[Federal Register: December 3, 2008 (Volume 73, Number 233)]
[Rules and Regulations]
[Page 73549-73556]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03de08-3]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1300, 1315, and 1316
[Docket No. DEA-293F]
RIN 1117-AB08
Import and Production Quotas for Certain List I Chemicals
AGENCY: Drug Enforcement Administration (DEA), Justice.
ACTION: Final rule.
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SUMMARY: On March 9, 2006, the President signed the Combat
Methamphetamine Epidemic Act of 2005, which mandates that DEA establish
total annual requirements, and individual import, manufacturing, and
procurement quotas for ephedrine, pseudoephedrine, and
phenylpropanolamine. DEA issued an Interim Final Rule establishing
procedures for applying for individual import, manufacturing, and
procurement quotas. DEA is finalizing the rule with one change, to
extend the authority to sign certifications to persons granted power of
attorney to do so by the registrant.
DATES: Effective Date: December 3, 2008.
FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, Ph.D., Chief,
Drug and Chemical Evaluation Section, Office of Diversion Control, Drug
Enforcement Administration, 8701 Morrissette Drive, Springfield, VA
22152; at (202) 307-7183.
SUPPLEMENTARY INFORMATION:
DEA's Legal Authority
DEA implements the Comprehensive Drug Abuse Prevention and Control
Act of 1970, often referred to as the Controlled Substances Act (CSA)
and the Controlled Substances Import and Export Act (21 U.S.C. 801-
971), as amended. DEA publishes the implementing regulations for these
statutes in Title 21 of the Code of Federal Regulations (CFR), Parts
1300 to 1399. These regulations are designed to ensure that there is a
sufficient supply of controlled substances for legitimate medical,
scientific, research, and industrial purposes, for lawful exports, and
for maintenance of reserve stocks, while deterring the diversion of
controlled substances to illegal purposes. The CSA mandates that DEA
establish a closed system of control for manufacturing, distributing,
and dispensing, importing, and exporting controlled substances. Any
person who manufactures, distributes, dispenses, imports, exports, or
conducts research or chemical analysis with controlled substances must
register with DEA (unless exempt) and comply with the applicable
requirements for the activity. The CSA as amended also requires DEA to
regulate the manufacture, distribution, import, and export of chemicals
that may be used to manufacture controlled substances illegally. Listed
chemicals that are classified as List I chemicals are important to the
manufacture of controlled substances. Those classified as List II
chemicals may be used to manufacture controlled substances.
On March 9, 2006, the President signed the Combat Methamphetamine
Epidemic Act of 2005 (CMEA), which is Title VII of the USA PATRIOT
Improvement and Reauthorization Act of 2005 (Pub. L. 109-177). The Act
amends the CSA by adding new provisions related to the importation,
production, and sale of ephedrine, pseudoephedrine, and
phenylpropanolamine, their salts, optical isomers, and salts of optical
isomers, and products that contain any of the three chemicals.
Combat Methamphetamine Epidemic Act of 2005
The Combat Methamphetamine Epidemic Act of 2005 (CMEA) amends the
CSA to tighten controls on the manufacture, distribution, import,
export, and retail sale of three List I chemicals--ephedrine,
pseudoephedrine, and phenylpropanolamine, and drug products containing
them. CMEA imposes the following changes:
Sales limits apply to retail sales of nonprescription
(over-the-counter) (OTC) products, which the CMEA defined as
``scheduled listed chemical products.'' Regulated sellers are required
to store the products behind the counter or in locked cabinets and
maintain records on each sale, including verifying the name of the
purchaser against an approved form of identification supplied by the
purchaser. The exemption for blister packs has been removed. Thus, all
products sold at retail are regulated under the CSA. (The law contained
an exception from recordkeeping requirements for individual sales
transactions consisting of a single
[[Page 73550]]
package of pseudoephedrine where the package contains not more than 60
milligrams.)
DEA must establish an assessment of the annual needs for
the estimated medical, scientific, research, and industrial needs of
the United States, for lawful exports, and for maintenance of reserve
stocks, for the three chemicals. That assessment establishes an upper
limit on the quantity of the chemicals and products containing the
chemicals that can be produced in or imported into the United States.
Bulk manufacturers must obtain a manufacturing quota to
produce any of the three chemicals.
Manufacturers who purchase the bulk chemicals to produce
products must obtain a procurement quota.
Importers must obtain a quota to import the chemicals in
bulk or in drug products.
Importers, exporters, brokers, and traders must provide
additional information on the persons to whom they intend to sell the
chemicals prior to the sale. They must also provide a return
declaration, providing actual information regarding the import, export,
or international transaction.
Interim Final Rule
On July 10, 2007, DEA published an Interim Final Rule to establish
the procedures for manufacturers to apply for manufacturing and
procurement quotas and for importers to apply for import quotas, as
required under CMEA (72 FR 37439). The Interim Final Rule created a new
part 1315, which parallels the existing part 1303, which covers the
same processes for controlled substances. The Interim Final Rule
established the following requirements:
Production Quotas
Bulk manufacturers of the three chemicals are required to obtain
annual manufacturing quotas. A separate quota is required for each
chemical. A bulk manufacturer must be registered as a manufacturer to
handle the chemical for which a quota is applied. A bulk manufacturer
must complete and file a DEA Form 189 on or before May 1 of each year
for the following calendar year, as discussed further below. The
applicant must provide the following information on the form:
For the current and preceding two calendar years, the
actual quantity manufactured, actual net disposals, and actual
inventory as of December 31.
For the next year, the desired quota, the name and
registration number of each customer and the amount estimated to be
sold to each, and any additional factors the applicant finds relevant
to fixing the quota.
The above requirements are consistent with existing requirements for
controlled substances quotas found in 21 CFR Part 1303.
Each manufacturer that purchases the chemicals in bulk or in dosage
forms is required to obtain a procurement quota to obtain the bulk
chemicals or dosage forms. A separate procurement quota is required for
each chemical. A manufacturer must be registered as a manufacturer to
handle the chemical for which a quota is applied. A manufacturer must
complete and file a DEA Form 250 on or before April 1 of each year for
the following calendar year. The applicant must provide the following
information:
A statement about the purpose(s) of the requested chemical
and the quantity which will be used for each purpose during the next
calendar year. The applicant should provide information about the
quantities used (acquired, distributed, and inventory) for the current
and preceding two calendar years.
If the purpose is to manufacture dosage forms, the
applicant must state the official name, common or usual name, chemical
name, or brand name of that dosage form, and must include the strength.
The applicant must state the type of activity intended:
Product development, repackaging, relabeling, manufacturing OTC
finished product, or manufacturing prescription finished product.
If the purpose is to manufacture a controlled substance
listed in Schedule I or II or another List I chemical, the applicant
must state the quantity of the other substance or chemical that the
applicant has applied to manufacture under Sec. 1303.22 and the
quantity of the first chemical needed to manufacture a specified unit
of the second chemical.
The above requirements are consistent with existing requirements for
controlled substances quotas found in 21 CFR Part 1303.
DEA recognizes that applicants may not have complete data on
inventories and records for previous years because DEA has not required
registrants to keep these records. Most manufacturers of OTC products
should have the information in the records they maintain on regulated
transactions. Applicants who manufacture prescription products may not
have full records for the initial filings. DEA notes that the provision
of incomplete information as part of an application for quota in the
initial year of implementation of quotas for ephedrine,
pseudoephedrine, and phenylpropanolamine may not, in and of itself,
prevent an applicant from obtaining quota. DEA has significant
experience regarding the processing of quota applications for which
incomplete information is present at the initial establishment of quota
(e.g., a new formulation of a controlled substance). DEA will work with
quota applicants to obtain information that could be used in the
processing of the applicant's initial application.
Import Quotas
To track and control the quantity of each of the chemicals and drug
products containing the chemicals, DEA must limit imports to a quantity
consistent with the national needs. CMEA amended 21 U.S.C. 952(a) to
state that ``It shall be unlawful to import * * * ephedrine,
pseudoephedrine, and phenylpropanolamine * * * except that such amounts
of * * * ephedrine, pseudoephedrine, and phenylpropanolamine as the
Attorney General [DEA by delegation] finds necessary to provide for the
medical, scientific, or other legitimate purposes * * *.'' Importers
are required to obtain an import quota for each chemical covering both
bulk chemicals and dosage forms. An importer must be registered as an
importer of the chemical for which a quota is applied. An importer must
complete and file a DEA Form 488 on or before April 1 of each year for
the following calendar year. The applicant must provide the following
information:
The type of product (bulk chemical or finished forms to be
transferred to a manufacturer or product to be sold for distribution).
The quantity of each type of product.
For the previous two calendar years, the name, address,
and DEA registration number (if applicable) of each customer and the
amount sold; inventory as of December 31 for each form of the product
(i.e., bulk chemical, in-process material, or finished dosage form);
and acquisitions (imports).
DEA recognizes that importers handling prescription products may
not have historical records for their initial filings. If an importer
is handling prescription drug products, it is possible that some of its
customers may not be DEA registrants. DEA notes that the provision of
incomplete information as part of an application for quota in the
initial year of implementation of quotas for ephedrine,
pseudoephedrine, and phenylpropanolamine may not, in and of itself,
prevent an applicant from obtaining quota. As noted above, DEA
[[Page 73551]]
has significant experience regarding the processing of quota
applications for which incomplete information is present at the initial
establishment of quota (e.g., a new formulation of a controlled
substance). DEA will work with quota applicants to obtain information
that could be used in the processing of the applicant's initial
application.
Depending on the activities that a firm engages in, a firm may have
to apply for multiple quotas. For example, a firm that imports
ephedrine to bulk manufacture pseudoephedrine would need to obtain an
import quota and a procurement quota for ephedrine and a manufacturing
quota for pseudoephedrine. A manufacturer that imports bulk ephedrine
and pseudoephedrine to produce dosage units of drugs containing the
chemicals would need to obtain separate import and procurement quotas
for each chemical.
DEA uses the information filed in support of the quota applications
as one factor in the determination of an initial assessment of annual
needs for each of the chemicals to ensure that the United States has
sufficient quantities to meet medical, scientific, research,
industrial, exportation, and reserve stock needs. The criteria to be
considered in setting quotas are set forth in the CSA. Specifically,
the CSA requires the Attorney General, DEA by delegation, to establish
production quotas, referred to here as the assessment of annual
national needs for the List I chemicals ephedrine, pseudoephedrine, and
phenylpropanolamine, in terms of quantities of the listed chemical and
not in terms of individual dosage forms (21 U.S.C. 826(a); 21 CFR
1315.11). The actual setting of the annual assessment is done after
considering the factors in 21 CFR 1315.11, publishing a proposed annual
assessment, and giving the regulated community an opportunity to
comment before finalizing the annual assessment (21 CFR 1315.13). DEA
published the initial established assessment of annual needs for 2008
on December 27, 2007 (72 FR 73361), proposed revisions and accepted
comments thereto (73 FR 35410, June 23, 2008), and published the final
2008 assessment of annual national needs (73 FR 63732, October 27,
2008). DEA must limit or reduce individual production quotas to the
extent necessary to prevent the aggregate of all individual quotas from
exceeding the assessment of annual national needs (21 U.S.C. 826(b)).
In establishing individual manufacturing quotas based on the assessment
of annual national needs, DEA considers the manufacturer's estimated
disposal, inventory, and other requirements for the calendar year; DEA
also considers the manufacturer's current rate of disposal, the trend
of the national disposal rate during the preceding calendar year, the
manufacturer's production cycle and inventory position, the economic
availability of raw materials, yield and stability problems,
emergencies such as strikes and fires, and other factors (21 U.S.C.
826(c); 21 CFR 1315.23). DEA notes that the rule being finalized today
does not establish the assessment or individual quotas; today's rule
simply finalizes the establishment of procedures for collecting
information from manufacturers and importers.
The assessment of annual needs establishes a ceiling on domestic
manufacturing and importation of these chemicals. DEA may, at its
discretion, seek additional information from applicants if needed to
determine an appropriate level for the annual assessment ceiling. For
example, because repackagers and relabelers handle products that are
covered by other procurement or import quotas, DEA may need more
details on customers from those seeking procurement quotas to ensure
that it is not double counting quantities. This issue may arise
particularly in reference to OTC products, where a manufacturer may
produce dosage units that are repackaged or relabeled to be sold under
multiple store brand labels.
DEA adopted the same process for manufacturing and procurement
quotas for the three chemicals as was already in place for
manufacturing and procurement quotas for controlled substances.
Manufacturers may apply for increases in their manufacturing quotas (21
CFR 1315.25); DEA may reduce individual manufacturing quotas to prevent
the total amount produced from exceeding the assessment of annual needs
(21 CFR 1315.26). Manufacturers may abandon their quota by notifying
DEA (21 CFR 1315.27).
Manufacturers holding a procurement quota may apply for adjustment
of the quota by applying to DEA with a statement indicating the need
for an adjustment (21 CFR 1315.32(g)). Any manufacturer who holds a
procurement quota must, before giving an order to another manufacturer
or importer requiring the distribution of a covered chemical, certify
in writing that the quantity being ordered does not exceed the unused
portion of the person's procurement quota for the year (21 CFR
1315.32(h)).
As specified in the CMEA amendment to section 952 of the CSA,
importers may apply for an increase in their quota and DEA may approve
the application if DEA determines that the increase is needed to meet
medical, scientific, or other legitimate purposes (21 CFR 1315.36). For
changes in the import quota, DEA will approve or deny the application
within 60 days of receiving the application; if DEA does not reach a
decision within the 60 days, the application is considered to be
approved until DEA notifies the applicant in writing that the approval
is terminated (21 U.S.C. 952(d); 21 CFR 1315.36(c)).
DEA may hold hearings, at the Administrator's sole discretion, to
obtain factual evidence regarding the determination or adjustment of
any assessment of annual national needs (21 CFR 1315.52(a)). Applicants
or quota holders may request hearings on the issuance, adjustment,
suspension, or denial of a quota (21 CFR 1315.52(b)). In hearings on
the assessment of annual national needs, each interested party has the
burden of proving any propositions of fact or law that the party
asserts (21 CFR 1315.58(a)). At hearings on the issuance, adjustment,
suspension, or denial of an individual quota, DEA has the burden of
proving that the requirements for issuance, adjustment, suspension, or
denial of an individual quota are met (21 CFR 1315.58(b)).
Discussion of Comments
DEA received five comments on the Interim Final Rule. Commenters
included an association representing distributors of drug products
containing ephedrine, pseudoephedrine, and phenylpropanolamine; two
manufacturers; one distributor; and an association representing
manufacturers and distributors of OTC products.
General Comments
One commenter supported the rule as written, three commenters
requested clarification of certain aspects of the rule, and one
commenter raised objections to the rule, although its comments actually
addressed issues that were not the subject of the Interim Final Rule.
Three of the commenters raised issues about the actual assessment
of annual needs for the List I chemicals ephedrine, pseudoephedrine,
and phenylpropanolamine rather than the process manufacturers and
importers will use to apply for a quota, which is the subject of this
rulemaking. One distributor stated that DEA had failed to prove that
convenience stores are a ``gray market'' for these products.
DEA Response: The issues raised about the assessment of annual
needs
[[Page 73552]]
are beyond the scope of this Final Rule, which deals only with the
procedures for applying for and obtaining quotas in general. Any
comments on the establishment or revision of the annual assessment and
the methodology used to develop it should be submitted in response to
notices DEA may publish regarding the assessment of annual needs. This
rule includes only the general approach for establishing and issuing
the proposed and final assessments of annual needs and individual
quotas and contains only the statutory criteria. The issues related to
the sale of products containing the three List I chemicals at
nonconventional outlets are also beyond the scope of this rule, which
does not regulate distributors or retailers. Therefore, these comments
are not addressed in this Final Rule.
Obtaining a Procurement Quota
One pharmaceutical manufacturer asked DEA to revise the requirement
that the certification that an order is within the manufacturer's
procurement quota be signed by a person eligible to sign a
registration. The commenter noted that for controlled substances, the
certification may be signed by a person who is eligible to sign the DEA
Form 222 ``U.S. Official Order Form for Schedule I and II Controlled
Substances'', which may be a person granted signing authority through a
power of attorney.
DEA Response: DEA agrees with the commenter and is revising 21 CFR
1315.32(h) to permit the signature of a certification for procurement
quota to be by an individual authorized to sign the registration, or a
person granted power of attorney to sign the certification. DEA is also
amending the regulations to add 21 CFR 1315.33, which establishes a
process for granting and revoking power of attorney delegations. This
process parallels the process in existence for controlled substance
orders under part 1305.
Distinction Among Types of Outlets
One association representing manufacturers and distributors of OTC
drug products supported the rule and DEA's tripartite distinction among
manufacturers and importers: Those that handle prescription drugs,
those that produce products sold mainly through conventional outlets,
and those that sell certain high dosage unit products almost
exclusively through nonconventional outlets. The commenter noted some
inconsistencies in the references to these groups that the commenter
stated could be confusing. A manufacturer also raised concerns about
DEA's review of quota applications where the manufacturer's products
are sold through conventional and nonconventional outlets.
DEA Response: DEA appreciates the support for this rulemaking
expressed by the association. DEA emphasizes that each quota
application will be reviewed on its own merits. DEA recognizes that
many products are sold through both conventional and nonconventional
outlets. As the 2002 Economic Census of the Retail Trade, Product Line,
data indicate, nonconventional outlets handle only about three percent
of sales of OTC medications. Products sold through both types of retail
outlets, therefore, will be mainly sold through conventional outlets.
As DEA stated in the Interim Final Rule, its concern with products sold
through nonconventional outlets is with a limited number of high-
dosage-unit products, sold almost exclusively through these outlets and
the Internet. These high-dosage-unit products are generally not the
bronchodilators used for asthma that commenters cited as a concern.
Assessment of Annual Needs
One manufacturer raised concerns about the consideration of data in
the assessment of annual needs. The commenter stated that the trends in
demand for ephedrine and pseudoephedrine appear to be changing as
customers find the substitutes inadequate. The commenter asked that DEA
consider both present and past trends.
DEA Response: DEA agrees with the commenter that changing trends in
use need to be considered when establishing the assessment of annual
needs for ephedrine, pseudoephedrine, and phenylpropanolamine. DEA
notes that manufacturers and importers had an opportunity to comment on
the proposed 2008 assessment of annual needs (72 FR 53911, September
20, 2007), and to submit additional information on demand to assist DEA
in ensuring that the initial established assessment (72 FR 73361,
December 27, 2007) met the legitimate medical, scientific, research,
and industrial needs of the United States, for lawful exports, and for
maintenance of reserve stocks. As required, DEA will revise the
assessment of annual needs and will again seek comment from importers
and manufacturers (21 CFR 1315.13).
Inventory Allowances
One manufacturer raised issues related to the inventory allowance
for bulk manufacturers and asked that importers also be given inventory
allowances. The commenter stated that unlike controlled substances,
where imports are allowed only if domestic manufacturers cannot meet
the need, with these chemicals most of the chemicals are imported. The
commenter stated that providing inventory allowances only to bulk
manufacturers would place other manufacturers that rely on imports for
the chemical at a disadvantage. The commenter suggested that both
manufacturers and importers be given a 20 percent inventory allowance.
DEA Response: DEA agrees with the commenter that the inventory
allowance is an issue. Congress clearly intended that these chemicals
should be closely regulated. In its Interim Final Rule establishing the
procedures to implement individual procurement quotas, DEA established
a 50 percent inventory allowance, the same allowance permitted for
manufacturers of controlled substances. DEA believes that the 50
percent inventory allowance may be too great in some circumstances.
Because this issue was not raised in the Interim Final Rule, however,
DEA plans to address it in a separate rulemaking to give regulated
entities an opportunity to comment.
Regarding the commenter's suggestion for an inventory allowance for
importers and manufacturers obtaining procurement quotas, as noted
previously, all importation of ephedrine, pseudoephedrine, and
phenylpropanolamine is prohibited except such amounts as the Attorney
General finds to be necessary to provide for the medical, scientific,
and other legitimate needs of the United States (21 U.S.C. 952(a)).
Further, CMEA specifically amended the CSA to require that importers
specify, as part of the import declaration for all listed chemicals,
the name of the transferee (``downstream customer'') of the chemicals
and the quantity of the chemicals to be transferred (21 U.S.C. 971(d)).
Thus, as importers must provide, prior to importation, the name of the
transferee to whom the chemicals are to be transferred, there should be
limited need for the importer to maintain an inventory of these
chemicals.
Petition for Repeal
One distributor stated that the Interim Final Rule will cause harm
to the national economy through loss of jobs at convenience stores due
to loss of sales of ephedrine-based products. The commenter also
claimed that the Interim Final Rule would cause harm to rural
communities which would not be able to obtain the products and that DEA
had underestimated the cost of the rule. The
[[Page 73553]]
commenter asked DEA to stay the Final Rule until DEA has ruled on its
petition for repeal. The commenter also claimed that the Interim Final
Rule quota was based on incomplete data and was, therefore, arbitrary
and capricious and a violation of the Administrative Procedure Act. The
commenter stated that DEA should have used notice and comment
rulemaking for the Interim Final Rule. Finally, the commenter stated
that the rule would not affect diversion and methamphetamine abuse.
DEA Response: The commenter appears to have misunderstood the
nature of this rulemaking. The Interim Final Rule addressed only the
procedures that importers and manufacturers must follow to apply for
import, manufacturing, and procurement quotas for ephedrine,
pseudoephedrine, and phenylpropanolamine. The rule did not establish
the assessment of annual needs for ephedrine, pseudoephedrine, and
phenylpropanolamine or individual quotas, nor did it address the
subsequent distribution of scheduled listed chemical products. The
Interim Final Rule had no impact on the convenience store industry, nor
on the availability of scheduled listed chemical products at retail--
either in urban or rural communities.
Regarding the cost of the Interim Final Rule, as DEA discussed in
that rule, the only cost associated with this rulemaking is the cost of
applying for import, manufacturing, or procurement quota. DEA estimates
that the cost of applying for a quota is about $96 for importers and
$113 for manufacturers, which includes data collection and mailing.
Regarding the commenter's claim that the Interim Final Rule was
arbitrary and capricious, and that DEA should have used notice and
comment rulemaking to implement the provisions of CMEA, DEA believes
that it had good cause under the Administrative Procedure Act to
publish the rule as an Interim Final Rule. As DEA explained in the
Interim Final Rule, it published this procedural rule as an Interim
Final Rule to ensure that it would have a process in place for
importers and manufacturers to apply for quotas. Without publication of
the Interim Final Rule, DEA would not be able to issue quotas, but the
rule does not set quotas. Given that Congress mandated that these
chemicals and products containing these chemicals could only be
imported and manufactured if the importer or manufacturer had obtained
a quota from DEA, delaying the implementation of the procedural steps
for seeking quotas would have cut off the supply of the chemicals and
products containing those chemicals.
In regard to the commenter's discussion of the economic impact of
the Interim Final Rule, the comments regarding the actual availability
of those List I chemicals, the establishment of the assessment of
annual national needs, and the issuance of individual import,
manufacturing, and procurement quotas, are beyond the scope of the
Interim Final Rule. The comments apply to the assessment of annual
needs, not the application procedures; there are no provisions in this
procedural rule that affect the supply or distribution of these
chemicals or that impose significant costs on applicants. DEA notes
that this commenter provided almost identical comments to this Interim
Final Rule as it did to DEA's notice ``Assessment of Annual Needs for
the List I Chemicals Ephedrine, Pseudoephedrine, and
Phenylpropanolamine for 2008: Proposed'' [Docket No. DEA-306] (72 FR
53911, September 20, 2007).\1\ DEA provided an extensive response to
the commenter's economic arguments to that notice in its notice
``Established Assessment of Annual Needs for the List I Chemicals
Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2008'' [Docket
No. DEA-306] (72 FR 73361, December 27, 2007).
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\1\ All comments to both dockets may be found at http://
www.regulations.gov.
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The commenter claimed that DEA had not assessed the impact on small
entities. DEA, however, did precisely that even though it was not
required to do so. The Regulatory Flexibility Act (RFA) applies only to
rules that have been proposed; it does not apply to Interim Final
Rules. Nonetheless, DEA did consider the issue. The Interim Final Rule
simply sets out the process by which importers and manufacturers may
apply for quotas. The costs of the application process are very low and
do not impose a significant economic impact on small entities. DEA
notes that distributors, such as the commenter, are not subject to this
rule. DEA included the wholesale sector in its economic analysis in the
Interim Final Rule because that is where importers are usually
classified under the North American Industry Classification System.
Finally, the commenter stated that the rule would not affect
diversion and methamphetamine abuse. Congress mandated these rules as
part of a series of actions to prevent diversion of scheduled listed
chemical products, and the chemicals used to manufacture them, to
clandestine laboratories. Since the states and, in 2006, DEA, imposed
sales limits on these products, the number of clandestine laboratory
seizures in the United States has fallen dramatically, indicating that
the Congressionally mandated actions have been effective in limiting
diversion of products to clandestine laboratories in the United States.
International sources of methamphetamine are addressed by other parts
of CMEA.
Technical Corrections
While drafting this Final Rule, DEA noted that it had inadvertently
required bulk manufacturers to complete and file DEA Form 189,
Application for Individual Manufacturing Quota for a Basic Class of
Controlled Substance and for Ephedrine, Pseudoephedrine, and
Phenylpropanolamine, on or before April 1 of each year for the
following calendar year (21 CFR 1315.22). This differs from the
requirement for controlled substances; DEA Form 189 to request
manufacturing quota for any basic class of controlled substance in
Schedules I and II must be completed and filed on or before May 1 of
each year for the following calendar year (21 CFR 1303.22). To
alleviate potential confusion and ensure that the systems for
controlled substances and ephedrine, pseudoephedrine, and
phenylpropanolamine are as similar as possible, DEA is revising 21 CFR
1315.22 to require applicants for manufacturing quota for ephedrine,
pseudoephedrine, and phenylpropanolamine to complete and file DEA Form
189 on or before May 1 of the year preceding the calendar year for
which the manufacturing quota is being applied. DEA notes that only one
registrant has applied for manufacturing quota. Therefore, DEA believes
that this change will not significantly impact any registrant and will
benefit the one registrant that currently utilizes this form.
Further, DEA noted that it had inadvertently not revised 21 CFR
1316.41, the section discussing the scope of the subpart related to
administrative hearings, to include in the listing of CFR sections in
which specific procedures regarding administrative hearings can be
found sections 1315.50-1315.62. Therefore, for clarity, DEA is adding
these sections to the listing of sections in which specific procedures
regarding administrative hearings are found in 21 CFR 1316.41.
Adoption as Final Rule
The Interim Final Rule amending Parts 1300 and 1315 of Title 21,
Code of Federal Regulations, which was
[[Page 73554]]
published in the Federal Register on July 10, 2007 at 72 FR 37439, is
hereby adopted as a Final Rule as published, with one change. DEA is
revising the provision in 21 CFR 1315.32(h) regarding who may sign the
required certification that an order is within the ordering company's
quota. This revision provides a benefit to registrants, permitting the
signature of a certification for procurement quota to be by an
individual authorized to sign the registration, or a person granted
power of attorney to sign the certification. To accomplish this, DEA is
also adding a new 21 CFR 1315.33 to establish a process for granting
and revoking power of attorney status; this section parallels the
provisions of 21 CFR 1305.05.
Regulatory Certifications
Administrative Procedure Act (5 U.S.C. 553)
An agency may find good cause to exempt a rule from certain
provisions of the Administrative Procedure Act (5 U.S.C. 553),
including making the rule effective upon the date of publication. DEA
finds good cause to make this rule effective upon publication, as this
Final Rule provides a benefit or relieves a restriction by permitting
the signature of a certification for procurement quota to be by an
individual authorized to sign the registration, or a person granted
power of attorney to sign the certification. To accomplish this, DEA is
adding a new 21 CFR 1315.33 to establish a process for granting and
revoking power of attorney status. The rest of this Final Rule merely
confirms existing regulatory requirements implemented as part of the
Interim Final Rule published July 10, 2007 at 72 FR 37439.
Regulatory Flexibility Act
The Acting Administrator hereby certifies that this rulemaking has
been drafted in accordance with the Regulatory Flexibility Act (RFA) (5
U.S.C. 601-612). Because this rule is codifying statutory provisions,
DEA has determined that public notice and comment are not necessary.
Consequently, the RFA does not apply.
DEA has nonetheless considered the impact of the rule on small
entities. As discussed below, DEA estimates that about 310 firms in the
manufacturing and wholesale sectors may be affected by this rule. About
250 of these may be small entities under the Small Business
Administration definitions of small entities. For most of these firms
the impact of the rule is very small; they are required to file an
annual request for import or procurement quotas. DEA estimates that the
cost of applying for a quota is about $96 for importers and $113 for
manufacturers, which includes data collection and mailing. These costs
do not represent a significant economic impact even on the smallest
repackagers whose average revenues are above $54,000. The average
revenues of the smallest firms in sectors subject to the rule for which
the 2002 Economic Census has data are shown in Table 1.
Table 1--Average Revenues of Smallest Firms by Affected Sector
------------------------------------------------------------------------
Average
revenue of
Sector smallest
firms
------------------------------------------------------------------------
Packaging and labeling..................................... $54,271
Drug wholesalers........................................... 127,367
Chemical wholesalers....................................... 718,697
Pharmaceutical manufacturers............................... 824,268
------------------------------------------------------------------------
Executive Order 12866
The Acting Administrator further certifies that this rulemaking has
been drafted in accordance with the principles in Executive Order 12866
Section 1(b). It has been determined that this is ``a significant
regulatory action.'' Therefore, this action has been reviewed by the
Office of Management and Budget.
Regulated Entities. The firms subject to this rule are
manufacturers and importers. At present, only one firm in the United
States manufactures any of these chemicals in bulk and, therefore, only
that firm will have to apply for a manufacturing quota. DEA reviewed a
list of pseudoephedrine OTC and prescription products and ephedrine
prescription products and identified about 240 firms based on their
labeler codes. Each of these firms, plus any firms that repackage or
relabel, will need to obtain procurement quotas. Based on 2005 DEA
data, DEA estimates that about 69 firms with 91 locations are currently
registered to import the chemicals; these firms will need to obtain
import quotas if they are actually importing the chemicals. Although 91
locations are registered to import these chemicals, import notices
indicate that many of these locations do not handle the chemicals. If
other firms import prescription drug products that contain the
chemicals they will also have to obtain import quotas. Based on these
data, DEA estimates that 332 locations may apply for quotas if the
demand for the chemicals and drug products remains the same (1 bulk
manufacturer, 240 manufacturers, and 91 importers). Table 2 presents
the number of potential applicants by sector. Registrants must apply
for quotas for each registered location rather than by firm.
Consequently, the number of manufacturing locations applying may be
higher than listed if the firms handle the product at multiple
locations. The importers are, in some cases, also manufacturers, so
that the total number of affected firms may be reduced. The total
number of importer registrants includes firms with multiple registered
locations.
Table 2--Potential Quota Applicants by Sector
------------------------------------------------------------------------
Type Number
------------------------------------------------------------------------
All Manufacturers.......................................... 240
Small Manufacturers........................................ 211
Importer Registered Locations.............................. 91
Small Importer Firms....................................... 42
------------------------------------------------------------------------
Costs. As detailed in the Regulatory Flexibility Act section, there
is some burden associated with applying for quotas. DEA estimates that
the total cost of the quota application process is about $35,880 a
year.
Benefits. Congress, in CMEA, imposed a set of requirements on the
manufacture, import, and sale of the three chemicals. These
requirements, taken together, are intended to limit production and
sales of these chemicals to that needed for legitimate purposes.
Reduction in the number of clandestine methamphetamine laboratories
reduces costs to Federal, State, and local governments of raiding these
clandestine operations and cleaning up pollution at clandestine
methamphetamine laboratory sites. As DEA detailed in its Interim Final
Rule implementing the retail sales provisions of CMEA (specifically 71
FR 56020, September 26, 2006), DEA, the States, and local governments
spent more than $17 million in clean up costs in FY 2005. This cost
covers only the removal of chemicals that could be reused from
clandestine laboratory sites; the cost of cleaning up soil or property
contamination is paid by the land owner, but if the owner cannot pay
the cost, local governments bear the burden or the contamination
remains. The costs also do not cover the time State and local
governments spend investigating, arresting, and trying clandestine
laboratory operators or the social costs related to children and others
exposed to hazardous chemicals at these laboratories.
Paperwork Reduction Act
This Final Rule does not change existing requirements. Therefore,
the
[[Page 73555]]
approved information collections that were published with the Interim
Final Rule are not being revised.
Executive Order 12988
This regulation meets the applicable standards set forth in
Sec. Sec. 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice
Reform.
Executive Order 13132
This rulemaking does not preempt or modify any provision of State
law; nor does it impose enforcement responsibilities on any State; nor
does it diminish the power of any State to enforce its own laws.
Accordingly, this rulemaking does not have federalism implications
warranting the application of Executive Order 13132.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of
$120,000,000 or more (adjusted for inflation) in any one year, and will
not significantly or uniquely affect small governments. Therefore, no
actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Congressional Review Act
This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Fairness Act of 1996
(Congressional Review Act). This rule will not result in an annual
effect on the economy of $100,000,000 or more; a major increase in
costs or prices; or significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
United States-based companies to compete with foreign-based companies
in domestic and export markets.
List of Subjects
21 CFR Part 1315
Administrative practice and procedure, Chemicals, Drug traffic
control, Imports, Reporting and recordkeeping requirements.
21 CFR Part 1316
Administrative practice and procedure, Authority delegations
(Government agencies), Drug traffic control, Research, Seizures and
forfeitures.
0
For the reasons set out above, 21 CFR parts 1315 and 1316 are amended
as follows:
PART 1315--IMPORTATION AND PRODUCTION QUOTAS FOR EPHEDRINE,
PSEUDOEPHEDRINE, AND PHENYLPROPANOLAMINE
0
1. The authority citation for part 1315 continues to read as follows:
Authority: 21 U.S.C. 802, 821, 826, 871(b), 952.
0
2. The introductory text of Sec. 1315.22 is revised to read as
follows:
Sec. 1315.22 Procedure for applying for individual manufacturing
quotas.
Any person who is registered to manufacture ephedrine,
pseudoephedrine, or phenylpropanolamine and who desires to manufacture
a quantity of the chemical must apply on DEA Form 189 for a
manufacturing quota for the quantity of the chemical. Copies of DEA
Form 189 may be obtained from the Office of Diversion Control Web site,
and must be filed (on or before May 1 of the year preceding the
calendar year for which the manufacturing quota is being applied) with
the Drug & Chemical Evaluation Section, Drug Enforcement
Administration, Department of Justice, Washington, DC 20537. A separate
application must be made for each chemical desired to be manufactured.
The applicant must state the following:
* * * * *
0
3. Section 1315.32(h) is revised to read as follows:
Sec. 1315.32 Obtaining a procurement quota.
* * * * *
(h) Any person to whom a procurement quota has been issued,
authorizing that person to procure and use a quantity of ephedrine,
pseudoephedrine, or phenylpropanolamine during the current calendar
year, must, at or before the time of placing an order with another
manufacturer or importer requiring the distribution of a quantity of
the chemical, certify in writing to the other registrant that the
quantity of ephedrine, pseudoephedrine, or phenylpropanolamine ordered
does not exceed the person's unused and available procurement quota of
the chemical for the current calendar year. The written certification
must be executed by a person authorized to sign the registration
application pursuant to Sec. 1301.13 or Sec. 1309.32(g) of this
chapter or by a person granted power of attorney under Sec. 1315.33 to
sign the certifications. A copy of such certification must be retained
by the person procuring the quantity of ephedrine, pseudoephedrine, or
phenylpropanolamine for two years from the date of the certification.
Registrants must not fill an order from persons required to apply for a
procurement quota under paragraph (b) of this section unless the order
is accompanied by a certification as required under this section.
* * * * *
0
4. Section 1315.33 is added to read as follows:
Sec. 1315.33 Power of attorney.
(a) A registrant may authorize one or more individuals, whether or
not located at his registered location, to sign certifications required
under Sec. 1315.32(h) on the registrant's behalf by executing a power
of attorney for each such individual. The registrant shall retain the
power of attorney in the files, with certifications required by Sec.
1315.32(h), for the same period as any certification bearing the
signature of the attorney. The power of attorney must be available for
inspection together with other certification records.
(b) A registrant may revoke any power of attorney at any time by
executing a notice of revocation.
(c) The power of attorney and notice of revocation must be similar
to the following format:
Power of Attorney for certifications of quota for procurement of
ephedrine, pseudoephedrine, and phenylpropanolamine
------------ (Name of registrant)
------------ (Address of registrant)
------------ (DEA registration number)
I, ------------ (name of person granting power), the undersigned,
who am authorized to sign the current application for registration of
the above-named registrant under the Controlled Substances Act or
Controlled Substances Import and Export Act, have made, constituted,
and appointed, and by these presents, do make, constitute, and appoint
------------ (name of attorney-in-fact), my true and lawful attorney
for me in my name, place, and stead, to sign certifications of quota
for procurement of ephedrine, pseudoephedrine, and phenylpropanolamine
in accordance with Part 1315 of Title 21 of the Code of Federal
Regulations. I hereby ratify and confirm all that said attorney must
lawfully do or cause to be done by virtue hereof.
-----------------------------------------------------------------------
(Signature of person granting power)
I, ------------ (name of attorney-in-fact), hereby affirm that I am the
person named herein as attorney-in-fact and that the signature affixed
hereto is my signature.
[[Page 73556]]
(Signature of attorney-in-fact)
Witnesses:
1. ------------
2. ------------
Signed and dated on the ---- day of --, (year), at ------------.
Notice of Revocation
The foregoing power of attorney is hereby revoked by the
undersigned, who is authorized to sign the current application for
registration of the above-named registrant under the Controlled
Substances Act or the Controlled Substances Import and Export Act.
Written notice of this revocation has been given to the attorney-in-
fact ------------ this same day.
-----------------------------------------------------------------------
(Signature of person revoking power)
Witnesses:
1. ------------
2. ------------
Signed and dated on the ---- day of --, (year), at ------------.
(d) A power of attorney must be executed by the person who signed
the most recent application for DEA registration or reregistration; the
person to whom the power of attorney is being granted; and two
witnesses.
(e) A power of attorney must be revoked by the person who signed
the most recent application for DEA registration or reregistration, and
two witnesses.
PART 1316--ADMINISTRATIVE FUNCTIONS, PRACTICES, AND PROCEDURES
0
5. The authority citation for subpart D of part 1316 continues to read
as follows:
Authority: 21 U.S.C. 811, 812, 871(b), 875, 958(d), 965.
0
6. Section 1316.41 is revised to read as follows:
Sec. 1316.41 Scope of subpart D.
Procedures in any administrative hearing held under the Act are
governed generally by the rule making and/or adjudication procedures
set forth in the Administrative Procedure Act (5 U.S.C. 551-559) and
specifically by the procedures set forth in this subpart, except where
more specific regulations (set forth in Sec. Sec. 1301.51-1301.57,
Sec. Sec. 1303.31-1303.37, Sec. Sec. 1308.41-1308.51, Sec. Sec.
1311.51-1311.53, Sec. Sec. 1312.41-1312.47, Sec. Sec. 1313.51-
1313.57, or Sec. Sec. 1315.50-1315.62) apply.
Dated: November 26, 2008.
Michele M. Leonhart,
Acting Administrator.
[FR Doc. E8-28651 Filed 12-2-08; 8:45 am]
BILLING CODE 4410-09-P