raised concern about tracking DEA's accountability 
with respect to the DCFA. These commenters wrote that an audit should 
be done on the DCFA to avoid waste and to ensure that the DCFA does not 
become a blank check for DEA to do whatever they want with it. In 
particular, the commenters were concerned with how the fees are being 
spent. The physician commenter objected to the fee increase and 
proposed that an independent, non-

[[Page 44714]]

governmental audit be performed on an annual basis to ensure that there 
is no fraud or waste of the fees.
    DEA Response: As required by the Chief Financial Officers (CFO) 
Act, DOJ OIG annually audits DEA's financial statements, using a third 
party auditor (currently KPMG). These audits cover all of DEA's funding 
sources and lines of business, including the DCFA. DEA has received an 
unqualified audit opinion for approximately twenty years.
    Additionally, DEA has established a robust system of internal 
controls to ensure that DEA recovers the full cost of the DCP, and that 
the DCFA is used only for all of that program's costs, as directed by 
law. These internal controls over non-personnel expenses are managed by 
the Cost Diversion Validation Unit. This unit is independent of the DCP 
and resides within the Financial Management Division, which is 
responsible for all of DEA's financial management, including that of 
the DCFA. The unit reviews every DCFA expenditure over $500 for a 
justification for how it relates to the DCP and ensures that DCFA 
funding is in compliance with established methodologies. The Cost 
Diversion Validation Unit recommends methodologies for the appropriate 
and consistent use of DCFA funding across commodities and cost areas, 
to ensure the funding is used to pay for only costs attributable to the 
DCP.
    Along with the oversight of the Cost Diversion Validation Unit over 
non-personnel expenses, DEA's Office of Resource Management reviews the 
investigative work performed by DEA's workforce, including Special 
Agents, on a quarterly basis. These reviews enable DEA to ensure that 
the DCFA pays for all payroll costs associated with DCP casework and 
does not pay for the payroll or employees working on non-DCP casework. 
In instances where DCFA funded employees work on non-DCP cases, DEA's 
salaries and expenses (non-DCFA) account reimburses the DCFA for those 
payroll expenses. These internal controls ensure that DCFA funding is 
used only for the requirements of the DCP and not made available for 
non-diversion related expenses within DEA.
    DC, as part of DEA, must adhere to Office of Management and Budget 
(OMB) Circular A-123, Management's Responsibility for Enterprise Risk 
Management,\9\ and Internal Control and Federal Managers' and Financial 
Integrity Act \10\ which have been at the center of Federal 
requirements to improve accountability in Federal programs and 
operations since 1981. Under OMB Circular A-123, DEA must maintain 
internal controls that reduce the risk of fraud, waste, and error. DEA 
is also responsible for establishing and maintaining internal controls 
to achieve specific internal control objectives related to operations, 
reporting, and compliance.
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    \9\ Office of Management and Budget (OMB) Circular No. A-123, 
Management's Responsibility for Internal Control.
    \10\ 31 U.S.C. 3512.
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    In addition to DEA's internal inspection and evaluation practices, 
DEA's programs are subject to external audits and reviews, as part of 
maintaining the public's trust in DEA's ability to manage resources in 
fulfillment of its mission. DOJ, OIG, and the Government Accountability 
Office (GAO) are the primary auditing agencies that review DEA's 
programs on an ad hoc basis. The outcome of external audits, whether 
positive or negative, has a significant impact on DEA's programs.
    Moreover, all budget submissions for the DCP are subject to 
multiple levels of scrutiny and review within DEA, the DOJ, and OMB. 
Each of DEA's annual budget requests to Congress, which includes the 
DCP, is available for public view. Each budget request is examined and 
approved by both DOJ and OMB.
    The DCP's implementation of internal inspection and evaluation 
practices coupled with federal mandates established by OMB, OIG, and 
GAO are sufficient to maintain DC's program integrity, efficiency, and 
transparency. All aspects of the DCP are inspected to detect any waste, 
fraud, or abuse. An external, non-governmental audit, as suggested by 
the physician commenter, would require a large expenditure of 
registrant fees, and would be excessive, given the other safeguards 
that are already in effect.
Hiring of Additional Personnel To Address DCP's Mission; Finalizing 
Rules and Updates to DEA Publications
    Issue: The anonymous commenter raised concern about the increase in 
fees as it relates to the hiring of additional personnel, and the 
physician questioned what is being funded by registrant fees. The 
anonymous commenter stated that hiring personnel did not seem to be the 
answer because enforcement was not working on the opioid epidemic. The 
anonymous commenter further suggested that hiring additional people 
would not solve the problems of the opioid epidemic, and opined that 
DEA believes that additional people will magically solve the opioid 
epidemic. Both commenters stated that DEA has failed to meet many 
Congressional deadlines that were imposed by the enactment of various 
legislation. The physician also added that DEA has been slow to draft 
implementing regulations for statutory amendments to the CSA, and to 
draft other rules, schedule substances, or update manuals and 
publications that help registrants.
    DEA Response: As a part of executing the DCP's mission, DEA is 
focused on combatting the opioid epidemic, as well as addressing the 
diversion of other controlled substances and listed chemicals. While 
DEA knows that the hiring of additional people will not automatically 
solve the epidemic, hiring more people will improve DEA's ability to 
successfully investigate diversion. By increasing personnel and 
devoting more resources towards prioritizing and drafting rules, DEA 
will be able to more efficiently and effectively meet deadlines and 
address diversion.
    While DEA aims to meet every deadline Congress puts in place when 
creating new legislation, DEA's rulemaking process involves many steps. 
Where Congress has enacted statutory amendments to the CSA, such as the 
SUPPORT Act, DEA complies with these laws while finalizing implementing 
regulations for these amendments. Moreover, finalizing and implementing 
rules require the publication of proposed rules or interim final rules 
and final rules. These documents require significant drafting and 
analysis, as well as a lengthy review process to ensure that the rule 
is legal, fair, and will be effective in meeting the goal of the 
particular rule.
    In the proposed rule to increase fees, DEA chose not to discuss any 
other proposed rules or their status, due to the sensitive nature of 
rule drafting, as well as the fact that proposed rules can change prior 
to finalization. However, DEA received comments questioning the 
necessity of the fee increase due to the fact that implementing 
regulations for statutory amendments to the CSA, as well as a 
regulation related to marijuana growers, have yet to be published. As 
stated above, the rulemaking process is lengthy and involves multiple 
phases. In 2019, DEA published two NPRMs, three Final Rules, and two 
Notices (regarding the setting of the aggregate production quota and 
assessment of annual needs). So far, in 2020, DEA has published three 
NPRMs and one Notice (to adjust the established aggregate production 
quotas and assessment of annual needs).
    The physician commenter also noted that DEA's Diversion Control 
website Manuals and Publications section contains older manuals. 
However, this

[[Page 44715]]

is not indicative of DEA's continuous efforts to keep policies and 
procedures current with regulations, technology, and industry best 
practices. DEA is in the process of updating the entire Manuals and 
Publications section on its website and several manuals are being 
drafted. DCFA funds will be used to provide the DCP with additional 
resources to update the manuals and outdated documents. The physician 
also contended that DEA publishes an average of only three scheduling 
actions per year. This is inaccurate. Since FY 2019 alone, DEA has 
published in the Federal Register over twenty final rules placing 
dangerous substances in schedules I and II of the CSA.
Quotas
    Issue: The physician commenter raised a concern about DEA's process 
for setting quotas. In particular, the commenter did not understand how 
proposing new use-specific quotas would expedite the process or provide 
clarity. The commenter wrote that it is unsettling to pay for 
leadership that is unsure about how certain processes under their 
purview work.
    DEA Response: DC's leadership fully understands the quota setting 
process and plays an active role in the rule-making process.
    In addition, DEA is committed to ensuring that quotas are set in 
such a way as to grant manufacturers the ability to provide controlled 
substances to meet the demand of the legitimate medical, scientific, 
industrial, and research needs of the U.S. DEA is required to 
understand what is available for legitimate patient need versus what is 
available for product development to properly calculate the Aggregate 
Production Quota (APQ) and individual quotas. Additionally, as the 
number of manufacturers continues to increase and industry practices 
and specializations change, the ability to methodically track movements 
of material between registrants at all stages of manufacturing becomes 
more critical. Use-specific subcategories improve the efficiency of the 
application and reporting process for DEA-registered manufacturers. The 
specification of quota subcategories reflects the manufacturing 
activity of the applying DEA registrant, has facilitated the issuance 
of manufacturing and procurement quotas, and has provided a more 
accurate calculation of the APQs for the U.S. by preventing double 
counting of quotas. Use-specific quotas have been informally in place 
for well over a decade with no complaints from the registrants who have 
found the system beneficial in separating their product development and 
packaging efforts from their commercial manufacturing efforts when 
requesting adjustments to their quotas.
Education and Outreach Programs
    Issue: The physician commenter suggested that DEA could save money 
and manpower by eliminating programs such as DEA 360 Strategy, National 
Take-Back Initiative (NTBI), and Tactical Diversion Squads (TDS). This 
commenter believes that DEA has not been proactive enough in its 
mission to address or prevent the opioid problem.
    DEA Response: DEA works diligently to achieve operational 
efficiencies in all of its programs, including the DCP, while keeping 
costs as low as possible. 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, DEA's 360 Strategy, 
NTBI, and TDS groups are necessary tools to aid ending the deadly cycle 
of prescription opioid misuse.
    Through DEA's 360 program, prescription opioid misuse is targeted 
using a holistic approach while leveraging enforcement resources. Given 
the number of opioid-related deaths, the coordinated and targeted 
enforcement efforts of federal, state, and local law enforcement are 
needed resources to help fight the epidemic. This epidemic is too 
massive for state and local governments to handle alone. The opioid 
epidemic is a national matter, which requires coordinated law 
enforcement, diversion control, and community outreach efforts, and 
which is aided by DEA's 360 Strategy initiative.
    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 did not know how to dispose of them. 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. NTBI events have been overwhelmingly successful for over a 
decade, and have resulted in the collection and disposal of over 6,349 
tons of pharmaceuticals. The huge volume of drugs must be transported 
for proper disposal. The assistance from local points of contact is 
necessary to pick up collected drugs for disposal in accordance with 
Federal and State environmental standards. The NTBI program is an 
example of the DCP's commitment to community outreach efforts and the 
need to properly dispose of unused and unwanted 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.
    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 capabilities 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 and made more than 2,100 arrests per year.
    The opioid epidemic is a national matter, which requires consistent 
coordinated law enforcement, diversion control, and community outreach 
efforts through DEA's 360, NTBI, and TDSs to represent the interests of 
the nation as a whole. Elimination of these programs would reduce the 
awareness of the opioid crisis, increase opportunities for diversion, 
and possibly result in a rise in opioid-related deaths.
Fee Calculation Methodology
    Issue: The physician commenter believes that the methods described 
by the Agency that were used to come up with the fee increase seem 
arbitrary.
    DEA Response: In developing this rule, DEA considered three 
methodologies to calculate registration and reregistration fees. DEA 
selected the current weighted-ratio option to calculate the 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 new fees. The weighted-ratios used by DEA to calculate the current 
fee have proven effective and reasonable over time, and generally 
reflect the differences in activity level, notably in inspections, 
scheduled investigations, and other control and monitoring, by 
registrant category (i.e., these costs are higher for

[[Page 44716]]

manufacturers). DEA selected this option because it is the only option 
that resulted in ``reasonable'' fees for all registrant groups.
Fees for Registrant Categories
    Issue: The pharmaceutical company objected to the increased 
registration fees, especially for small businesses. This commenter 
proposed two alternatives for assessing registration fees: Assessing 
fees based on the size of the business, or having registrants with a 
significant history of CSA violations pay higher registration fees. The 
commenter stated that in the first proposal, registration fees would be 
assessed based on the size of the business (e.g., the number of 
employees, annual earnings, etc.). The commenter's second proposal 
requires registrants with a significant history of CSA violations to 
pay dramatically increased registration fees. The commenter believes 
that specific manufacturers and wholesale distributors contributed to 
the opioid epidemic by turning a blind eye to CSA laws and implementing 
regulations, and were lured by sales of opioid medications and profits 
over their responsibilities as DEA registrants.
    DEA also received a comment from an association agreeing with the 
concern for imposing disproportionately higher fees on NTPs, but 
objecting because they believe distributors will not be paying their 
fair share under the proposed ``weighted ratio option.'' The comment 
states that the ``past-based option'' would lead to a 117 percent 
increase for distributors, as opposed to the lower 21 percent that is 
being proposed. In their view, practitioners under the current and 
proposed ``weighted ration option'' would be paying too much as 
compared to manufacturers and distributors. The association also 
included a suggestion to lower fees for physicians who comply with DEA 
regulations that impose an extra cost upon the registrants, such as the 
electronic prescribing of controlled substances (EPCS) or a waiver to 
prescribe buprenorphine. The association takes the position that if 
EPCS is supposed to reduce diversion, then DCP must be incurring lower 
costs for those who adopt EPCS. Similarly, they state that physicians 
trained to prescribe buprenorphine to treat opioid use disorder are 
lowering DCP costs by lowering the costs associated with drug 
addiction.
    A company in support of the fee increase suggested that DEA 
eliminate the duplicative registration requirement. This company 
previously sent a letter to the Office of Legal Policy, U.S. Department 
of Justice, dated August 14, 2017, requesting that DEA amend the 
regulations to waive the chemical registration requirement for 
wholesale distributors who are also registered as controlled substance 
handlers. The company further stated that it is redundant, unnecessary, 
and unfair to make a single facility pay two registration fees. The 
company was specifically concerned that wholesale distributors that 
possess and distribute both controlled substances and certain iodine 
products must apply and pay registration fees for two separate 
registrations, even though they are storing and distributing these 
products at a single warehouse.
    DEA Response: It is important to emphasize that the focus of DEA's 
fee calculation methodology is to account for DCP program costs among 
the registrant categories and not to set fees according to business 
size or quantities of controlled substances handled. DEA provided 
economic impact analysis demonstrating the relatively minor proportion 
of registrant's total income needed to pay a registration fee. 
Additionally, the analysis showed that the percentage fee increase is 
comparable to inflation.
    DEA continues to review possible methodologies for differentiating 
fees between various registrant groups. However, at this time, DEA has 
determined that it is both practicable and reasonable to continue to 
apply the weighted-ratio methodology without distinction between small 
and large businesses.
    Regarding using CSA violations as a factor in setting registration 
fees, DEA's statutory authority is to charge reasonable registration 
fees set at a level that ensures the recovery of the full costs of 
operating the various aspects of the DCP. As a practical matter, the 
vast majority of DEA registrants are in compliance with the CSA, and 
DEA works with any registrant who is not in full compliance with the 
CSA to bring that registrant into compliance. The CSA provides for 
mechanisms independent of the registration fee by which to exact 
financial penalties from registrants who violate the law. Registrants 
who violate the CSA may be subject to civil and criminal penalties, as 
well as forfeitures. 21 U.S.C. 841, 842, 843, 881. Additionally, DEA 
would move to suspend the registration of a person whose registration 
is inconsistent with the public interest.
    As discussed in the NPRM and in the final rule, DEA examined three 
alternative methodologies to calculate registration and reregistration 
fees. DEA did not select 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 
would 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 new fees. The selected 
methodology must be applied to all registrants. For example, DEA cannot 
only apply the past-based option to distributors.
    DEA does not have access to practitioners' rates of EPCS use or 
buprenorphine prescribing rates. In fact, many states with prescription 
drug monitoring programs prohibit law enforcement entities from using 
prescribing data without specific, independent legal authority to do so 
(e.g., a subpoena or warrant). Even so, DEA does not have the resources 
to calculate the rate of prescribing for each registrant or to 
personalize each registrant's registration fee. Additionally, allowing 
individualized calculations based on EPCS use, prescribing rates, 
business size, or type of patients served would introduce uncertainty 
and unpredictable fluctuations in the collection cycle, thereby 
jeopardizing the statutory mandate to recover the full costs of 
operating the DCP.
    Purchasers and suppliers of controlled substances and listed 
chemicals are regulated under the CSA and are therefore subject to the 
registration and reregistration requirement and fees.\11\ The CSA is 
Federal law and cannot be changed by DEA. DEA carries out the mandates 
of the CSA by preventing the diversion of controlled substances and 
listed chemicals into the illicit market, but does not have the 
authority to change Federal provisions. The commenter suggested that 
DEA eliminate the duplicative registration requirement for certain 
chemicals (e.g., iodine). The CSA requires a separate registration for 
certain chemicals to prevent its diversion into the illicit market. 
Iodine is not identified as a listed chemical that is contained in a 
drug marketed or distributed lawfully in the U.S. under the Federal 
Food, Drug, and Cosmetic

[[Page 44717]]

Act.\12\ Furthermore, iodine may be used for non-research, illegitimate 
purposes, and is also used in the illicit manufacture of 
methamphetamine. DEA requires a separate registration for this chemical 
due to the high probability that it may be diverted to the clandestine 
manufacture of methamphetamine.
---------------------------------------------------------------------------

    \11\ 21 U.S.C. 822(a)(1); 21 U.S.C. 833(b).
    \12\ 21 CFR 1300.02(1)(iv).
---------------------------------------------------------------------------

Extension of Implementation Due to Coronavirus Disease 2019 Public 
Health Emergency
    Issue: Three commenters recommended deferring the proposed fee 
increase and one objected to its implementation due to the Coronavirus 
Disease (COVID-19) pandemic and the economic uncertainty that it has 
engendered. A pharmaceutical company suggested that DEA postpone the 
fee increases and the comment period at least until January 2021, and 
noted that publishing a proposed fee increase during a worldwide health 
pandemic with looming economic uncertainties was poorly timed, as the 
nation's current priority is to focus public health and safety measures 
on the COVID-19 pandemic. An association recommended that the fee 
increases be postponed until the conclusion of the public health 
emergency, stating that implementing the proposed 21 percent increase 
would be a heavy burden to pharmacists who are already struggling 
during this time, as the pandemic has led to a decrease in patient 
services and revenues. A third commenter, also an association, urged 
that DEA defer the registration fee increases for at least 12 months 
due to the COVID-19 pandemic and resulting economic recession, or until 
the business community has recovered.
    A fourth commenter objected to the increase in practitioners' 
registration fees because physicians cannot afford to pay higher DEA 
registration and reregistration fees. It stated that Medicare payment 
rates are in the midst of a six-year freeze, and COVID-19 has led to 
steep declines in patient services and associated revenues, even for 
frontline physicians caring for patients with COVID-19, who may face a 
reduction in revenues from elective procedures and increased expenses 
due to new infection control processes and supplies.
    DEA Response: DEA recognizes that industry is experiencing unique 
challenges, including financial challenges, during the current 
coronavirus pandemic. Protecting the health and safety of our 
communities is DEA's top priority, and that commitment has continued 
during the unprecedented public health emergency caused by the ongoing 
COVID-19 pandemic. During this emergency, DC is responding quickly and 
appropriately to ensure continued access to necessary controlled 
substances. DC's efforts include supporting prescribing practices that 
limit exposure, enabling uninterrupted access to practitioners, and 
safeguarding a consistent and reliable drug supply. Some of the ways DC 
continues to fulfill its mission and serve the American people during 
this challenging time include:

     Working with registrants to facilitate satellite 
hospitals and clinic locations;
     Temporarily lifting restrictions on DEA's ``five 
percent rule'';
     Temporarily raising aggregate production quotas for 
certain medications;
     Providing clear guidance on electronic prescribing of 
controlled substances;
     Allowing Narcotic Treatment Programs to sign invoices 
post delivery;
     Ensuring Narcotic Treatment Programs can get medication 
to their patients; and
     Supporting responsible use of telemedicine while 
providing medication assisted treatment.

    These additional COVID-19-related responsibilities have put 
additional pressure on the DCP and its resource needs.
    Moreover, DEA's scope of responsibilities has expanded due to 
Congressional mandates since the last fee schedule revision in 2012. 
DEA outlined the legal authority, the history of the fees, the need for 
an increase in fees, the methodology, and the proposed fee calculation 
in the NPRM to explain why there is a fee, why there is a periodic 
recalculation, and how the proposed new fee schedule was calculated. 
The registration fee is a statutory requirement for those seeking to 
participate in the closed system of distribution by handling, or having 
access to, controlled substances or List I chemicals. These fees fund 
the DCP, which includes providing and maintaining services to DEA 
registrants.
    DEA is sensitive to the challenges facing many registrants and has 
endeavored to set the fee as low as possible, consistent with its 
statutory mandates, and has provided a 60-day comment period to solicit 
input from interested parties. DEA continuously strives to be fiscally 
responsible. The last fee increase was set in FY 2012, and was intended 
to encompass only FYs 2012-2014. Through various efforts and cost-
saving measures, the DCP has been able to operate under that fee 
structure through FY 2020. While DEA is publishing this final rule at 
this current time, the increase will not immediately go into effect on 
the date of publication of this rule. The new fee schedule will be 
implemented for all new applications submitted on or after October 1, 
2020, and for all renewal applications submitted on or after October 1, 
2020. Thus, not all registrants will be paying registration and 
reregistration fees on October 1, 2020. Those whose reregistration fees 
are due between now and September 30, 2020, will continue to pay the 
current fees until their next date of renewal. As such, only a small 
subset of registrants will be affected when the rule is first 
implemented.
    Without an adjustment in the annual registration fees, the DCP will 
be unable to continue current operations and will be in violation of 
the statutory mandate that fees ``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). Continued 
collections under the current fee schedule would 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 of distribution as outlined in the proposed rule, particularly 
at this time of increased abuse and diversion.

V. Provisions of the Final Rule

    After careful consideration of all the comments, DEA is finalizing, 
without change, the fee schedule, and codifying existing practices of 
the issuance of refunds by DEA for applicant registration fees as 
proposed in the NPRM published on March 16, 2020. 85 FR 14810-14837.

Revised Fees

    Based on thorough analysis of the identified fee calculation 
options--including the anticipated economic impact on registrants--DEA 
has determined that the weighed-ratio option represents the most 
reasonable approach to calculate registrant fees sufficient to fully 
fund the DCP.
    The fee schedule replaces the current fee schedule for controlled 
substance and chemical registrants to recover the full costs of the DCP 
so it can 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 finalizes

[[Page 44718]]

the following new fees for the FY 2021 to FY 2023 period.

                       Table 1--Registration and Reregistration Fees by Business Activity
----------------------------------------------------------------------------------------------------------------
                                                                   Current fees                     Difference
                        Business activity                               ($)        New fees  ($)        ($)
----------------------------------------------------------------------------------------------------------------
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 revised fee for the three-year
  registration period is $888. The three-year difference is $157 or an annual difference of $52.

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

                               Table 2--Overview of 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
----------------------------------------------------------------------------------------------------------------

Refund of Registration Fees

    DEA is 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. With increased 
registration fees, DEA recognizes the need to issue refunds in limited 
circumstances. These provisions of the rule will give the DEA 
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 issued for applicant error when there has been a 
duplicate payment for the same renewal, incorrect billing or incorrect 
transposing of credit card digits, payment for incorrect business 
activity, or when an applicant is fee-exempt. Refunds will be issued 
based on DEA error when DEA caused the error; for example, when DEA 
incorrectly advised that a new application was needed, or advised a 
registrant to submit payment for a wrong business activity. While these 
provisions will have no economic costs or benefits, DEA believes it is 
important to accurately codify existing practices.

VI. Need for a New Fee Calculation

    As discussed in the NPRM, DEA last adjusted the fee schedule in 
March 2012, with collections beginning in April 2012.\13\ This fee 
schedule was intended 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

[[Page 44719]]

well as unforeseen delays in hiring. As indicated by the above-
referenced 2008 OIG report, the DCP has assumed a number of costs since 
the last fee increase, including indirect pay and rightsizing, 
additional salary, and other costs attributable to diversion control 
activities. In addition, Congress has expanded DCP's responsibility to 
address the opioid epidemic public health emergency. 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.
---------------------------------------------------------------------------

    \13\ 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 opioid epidemic, 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 Staff (DS) across the nation to support its 
increased regulatory mission. In April 2012, DEA had 48 TDSs, 65 DGs 
and 17 DSs. At the end of FY 2019, DEA had 86 TDSs, 87, DG, 15 DSs, and 
16 TDS-Extensions.\14\
---------------------------------------------------------------------------

    \14\ 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 meet its increased 
responsibilities. In April 2012, DEA had 1,167 employees in DCFA funded 
positions; at the end of FY 2019, DEA had 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. 
DEA plans to increase its 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 seek 
to improve efficiencies and identify 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 drug abuse and diversion.

Fee Calculation

    As described above, DEA is delegated the task of determining the 
details of how to fulfill the statutory requirement to recover the full 
costs of operating the DCP and charging registrants reasonable fees 
relating to the registration and control ``of the manufacture, 
distribution, dispensing'' \15\ and ``importers and exporters'' \16\ of 
controlled substances and listed chemicals. In advance of actual 
expenditures, DEA must determine reasonable fees to be charged. To 
project the annual costs of the DCP, DEA uses historical data and 
projections, together with actual and current costs. Additionally, a 
reasonable fee must be calculated that will fully recover the costs of 
the DCP based on a variable number of registrants in the different 
categories of registration (e.g., manufacturers, distributors, 
importers, exporters, reverse distributors, practitioners, and 
individual researchers). Because 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), DEA must collect more than 
is actually spent to avoid running a deficit and being in violation of 
federal fiscal law.\17\ 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. Consequently, the agency must 
select and follow a single methodology throughout any given fee cycle.
---------------------------------------------------------------------------

    \15\ 21 U.S.C. 821.
    \16\ 21 U.S.C. 958(f).
    \17\ 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, DEA estimates the full cost of the DCP for the analysis 
period, which is generally three years. The corresponding registration 
fees required to pay the full cost of the DCP for the analysis period 
are then calculated by employing 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. These are long-established ratios, utilized in 
previous fee increases, and repeatedly determined to be reasonable.\18\ 
By utilizing these different ratios, DEA 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.
---------------------------------------------------------------------------

    \18\ 77 FR 15234 (March 15, 2012); 71 FR 51105 (August 29, 
2006).
---------------------------------------------------------------------------

    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. 
Practitioners, mid-level practitioners, dispensers, researchers, and 
narcotic treatment programs pay an annual registration fee of $244. For 
administrative convenience, 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, while manufacturers pay an annual fee of $3,047. 21 CFR 1301.13 
and 1309.11.
    Since the last fee schedule adjustment in March 2012,\19\ DEA 
continued to review possible alternative methodologies to differentiate 
registration fees between various registration business activities. In 
developing this 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 selected 
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

[[Page 44720]]

selected the current weighted-ratio method to calculate and 
differentiate fees between registrant groups. A detailed discussion of 
the alternatives is provided below. Additionally, the selected fee 
calculation method is summarized below and detailed in ``Proposed 
Registration Fee Schedule Calculation'' in the rulemaking docket at 
https://www.regulations.gov.
---------------------------------------------------------------------------

    \19\ 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 began 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 basis of 
current fees was to fund the DCP for the time period of FY 2012 to FY 
2014, and the fees need to be adjusted to reflect these factors. 
Specific details on the DCP budget are available in the annual 
President's Budget Submission and supplemental budget justification 
documents provided to Congress. \20\
---------------------------------------------------------------------------

    \20\ See this rulemaking docket found at www.regulations.gov.
---------------------------------------------------------------------------

    DEA must 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 two percent to cover 
Within-Grade Increases, Career Ladders,\21\ Cost of Living Adjustment, 
and increased benefits costs. Non-payroll obligations generally follow 
payroll obligations. As FTE and payroll obligations increase, non-
payroll obligations increase accordingly. Non-payroll obligations 
include items such as rent, communications, utilities, services, 
equipment, travel, etc. \22\ DEA believes its methodology supports the 
estimated budget 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.
---------------------------------------------------------------------------

    \21\ 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.
    \22\ 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, DEA 
had 48 TDSs, 65 DGs, and 17 DSs. At end of FY 2019, DEA had 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 3 summarizes the estimated number of field groups by year.

                                     Table 3--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
----------------------------------------------------------------------------------------------------------------

    Additionally, in April 2012, DEA had 1,167 employees in DCFA funded 
positions; at the end of FY 2020, DEA will have an estimated 1,803 
employees in such positions. 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 the DCP's 
enforcement and regulatory capacity, as well as its support functions. 
From an estimated FTE of 1,782 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,\23\ Cost of Living Adjustment, 
and increased benefits costs. From an estimated base of $289,450,003 in 
FY 2020, estimated payroll obligations increase to an estimated 
$311,587,162, $344,462,812, and $376,513,554 in FY 2021, FY 2022, and 
FY 2023, respectively, reflecting the increase in FTEs.
---------------------------------------------------------------------------

    \23\ 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,

[[Page 44721]]

services, equipment, travel, etc. \24\ Non-payroll obligations 
generally follow payroll obligations. As FTE and payroll obligations 
increase, non-payroll obligations also increase. The year-over-year 
increases to payroll are 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.
---------------------------------------------------------------------------

    \24\ 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 4--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, DEA also 
considers the cost components outlined below 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.\25\ 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 of collected fees 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.
---------------------------------------------------------------------------

    \25\ 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.\26\ Monthly collections and 
obligations fluctuate throughout the year. There are times when 
obligations (i.e., spending) exceed collections. This can happen 
consecutively for several months. Therefore, DEA maintains a DCFA 
balance to avoid operational disruptions due to these fluctuations. The 
estimated DCFA balance at beginning of FY 2021 is $69 million. Based on 
the history of these fluctuations, 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.
---------------------------------------------------------------------------

    \26\ ``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 outlined above, 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 to FY 2023, to fully fund the DCP.

                           Table 5--Estimated DCFA Cash Flow under New 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)

[[Page 44722]]

 
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, 
DEA would have obligations that would exceed the collections and DCFA 
balance beginning in FY 2021.

                          Table 6--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.

Selected Methodology for New Fee Calculation

    As shown in Table 5 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 in 
registration fees over the three-year period, FY 2021 to FY 2023, to 
fully fund the DCP. DEA must select a method for determining fees for 
various business activities that would generate the target collections.
    In developing this rule, DEA examined alternative methodologies to 
calculate the registration and reregistration fees in light of 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 requires 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, while 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).
    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 selected method). 
While the fee increases may be passed down to the registrants' 
customers, the analysis below assumes they are absorbed fully by the 
registrants.
    For each of the alternatives, 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,

[[Page 44723]]

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 a 
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 7--Registration Fees Under Flat Fee Option
----------------------------------------------------------------------------------------------------------------
                                                   Current fees      Option 1:      Difference    Increase  over
                Business activity                       ($)        flat fee  ($)        ($)        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.
    The calculation considered in Option 1 results in a disparity in 
fee change among registrant groups. For each registrant group to pay 
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 registrant group, 
and set fees to recover the costs associated with each group. Because 
the registration fee is not a user fee, DEA is not required to 
calculate fees according to the regulatory and enforcement costs 
associated with each registrant group. 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 for Flat Fee Option

    After consideration of the flat fee option, DEA did not select this 
option to calculate the 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. While the vast majority of registrants are 
practitioners, such as individual physicians and nurse practitioners, 
DEA registrants also include some of the largest corporations in the 
world. 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 uses historic 
investigative work hour data to apportion the cost to each registrant 
category. In considering Option 2, DEA used historic investigative work 
hour data from FY 2016-FY 2018. DEA's records provide an accurate 
apportionment of work hours for certain types of diversion control 
activities (e.g., investigations) among different classes of 
registrants. DEA estimates that approximately three 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 due 
to the unpredictable nature of this investigations. 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

[[Page 44724]]

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 8--Registration Fees Under Past-Based Option
----------------------------------------------------------------------------------------------------------------
                                                                     Option 2:                      % Increase
                Business activity                  Current fees     Past-Based      Difference     over current
                                                        ($)             ($)             ($)             (%)
----------------------------------------------------------------------------------------------------------------
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, including Agency priorities, new legislation, control of 
substances, new investigative requirements, and other program needs.

Conclusion for Past-Based Option

    DEA did not select 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 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 a reasonable 
basis for the calculation of new fees.

Weighted-Ratio Option (Current and Selected Method)

    The Weighted-Ratio Option 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: 1.0 for researchers, canine handlers, analytical 
labs, and narcotics treatment programs; 3.0 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 because 
historically costs vary and a fee must be set in advance. To determine 
the fee, the amount needed to be collected over the FY 2021 to FY 2023 
period is divided by the weighted number of estimated registrations.

                             Table 9--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

[[Page 44725]]

 
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, and a corresponding 
increase of $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 
comparable to the rate of inflation. The same increase equates to a 1.8 
percent annual rate over 11 years, from 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, it 
applies historic weighted ratios to differentiate fees among registrant 
groups. This methodology has the advantage of differentiating fees 
based on historic weighted ratios, but does not create a 
disproportionate fee increase in any registrant group.

Conclusion for Weighted-Ratio Option

    DEA selected this option to calculate the 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 option does not create a disparity in 
the relative increase in fees from the current to the new fees. The 
weighted-ratios used by DEA to calculate the current fee have proven 
effective and reasonable over time, and generally reflects the 
differences in activity level, notably in inspections, scheduled 
investigations, and other control and monitoring, by registrant 
category (i.e., 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.

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 (E.O.) 12866 and 13563. E.O. 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). E.O. 13563 is supplemental to and reaffirms the principles, 
structures, and definitions governing regulatory review as established 
in E.O. 12866. The Executive Order classifies a ``significant 
regulatory action'' requiring review by 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 estimates that this 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.\27\ The analysis 
of benefits and transfers is below. The OMB's Office of Information and 
Regulatory Affairs has determined that this rulemaking is a significant 
regulatory action under the meaning of E.O. 12866, and it therefore has 
been reviewed by the OMB.
---------------------------------------------------------------------------

    \27\ 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).

[[Page 44726]]

    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 
selected 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 one 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 
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. While the vast majority of 
registrants are practitioners, such as individual physicians and nurse 
practitioners, DEA registrants also include some of the largest 
corporations in the world. 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 two is called the Past-Based Option, and uses historic 
investigative work hour data to apportion the cost to each registrant 
category. Under Option two, 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 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. DEA did not select 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 unreasonable. 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 estimate. 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 a 
reasonable basis for the calculation of new fees.
Weighted-Ratio Option (Current and Selected Method)
    The Weighted-Ratio Option 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, it applies historic weighted ratios to 
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 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 option does not create a disparity in 
the relative increase in fees from the current to the new fees. The 
weighted-ratios used by DEA to calculate the current fee have proven 
effective and reasonable over time, and generally reflects the 
differences in activity level, notably in inspections, scheduled 
investigations, and other control and monitoring, by registrant 
category (i.e., 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 New Fees Relative to Current Fees
Affected Entities
    As of September 2019, DEA issued 1,840,501 issued controlled 
substances and chemical registrations (1,839,556 controlled substances 
registrations and 945 chemical registrations), as shown in Table 10.

         Table 10--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  ..............

[[Page 44727]]

 
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 10 are subject to the fees. Any 
hospital or other institution operated by an agency of the U.S. 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.\28\ Fee-exempt registrants are not affected by the 
new fees.
---------------------------------------------------------------------------

    \28\ 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 to FY 2023, will be 2,004,358 as shown in Table 
11. Estimated annual growth in fee-paying registrations is 
approximately 3.8 percent. The largest growth is in the MLPs. 
Approximately eight percent of all registrations are fee-exempt.

  Table 11--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............................             578             208
Distributor.............................             666             329
Reverse Distributor.....................              73  ..............
Importer................................             222             202
Exporter................................             264             150
                                         -------------------------------
    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 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, DEA issued 1,840,501 total 
controlled substances and chemical registrations (1,839,556 controlled 
substances registrations and 945 chemical registrations), as shown 
above in Table 10. DEA estimates an average total fee-paying population 
of 2,004,358 over the three-year period, FY 2021 to FY 2023, as shown 
in Table 11.
    The registrations on a three-year cycle (i.e., pharmacies, 
hospitals/clinics, practitioners, teaching institutions, and

[[Page 44728]]

mid-level practitioners), make up 99.5 percent of all registrations not 
exempt from paying registration applications fees. All other categories 
of registration (i.e., manufacturers, distributors, reverse 
distributors, importers, exporters, chemical manufacturers, chemical 
distributors, chemical importers, and chemical exporters) maintain an 
annual registration. Registration and reregistration costs vary by 
registrant category as is described in more detail in the sections 
below.
    The new fees would affect a wide variety of entities. Table 12 
indicates the sectors, as defined by the North American Industry 
Classification System (NAICS), affected by the 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 12--Industrial Sectors of DEA Registrants
----------------------------------------------------------------------------------------------------------------
                                                                                                 Average annual
            Business activity                 NAICS code          NAICS code description          revenue ($)
----------------------------------------------------------------------------------------------------------------
Manufacturer............................             325411  Medicinal and Botanical                  33,905,094
                                                     325412   Manufacturing.                         148,265,482
                                                             Pharmaceutical Preparation
                                                              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
                                                     446110   (except Convenience) Stores.            12,533,279
                                                   * 452210  Pharmacies and Drug Stores......      2,899,338,610
                                                   * 452311  Department Stores...............     13,159,528,688
                                                             Warehouse Clubs and Supercenters
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/               621111  Offices of Physicians (except             2,299,354
 Clinic.                                             621112   Mental Health Specialists).                476,408
                                                     621210  Offices of Physicians, Mental               836,911
                                                     621330   Health Specialists.                        393,471
                                                     621391  Offices of Dentists.............            550,257
                                                     621420  Offices of Mental Health                  2,982,804
                                                     621491   Practitioners (except                   68,506,712
                                                     621493   Physicians).                             5,844,323
                                                     622110  Offices of Podiatrists..........        284,660,783
                                                     622210  Outpatient Mental Health and             48,476,596
                                                     622310   Substance Abuse Centers.                97,844,233
                                                             HMO Medical Centers.............
                                                             Freestanding Ambulatory Surgical
                                                              and Emergency Centers.
                                                             General Medical and Surgical
                                                              Hospitals.
                                                             Psychiatric and Substance Abuse
                                                              Hospitals.
                                                             Specialty (except Psychiatric
                                                              and 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 13 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 rule.

              Table 13--Labor Categories of DEA Registrants
------------------------------------------------------------------------
                                                        Annual mean wage
        Occupation code            Occupation title           ($)
------------------------------------------------------------------------
29-1021.......................  Dentists, General....            175,840
29-1060.......................  Physicians and                   210,980
                                 Surgeons.
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 12 
and 13 are not intended to be exhaustive, but to generally represent 
DEA registrants.
Economic Impact Analysis of New Fee
    The new fees are expected to have two levels of impact. Initially, 
the fee increase 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 registration fees may 
result in reduced tax liability, which may diminish the impact of the 
increase. 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

[[Page 44729]]

causes income/profit to decrease by $52, decreasing the tax liability 
by $18. The net cash outlay is $34.\29\ However, to be analytically 
conservative, the analysis does not consider the impact of reduced tax 
liability.
---------------------------------------------------------------------------

    \29\ This example is for illustration purposes only. Each entity 
should seek competent tax advice for tax consequences of the rule.
---------------------------------------------------------------------------

    As individual practitioners and small businesses are expected to 
experience the greatest impact, DEA examined the new 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 new fee for practitioners and mid-level practitioners of 
$888 per three years represents a $157 increase over the current fee of 
$731 per three 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 14 indicates the annual effect as a 
percentage of income. The impact on small businesses is discussed in 
the Regulatory Flexibility Act section.

                            Table 14--Fee Increase as Percentage of Annual Mean Wage
----------------------------------------------------------------------------------------------------------------
                                                                                                   Annual fee
                                                                             Annual mean wage     increase of
             Occupation code                      Occupation title                 ($)          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
----------------------------------------------------------------------------------------------------------------

    Additionally, the impact of the fee increase is also diminished by 
an estimated increase in registrant income. The table below describes 
the annual-equivalent fee as a percentage of income in 2012, the year 
of the last fee increase, and 2021. This analysis assumes that the fee 
increase is absorbed personally by each practitioner or 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 the new fees 
are 21 percent above the current fees implemented in 2012, the average 
incomes for dentists, physicians, physician assistants, and nurse 
practitioners increased an average 12 percent, 17 percent, 26 percent, 
and 30 percent, respectively, since that time.\30\ This estimated 
increase in average income lessens the impact of the fee increase as a 
percentage of average income. The new 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 a 2.2 percent annual rate (on compound annual growth 
rate basis), which is comparable to the rate of inflation. The same 
increase equates to a 1.8 percent annual rate over 11 years, from 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 15 represents fees as 
percentage of average income.
---------------------------------------------------------------------------

    \30\ From Table 14, 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 15--Fees as Percentage of Annual Mean Wage in 2012 and 2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                2012                      2018                      2021
                                                              ------------------------------------------------------------------------------------------
                       Occupation title                                                                            Annual mean
                                                               Annual mean   Annual fee  Fee of wage  Annual mean   wage  ($)    Annual fee  Fee of wage
                                                                wage  ($)      ($) *          (%)      wage  ($)        **        ($) ***         (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 three 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 three more years to
  2021.
*** The new fee is $888 per three 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 U.S., 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. Fee exempt registrants are not affected 
by the new fees.

[[Page 44730]]

d. Analysis of Benefits, Costs, and Transfers
Benefits
    The primary benefit of the rule is continued support to the DCP, 
without the need for any additional congressional appropriations. 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 as discussed earlier in this document.
Costs
    This rule has little or no cost, as fees to DEA are transfer 
payments.
Transfers
    The difference between the current fees and the new fees--the fee 
increase--is $318 million over the three year period, from FY 2021 to 
FY 2023, or approximately $106 million annually. The difference in the 
fees projected to be collected under the current fee rates and the new 
fee rates is $102 million, $105 million, and $110 million in FY 2021, 
FY 2022, and FY 2023, respectively. Table 16 summarizes the estimated 
collections under the current fees, estimated collections under the new 
fees, and the difference between the current and the new fees.

                           Table 16--Estimated Collections Under Current and New Fees
----------------------------------------------------------------------------------------------------------------
              Estimated collections                FY 2021  ($M)   FY 2022  ($M)   FY 2023  ($M)    Total  ($M)
----------------------------------------------------------------------------------------------------------------
Current Fee.....................................             474             491             514           1,479
New Fee.........................................             576             596             625           1,797
Difference......................................             102             105             110             318
----------------------------------------------------------------------------------------------------------------

    The present value of the transfer is $299 million at a three 
percent discount rate and $277 million at a seven percent discount 
rate.
    E.O. 13771 was issued on January 30, 2017, and published in the 
Federal Register on February 3, 2017. 82 FR 9339. This rule is not 
subject to the requirements of E.O. 13771 because this 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 E.O. 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 E.O. 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 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 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 option does not create a disparity in the relative increase in 
fees from the current to the new 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 increases fees proportionally (21 percent) across all 
registrant groups, maintaining the weighted-ratio of 1.0, 3.0, 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 new and current fees.

[[Page 44731]]



                             Table 17--Difference in Fees Under Current and New Fees
----------------------------------------------------------------------------------------------------------------
                                       Total                                           Total
                                   registrations   Current fees                     collections   Difference  in
        Business activity          (FY 2021- FY         ($)        New fees  ($)     under new      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.

    As shown in Table 12, the new 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 rule is expected to affect a substantial number 
of small entities.
    DEA compared the annual increase in fees from current fees to new 
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 18--Fee Increase as Percentage of Annual Revenue
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Average
                                                                            Enterprise       Number of      revenue 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 Manufacturing             0-4             108         727,444             652          0.0851
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 Products                0-4           3,352       2,007,996             327          0.0154
                                    Merchant Wholesalers.
445110...........................  Supermarkets and Other Grocery                    0-4          23,710         453,787              52          0.0108
                                    (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 Supercenters.....             0-4              12         326,333              52          0.0150
541380...........................  Testing Laboratories.................             0-4           2,415         297,737              52          0.0165
541712...........................  Research and Development in the                   0-4           5,013         427,790              52          0.0115
                                    Physical, Engineering, and Life
                                    Sciences (except Biotechnology).
541940...........................  Veterinary Services..................             0-4           8,881         292,166              52          0.0168
561612...........................  Security Guards and Patrol Services..             0-4           2,162         114,198              52          0.0429
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 Mental              0-4          95,648         447,715              52          0.0109
                                    Health Specialists).
621112...........................  Offices of Physicians, Mental Health              0-4           8,980         253,837              52          0.0193
                                    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

[[Page 44732]]

 
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 Surgical and              0-4           1,011         549,974              52          0.0089
                                    Emergency Centers.
622110...........................  General Medical and Surgical                      0-4              39      10,621,308              52          0.0005
                                    Hospitals.
622210...........................  Psychiatric and Substance Abuse               * 20-99              27       5,142,444              52          0.0010
                                    Hospitals.
622310...........................  Specialty (except Psychiatric and                 0-4              21       8,561,238              52          0.0006
                                    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 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 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 
million 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 will 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 final 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 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 U.S.-based companies to 
compete with foreign-based companies in domestic and export markets. 
DEA 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 amends 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 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)

[[Page 44733]]



                                                  Summary of Registration Requirements and Limitations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Registration
          Business activity              Controlled substances     DEA application forms     Application       period      Coincident activities allowed
                                                                                              fee  ($)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(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.
(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.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 44734]]

* * * * *

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 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) * * *

                              Summary of Registration Requirements and Limitations
----------------------------------------------------------------------------------------------------------------
                                                                                  Registration      Coincident
      Business activity           Chemicals        DEA forms       Application       period         activities
                                                                       fee           (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.
----------------------------------------------------------------------------------------------------------------


Timothy J. Shea,
Acting Administrator.
[FR Doc. 2020-16169 Filed 7-23-20; 8:45 am]
BILLING CODE 4410-09-P