# Revision of Import and Export Requirements for Controlled Substances, Listed Chemicals, and Tableting and Encapsulating Machines, Including Changes To Implement the International Trade Data System; Revision of Reporting Requirements for Domestic Transactions in Listed Chemicals and Tableting and Encapsulating Machines; and Technical Amendments

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2016-21589

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** September 15, 2016
- **Citation:** 81 FR 63576

## Text

DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1300, 1301, 1302, 1303, 1304, 1308, 1309, 1310, 1312, 1313, 1314, 1315, 1316, and 1321
[Docket No. DEA-403]
RIN 1117-AB41
Revision of Import and Export Requirements for Controlled Substances, Listed Chemicals, and Tableting and Encapsulating Machines, Including Changes To Implement the International Trade Data System; Revision of Reporting Requirements for Domestic Transactions in Listed Chemicals and Tableting and Encapsulating Machines; and Technical Amendments

AGENCY:

Drug Enforcement Administration, Department of Justice.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Drug Enforcement Administration is proposing to update its regulations for the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals, and its regulations relating to reports required for domestic transactions in listed chemicals, gamma-hydroxybutyric acid, and tableting and encapsulating machines. In accordance with Executive Order 13563, the Drug Enforcement Administration has reviewed its import and export regulations and reporting requirements for domestic transactions in listed chemicals (and gamma-hydroxybutyric acid) and tableting and encapsulating machines, and evaluated them for clarity, consistency, continued accuracy, and effectiveness. The proposed amendments clarify certain policies and reflect current procedures and technological advancements. The amendments also allow for the implementation, as applicable to tableting and encapsulating machines, controlled substances, and listed chemicals, of the President's Executive Order 13659 on streamlining the export/import process and requiring the government-wide utilization of the International Trade Data System. This proposal additionally contains amendments that would implement recent changes to the Controlled Substances Import and Export Act (CSIEA) for reexportation of controlled substances among members of the European Economic Area made by the Improving Regulatory Transparency for New Medical Therapies Act. The proposal includes additional substantive and technical amendments.

DATES:

Electronic comments must be submitted, and written comments must be postmarked, on or before October 17, 2016. Commenters should be aware that the electronic Federal Docket Management System will not accept comments after 11:59 p.m. Eastern Time on the last day of the comment period.

All comments concerning collections of information under the Paperwork Reduction Act must be submitted to the Office of Management and Budget (OMB) on or before October 17, 2016.

ADDRESSES:

To ensure proper handling of comments, please reference “Docket No. DEA-403” on all correspondence, including any attachments.

The Drug Enforcement Administration encourages that all comments be submitted through the Federal eRulemaking Portal, which provides the ability to type short comments directly into the comment field on the Web page or to attach a file for lengthier comments. Please go to
http://www.regulations.gov
and follow the online instructions at that site for submitting comments. Upon completion of your submission you will receive a Comment Tracking Number for your comment. Please be aware that submitted comments are not instantaneously available for public view on
Regulations.gov.
If you have received a Comment Tracking Number, your comment has been successfully submitted and there is no need to resubmit the same comment. Paper comments that duplicate an electronic submission are not necessary and are discouraged. Should you wish to mail a paper comment
in lieu of
an electronic comment, it should be sent via regular or express mail to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/ODW, 8701 Morrissette Drive, Springfield, Virginia 22152.

All comments concerning collections of information under the Paperwork Reduction Act must be submitted to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for DOJ, Washington, DC 20503. Please state that your comment refers to RIN 1117-AB41/Docket No. DEA-403.

FOR FURTHER INFORMATION CONTACT:

Michael J. Lewis, Office of Diversion Control, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-6812.

SUPPLEMENTARY INFORMATION:

Posting of Public Comments

Please note that all comments received in response to this docket are considered part of the public record. They will, unless reasonable cause is given, be made available by the Drug Enforcement Administration (DEA or Administration) for public inspection online at
http://www.regulations.gov.
Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter. The Freedom of Information Act (FOIA) applies to all comments received. If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be made publicly available, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also place the personal identifying information you do not want made publicly available in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment, but do not want it to be made publicly available, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment.

Comments containing personal identifying information and confidential business information identified as directed above will generally be made publicly available in redacted form. If a comment has so much confidential business information or personal identifying information that it cannot be effectively redacted, all or part of that comment may not be made publicly available. Comments posted to
http://www.regulations.gov
may include any personal identifying information (such as name, address, and phone number) included in the text of your electronic submission that is not identified as directed above as confidential.

An electronic copy of this document and supplemental information to this proposed rule are available at
http://www.regulations.gov
for easy reference. The DEA specifically solicits written comments regarding the DEA's economic analysis of the impact of these proposed changes. The DEA requests that commenters provide detailed descriptions in their comments of any expected economic impacts, especially to small entities. Commenters should

provide empirical data to illustrate the nature and scope of such impact.

Outline

I. Background and Purpose

A. Legal Authority

B. Current Import/Export Practices and Regulatory Framework

1. Import and Export Permits for Controlled Substances

2. Import and Export Declarations for Controlled Substances

3. Import and Export Declarations and Notices for Listed Chemicals

4. Import and Export Reports for Tableting and Encapsulating Machines; Reports for Domestic Transactions in Listed Chemicals, Gamma-Hydroxybutyric Acid, and Tableting and Encapsulating Machines

5. Transshipments of Controlled Substances

6. Transshipments of Listed Chemicals

7. Notifications of International Transactions by Brokers or Traders

C. Purpose of Regulatory Action

II. Discussion of Technical Amendments and Proposed Significant Regulatory Changes

A. Proposed Amendments Directly Associated With Implementation of the International Trade Data System

1. Applications, Notices and Other Filings

a. Import and Export Permits for Controlled Substances

b. Import and Export Declarations for Controlled Substances

c. Import and Export Declarations for Listed Chemicals

d. Import and Export Reports for Tableting and Encapsulating Machines

e. Transshipments of Controlled Substances

f. Transshipments of Listed Chemicals

g. Notifications of International Transactions by Brokers or Traders

2. Security

3. Miscellaneous

B. Proposed Amendments Indirectly Associated With Implementation of the International Trade Data System

1. Terminology and Definitions

2. Part 1302: Labeling and Packaging Requirements for Controlled Substances

3. Part 1304: Records and Reports of Registrants

4. Part 1308: Schedules of Controlled Substances

5. Part 1309: Registration of Manufacturers, Distributors, Importers and Exporters of List I Chemicals

6. Part 1310: Records and Reports of Listed Chemicals and Certain Machines

a.
Mail Order Reporting for Ephedrine, Pseudoephedrine, Phenylpropanolamine, and Gamma-Hydroxybutyric Acid

b.
Listed Chemicals and Tableting and Encapsulating Machines

7. Part 1312: Importation and Exportation of Controlled Substances

8. Reexportation of Controlled Substances—Including Implementation of section 4 of the Improving Regulatory Transparency for New Medical Therapies Act

9. Part 1313: Importation and Exportation of List I and List II Chemicals

10. Part 1316: Administrative Functions, Practices, and Procedures

C. DEA Mailing Addresses

III. Regulatory Analyses

I. Background and Purpose

A. Legal Authority

The DEA implements and enforces titles II and III of the Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended. 21 U.S.C. 801-971. Titles II and III are known as the “Controlled Substances Act” and the “Controlled Substances Import and Export Act,” respectively, and are collectively referred to as the “Controlled Substances Act” or “CSA” for the purpose of this action. The DEA publishes implementing regulations for these statutes in title 21 of the Code of Federal Regulations (CFR), chapter II. The CSA and its implementing regulations are designed to prevent, detect, and eliminate the diversion of controlled substances and listed chemicals into the illicit market while ensuring an adequate supply is available for the legitimate medical, scientific, research, and industrial needs of the United States. Controlled substances have the potential for abuse and dependence and are controlled to protect the public health and safety.

Under the CSA, each controlled substance is classified into one of five schedules based upon its potential for abuse, its currently accepted medical use in treatment in the United States, and the degree of dependence the substance may cause. 21 U.S.C. 812. The initial schedules of controlled substances established by Congress are found at 21 U.S.C. 812(c), and pursuant to 21 U.S.C. 812 (a) and (b), the current list of all scheduled substances is published at 21 CFR part 1308. Controlled substances generally include narcotics, stimulants, depressants, and hallucinogens that have a potential for abuse and physical and psychological dependence, as well as anabolic steroids. Listed chemicals are separately classified based on their use and importance to the illicit manufacture of controlled substances (list I or list II chemicals). 21 U.S.C. 802 (33)-(35).

Through the enactment of the CSA and its amendments, Congress has established a closed system of distribution making it unlawful to handle any controlled substance (manufacture, distribute, reverse distribute, dispense, conduct research, engage in narcotic treatment or maintenance, import, export, collect, conduct chemical analysis, dispose, or possess) or manufacture, distribute, import, or export any listed chemical except in a manner authorized by the CSA.
See e.g., Gonzales
v.
Raich,
545 U.S. 1, 12-13 (2005) (stating “The main objectives of the CSA were to conquer drug abuse and to control the legitimate and illegitimate traffic in controlled substances. Congress was particularly concerned with the need to prevent the diversion of drugs from legitimate to illicit channels. To effectuate these goals, Congress devised a closed regulatory system making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the CSA. 21 U.S.C. §§ 841(a)(1), 844(a).”); H.R. Rep. No. 91-1444, pt. 1 at 3 (1970) (stating: “
Title II: Control and Enforcement.
—The bill provides for control by the Justice Department of problems related to drug abuse through registration of manufacturers, wholesalers, retailers, and all others in the legitimate distribution chain, and makes transactions outside the legitimate distribution chain illegal.”).

In order to maintain this closed system of distribution, the CSA requires handlers of controlled substances, unless exempt from registration, to be registered with the DEA at each principal place of business or professional practice where controlled substances are manufactured, distributed, or dispensed. 21 U.S.C. 822. The CSA also requires persons who manufacture or distribute, or who propose to manufacture or distribute, list I chemicals to be registered at each principal place of business or professional practice, unless exempt. 21 U.S.C. 822; 21 CFR 1309.22. A separate registration is also required for each principal place of business where controlled substances or list I chemicals are imported or exported, unless exempt from registration. 21 U.S.C. 958. A “registrant” is any person who is registered pursuant to either section 303 or section 1008 of the CSA (codified at 21 U.S.C. 823 or 958).
1

21 CFR 1300.01(b). Registrants are permitted to possess controlled substances and list I chemicals as authorized by their registration and must comply with the applicable requirements associated with their registration. 21 U.S.C. 822 and 958.

1
Unless otherwise noted, all references to registrant(s) in this preamble include persons exempt from DEA registration and persons not registered with the DEA as an importer or exporter who are authorized to perform importing or exporting activities as a coincident activity of their research or chemical analysis registration in accordance with 21 CFR 1301.13(e).

In contrast, a “regulated person” means “a person who manufactures, distributes, imports, or exports a listed

chemical, a tableting machine, or an encapsulating machine or who acts as a broker or trader
2

for an international transaction
3

involving a listed chemical, a tableting machine, or an encapsulating machine.” 21 U.S.C. 802(38). (Tableting machines and encapsulating machines are also commonly known as “pill presses” and “capsule fillers” respectively.) Regulated persons who engage in “regulated transactions,” defined at 21 U.S.C. 802(39),
4

are subject to specific recordkeeping and reporting requirements pursuant to 21 U.S.C. 830, 971; 21 CFR part 1310. In addition, a person located in the United States who is a broker or trader for an international transaction in a listed chemical that is a regulated transaction shall, with respect to that transaction, be subject to all of the notification, reporting, recordkeeping, and other requirements placed upon exporters of listed chemicals. 21 U.S.C. 971(e).

2
A “broker” and “trader” are persons that assist in arranging an international transaction in a listed chemical by: negotiating contracts; serving as an agent or intermediary; or bringing together a buyer and seller, a buyer and transporter, or a seller and transporter. 21 U.S.C. 802(43).

3
An “international transaction” is a transaction that involves “the shipment of a listed chemical across an international border (other than a United States border) in which a broker or trader located in the United States participates.” 21 U.S.C. 802(42).

4
The CSA defines a “regulated transaction” as being: (1) with certain enumerated exceptions, “a distribution, receipt, sale, importation, or exportation of, or an international transaction involving shipment of, a listed chemical, or if the Attorney General establishes a threshold amount for a specific listed chemical, a threshold amount, including a cumulative threshold amount for multiple transactions (as determined by the Attorney General, in consultation with the chemical industry and taking into consideration the quantities normally used for lawful purposes), of a listed chemical;” and (2) “a distribution, importation, or exportation of a tableting machine or encapsulating machine.” 21 U.S.C. 802(39).

The CSA grants the Attorney General authority to promulgate rules and regulations relating to: the registration of controlled substance and list I chemical handlers; control of the manufacture, distribution, and dispensing of controlled substances; control of the manufacture and distribution of listed chemicals; maintenance and submission of records and reports; and for the efficient execution of her statutory functions. 21 U.S.C. 821-822, 825, 827-831, 871, 952, 954, 956, 958, 971. The Attorney General is further authorized by the CSA to promulgate rules and regulations relating to the registration and control of importers and exporters of controlled substances or listed chemicals. 21 U.S.C. 958(f). The Attorney General has delegated these authorities to the Administrator of the DEA, who in turn redelegated many of these authorities to the Deputy Administrator of the DEA and the Deputy Assistant Administrator of the DEA Office of Diversion Control. 28 CFR 0.100
et seq.

Within the DEA, the Office of Diversion Control is the strategic focus area that carries out the mandates of the CSA to ensure that adequate supplies of controlled substances and listed chemicals are available to meet legitimate domestic medical, scientific, industrial, and export needs. The Office of Diversion Control carries out the mission of the DEA to prevent, detect, and eliminate the diversion of these substances into the illicit drug market. Activities in support of the Office of Diversion Control and its mission include: Determination of program priorities; field management oversight; coordination of major investigations; drafting and promulgating regulations; the design and proposal of national legislation; advice and leadership on State legislation/regulatory initiatives; oversight of the importation and exportation of tableting and encapsulating machines, controlled substances, and listed chemicals; establishment of national drug production quotas; activities related to drug scheduling and compliance with international treaty obligations; the design and execution of diplomatic missions; computerized monitoring and tracking of the distribution of certain controlled substances; planning and allocation of program resources; and liaison efforts with industry and their representative associations as well as to the DEA's regulatory and law enforcement counterparts at the federal, State, tribal, and local levels.

B. Current Import/Export Practices and Regulatory Framework

Under the CSA, a controlled substance, listed chemical, or tableting or encapsulating machine is considered imported if it is either brought into the customs territory from a place that is outside the customs territory but within the United States (
e.g.,
a shipment from an insular possession such as Guam into one of the 50 States) or brought into the United States from any other place (
e.g.,
a shipment from India into one of the 50 States or into an insular possession such as American Samoa). 21 U.S.C. 951, 952;
see also
21 U.S.C. 802(39), 830(a). For purposes of the CSA, the “customs territory of the United States” includes only the 50 States, the District of Columbia, and Puerto Rico. 21 U.S.C. 951(a)(2). In contrast, an export of a controlled substance, listed chemical, or tableting or encapsulating machine occurs when that item is taken out of, or removed from, the United States, which, pursuant to the definition at 21 U.S.C. 802(28), includes “all places and waters, continental or insular, subject to the jurisdiction of the United States.”
See
21 U.S.C. 802 (38) and (39), 830(a), 953(a).

The DEA regulations are drafted to be consistent with the meaning of “import” and “export” under the CSA, which is broader in scope than the meaning of those terms as used in the U.S. Customs and Border Protection's (CBP) regulations. The DEA regulations are also drafted to take into account the authority of customs officials of U.S. territories to enforce the CSA. The CSA and DEA regulations prohibit any person from importing or exporting any controlled substance or list I chemical unless that person is registered with the DEA (or exempt from registration). 21 U.S.C. 957. In addition, these substances may only be imported and exported if specific statutory criteria are met. For instance, schedule II controlled substances may be imported to the extent that the Attorney General finds such importation is “necessary to provide for the medical, scientific, or other legitimate needs of the United States * * * in any case in which the Attorney General finds that such controlled substance is in limited quantities exclusively for scientific, analytical, or research uses,” 21 U.S.C. 952(a)(2)(C), or in other limited circumstances. Schedule II narcotic drugs may be exported if,
inter alia,
“substantial evidence is furnished to the Attorney General by the exporter that (A) the narcotic drug is to be applied exclusively to medical or scientific uses within the country of import, and (B) there is an actual need for the narcotic drug for medical or scientific uses within such country.” 21 U.S.C. 953(a)(4). Depending on the circumstances surrounding the proposed import or export, in most cases the CSA and implementing regulations require importers and exporters, in advance of the import or export, to obtain a permit from the DEA, or to report the activity to the DEA by filing a declaration. 21 U.S.C. 952-953, 971; 21 CFR 1312.11, 1312.21, 1313.12, 1313.21.

1. Import and Export Permits for Controlled Substances

Registrants (and those exempt from registration)
5

who wish to import a

controlled substance listed in schedule I or II; any narcotic drug listed in schedule III, IV, or V; any non-narcotic drug in schedule III that has been specifically designated by regulation in 21 CFR 1312.30; or any non-narcotic substance listed in schedule IV or V that is also listed in schedule I or II of the Convention on Psychotropic Substances, 1971, must apply (on DEA Form 357) for and be granted a permit from the DEA prior to the import. 21 U.S.C. 952; 21 CFR 1312.11, 1312.12, 1312.13. Similarly, registrants who wish to export any schedule I or II controlled substance; any narcotic drug in schedule III or IV; any non-narcotic drug in schedule III that has been specifically designated by regulation in 21 CFR 1312.30; or any non-narcotic substance listed in schedule IV or V that is also listed in schedule I or II of the Convention on Psychotropic Substances, 1971, must apply (on DEA Form 161 or 161R) for and be granted a permit from the DEA prior to the export. 21 U.S.C. 953; 21 CFR 1312.21, 1312.22, 1312.23. The DEA currently issues permits in sextuplet for imports and in septuplet for exports, serially numbered, on special paper. 21 CFR 1312.13(e), 1312.23(e). The copies are distributed among the importer, the foreign exporter, the foreign government authority, CBP, and the DEA in accordance with §§ 1312.14 and 1312.24. Permits expire on the date specified on the permit, but in no event shall the date be more than six months after the date the permit is issued. 21 CFR 1312.16(b), 1312.25. Unused permits are required to be returned to the DEA for cancellation.
Id.

5
As discussed in note 1, unless specifically noted otherwise, discussion of “registrants” also includes persons exempt from registration for purposes of the preamble portion of this notice.

2. Import and Export Declarations for Controlled Substances

Those non-narcotic controlled substances listed in schedule III, IV, or V, that are not subject to the requirement of a permit, may be imported or exported if the registrant files a controlled substances import/export declaration (on DEA Form 236) with the DEA. 21 U.S.C. 952(b), 953(e); 21 CFR 1312.11(b), 1312.21(b). Likewise, narcotic controlled substances in schedule V may be exported if the registrant files a controlled substances export declaration. 21 U.S.C. 953(e); 21 CFR 1312.21(b). Currently, the declaration must be executed in quintuplicate and Copy 4 shall be filed with the DEA not later than 15 calendar days prior to the proposed date of importation or exportation. 21 CFR 1312.18, 1312.19, 1312.27, 1312.28. The five copies of the import/export declaration (DEA Form 236) are distributed among the importer, the foreign shipper, the governmental authority of the foreign country, CBP, and the DEA in accordance with § 1312.19 or § 1312.28.

3. Import and Export Declarations and Notices for Listed Chemicals

The CSA and DEA regulations have established a system of recordkeeping and reporting requirements that provide the DEA with a mechanism to track international movement of listed chemicals in order to prevent their being diverted for use in the clandestine manufacture of controlled substances. The CSA generally requires regulated persons who import or export a listed chemical to report the transaction to the DEA, as delegated by the Attorney General, at least 15 days in advance. 21 U.S.C. 971(a). This requirement is modified for regulated persons engaging in a transaction with a “regular customer” and for regulated persons designated as “regular importers.” 21 U.S.C. 802 (36) and (37), 971(b); 21 CFR 1313.15, 1313.24. The DEA has the obligation to examine the report in order to determine if the shipment is legitimate and that the chemical will not be diverted into the illicit manufacture of controlled substances, pursuant to the authority granted in 21 U.S.C. 971 (c) and (d).

For listed chemicals at or above thresholds set forth in § 1310.04(f) and listed chemicals for which no threshold has been established as identified in § 1310.04(g), regulated persons may import or export list I or II chemicals by filing a listed chemical import declaration (on DEA Form 486/486A) or an export declaration (on DEA Form 486) with the Administration not later than 15 calendar days prior to the date of the proposed importation or exportation (unless DEA has waived such advance reporting through regulation). 21 CFR 1313.12, 1313.13, 1313.21, 1313.22. The United States importer or exporter must include on their declaration the name and address of each person to whom the listed chemical(s) will be transferred (
i.e.,
the transferee, consignee, and intermediate consignees), including the quantity. 21 U.S.C. 971(d); 21 CFR 1313.13(c), 1313.22(c). For an importer, the transferee is the person to whom the importer transfers the listed chemical (
i.e.,
the downstream customer). For an export from the United States, the transferee/consignee is the foreign importer. For a broker or trader, the transferee/consignee is the foreign customer purchasing the listed chemicals. Importers are also required to list their foreign supplier on their declaration. The DEA Form 486/486A must be executed in triplicate. 21 CFR 1313.13, 1313.22. The three copies of the listed chemical import/export declaration are distributed among the importer/exporter, CBP, and the DEA in accordance with §§ 1313.14 and 1313.23.

If, after submission of the initial DEA Form 486/486A, the importer, exporter, broker or trader will not be transferring the listed chemical to the transferee named on the declaration, or if the quantity of listed chemical to be imported, exported, or transferred is greater than the quantity originally indicated on the declaration, the importer, exporter, broker or trader must file an amended DEA Form 486/486A reporting the change. 21 CFR 1313.16(b), 1313.26(b), 1313.32(d). Even if an importer or exporter did not have to file an initial notification—either because he or she is a regular importer selling to a regular customer, or an exporter selling to a regular customer—if the newly arranged spot market sale is not to a regular customer, the importer or exporter must file an advance notice 15 days prior to transferring the chemical to a new customer. 21 CFR 1313.16, 1313.26.

Within 30 days after an import or export of a listed chemical has occurred, the importer/exporter must file with the DEA a return declaration containing the particulars of the transaction, including the date, quantity, chemical, container, name of transferees, and any other information as the Administration may specify. 21 U.S.C. 971(g); 21 CFR 1313.17(a), 1313.27(a). An importer may file a single return declaration including the particulars of both the importation and the distribution. 21 CFR 1313.17(a). If the importer has not distributed all chemicals imported by the end of the initial 30-day period, the importer must file supplemental return declarations every 30 days until the distribution or other disposition of all chemicals imported under the declaration or amended declaration have been accounted for. 21 CFR 1313.17(a). If an import/export for which a declaration has been filed does not in fact take place, the importer/exporter must file an amended declaration notifying the DEA that the transaction did not in fact occur. 21 CFR 1313.17(b), 1313.27(b).

4. Import and Export Reports for Tableting and Encapsulating Machines; Reports for Domestic Transactions in Listed Chemicals, Gamma-Hydroxybutyric Acid, and Tableting and Encapsulating Machines

Regulated persons who engage in a regulated transaction involving a listed chemical, a tableting machine, or an

encapsulating machine must keep records of the transaction and file reports in accordance with §§ 1310.03(a), 1310.04, and 1310.05. Regulated persons who import or export a tableting machine or encapsulating machine are not required to obtain prior approval from the DEA for the transaction, but they are required to file a report with the DEA of any importation or exportation of a tableting or an encapsulating machine on or before the date of importation or exportation. 21 U.S.C. 830(b)(1)(D); 21 CFR 1310.05(c), 1310.06 (e) and (f).

Regulated persons who engage in an export transaction that involves ephedrine, pseudoephedrine, phenylpropanolamine, or gamma-hydroxybutyric acid (including drug products containing these chemicals or controlled substance) and use or attempt to use the U.S. Postal Service or a private or commercial carrier are required to file monthly reports of these transactions in accordance with §§ 1310.03(c), 1310.05(e), 1310.06(i), and 1314.110;
see also
§ 1310.04. The report must be submitted to the Import/Export Unit of the DEA on company letterhead, signed by the person authorized to sign the registration application forms on behalf of the registrant. 21 CFR 1310.05(e). Regulated persons who engage in any domestic regulated transaction with a tableting machine or an encapsulating machine, including those following an import of such machines, must orally report, when possible, and subsequently file written reports with the Special Agent in Charge of the DEA Divisional Office for the area in which the regulated person making the report is located. 21 CFR 1310.05 (a)(4) and (b).

Regulated persons are required to report regulated transactions involving extraordinary quantities of a listed chemical, uncommon method of payment or delivery, or other circumstances that the regulated person believes may indicate that the listed chemical will be used in violation of the CSA and its implementing regulations. 21 CFR 1310.05 (a)(1) and (b). Regulated persons must also report the unusual or excessive loss or disappearance of a listed chemical under their control, 21 CFR 1310.05 (a)(3) and (b), and any proposed regulated transaction with a person whose description or identifying characteristic the Administration has previously provided. 21 CFR 1310.05(a)(2).

5. Transshipments of Controlled Substances

The transshipment of controlled substances through the United States is governed by 21 U.S.C. 954. Persons seeking to transship or transfer for immediate exportation schedule I controlled substances within the United States must apply for a permit at least 30 days in advance of the expected transshipment or, in the case of an emergency, as soon as practicable, and receive a transshipment permit from the DEA before the transshipment may occur. 21 CFR 1312.31. Controlled substances listed in schedule II, III, or IV may be so transshipped or transferred if 15 days advance written notice is provided to the DEA in accordance with 21 CFR 1312.32. 21 U.S.C. 954(2). A specific DEA Form is not required for transshipments, however the application for prior written approval (for schedule I substances) and the advance notice (for schedule II, III, or IV substances) must conform with very specific requirements outlined in § 1312.31 (b) and (c).
See
21 CFR 1312.32(b).

6. Transshipments of Listed Chemicals

As stated above, the CSA generally requires regulated persons who import or export a listed chemical to report the transaction to the DEA, as delegated by the Attorney General, at least 15 days in advance. 21 U.S.C. 971(a). This requirement is modified for regulated persons engaging in a transaction with a “regular customer” and for regulated persons designated as “regular importers.” 21 U.S.C. 802 (36) and (37), 971(b); 21 CFR 1313.15, 1313.24. No waiver of the 15-day advance notice is permitted under 21 CFR 1313.31(d) for importations for transshipment purposes of threshold or greater quantities of listed chemicals. Regardless of whether the shipment is a direct export or a transshipment, the DEA has the obligation to examine the report in order to determine if the shipment is legitimate and that the chemical will not be diverted into the illicit manufacture of controlled substances.

Persons seeking to transship or transfer listed chemicals in a quantity that meets or exceeds the threshold amounts found in § 1310.04(f) must provide advance notification to the DEA not later than 15 days prior to the proposed date that the listed chemical will transship or transfer through the United States. 21 CFR 1313.31. The notification must contain the information that is required by the DEA Form 486, but it is not required to be submitted to DEA using the DEA Form 486.

7. Notifications of International Transactions by Brokers or Traders

Brokers or traders engaging in international transactions involving listed chemicals which meet or exceed the threshold amounts found in § 1310.04 must provide notification to the DEA not later than 15 days in advance of the transaction by filing DEA Form 486. 21 CFR 1313.32.

Within 30 days after an international transaction has occurred, the broker or trader must send the DEA a return declaration containing the particulars of the transaction, including the date, quantity, chemical, container, name of transferees, and any other information as the Administration may specify. 21 CFR 1313.35(a). If an international transaction for which a DEA Form 486 has been filed does not in fact take place, the broker or trader must file an amended DEA Form 486 notifying the DEA that the transaction did not in fact occur. 21 CFR 1313.35(b).

C. Purpose of Regulatory Action

The DEA is proposing to update its regulations regarding the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals. In accordance with Executive Order 13563, the DEA has reviewed its import and export regulations and reporting requirements for domestic transactions involving listed chemicals (and gamma-hydroxybutyric acid) and tableting and encapsulating machines, and evaluated them for clarity, consistency, continued accuracy, and effectiveness. The amendments would codify current practices and incorporate current procedures and technological advancements and allow for implementation of the President's Executive Order on streamlining the export/import process and requiring Government-wide utilization of the International Trade Data System (ITDS). Section 3 of the President's Executive Order 13659 of February 19, 2014, “Streamlining the Export/Import Process for America's Businesses,” directs participating agencies to have capabilities, agreements, and other requirements in place to allow electronic filing through ITDS and supporting systems of data and other relevant documents (exclusive of applications for permits, licenses, or certifications) required for imported and exported goods. Businesses are able to transmit their import and export data according to the Electronic Data Interchange (EDI), an electronic communication framework providing standards for exchanging data via any

electronic means. Data transmitted through EDI links to the Automated Commercial Environment (ACE), which serves as the single window for CBP and participating agencies. For purposes of this notice, the DEA will describe EDI, ACE, and any successor system to ACE, by the statutory term for the single window goal, which is ITDS.

As discussed above, current DEA regulations specifically require applications for permits, and declarations and other required notices and reports to be filed in paper form, or by electronic means in some circumstances. The DEA must amend its regulations in order to integrate DEA procedures related to the importation and exportation of tableting and encapsulating machines, controlled substances, and listed chemicals with the ITDS.

Because the ITDS excludes applications for permits, licenses, or certifications, the ITDS single window will not be used by DEA registrants, regulated persons, or brokers or traders applying for permits or filing import/export declarations, notifications or reports with the DEA. The DEA import/export application and filing processes will continue to remain separate from (and in advance of) the ITDS single window. Entities will continue to use the DEA application and filing processes; however, the processes will be electronic rather than paper. After DEA's approval or notification of receipt as appropriate, the DEA will transmit the necessary information electronically to the ITDS and the registrant or regulated person so that customs officers can validate importations and exportations subject to DEA regulations.

Because of the requirement that regulated persons submit reports of regulated transactions in tableting machines and encapsulating machines to the DEA, the DEA also proposes to require such domestic regulated transaction reports to be submitted through the DEA Office of Diversion Control secure network application, in addition to import and export regulated transactions. Mandatory reporting requirements for domestic regulated transactions are included as part of this proposal because it allows for the DEA to create, at one time, an efficient, streamlined reporting structure of regulated activities applicable to tableting and encapsulating machines. Additional information related to the proposed mandatory electronic reporting requirements for tableting and encapsulating machines is discussed in section II, B, 6, b of this document.

This proposal additionally contains amendments that would implement section 4, Re-exportation Among Members of the European Economic Area, of the Improving Regulatory Transparency for New Medical Therapies Act, Public Law 114-89, which was signed into law on November 25, 2015. Section 4 amended section 1003 of the Controlled Substances Import and Export Act (21 U.S.C. 953) by making changes to paragraph (f) and adding paragraph (g) that allows for reexportation of controlled substances among members of the European Economic Area. Additional information related to the proposed revisions to implement section 4 of the Improving Regulatory Transparency for New Medical Therapies Act is discussed in section II, B, 8 of this document.

This proposal also includes technical and stylistic changes to several regulations to clarify and simplify the language and to further the goals of the President's memorandum on Transparency and Open Government. 74 FR 4685, Jan. 26, 2009.

II. Discussion of Technical Amendments and Proposed Significant Regulatory Changes

A. Proposed Amendments Directly Associated With Implementation of the International Trade Data System

1. Applications, Notices, and Other Filings

The principal changes necessary to implement the ITDS are also those that will allow the efficient and standardized electronic exchange of required information.

To transmit data electronically to the ITDS, the first global change that the DEA is proposing is to mandate the electronic submission of all applications and other required filings and reports (
e.g.,
declarations, notices, returns) associated with the importation or exportation of tableting and encapsulating machines, controlled substances, and listed chemicals. 21 U.S.C. 958(f). However, the DEA will not require electronic submission of transshipment data. (The electronic application and filing process is not feasible in such circumstances because foreign IP addresses are blocked by the Department of Justice's firewall and are prevented from accessing the DEA Office of Diversion Control secure network application.) Accordingly, the vast majority of persons subject to the CSA requirements and DEA regulations pertaining to imports and exports would be required to make all DEA-required submissions through the DEA Office of Diversion Control secure network application. The DEA will provide customs information to validate importations subject to DEA regulations, and this change will enable the DEA to analyze and electronically transmit necessary information to the ITDS quickly and accurately. The DEA Office of Diversion Control secure network application will be accessed by DEA registrants and regulated persons through the DEA Office of Diversion Control Web site. Security of the new electronic system is discussed in section II, A, 2 of this document under the heading “Security.” In addition, importers and exporters would obtain information regarding approved permits and DEA's receipt of completed declarations, notices, returns, and reports through the same DEA Office of Diversion Control secure network application. If importers and exporters were permitted to continue submitting paper documents, the DEA would have to manually transcribe the paper information into an electronic format for transmission to the ITDS. Such an intermediary step would cause unnecessary delay and is subject to error. In addition to providing for electronic filing of information to CBP through ITDS and reducing errors, electronic applications, approvals, declarations, notices, and reports strengthen the DEA's ability to monitor and prevent unauthorized imports and exports and will enhance information sharing between CBP/customs services of Insular Areas and the DEA.
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Electronic processing is expected to help the DEA identify unauthorized or suspicious shipments prior to import or export, and diversion of in-transit shipments being exported or imported, by improving the quality and timeliness of data review and transaction authorization.

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For purposes of this preamble, “customs services of Insular Areas” means the governmental authority/authorities (federal or insular), charged with enforcement of the customs laws of the United States/Insular Area.

For the foregoing reasons, the DEA is proposing amendments to its regulations that would authorize electronic submission of data, and would make the procedure mandatory over paper in most circumstances. 21 U.S.C. 958(f). The use of electronic applications and filings is consistent not only with the requirements of Executive Order 13659, but also with the general principles outlined in the Government's Open Data Policy which requires agencies to collect or create information in a way that supports downstream information processing and

dissemination.
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The Open Data Policy states that information should be collected electronically by default. As discussed in greater detail in the Regulatory Analyses section of this document, the DEA believes that the regulated community should be able to easily adapt to this new requirement with minimal effort or cost.

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OMB Memorandum M-13-13,
Open Data Policy—Managing Information as an Asset,
available at
https://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-13.pdf.

If an importer/exporter tries to submit an application, declaration, notice, report, or other required submission through the DEA Office of Diversion Control secure network application but does not complete all of the required fields or enters key data that is not valid or is inaccurate (
e.g.,
unknown port or erroneous drug code) with the submission, the DEA Office of Diversion Control secure network application will automatically alert the filer to the fact that information is missing or does not meet the validation requirements.

Applications, declarations, notices, and reports filed through the DEA Office of Diversion Control secure network application would generally not be deemed filed until the DEA assigns a single-use, randomly-generated, unique identifier. This identifier would be referenced as the “transaction identification number,” except for permits, where the transaction identification number would continue to be called the “permit number” to correspond with current business practice. A permit number would be assigned once the DEA has approved an application for a permit. A transaction identification number would be assigned once the DEA reviews a declaration, notice, or other filing for completeness, and it is accepted for filing. Although issuance of a transaction identification number would signify that the declaration, notice, or other filing has been reviewed for completeness, the issuance of the transaction identification number does not mean that such filing has been “approved” by the DEA. The DEA reserves the right to cancel an import or export permit or declaration for cause and suspend shipments of listed chemicals in accordance with applicable regulations. Currently, the DEA assigns a Web Tracking Number to each filing submitted electronically to the DEA and would continue to do so under this proposal. However, unlike the proposed transaction identification number, the Web Tracking Number is assigned automatically upon submission to the DEA; the transaction identification number would be assigned only after the DEA has reviewed the filing for completeness.

Instead of distributing “copies,” registrants and other importers/exporters, once logged into the DEA Office of Diversion Control secure network application through authenticated access, would be able to use the assigned permit or transaction identification number to access the “official record” of the filing from the DEA Office of Diversion Control secure network application. The registrant or other importer/exporter would then be responsible for forwarding official record information to their broker or any other of their agents needing the information contained therein to complete the release process through customs. Permit numbers and transaction identification numbers are discussed in more detail later in this document for each transaction category.

Declarations, permits, and most other filings with DEA would not be deemed filed until a transaction identification number (or permit number) is issued by the DEA. The transaction identification number would be issued by the DEA after any necessary corrections are complete. The DEA considered, but ultimately did not choose to propose, a specific timeframe in which transaction identification numbers (and permit numbers) will be issued because of concern of instances that require longer-than-average review and processing times that can result from any number of circumstances, not all of which are foreseeable. However, the DEA does not have reason to believe that by not having a stated timeframe that there will be any significant impact on import and export activities.

The DEA is proposing to have the option of deeming a submission filed on the date submitted, if a listed chemical import or export declaration, or other filing was complete at the time of filing and no additional follow-up action was required, instead of on the date the transaction identification number was issued. However, if a chemical importer or exporter made a submission on the last day that would comply with the reporting deadline, and DEA review subsequently found the submission not to be complete, then he or she would be in violation of the regulation. The requirement to submit applications, declarations, notices, reports, and other filings includes the duty that such filings be complete. If an importer or exporter has concerns that their information may not be complete they would be able to contact the DEA in advance of the submission to ask questions and/or submit the filing in advance of the deadline to ensure that if changes or additional information is required that those changes can be made before the established 15-day filing deadline.

In association with this change, the DEA is proposing to globally amend its import and export regulations to provide that expiration periods, filing deadlines, and other timed action dates are to be generally calculated as “calendar days” (
i.e.,
including weekends and holidays) unless otherwise noted in a regulation (
e.g.,
in the case of amendments). This change corresponds with business rule policies that will be built into the DEA's electronic systems of records for the impacted applications, notices, and other filings that will be required to be electronically submitted to the DEA.

(a) Import and Export Permits for Controlled Substances

The DEA proposes to incorporate the mandatory electronic application requirements for controlled substance imports and exports into §§ 1312.12 and 1312.22. Applicants for a permit to import or export controlled substances would be required to access, complete, and submit the DEA application for import, application for export, or application for reexport, as appropriate, to the DEA through the DEA Office of Diversion Control secure network application. This requirement would also be incorporated into a new § 1312.03, which references applicable forms for part 1312, and would state that such forms are electronic.

Other than for transshipments, current DEA regulations requiring import and export permits to be issued in multiples via paper form would be eliminated in favor of regulations making such information available via digital means. The DEA would continue to issue original permits under existing practices, and would still transmit the original permit to the pertinent foreign competent national authorities (CNAs); however, the DEA would eliminate issuing the other copies. The DEA proposes that “copies” currently issued by the DEA to registrants would only be accessible through the DEA Office of Diversion Control secure network application. The DEA would assign each approved permit a permit number (a unique identifier). Once the permit has been issued, registrants would be able to use the assigned permit number to access the digital copy of the permit, or the “official record of the permit.” Corresponding changes would be made throughout DEA import/export regulations. These changes will reference the data downloads from the

secure network application by the registrant as an “official record of the permit” instead of a “copy.” These changes are proposed in §§ 1312.13, 1312.14, 1312.23, and 1312.24.

The DEA proposes to amend its import/export regulations to describe the procedures relating to amendments following issuance of an import or export permit. The DEA is proposing to revise §§ 1312.16 and 1312.25 to clearly specify how and under what conditions controlled substance import and export permits may be amended or cancelled after issuance and when a new permit is required instead of an amendment. Registrants would submit a request to amend or cancel an application for an import or export permit, amend an issued import or export permit, or request for a cancelation of an issued import or export permit to the Administration through the DEA Office of Diversion Control secure network application. Return information on imports and exports may not be amended.

Consistent with current practice, importers and exporters would continue to be able to request an amendment to a permit for the following data fields: The National Drug Control number, description of the packaging, or trade name of the product, so long as the description is for the same basic class of controlled substance(s) as in the original permit; the proposed port of entry or export; the proposed date of import or export;
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the method of transport; any registrant notes; and the justification entered by the importer or exporter for why an import or export is needed to meet the medical, scientific, or other legitimate needs of the United States or foreign jurisdiction. The DEA allows amendments to these fields as these are areas that may be easily mis-keyed or subject to change as part of the normal import and export business practice. While the data contained in these fields is important to determining the risk of diversion and the tracking of controlled substances through the closed system of distribution, the DEA believes that the Administration is able to enforce the CSA and uphold U.S. obligations under international drug control treaties while potentially limiting burden on industry by allowing these fields to be amendable.

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The DEA is proposing to make global changes to DEA regulations to change usage, where applicable, of “import” and “export” to reference the date of release by customs officers for purposes of DEA recordkeeping and reporting requirements.

Consistent with current practice, importers and exporters would continue to generally be allowed to amend the base weight of controlled substance(s) listed on their permit prior to the start of an import or export transaction (
i.e.,
prior to shipment). However, also consistent with current practice, exporters would not be allowed to exceed the total base weight of controlled substance(s) listed on the corresponding foreign permit. Also consistent with current practice, neither would exporters be allowed to exceed the strength of a controlled substance product if product strength information has been included on the import permit issued by the foreign competent national authority. Consistent with current § 1312.15(a), importers would continue to be allowed to request an amendment to the quantity of controlled substances specified on an import permit once a shipment has arrived at the U.S. customs port of entry if the increase in the amount of controlled substance to be imported is less than 1% of that listed on the issued import permit. Importers and exporters need not request an amendment for the sole purpose of decreasing the amount authorized.

Consistent with current practice, importers and exporters would continue to be able to request that an import or export permit be amended to remove a controlled substance. However, importers and exporters would no longer be able to amend permits to add a new controlled substance, replace the name of a controlled substance with a different controlled substance, or amend the controlled substance content of a drug or preparation. Instead, importers and exporters who needed to make changes to any of these fields would need to cancel the existing permit and apply for a new permit. The DEA understands that sometimes the incorrect controlled substance is identified on the permit application due to clerical error, for example because a similar item was selected from the drop-down selection in the DEA Office of Diversion Control secure network application that was located near the correct item. However, the DEA has closely considered this issue and ultimately determined that because the listed controlled substance proposed to be imported or exported is such a critical element of determining whether or not a permit should be issued and, if issued, the amount allowed to be imported or exported, this element should not be amendable. As stated elsewhere in this preamble, the DEA reminds importers and exporters that the duty to file reports and other documents with the DEA includes the duty that these filings be complete and accurate.

Similarly, in a change from current practice, the DEA is proposing to cease allowing exporters to amend foreign permit information on permit applications and issued permits. The DEA understands that sometimes, especially in the case of less experienced exporters, the incorrect foreign permit number is entered onto the permit application. This is often the result of numbers being transposed or a different number on the foreign permit being entered instead of the actual permit identification number. However, similar to the controlled substance identified on the permit, the DEA has closely considered this matter and ultimately determined that, because the authorization from the foreign competent national authority is such a critical element in determining whether a permit can be issued and the amount of the controlled substance to be exported, this element should not be amendable. As stated above and elsewhere in this document, the DEA reminds importers and exporters that the duty to file reports and other documents with the DEA includes the duty that these filings be complete and accurate.

Consistent with current practice, importers and exporters would not be able to request an amendment to a permit for changes to the importer or exporter's name (as it appears on their DEA certificate of registration) or the name of the foreign importer or exporter. The DEA considers the name of the foreign importer or exporter to be a key factor in determining associated risks of the diversion of controlled substances and subsequently whether or not to issue an import or export permit. Therefore, these fields would not be amendable.

However, also consistent with current practice, as stated above, the DEA would continue to allow importers and exporters to amend any additional associated company names they are DBA (doing business as) that they wish to have included in the notes section of the permit. The only change from current practice is that such amendments would be required to be made through the DEA Office of Diversion Control secure network application.

Importers and exporters would be required to make an official request through the DEA Office of Diversion Control secure network application for an amendment. Supplementary information submitted by an importer or exporter through the DEA Office of Diversion Control secure network application would not automatically trigger the amendment process. An

amendment would have no effect on the date of expiration of the permit; an amended import or export permit would have the same expiration date as the originally issued permit. Return information would not be allowed to be amended. Importers and exporters would be able to request that an issued import or export permit be canceled provided that no shipment has yet been made.

Under proposed § 1312.16(a)(5), registrants would be required to submit all requests for an amendment that would affect the total base weight of each controlled substance, other than those submitted in accordance with § 1312.15(a), at least three business days in advance of the date of release by a customs officer. Three business days are the minimum amount of time that the DEA needs to review this type of requested amendment, approve or deny the request, and transmit the applicable data to the ITDS. All other requests for amendment would be required to be submitted to the DEA at least one business day before the date of release by a customs officer at the port of entry. One business day is the minimum amount of time that the DEA needs to review the requested amendment, approve or deny the request, and transmit the applicable data to the ITDS.

For the reasons discussed above, the DEA is also proposing mandatory electronic reporting of return information for controlled substances imported or exported under permit procedures. The requirement of return information for imports and exports under permit procedure is discussed in greater detail in section II, B, 1 of this proposal under the heading “Terminology and Definitions.”

(b) Import and Export Declarations for Controlled Substances

The DEA proposes to incorporate the mandatory electronic filing of DEA import declarations and DEA export declarations for controlled substances with the DEA into §§ 1312.18 and 1312.27. This requirement would also be incorporated into a new § 1312.03 which would reference a list of applicable forms for part 1312, and will state that the declaration forms are electronic. This information is currently listed multiple times in the applicable regulations. Consolidating this information into one section will make it easier for registrants to understand and comply.

Consistent with current requirements, controlled substance declarations would be required to be filed at least 15 calendar days in advance of the antipcated date of release by a customs officer at the port of entry or port of export. 21 CFR 1312.18(b), 1312.27(a). Under proposed revised §§ 1312.18(b) and 1312.27(a), controlled substance declarations would not be deemed filed until the Administration issues a transaction identification number. The DEA proposes to allow registrants to proceed with the import or export transaction as soon as the transaction identification number has been issued, regardless of whether 15 calendar days have elapsed since its issuance. The 15-day advance notification period currently required by DEA regulations is now used to review notifications. Under this proposal, that review period would occur prior to the issuance of the transaction identification number. Therefore, the DEA would no longer need additional processing time after the issuance of the transaction identification number. Therefore under this proposal, importers of controlled substances under declaration procedures would more closely align with import procedures under permit procedures in regard to timing as to when they may proceed with the transaction. The DEA proposes to retain the 15-day-advance time period to ensure enough time for the DEA to review the submission for completeness and conduct any necessary follow-up prior to the import/export transaction. As discussed above, transaction identification numbers would be single-use identifiers, unique to a specific communication or transaction (
e.g.,
a notice, filing, report, application, etc.), signifying that a communication has been received, reviewed, and accepted. While current DEA regulations do not require confirmation of receipt from the DEA prior to importation or exportation pursuant to a declaration, the proposal to assign a transaction identification number is consistent with the DEA's current practice for declarations submitted online. Currently, the DEA assigns a Web Tracking Number to each declaration when it is submitted and accepted. However, unlike the proposed transaction identification number, the Web Tracking Number is assigned automatically upon submission to the DEA; the transaction identification number would be assigned only after the DEA has reviewed the filing for completeness. The proposed regulatory codification of the issuance of a transaction identification number is designed to ensure that electronically submitted declarations are indeed received by the DEA, are completed, and can be appropriately tracked and monitored; to streamline the declaration filing process; and to eliminate duplicate filings. Current DEA regulations requiring declarations to be completed in triplicate would be eliminated.

The DEA proposes to amend its import/export regulations to describe the procedures relating to amendments following the filing of a controlled substance import or export declaration with implementation of the ITDS. The DEA proposes changes to §§ 1312.18(f) and 1312.27(e) to clearly specify how and under what conditions controlled substance import and export declarations may be amended or cancelled after having been filed and when a new declaration is required instead of an amendment. Registrants would submit a request to amend or cancel a filed declaration to the Administration through the DEA Office of Diversion Control secure network application. Return information may not be amended.

Consistent with current practice, importers and exporters would continue to be able to amend a declaration for the following data fields: The National Drug Control number, description of the packaging, or trade name of the product, so long as the description is for the same basic class of controlled substance(s) as in the original declaration; the proposed port of entry or export; the anticipated date of release by a customs officer at the port of entry or port of export; the method of transport; any registrant notes; and the justification entered by the importer or exporter for why an import or export is needed to meet the legitimate scientific or medical needs of the United States or foreign jurisdiction. The DEA allows amendments to these fields as these are areas that may be easily mis-keyed or subject to change as part of the normal import and export business practice. While the data contained in these fields is important to the tracking of controlled substances through the closed system of distribution, the DEA believes that the Administration is able to enforce the CSA and U.S. obligations under international drug control treaties while potentially limiting burden on industry by allowing these fields to be amendable.

Consistent with current practice, importers and exporters would continue to generally be allowed to amend the base weight of controlled substance(s) listed on their filed declaration prior to the start of an import or export transaction (
i.e.,
prior to shipment). However, also consistent with current practice, exporters would not be allowed to exceed the total base weight of controlled substance(s) listed on the corresponding authorization for import

issued by the foreign competent national authority. Also consistent with current practice, neither would exporters be allowed to exceed the strength of a controlled substance product if product strength information has been included on the authorization for import issued by the foreign competent national authority. Consistent with § 1312.15(a) for imports of controlled substances under permit procedure, importers under declaration procedure would be allowed to request an amendment to an import declaration regarding the quantity of controlled substances once a shipment has arrived at the U.S. customs port of entry if the increase in the amount of controlled substance to be imported is less than 1% of that listed on the filed declaration. Importers and exporters need not request an amendment for the sole purpose of decreasing the amount authorized.

Consistent with current practice, importers and exporters would continue to be able to amend a filed import or export declaration to remove a controlled substance. However, importers and exporters would no longer be able to amend declarations to add a new controlled substance or replace a controlled substance with another controlled substance. Instead, importers and exporters who needed to make changes to any of these fields would need to cancel the existing declaration and file a new declaration. The DEA understands that sometimes the incorrect controlled substance is identified on the declaration due to clerical error, for example because a similar item was selected from the drop-down selection in the DEA Office of Diversion Control secure network application that was located near the correct item. However, the DEA has closely considered this issue and ultimately determined that because the identification of the controlled substance proposed to be imported or exported is such a critical element of the closed system of distribution, that this element should not be amendable. As stated elsewhere in this preamble, the DEA reminds importers and exporters that the duty to file reports and other documents with the DEA includes the duty that these filings be complete and accurate.

Similarly, in a change from current practice, the DEA is proposing to cease allowing importers and exporters to amend information related to the authorization to import or export from the foreign competent national authority. The DEA understands that sometimes, especially in the case of less experienced importers and exporters, the incorrect foreign authorization identifier is entered onto the declaration. This is often the result of numbers being transposed or a different number on the foreign permit being entered instead of the actual authorization identifier. However, similar to the identification of the controlled substance to be imported or exported, the DEA has closely considered this matter and ultimately determined that because the authorization from the foreign competent national authority to import or export a controlled substance is such a critical element to the Administration's ability to monitor and ensure the closed system of distribution, this element should not be amendable. As stated above and elsewhere in this document, the DEA reminds importers and exporters that the duty to file reports and other documents with the DEA includes the duty that these filings be complete and accurate.

Consistent with current practice, importers and exporters would not be able to request an amendment to a filed import or export declaration for changes to the importer or exporter's name (as it appears on their DEA certificate of registration) or the name of the foreign importer or exporter. The DEA considers the name of the foreign importer or exporter to be a key factor in determining associated risks of the diversion of controlled substances. Therefore, these fields would not be amendable.

However, also consistent with current practice, as stated above, the DEA would continue to allow importers and exporters to amend any additional associated company names they are DBA (doing business as) that they wish to have included in the notes section of the declaration. The only change from current practice is that such amendments would be required to be made through the DEA Office of Diversion Control secure network application.

Importers and exporters would be required to make an official request through the DEA Office of Diversion Control secure network application for an amendment. Supplementary information submitted by an importer or exporter through the DEA Office of Diversion Control secure network application would not automatically trigger the amendment process. An amendment would have no effect on the date of expiration of the declaration; an amended import or export declaration would have the same expiration date as the originally filed declaration. Return information would not be allowed to be amended. Importers and exporters would be able to request that filed import or export declaration be canceled provided that no shipment has yet been made.

Registrants would be required to submit all requests for an amendment that would affect the total base weight of each controlled substance, other than those allowed to be released into the United States pursuant to §§ 1312.18(f) and 1312.16(a)(5), at least three business days in advance of the date of release by customs. Three business days are the minimum amount of time that the DEA needs to review this type of requested amendment and transmit the applicable data to the ITDS. All other requests for amendment would be required to be submitted to the DEA at least one business day before the anticipated date of release by a customs officer at the port of entry or port of export. One business day is the minimum amount of time that the DEA needs to review and accept the requested amendment and transmit the applicable data to the ITDS.

For the reasons stated above, the DEA is also proposing mandatory electronic filing of return information for controlled substances imported or exported under declaration procedures; see section II, B, 1 of this proposal under the heading “Terminology and Definitions” for additional discussion of “return information.”

(c) Import and Export Declarations for Listed Chemicals

The DEA proposes to incorporate the mandatory electronic filing of import and export declarations for listed chemicals into §§ 1313.12 and 1313.21. Similar to the proposed § 1312.03, discussed above, the DEA is proposing a new § 1313.03, which references a list of applicable forms for part 1313, and will state that the declaration is electronic.

Under this proposal, the DEA would issue a transaction identification number once the DEA reviewed a listed chemical import or export declaration for completeness, and the 15-day reporting clock would begin on the date that the importer or exporter files a complete declaration. An import or export transaction of a listed chemical would not be allowed to take place until the transaction identification number has been issued and 15 calendar days have elapsed from the date a complete declaration was filed. Transaction identification numbers would be single-use numbers, unique to a specific transaction. While current DEA regulations do not require confirmation of receipt or acceptance from the DEA prior to importation or exportation pursuant to a declaration, the proposed

change aligns with current practices. In current practice, for notifications submitted through the DEA Office of Diversion Control secure network application and those that are not, industry waits until the transaction identification number has been issued to proceed with the transaction. The transaction identification number is assigned by the DEA only after the DEA has reviewed the filing for completeness. The proposed regulatory codification of current practices regarding the issuance of a transaction identification number is designed to ensure that electronically submitted declarations are indeed received by the DEA, are completed, and can be appropriately tracked and monitored; to streamline the declaration filing process; and to eliminate duplicate filings. Current DEA regulations requiring declarations to be completed in triplicate would be eliminated.

The DEA is also proposing to amend the language relating to waivers of the 15-day advance reporting requirement for importations by “regular importers” and export transactions between regulated persons and “regular customers” in §§ 1313.12, 1313.15, and 1313.21. With the implementation of the ITDS, it would be difficult for customs officers to clear a shipment of relevant listed chemicals without first receiving appropriate information from the DEA. The DEA has determined that three business days is the minimum amount of time that the DEA needs to review the information regarding the shipment and to transmit the applicable data accurately to the ITDS. The CSA requires the DEA to provide by regulation the circumstances in which the 15-day advance notice requirement required by 21 U.S.C. 971(a) does not apply for imports of listed chemicals by “regular importers” and exports of listed chemicals between regulated persons and “regular customers.” 21 U.S.C. 971(b). Pursuant to this authority, in the current regulations, the DEA has provided that specific circumstances allow for a waiver of the entire 15-day period of advance notification.
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Because a waiver of the entire 15-day period will no longer be feasible after implementation of the ITDS, the DEA proposes now to describe circumstances in which importers and exporters will not be subject to the 15-day advance notification requirement but must provide 3 calendar-days advance notification. The DEA does, however, propose to allow registrants to proceed with the import or export transaction as soon as the transaction identification number has been issued, regardless of whether the 3-calendar-day period has concluded. While the CSA also requires regulated persons subject to waivers to notify the DEA of the transaction “at the time of any importation or exportation,” the DEA intends to consider the notification provided to the DEA by customs officers at the time of release to serve this statutory purpose.

9
Importers should be aware that these waivers of advance notification requirements apply only to the information the trade files with the DEA; for example, importers remain required to follow CBP's Importer Security Filing and Additional Carrier Requirements (commonly known as “10+2”) rule, which applies to import cargo arriving to the United States by vessel.

The DEA is proposing to revise §§ 1313.16, 1313.17, 1313.26, and 1313.27 to clarify the procedure for amending listed chemical import and export declarations after filing. Importers and exporters of listed chemicals would submit a request to amend or cancel a filed declaration to the Administration through the DEA Office of Diversion Control secure network application. Return information may not be amended. Requirements regarding updated notices for change in circumstances in §§ 1313.16 and 1313.26 would remain essentially the same. However, to accommodate implementation of the ITDS, the DEA would require that amendments be submitted through the DEA Office of Diversion Control secure network application. Importers and exporters for whom the 15-day advance reporting requirement has been partially waived pursuant to 21 U.S.C. 971(b) needing to make changes in advance of shipment, such as to increase the quantity of a listed chemical to be imported or exported, would be required to file their amendment at least three business days in advance of the date of release by a customs officer at the port of entry or port of export. As described above, three business days is the minimum amount of time that the DEA needs to review the amendment and transmit the applicable data to the ITDS.

For the reasons stated above, the DEA is also proposing mandatory electronic filing of return information for listed chemicals imported or exported under declaration procedures; see section II, B, 1 of this proposal under the heading “Terminology and Definitions” for additional discussion of “return information.”

(d) Import and Export Reports for Tableting and Encapsulating Machines

The DEA proposes to incorporate mandatory electronic reporting requirements into § 1310.05 for all regulated transactions involving tableting machines and encapsulating machines, including domestic, import, and export transactions. To standardize and streamline the electronic filing of these reports, the DEA proposes to implement usage of a new form, DEA Form 452, Reports for Regulated Machines, which would cover imports, exports, and domestic regulated transactions of tableting and encapsulating machines, and whose usage would be referenced in the revised regulations. The new form would be accessed, completed, and submitted by regulated persons entirely though the DEA Office of Diversion Control secure network application. Upon receipt and review, the Administration will assign each completed report a transaction identification number. The DEA Form 452 would not be deemed filed until the Administration issues a transaction identification number. As discussed above, transaction identification numbers would be single-use identifiers, unique to a specific communication or transaction (
e.g.,
a notice, filing, report, application, etc.), signifying that a communication has been received, reviewed, and accepted. While current DEA regulations do not require confirmation of receipt from the DEA before the report is deemed filed, the proposed change is designed to ensure that electronically submitted reports are indeed received by the DEA, are completed, and can be appropriately tracked and monitored; to streamline the report filing process; and to eliminate duplicate filings. The current §§ 1310.05 and 1310.06 would be revised to reflect that these reports relating to tableting and encapsulating machines would now be submitted on the DEA Form 452.

Currently, regulated persons must provide notification of the import or export of a tableting machine or encapsulating machine on or before the date of importation or exportation. 21 CFR 1310.05(c). The DEA is proposing to require that the DEA Form 452 be submitted to the DEA 15 calendar days before the anticipated date of arrival at the port of entry or port of export in order to allow time for the DEA to review the information and transmit it to the ITDS. In order for these reports to be effective, they must be communicated by the DEA to CBP prior to arrival of the shipment at the port. The DEA has received reports that under current regulatory procedures, which require reporting “on or before” the date of importation, CBP has encountered machines at a hub or port of entry for which the importer has not provided DEA with notification, and

that seizures have resulted.
10

Under the revised regulations, an importer may not initiate an import or export transaction involving a tableting machine or encapsulating machine until the regulated person has been issued a transaction identification number from the Administration. The importer or exporter could proceed with the import or export of the machine(s) as soon as the transaction identification number has been issued. These changes are proposed in a revised § 1310.05(c). Correspondingly, the DEA is proposing to amend § 1310.05(c) to provide clear direction that regulated persons are to submit notification of import or export of tableting or encapsulating machines through the DEA Office of Diversion Control secure network application.

10
As discussed in notes 5 and 9, and later in this document, the DEA is including in this proposal to make global changes to DEA regulations to change usage, where applicable, of “import” and “export” to reference the date of release by customs officers for purposes of DEA recordkeeping and reporting requirements.

The DEA is proposing in the revised § 1310.06(e)(1)(v) that reports of importation of tableting or encapsulating machines include the reason for the importation. This information would assist the DEA in understanding the intended medical, commercial, scientific, or other legitimate use of the machine.

Additionally, the DEA proposes to add a paragraph (c)(2) to § 1310.05 to address what regulated persons are to do in the event that an import shipment of tableting machines or encapsulating machines has been denied release by customs. Proposed requirements for denied shipments of imported tableting machines and encapsulating machines parallel the requirements for denied shipments of controlled substances and listed chemicals. Importers would be required to report to the Administration, through the DEA Office of Diversion Control secure network application, within 24 hours of denial, that the shipment was denied release by a customs officer into the United States and the reason for the denial. Under the proposal, denials of shipments must be reported whether or not the denial is based on a violation of the CSA or its implementing regulations. Reports of denied releases by customs officers at the port entry of tableting and encapsulating machines are needed to aid the DEA in identifying attempted unreported imports of tableting and encapsulating machines. The DEA does not believe that reports of shipments denied release from the United States at the port of export are required because the DEA should already have knowledge of those machines through reports of their previous import (if applicable) and domestic regulated transactions required by the current § 1310.05(a)(4) and (c). A new proposed § 1310.06(g) would detail the information to be included in such report of denied release into the United States. If an importer subsequently receives notice from a customs officer that their shipment will be released into the United States, the importer would be required to file an amended DEA Form 452 with the DEA before the shipment may be released. In such circumstances, the regulated person may seek to have the tableting machines or encapsulating machines released by customs upon receipt of a transaction identification number for the refiled and amended DEA Form 452 without regard to the 15-day advance filing requirement.

For the reasons stated above, the DEA is also proposing mandatory electronic filing of return information for tableting and encapsulating machines imported or exported; see section II, B, 1 of this proposal under the heading “Terminology and Definitions” for additional discussion of “return information.” Return requirements would be incorporated into a new paragraph (h) in § 1310.06 and the existing paragraphs in the section correspondingly relabeled. This proposed change and other proposed changes to part 1310 not directly associated with the implementation of ITDS are discussed in more detail in section II, B, 6, b of this document.

The DEA also is proposing to revise the text that currently is located in § 1310.06(g) to require reports relating to exports of machines that are refused, rejected, or otherwise deemed undeliverable to be made through the DEA Office of Diversion Control secure network application. This provision, which is proposed to be moved to § 1310.06(i), does not require the use of a DEA Form 452. The DEA also proposes to require these reports to be submitted “at the earliest practicable opportunity” rather than the current standard of “within a reasonable time.” This proposed change would conform reporting requirements for declared exports of machines which are refused, rejected, or otherwise returned to the statutory language of 21 U.S.C. 830(b) which requires reports of regulated transactions in a tableting machine or encapsulating machine (including reports of importation or exportation of such machines) to be reported “at the earliest practicable opportunity.”

(e) Transshipments of Controlled Substances

Applications for transshipment permits would still be allowed to be submitted to the DEA via paper in accordance with the existing procedures under § 1312.31 for schedule I controlled substances. Information will be posted to the DEA Office of Diversion Control Web site informing persons seeking to transship schedule I controlled substances how to submit an application for a transshipment permit. Advance notification of transshipments for schedule II, III, and IV controlled substances would also still be allowed to be submitted to the DEA via paper in accordance with the current § 1312.32. The electronic application and filing process is not feasible in such circumstances because foreign IP addresses are blocked by the Department of Justice's firewall and are prevented from accessing the DEA Office of Diversion Control secure network application. Although the transshippers themselves would not have direct access to the instructions on the DEA Web site due to the firewall protection, it is the DEA's understanding that most transshippers have someone in the United States as a domestic presence facilitating the transaction who will be able to access the instructions. There is no change from the current operational system. The DEA also proposes to explicitly state in §§ 1312.31 and 1312.32 that a separate filing is required for each shipment, conforming the requirements of this section with the requirements for imports and exports of controlled substances in part 1312.

(f) Transshipments of Listed Chemicals

Advance notification would still be allowed to be submitted to the DEA via paper in accordance with the existing procedures under § 1313.31 for persons seeking to import a listed chemical into the United States for transshipment. Advance notification would still also be allowed to be submitted to the DEA via paper in accordance with the existing procedures under § 1313.31 for persons seeking to transfer, or transship listed chemicals within the United States for immediate exportation. The electronic application and filing process is not feasible in such circumstances because foreign IP addresses are blocked by the Department of Justice's firewall and are prevented from accessing the secure network application on the DEA Office of Diversion Control Web site. While a broker or trader for an international transaction might be able to electronically submit the required

information from a domestic IP address, for consistency and fairness across all transshipment activities, the DEA is proposing to allow paper applications and notices to continue for all transshipment transactions. Although the transshippers themselves would not have direct access to the instructions on the DEA Web site due to the firewall protection, it is the DEA's understanding that most transshippers have someone in the United States as a domestic presence facilitating the transaction who will be able to access the instructions. There is no change from the current operational system.

(g) Notifications of International Transactions by Brokers or Traders

The DEA proposes to incorporate in § 1313.32 the mandatory electronic filing of notifications of international transactions involving listed chemicals which meet or exceed the threshold amount identified in § 1310.04. While current DEA regulations do not require confirmation of receipt from the DEA prior to conducting an international transaction, the DEA is proposing to amend § 1313.32 to require that notifications of international transactions would not be deemed filed until a transaction identification number has been issued by the DEA. This change is designed to ensure that electronically submitted notifications are received by the DEA, are completed, and can be appropriately tracked and monitored; to streamline the notification filing process; and eliminate duplicate filings.

2. Security

The DEA's secure application authentication methods allow only authorized persons to gain access to the application and ensure that persons can only gain access in the roles in which they are authorized. Because the secure network application can only be accessed through authentication, verifying the legitimacy of the reporter/applicant is possible without a requirement for a signature. Additional security protections are based on the requirement that return information is tied to a specific transaction. The reporter must have knowledge of the applicable transaction identification number or permit number in order to file the required return information.

Under this proposed rule, the application, completion, and filing processes would be electronic; however, the electronic equivalent of the current, fillable DEA paper applications and other forms for imports and exports would not be downloadable. Rather, persons would be able to securely download approved permits and filed declarations, notices, and reports in digital image format. The DEA would enable security measures on the downloaded documents to prevent fraud, forgery, or other misuse or manipulation.

Applicants and registrants must provide effective controls and procedures to guard against theft and diversion of controlled substances. 21 CFR 1301.71(a). This includes responsibility for ensuring effective controls and procedures for which their agents and employees have access to and responsibility for completing and filing applications, notices, reports, and other filings required by DEA regulations, whether those filings be in paper format or electronic. Registrants must exercise caution in the consideration of employment of persons who have access to listed chemicals, who have been convicted of a felony offense relating to controlled substances or listed chemicals, or who have, at any time, had any application for registration with the DEA denied, had a DEA registration revoked, or surrendered a DEA registration for cause. 21 CFR 1309.72.

The DEA also takes this opportunity to remind registrants, those exempt from registration, and regulated persons that they may not delegate their liability away to their agents or employees. Registrants, those exempt from registration, and regulated persons remain legally liable (jointly or severally) with their agents or employees for violations of the CSA. It is unlawful for any person to knowingly or intentionally import or export controlled substances; knowingly or intentionally bring or possess on board a vessel, aircraft, or vehicle a controlled substance; or manufacture, possess with intent to distribute, or distribute a controlled substance in any means other than those authorized by the CSA. 21 U.S.C. 960(a). Except as provided in the CSA, it is unlawful for any person to knowingly import or export a listed chemical with intent to manufacture a controlled substance; export a listed chemical in violation of the laws of the country to which the chemical is exported; serve as a broker or trader for an international transaction involving a listed chemical, if the transaction is in violation of the laws of the country to which the chemical is exported; import or export a listed chemical knowing or having reasonable cause to believe that the chemical will be used to manufacture a controlled substance; export a listed chemical, or serve as a broker or trader for an international transaction involving a listed chemical knowing or having reasonable cause to believe that the chemical will be used to manufacture a controlled substance in violation of the laws of the country to which the chemical is exported; import or export a listed chemical with the intent to evade the reporting or recordkeeping requirements of 21 U.S.C. 971; import a listed chemical in violation of 21 U.S.C. 952, import or export such a chemical in violation of 21 U.S.C. 957 or 971, or transfer such a chemical in violation of 21 U.S.C. 971(d); or manufacture, possess with intent to distribute, or distribute a listed chemical in violation of 21 U.S.C. 959. 21 U.S.C. 960(d). It is unlawful for applicants, registrants, those exempt from registration, regulated persons, or agents or employees thereof, to knowingly and willfully falsify, conceal, or cover up by any trick, scheme, or device a material fact. 18 U.S.C. 1001(a)(1). It is unlawful for applicants, registrants, those exempt from registration, regulated persons, or agents or employees thereof, to knowingly and willfully make false statements or representations. 18 U.S.C. 1001(a)(2). It is unlawful for applicants, registrants, those exempt from registration, regulated persons, or agents or employees thereof, to knowingly and willfully make or use any false writing or document knowing it to contain materially false, fictitious, or fraudulent statement or entry. 18 U.S.C. 1001(a)(3).

It is the position of the DEA that an employee who has knowledge of diversion of controlled substances or listed chemicals from his employer by a fellow employee has an obligation to report such information to his employer. 21 CFR 1301.91, 1309.73.

3. Miscellaneous

To account for approvals by the Administration through the DEA Office of Diversion Control secure network application, DEA regulations would be amended to remove the reference to facsimile signatures found in § 1312.13 for import permits. To account for greater security and decrease opportunities for diversion, the DEA also proposes to eliminate the current requirements in §§ 1312.13 and 1312.23 that import and export permits be issued sequentially and instead assign each permit a unique, randomly-generated identifier.

Pursuant to E.O. 13659 (ITDS), the DEA would cease distributing paper copies of permits and declarations to CBP/customs services of Insular Areas. Instead, the DEA would electronically transmit pertinent data fields from the permit, declaration, or other notice to the ITDS.

To accommodate the change in practices concerning the exchange of information between the DEA and CBP/customs services of Insular Areas as part of the implementation of the ITDS, the DEA proposes to generally, globally remove current DEA regulations that address the transmission and review of import and export information between the DEA and CBP. The regulations that would be affected are §§ 1312.14, 1312.19, 1312.24, 1312.28, 1313.14, and 1313.23. The removal of these regulations will allow for increased flexibility to make adjustments regarding the transmission of information between the DEA and CBP/customs services of Insular Areas as the process is implemented. No changes or modifications in the exchange of information between the DEA and CBP/customs services of Insular Areas should have any impact on those entities that must utilize the DEA Office of Diversion Control secure network application to submit applications or filings. The DEA is not proposing to remove current operational requirements found in § 1312.15, “Shipments in greater or less amount than authorized.”

B. Proposed Amendments Indirectly Associated With Implementation of the International Trade Data System

1. Terminology and Definitions

For purposes of clarity and transparency, the DEA proposes to update its regulations for consistency of terminology (within DEA regulations, between DEA regulations and the CSA, and between DEA regulations and the regulations of other agencies that regulate imports and exports), to reflect name changes to referenced entities, and to add new definitions. These changes involve both technical and substantive amendments.

The DEA proposes to make technical changes to update references to certain named entities. One, all references to the “U.S. Customs Service” will be changed to “U.S. Customs and Border Protection” (CBP). In 2003, the functions of the Customs Service were transferred to the Department of Homeland Security (DHS). Its successor agency is known as U.S. Customs and Border protection (CBP). Two, the DEA is making a change in § 1310.06 to change “Federal Food and Drug Administration” to the agency's formal name, the “U.S. Food and Drug Administration.” Three, the DEA will amend current § 1312.12(b) (proposed § 1312.12(c)) to reflect that the cities located in the Republic of India currently referenced as Calcutta and Bombay are now recognized by the U.S. State Department as Kolkata and Mumbai. The DEA will also take this opportunity to remove any remaining incongruous references to the “Director” when referencing the head official of the DEA and alternatively insert the term “Administrator” or “Administration” as appropriate.

Additionally, the DEA proposes to make a technical change to more concisely incorporate U.S. obligations under international treaties of drug control, as statutorily codified in the CSA. The DEA will amend its regulations to consistently reference the “competent national authority” when referencing a foreign jurisdiction having authority to authorize the importation or exportation of controlled substances and listed chemicals into or out of their jurisdiction. This change is being accompanied by the addition of a definition in the regulations for “competent national authority.” A competent national authority (CNA) is an entity that has authority to authorize imports and exports of narcotic drugs and psychotropic substances and regulate or enforce national controls over precursor and essential chemicals. Generally, the only entities recognized as such by the DEA are those entities identified in the directory of “Competent National Authorities Under the International Drug Control Treaties” published by the United Nations Office on Drugs and Crime. However, for purposes of exports of narcotic drugs, such term also includes freely associated states eligible to receive exports of narcotic drugs from the United States pursuant to 48 U.S.C. 1972.

The DEA will remove “jurisdiction of the United States” as a defined term in §§ 1300.01(b) and 1300.02(b) but will add a clarification of the definition of the term “United States” in those provisions. Although the term “United States” is defined at 21 U.S.C. 802(28), the proposed definitions in the regulations will clarify the Administration's interpretation and make the reader aware that places and waters subject to the jurisdiction of the United States, in addition to the customs territory of the United States, include (
but are not limited to
) the U.S. territories or possessions listed in the new term. The list of territories and possessions is not a catalogue of Insular Areas where the CSA is in effect. Rather, these listed territories or possessions (U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands) are ones that are permanently inhabited. Thus, they are ones from which controlled substances, listed chemicals, and tableting or encapsulating machines might be expected to be regularly imported into the customs territory of the United States (or exported to foreign jurisdictions), as well as ones into which such materials may be imported from foreign jurisdictions, all of which would require compliance with the Administration's import and export regulations. No substantive change is intended by this revision. Removal of the definition of “jurisdiction of the United States” and corresponding changes to remove the term in §§ 1301.12, 1301.34, and 1302.07, as well as in the definitions of “export” and “import” in 21 CFR part 1300, will make DEA regulations consistent with the CSA. The DEA proposes to remove the phrase “jurisdiction of the United States” from § 1301.12(b)(3) because it is redundant with the preceding clause referencing registration at another location in the same State, as “State” is broadly defined in 21 U.S.C. 802(26). The addition of the phrase “in which he practices” to § 1301.12(b)(3) would conform the regulation to registration requirements for practitioners as stated in 21 U.S.C. 823(f). No substantive change is intended by this amendment. Similarly, the clause “within and without the jurisdiction of the United States” would be removed from § 1301.34(c)(2) as it is superfluous with the first portion of that regulation. No substantive change is intended by this amendment. In determining whether it is in the public interest to issue a registration to import schedule I or II controlled substances, the DEA considers employment of security procedures to guard against in-transit losses both domestically and abroad and will continue to do so. The term “jurisdiction of the United States” is also found in the definition of “chemical import.” The DEA proposes to remove that definition as unnecessary and superfluous, as it is only used once in subsequent DEA regulations, in § 1313.14 in reference to “listed chemical import declarations.”

In association with the above, the DEA also proposes to amend §§ 1301.24, 1301.26, 1309.26, 1312.13, and 1312.15 to denote the responsibility of customs services of Insular Areas, and not just CBP, to enforce the import and export requirements of the CSA. When controlled substances, listed chemicals, and tableting or encapsulating machines are imported into, or exported from, a U.S. territory (or possession) or an Insular Area of the United States that is not part of the customs territory of the United States, these items are cleared by

the customs service of an Insular Area and not CBP.
11

11
Although the U.S. Virgin Islands are outside the customs territory of the United States, the customs laws of the U.S. Virgin Islands are enforced by U.S. Customs and Border Protection. 19 CFR 7.2(c).

The DEA proposes to make global amendments to its import and export regulations where appropriate to reference the date of “release” by customs officers of items entering or departing the United States rather than the date of “import” or “export” where such terms are currently used in DEA regulations establishing DEA recordkeeping and reporting requirements (as compared to determining liability under the CSA as a result of items entering or leaving places and waters subject to the jurisdiction of the United States). This change will make clear that the DEA does not equate the “date of import” and “date of export” with the date that a customs officer “releases” an item that has been imported or an item intended or destined for export. As noted earlier in the document, the meaning of import and export under the CSA is much broader than how those terms may be used by other agencies exercising import or export control pursuant to organic statutes other than the CSA (
i.e.,
the actual date of import or export under the CSA may, and frequently will, occur at a date different than the date of release by a customs officer).

The DEA proposes to make a technical amendment to remove references to telex and facsimile number contact information found in various sections of 21 CFR part 1313, as telex systems and facsimile machines are now rarely utilized by registrants, regulated persons, or their agents. The DEA would add a general reference to “contact information.” This change is intended to account for contact information systems such as email now in common usage as well as other forms of communication which may be developed in the future.

The DEA proposes to make a technical amendment to replace all current references in DEA regulations to “special controlled substances invoice(s)” with “export declaration(s).” This change will conform terminology among the DEA Form 236, DEA regulations, and current practice.

The DEA is proposing global technical amendments related to plain language principles. The DEA has tried to balance the redrafting of regulatory language to better correspond with Federal Plain Language Guidelines against the knowledge that regulated persons have historical familiarity with long-standing regulatory text which may have been the subject of previous interpretation by the Administration and court decisions. Many of the DEA's current import and export regulations have not ever been significantly modified since the original requirements were implemented under predecessor drug control statutes (with reimplementation under authority of the CSA). The DEA has tried to balance the historical knowledge of the Administration and presently regulated individuals against the need for newly regulated persons and a broader segment of the population to be able to more easily read and comprehend applicable requirements. These proposed changes include changing the word “shall” to “must,” “desiring” to “seeking,” and “furnish” to “file,” without intending any change to the meaning of existing regulations. The DEA is proposing technical amendments throughout the revised regulations to eliminate use of passive voice in favor of the active voice. This change will make it easier for readers to identify what actions must be taken and by whom. The DEA's proposal would also eliminate unnecessary content and unnecessary words and phrases from regulations. The proposal also includes reorganization of several regulations to group reporting requirements for specific individuals or types of reports. This change will help to reduce the need to cross-reference between multiple regulations in order to more easily understand at a glance if you must report, when you must report, what you must report, and how you must report.

The DEA also proposes to amend various import and export regulations related to the maintenance of records to add a cross reference to 21 CFR part 1304 or 1310, as applicable, which are the general parts governing recordkeeping and reporting responsibilities related to controlled substances and listed chemicals, respectively.

In addition to the above noted technical changes, the DEA proposes to define the terms “customs officer,” “port of entry,” “port of export,” “return information,” and “shipment” currently utilized in DEA regulations. Defining these terms will add clarity and transparency as to how these terms are utilized for the specific purposes of DEA regulations related to the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals as compared to how these terms may be used by other federal agencies having additional authorities over import or export. The proposed DEA definitions are substantially similar to how these terms are used by other agencies with overlapping authority over import and export. However, the definitions are not exact duplications because of the unique obligations and requirements imposed on imports and exports of controlled substances, listed chemicals, and tableting and encapsulating machines by the CSA. Most specifically, DEA regulations must take into account that the CSIEA defines “import” in broader terms than just in relation to the customs territory which is used as the basis for CBP's definition of “date of importation” and related terms. Similarly, CBP's definition of “port of entry” is defined narrowly to reference only the authority of CBP officials, whereas DEA regulations also need to take into account the authority of customs officials of Insular Areas of the United States to enforce the CSA.

The proposed definition of “customs officer” makes clear that for purposes of DEA regulations, the term means any person authorized to enforce the customs laws of the United States. Consistent with 21 U.S.C. 951-953 and other provisions of the CSA, the term “customs officer” includes customs officers of any commonwealth, territory, or possession of the United States. Correspondingly, in defining “port of entry,” the DEA's goal is to improve readability and transparency, and to clarify that applicable regulations regarding the importation of tableting and encapsulating machines, controlled substances, and listed chemicals apply to all locations at which these machines and substances may potentially be imported.
See
21 U.S.C. 951(a)(1). The proposed definition of such locations include, but are not limited to, ports of entry as defined in title 19 of the United States Code, customs stations, landing rights airports, and user fee airports. Relatedly, the DEA is proposing to add a definition for “port of export” and make technical amendments throughout the export regulations to consistently refer to the “port of export.” Current DEA regulations variously refer to the point at which goods are released by customs officers for export from the United States as both the “port of exit” and the “port of exportation.” The proposed definition of “port of export” is based on the definition of the term in the Foreign Trade Regulations. 15 CFR 30.1. The Foreign Trade Regulations are promulgated by the U.S. Census Bureau, the Federal agency responsible for collecting, compiling, and publishing trade statistics for the United States pursuant to title 13, U.S.C., chapter 9. While the proposed definition is not an

exact duplication, due to the different authorities and responsibilities of the respective agencies, no significant substantive differences are intended. By basing the DEA's definition of “port of export” on 15 CFR 30.1, consistency of meaning, despite the unique requirements of the CSA, for the term will be achieved throughout the import and export process for persons who are subject to regulation by various Federal agencies.

“Shipment” is variously defined by the federal entities having authority over importation and exportation of goods. The addition of a definition of this term in DEA regulations will aid in readability and transparency on how this term is understood and utilized by the DEA in regard to the importation and exportation of tableting and encapsulating machines, controlled substances, and listed chemicals. Introduction of the proposed definition emphasizes requirements found in 21 CFR parts 1310, 1312, and 1313 that a shipment of tableting or encapsulating machines, controlled substances, or listed chemicals is not only limited to a single transaction between a single importer or exporter and a single consignee on a single loading document, but also that the shipment must occur on a single conveyance (
e.g.,
one plane, one ship, or one freight train—but not each rail car), as opposed to multiple conveyances (
e.g.,
two planes, two ships, two freight trains, or any combination thereof). This definition is not meant to preclude release of merchandise into the United States that has been transshipped at a location outside of the United States. This is meant to clarify that each individual shipment of tableting or encapsulating machines, controlled substances, or listed chemicals must be associated with a single filing with the DEA for such activity. Consistent with long-standing DEA policy and the proposed definition, a load of goods would be considered a “split shipment” if it is divided into multiple parts to be placed onto more than one conveyance, even if on the same commercial loading document. Under existing DEA policy and under these proposed regulations, such “split shipments” cannot be included on a single declaration or permit. Each part of such shipment constitutes a shipment in its own right and requires a separate permit or declaration pursuant to these proposed changes. This addition of the definition, as proposed, would not change the ability of registrants to include multiple line items on one permit application, declaration, or notice. Neither is the definition meant to preclude the ability of importers and exporters to utilize multiple common carriers as intermediaries for the transportation of an entire shipment. Thus, for example, a shipment consisting of lots A and B, subject to a single valid export permit or declaration, can be reloaded
together
from one conveyance to another (such as from a freight train to a plane on its way to the port), but lots A and B cannot be separated from each other onto
separate conveyances
(such as onto separate planes or separate ships) at any time until the shipment has reached its final destination and the export transaction concluded. (The same being true in reverse for imports until delivered to the registered location.) Likewise, lot A cannot be subdivided into lots A1 and A2 unless lots A1 and A2 are subject to separate valid permits or declarations. In relation to this change, and for consistency with the existing single-shipment requirements found in 21 CFR parts 1312 and 1313, the DEA proposes to amend § 1310.05(c)(1) to specify that each shipment of tableting or encapsulating machines must be reported separately to the DEA. To further make clear this prohibition, the DEA proposes to add a definition of “split shipment” to mean an import or export shipment that is divided between two or more conveyances.

Additionally, the DEA is proposing to amend §§ 1304.21(d) and 1310.06 to clarify record keeping requirements concerning imports and exports. The current text of § 1304.21(d) states that the date of importation or exportation is the date on which the controlled substances are “actually” imported or exported. The DEA is proposing to amend these regulations to instead require that in maintaining records concerning imports and exports, the registrant needs to record the date on which the items are released by a customs officer at the port of entry or port of export. However, it should be understood that this clarification only applies for purposes of recordkeeping. For all other purposes under the CSIEA, the date of import or export is the date such activity actually occurs within the meaning of those terms under the Act.
See
21 U.S.C. 951 through 953. The regulation remains unchanged with respect to recording dates of receipt and distribution,
i.e.,
the dates will remain the actual date received at the registered location and distributed from the registered location.

The DEA is additionally proposing to add a definition of “return information” to §§ 1300.01(b) and 1300.02(b) stating that such information references information that persons are required to report to the Administration following an import or export transaction. While this term is already generally understood by the regulated community, the term is not defined, and may cause initial confusion to the general public or parties that are newly subject to DEA reporting requirements.

The DEA proposes to harmonize the return information requirements across parts 1310, 1312, and 1313, to the extent possible. This document discusses the details of each proposal in the relevant section below. In general, the DEA is proposing that return information must be reported within 30 calendar days after release by customs at the port of entry or exit, or within 10 calendar days of a written request by the Administration, whichever is sooner. All return information for applications or other initial filings that are required to be made electronically through the DEA Office of Diversion Control secure network application would likewise be required to be filed electronically through the same system. Because the secure network application can only be accessed through authenticated access that ensures the legitimacy of the reporter/filer, and because the user must know the applicable transaction identification number or permit number in order to input return information for a specific transaction, the DEA does not see a need for return information to be signed by a responsible company official. Therefore, the DEA is proposing to remove the requirement for signature by a responsible company official that currently appears in § 1312.22(c)(7).

2. Part 1302: Labeling and Packaging Requirements for Controlled Substances

Corresponding to the removal of “jurisdiction of the United States” and the revised definitions of “export” and “import,” the DEA proposes to make a corresponding technical change to § 1302.07 to reflect those definitional changes. The sealing requirement would be separately stated for imports and exports. This change allows the import statement to clearly reflect that the sealing requirement for imported controlled substances applies regardless of whether the import occurred inside or outside of the customs territory of the United States. Separating the import and export requirements also makes clear that the distinction between the customs territory and the non-customs territory is only applicable to imports and not exports.

3. Part 1304: Records and Reports for Registrants

The DEA proposes to make a technical amendment to § 1304.02 to reflect that definitions found in § 1300.02, “Definitions relating to listed chemicals,” are not applicable to part 1304, that addresses the records and reports that are required of controlled substance handlers. (21 CFR part 1310 addresses records and reports of listed chemicals and certain machines.)

As discussed in section II, B, 1 of this document above, the DEA will make a technical amendment to amend § 1304.21(d) to separately state reporting requirements concerning imports and exports of controlled substances. The recording date for receipt, distribution, other transfer, or destruction would not change. The regulation would be amended to state that the recording date for imports or exports of controlled substances is the date on which the controlled substance was released by a customs officer at the port of entry or port of export.

4. Part 1308: Schedules of Controlled Substances

The DEA proposes to make two technical updates to part 1308. First, the DEA would amend § 13

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2016-21589. Public record. Not legal advice.