Registration and Reregistration Application Fees

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR PARTS 1301 and 1311

[DEA Number 140R]

RIN NUMBER 1117-AA34

Registration and Reregistration Application Fees

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule; remanded for further notice and comment.

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SUMMARY: On October 6, 1992, Congress passed the Departments of

Commerce, Justice, and State, the Judiciary, and Related Agencies

Appropriations Act of 1993, Pub. L. No. 102-395, 106 Stat. 1828 (1992)

(codified at 21 U.S.C. 886a) (Act). In section 886a(3) of this Act,

Congress directed that ``fees charged by the DEA under its Diversion

Control Program (DCP) shall be set at a level that ensures the recovery

of the full costs of operating the various aspects of the (diversion

control) program.'' On December 18, 1992, DEA published its proposal to

adjust the existing registration fee schedule. 57 FR 60,148. After

notice and comment, DEA published a Final Rule on March 22, 1993,

setting the new registration fees. 58 FR 15,272.

Following publication of the final rule, a complaint was filed by

the American Medical Association (AMA) and others in the United States

District Court for the District of Columbia. On July 5, 1994, the

district court issued its final order granting the government's motion

for summary judgment, and thus disposed of all claims with respect to

all parties. American Medical Association v. Reno, 857 F. Supp. 80

(D.D.C. 1994). The AMA appealed. On June 27, 1995, the United States

Court of Appeals for the District of Columbia Circuit issued its

decision holding that DEA's rulemaking was inadequate and that the rule

must be remanded, without being vacated, to the DEA for further

proceedings in which DEA provides both an opportunity for meaningful

notice and comment on, and an explanation of, the components of the

diversion control program. 57 F.3d 1129 (D.C. Cir. 1995) On August 29,

1995, the United States Court of Appeals for the District of Columbia

Circuit remanded this action to the district court with instructions.

On November 22, 1995, the District Court remanded the matter to DEA for

proceedings consistent with the opinion of the United States Court of

Appeals for the District of Columbia Circuit. This document responds to

that requirement and provides a description of the components of the

fee-funded diversion control program.

DATES: Comments and objections must be submitted on or before March 31,

1997.

FOR FURTHER INFORMATION CONTACT:

Mr. G. Thomas Gitchel, Chief, Liaison and Policy Section, Office of

Diversion Control, Drug Enforcement Administration, Washington, DC

20537, Telephone (202) 307-7297.

SUPPLEMENTARY INFORMATION: The Departments of Commerce, Justice, and

State, the Judiciary, and Related Agencies Appropriations Act of 1993

(Pub. L. 102-395) required that DEA recover the costs associated with

the DCP through fees charged by DEA under that program. Therefore, DEA

published a notice of proposed rulemaking (NPRM) in the Federal

Register on December 18, 1992 (57 FR 60148) proposing to amend the fees

set forth in Title 21, Code of Federal Regulations (21 CFR),

Secs. 1301.11 and 1311.11. On March 22, 1993, following notice and

comment, DEA published a final rule in the Federal Register amending

the fees.

DEA's rulemaking was challenged in court, in part on the grounds

that it failed to provide adequate notice or explanation of the costs

and scope of the DCP to be funded through the fees. While the United

States District Court upheld the rule, on appeal, the United States

Court of Appeals, District of Columbia Circuit decided on August 29,

1995, that the rulemaking was to be remanded, without being vacated, to

DEA in order to identify the components of the fee-funded DCP and

provide a brief explanation of why DEA deemed each component to be part

of that program. Such description was to provide the opportunity for

meaningful notice and comment regarding the established fee. AMA, et

al. v. Janet Reno, Attorney General, et al., 57 F.3d 1129 (D.C. Cir.

1995). In response to the decision of the court, the following

explanation of the various components of the DCP is provided. Since the

court did not vacate the final rule, DEA is not republishing either the

original NPRM or final rule. Persons seeking further information

regarding those notices should see the December 18, 1992 issue of the

Federal Register (57 FR 60148) for the NPRM and the March 22, 1993

issue of the Federal Register (58 FR 15272) for the final rule.

Background of The Budget Item ``Diversion Control Program''

The Comprehensive Drug Abuse Prevention and Control Act of 1970

(Pub. L. 91-513, commonly known as the Controlled Substances Act and

the Controlled Substances Import and Export Act (CSA)), established the

current Federal authority and programs to control the manufacture,

distribution, importation, exportation and dispensing of ``controlled

substances'' and to prevent the diversion of such substances from

legitimate medical, scientific, research, and industrial channels into

the illicit traffic. The CSA established a system of scheduling of

substances, registration of legitimate handlers, production quotas,

dispensing and distribution controls, record-keeping and reporting,

import/export provisions, and penalties for violations of the CSA. It

also mandated administrative and enforcement provisions, and

cooperative efforts with state and local authorities. Additionally, as

discussed in the later section regarding international activities, the

United States has obligations under the United Nations Single

Convention on Narcotic Drugs, 1961 (1961 Convention), and the

Convention on Psychotropic Substances, 1971 (1971 Convention) (referred

to collectively as the international treaties), to which it is a party,

with respect to international control and cooperation to prevent the

diversion of controlled substances. The CSA programs relating to the

registration and control of the manufacture, distribution, and

dispensing of controlled substances are the domestic mechanism for

implementing these treaty provisions. Over the past 25 years, the CSA

has

[[Page 68625]]

been amended to include various enhancements and refinements needed to

achieve the goals of the CSA and fulfill the U.S.'s obligations under

international treaties in an ever changing milieu of diversion, abuse

and illicit trafficking of drugs. These modifications include, among

others, the Narcotic Addict Treatment Act of 1974 (Pub. L. 93-281), The

Psychotropic Substance Act of 1978 (Pub. L. 95-633), the Diversion

Control Amendments of 1984 (Pub. L. 98-473), the Anti-Drug Abuse Act of

1986 (Pub. L. 99-570), and the Anabolic Steroids Control Act of 1990

(Pub. L. 101-647).

In executing the CSA mandates and international treaty obligations

related to the registration and control of the manufacture,

distribution, dispensing, importation and exportation of controlled

substances, Congress and the DEA (and its predecessor agency the Bureau

of Narcotics and Dangerous Drugs, BNDD) established an identified work

force and programs generally known as the DCP. Within DEA, the

programmatic authority and responsibility for this effort is exercised

by the Office of Diversion Control (OD) using the Congressionally

authorized resources identified in the budget category DCP which are

committed to those responsibilities and programs.

Historically, for the purposes of budget formulation and

appropriation, only resources, along with their individual ``modular''

or overhead costs, devoted to diversion control efforts, were

administratively identified as the DCP within the annual budget request

to Congress. Other resources which support a broad range of DEA

activities, including ``Diversion Control'', were carried for

administrative purposes in the budget formulation and appropriation

process under other budget categories, such as legal support. For

example, DEA's Office of Chief Counsel, which is carried as part of the

DEA Budget Category ``Management and Administration,'' exists primarily

to provide legal support to the entire agency. Although that office has

a full section devoted to ``Diversion Control'' support, such as legal

interpretation, DEA registration revocation actions, and quota

hearings, no resources of the Office of Chief Counsel are included in

the ``DCP'' category of DEA's annual budget submission, since the

overall Chief Counsel function is not primarily devoted to Diversion

Control and is carried elsewhere in the DEA budget.

Since 1970, the CSA has provided that the Attorney General ``is

authorized to promulgate rules and regulations and to charge reasonable

fees'' relating to the registration and control of the manufacture,

distribution, dispensing, import, and export of controlled substances.

See 21 U.S.C. 821 and 958. Prior to 1993, the fees collected solely for

registration to handle controlled substances were deposited into the

general fund of the United States Treasury; they did not accrue to DEA.

In October 1992, during the annual Congressional appropriation

process, Congress established the ``Diversion Control Fee Account.''

This was an amendment to the Department of Justice and Related Agencies

Appropriations Act, and did not purport to realign or curtail any DEA

programs, activities, or priorities; the amendment established

legislatively the future funding mechanism for Congressionally approved

resources related to ``the operation of the diversion control

program.'' In setting the parameters for this funding mechanism,

Congress identified the functions and resources within DEA which have

historically been assigned to the administratively determined budget

category ``DCP'', as submitted by DEA, the Department of Justice,

Office of Management and Budget, and the President of the United

States. Any future Congressionally approved adjustment of resources

devoted to these components, or Congressionally approved realignment of

appropriated resources from other DEA budget categories which are

related to the registration and control of the manufacture,

distribution, and dispensing of controlled substances and herein

identified, will be encompassed in the Diversion Control Fee Account.

Diversion Control Program and Responsibilities

The components of the DCP have their basis in the CSA and

international treaties to which the U.S. is a party. The resources

approved by Congress are directed toward these responsibilities. The

components of the DCP as they relate to the specific provisions of the

CSA and the treaties are set forth below:

Regulatory Development and Maintenance

(21 U.S.C. 821--Rules and regulations.)

The CSA sets the requirements with respect to the control of the

manufacture, distribution, and dispensing of controlled substances.

Development and refinement of the regulations set out in 21 CFR Parts

1301-1308, 1311-1312, and 1316 are an essential part of the DCP, for

they establish the specific procedures and guidelines that are

necessary to implement the requirements of the CSA.

The control of drug diversion and abuse is not static. Shifts in

health care practices, patterns of diversion and drug abuse, drug

treatment, industry practices, and technology present an ever-changing

milieu of diversion and abuse. Regulatory changes are necessary to

adjust to these shifts. The Attorney General (AG) is authorized to

promulgate rules and regulations relating to the registration and

control of the manufacture, distribution, and dispensing of controlled

substances. See 21 U.S.C. 821. The AG has delegated that authority to

DEA. See 28 CFR 0.100(b) and 0.104.

DEA, through the DCP, is responsible for regulatory development or

change. In order to carry out these functions DEA employs a specialist

staff that identifies the need for regulatory change or development,

performs the research and data collection in support of changes,

promulgates the regulatory changes, and provides guidance to DEA

personnel, other regulatory and law enforcement personnel, and industry

regarding the regulatory requirements.

Activities in support of these functions include meetings and

national conferences with representatives of the regulated industry,

representatives of the law enforcement community, and other interested

parties to discuss the current regulatory program and identify areas

that may need to be addressed. There are five different industry

workgroups: Practitioner, Distributor, Manufacturer, Pharmacy, and Mid-

Level Practitioner. Meetings with each workgroup are scheduled on a

regular basis. In addition, separate national conferences are held

approximately every 24 months for the pharmaceutical manufacturers and

distributors and for drug control personnel. In addition to the

administrative work required to prepare for such meetings and

conferences, including the solicitation of agenda topics from the

attendees, DCP personnel conduct research and prepare position papers

and briefing materials regarding the various agenda topics.

If regulatory change is needed, DCP personnel conduct the research,

reviews of scientific and technical literature and other Federal and

state laws and regulations; collect data; and consult with industry,

law enforcement/regulatory sources, or other interested parties.

Following drafting and publication of the notice of proposed

rulemaking, personnel review all comments and determine whether

substantive issues have been raised that require adjustment to the

proposed regulations. In drafting the final rule, issues raised in the

comments are

[[Page 68626]]

addressed and, where appropriate, adjustments to the proposed

regulations are made to accommodate any substantive issues. Following

establishment of new regulations, DCP staff prepare and distribute

interpretations, guidelines and informational material regarding the

new requirements for DEA personnel, industry, and other law

enforcement/regulatory personnel. As needed, direct consultations to

clarify the requirements of new regulations are also held with industry

and law enforcement/regulatory groups.

In addition to the activities relating to regulatory changes, DCP

personnel respond to requests from industry and law enforcement/

regulatory personnel for information and interpretation of existing

regulatory requirements and policy; respond to congressional inquiries

regarding issues related to controlled substances; draft legislation

relating to controlled substances; and prepare testimony and briefings

for congressional hearings on the diversion of controlled substances.

Classification of Substances

(21 U.S.C. 811, 812, and 813--Authority to Control; Authority and

criteria for classification of Substances; Schedules of Controlled

Substances; Treatment of analogues; 1961 Convention, Articles 2 and 3--

Substances under control; Changes in the scope of control; 1971

Convention, Articles 2 and 3--Scope of control; Control of

preparations)

The authority to control substances of abuse is central to the

effective application of the CSA and DEA's programs relating to the

registration and control of the manufacture, distribution and

dispensing of controlled substances. The CSA provides the criteria for

the classification of substances into five schedules of control. The

DCP collects, monitors, and analyzes data for recommendations to add,

transfer between, or delete from such schedules any drug or other

substance. These activities include the development of methodologies to

predict and confirm the abuse potential of substances and combinations

of substances; the application of scientific knowledge concerning the

actual and relative potential of abuse of substances; the collection

and appraisal of international scientific literature and information

from DEA, and other Federal, state, local and foreign sources regarding

the abuse, abuse and trafficking of substances; and the maintenance of

liaison and information exchange with the Department of Health and

Human Services (HHS) and other domestic and international agencies,

such as the World Health Organization and the International Narcotics

Control Board, having similar scientific, regulatory, law enforcement,

and drug control interests.

In addition to collecting information regarding the control of

substances, DEA provides scientific and other information for

international, national, and state scheduling of substances; responds

to scheduling petitions and reviews and determines the status of

controlled, excepted, excluded, or exempted drugs and analogues; and

provides training, guidance, expert testimony, assistance and/or

information on drug control and classification to law enforcement

agencies, the scientific community, industry, the public, and other

interested parties.

DEA has initiated over a dozen drug reviews of both controlled and

non-controlled substances in the recent past. Examples of controlled

substances reviewed are fenfluramine, methylphenidate, flunitrazepam,

quazepam, dronabinol, and marijuana (to Schedule II for medical or

industrial use). The review of noncontrolled substances being

considered for control include ketamine, butorphanol, gamma hydroxy

butyrate, and carisoprodol to determine if control of the manufacture,

distribution, and dispensing of the substances is appropriate. Each

review requires a comprehensive study of the national and international

scientific literature regarding the properties and use of the drugs,

the current national and international controls over the drugs, data

regarding annual production and consumption, and information from

domestic and international law enforcement, regulatory, and medical

sources regarding the diversion, trafficking, and abuse of the drugs.

As appropriate, action may be taken, through formal rulemaking on the

record with opportunity for hearing, to schedule, reschedule, or

decontrol the drugs.

Identification of Controlled Substances

(21 U.S.C. 825--Labeling and packaging; 1961 CONVENTION, ARTICLE

30--Trade and distribution; 1971 CONVENTION, ARTICLE 10--Warnings on

packages)

In conjunction with the classification of substances as controlled

under the law, the CSA and international treaties require that such

substances contain certain identifying symbols, warnings, and seals.

DCP personnel monitor compliance with the requirements of 21 U.S.C. 821

as promulgated by 21 CFR 1302 pertaining to labeling and packaging

requirements by reviewing 200 to 300 labels per year which are

collected by DEA or are submitted to DEA by manufacturers.

Additionally, DCP personnel provide interpretation of the requirements

to registrants and Federal and state authorities, and review and

enforce the requirements on an ongoing operational basis.

Registration

(21 U.S.C. 822, 823, 824, 957, 958--Persons required to register;

Registration Requirements; Denial, revocation, or suspension of

registration; 1961 Convention, Article 30--Trade and distribution; 1971

Convention, Article 8--Licenses)

Another component of the DCP is the registration of those persons

authorized to manufacture, distribute, dispense, import, or export

controlled substances. The CSA requires that every person who

manufactures, distributes, dispenses, imports, or exports a controlled

substance shall obtain a registration, and establishes the requirements

for such registration. The CSA also includes provisions relating to the

denial, revocation, or suspension of registrations. The international

treaties require that the signatories allow trade and distribution of

controlled substances only under license.

DEA manages and operates the registration and reregistration

process for over 900,000 handlers of controlled substances. DCP

personnel process an average of 300,000 renewal applications and 48,000

new applications per year. The process includes reviewing the forms,

processing and accounting for the fees, entering the appropriate data

into the registration system, obtaining corrections from applicants

when appropriate, and referring the applications to the appropriate

office for review of the applicant's qualifications and bona fides for

registration. Applications for the bulk manufacture or importation of

Schedule I and II controlled substances require the preparation of

notices of application for publication in the Federal Register. New

applications to conduct research with Schedule I controlled substances

and for narcotic treatment programs must be evaluated and considered in

conjunction with the Food and Drug Administration. Further, all new

applications for registration must be examined and evaluated with the

appropriate state authorities to ensure that the applicant has been

granted the appropriate state authorization.

DCP personnel process over 150,000 requests per year from

registrants for modification of registration (name, address, drug

schedule changes, etc.), voluntary retirement of registration, or

[[Page 68627]]

for order forms; respond to over 10,000 telephonic inquiries per month

from applicants and registrants regarding registration; respond to

Freedom of Information Act and Congressional requests regarding

registrant information; and prepare affidavits and certification

statements regarding the registration status of DEA registrants and

applicants for use in DEA hearings and other proceedings.

DCP personnel also prepare and distribute registrant information to

other DEA elements, Federal, state and local regulatory personnel, and

registrants for the purpose of confirming registrant status; and

initiate studies and new systems to support and enhance the

registration program.

Records and Reports

(21 U.S.C. 827, 828 AND 829--Records and Reports of Registrants;

Order Forms; Prescriptions; 1961 CONVENTION, ARTICLES 19, 20, AND 30--

Estimates of drug requirements, Statistical returns furnished to the

Board; Trade and distribution; 1971 CONVENTION, ARTICLES 11, 16 AND 9--

Records and Reports to be furnished by the parties; Prescriptions)

The CSA and international conventions provide for the maintenance

of a system of records and accountability for controlled substances by

authorized handlers. Registrants are required by the CSA to maintain

records and inventories of controlled substances manufactured,

received, distributed, dispensed, imported, exported, or otherwise

disposed of; make such records available for inspection and copying;

and make certain reports to the Attorney General (DEA).

Establishment and enforcement of the record-keeping and reporting

provisions of the CSA and examination of the records to identify

potential diversion constitute a substantial part of the DCP

activities. With respect to records, program personnel conduct

comprehensive cyclic investigations of registrants' records and

inventories to ensure the integrity of the diversion control system.

Investigations of registrants for failure to comply with the record-

keeping and reporting provisions of the CSA are conducted and the

appropriate administrative, civil, or criminal action is pursued.

Additional discussion of these investigations can be found in the

section relating to Enforcement Activities.

DCP personnel conduct a variety of duties utilizing various reports

required to be submitted by registrants. As part of the closed system

to control the manufacture, distribution and dispensing of controlled

substances, registrants must make reports to DEA regarding the bulk or

dosage form manufacture of all Schedule I and II controlled substances,

all narcotic controlled substances in Schedules III-V, and certain

psychotropic controlled substances in Schedules III and IV; and the

repackaging and relabeling of and the distribution of all Schedule I

and II controlled substances and all narcotic controlled substances in

Schedule III. In addition, registrants must provide copies of order

forms documenting the distribution of Schedule I and II controlled

substances, excessive purchase and suspicious order reports, theft or

loss reports, and reports of the disposal of controlled substances.

The order forms, excessive purchase, suspicious order, and theft or

loss of reports are reviewed by DCP personnel, both on an individual

basis and with reference to other reports that have been filed to

determine whether further investigation is required. Theft or loss data

are also electronically compiled and tracked to allow for

identification of suspicious or unusual local, regional, or national

trends in the theft or loss of controlled substances.

Manufacturing reports are reviewed by DCP personnel to determine if

registrants are complying with quota requirements and to determine

various trends and availability of substances. The information is then

extracted and collated for domestic manufacturing reports required by

the U.N. conventions.

DCP personnel receive and process over 9,500 reports per year

regarding controlled substances distributions, commonly referred to as

``ARCOS'' reports, from approximately 1,400 registrants. The reports

contain data regarding approximately 14,000,000 controlled substances

transactions per year. Each report must be processed, corrected, and

entered into the ARCOS system. From this, as mandated by the CSA, DEA

operates a diversion targeting system for DEA and state and local

officials. In addition, special reports regarding regional distribution

and distributions to specific registrants are generated as needed.

Production Quotas

(21 U.S.C. 826--Production Quotas for Controlled Substances; 1961

CONVENTION, ARTICLE 21--Limitations on Manufacture and Importation;

1971 CONVENTION, ARTICLE 5--Limitation of use to medical and scientific

purposes)

The CSA and international treaties require that DEA determine the

total quantity of certain controlled substances that is necessary for

medical, scientific, research, and industrial use in the U.S. and that

the manufacture of such substances be limited accordingly through a

system of production quotas.

In fulfilling this mandate, the DCP collects and analyzes

information regarding the legitimate use, trafficking and abuse of

Schedule I and II controlled substances in the U.S. from such sources

as manufacturing and distribution reports, treatment and prescription

utilization data, case data, drug abuse indicators, and HHS estimates

of medical use. Based on the information collected, more than 1200

manufacturing and procurement quotas are established annually for

Schedule I and II controlled substances. Aggregate production quotas

are then determined for each basic class of controlled substance in

Schedule I and II. Notices regarding the aggregate production quotas

are provided to the Federal Register for publication. The DCP monitors

the manufacture, utilization, trafficking and abuse of controlled

substances against the quotas, processes requests for adjustments to

specific quotas, and, where appropriate, drafts notices adjusting

specific quotas for publication in the Federal Register. To facilitate

the quota process, DCP staff also conduct training seminars for the

industry. The DCP conducts domestic and international reviews of

controlled substances utilization trends and coordinates with the UN

control and scientific bodies regarding such trends, and prepares

reports concerning the domestic manufacture of controlled substances.

Import and Export of Controlled Substances

(21 U.S.C. 952, 953, 954 AND 958--Importation of controlled

substances; Exportation of controlled substances; Transshipment and in-

transit shipment of controlled substances; 1961 CONVENTION, ARTICLE

31--Special provisions relating to international trade; 1971

CONVENTION, ARTICLE 12--Provisions relating to international trade)

The CSA and the international treaties require that controlled

substance imports and exports be subject to registration requirements;

be allowed only when necessary to provide for the medical, scientific,

or other legitimate needs of the United States; and be subject to a

system of permits or declarations for each individual importation or

exportation. Further, the U.N. International Narcotics Control Board

(INCB), which administers the international conventions, establishes

annual ``estimates'' of the amount of

[[Page 68628]]

Schedule I and II narcotic drugs that each country may import.

In addressing these requirements, the DCP operates a system of

declarations and permits for imports and exports. Under this system,

DCP personnel receive and examine requests for permission to import or

export controlled substances to determine if they are in compliance

with the CSA, the international treaties, and the laws of the country

that is involved in the transaction. DCP personnel maintain records of

all controlled substance imports and exports, and of international

treaty and specific foreign country provisions relating to the import

and export of controlled substances. DCP personnel also monitor all

Schedule I and II narcotic imports and exports to insure that they are

consistent with the legitimate needs of the United States and the INCB

estimates. If an import or export appears inconsistent with legitimate

need or will exceed the estimates, DCP personnel will examine the

circumstances of the request to import or export. DEA will subsequently

either pursue a course of action to comply with the international

obligations or initiate proceedings to deny the request to import or

export.

As required by the international conventions, DCP personnel prepare

reports of controlled substances imports and exports for submission to

the UN control bodies; provide support and assistance to foreign

governments in the establishment and maintenance of import/export

control programs; and coordinate with foreign authorities and the INCB

in monitoring the international commerce of controlled substances.

International Activities

The registration and control of the manufacture, distribution, and

dispensing of controlled substances is not restricted by domestic

borders. The CSA's system of controls was not developed, and is not

administered, parochially; it is part of a global system comprised of

international laws and obligations designed to establish a consistent,

worldwide structure of control of the manufacture, distribution, and

dispensing of controlled substances to prevent the compromise of any

country's systems of controls by preventing the diversion of

pharmaceutical controlled substances from one country for abuse in

another. The international treaties mandate that each party to the

conventions shall establish a domestic program of controls relating to

the registration and control of the manufacture, distribution

(including import/export), and dispensing of controlled substances. The

treaty provisions include requirements for licensure, scheduling,

quotas, records and reports, import/export investigation, control and

cooperation, prescriptions, penalties, and mutual assistance. The

international community, through the International Narcotics Control

Board and the Commission on Narcotic Drugs, continuously monitors the

workings of the treaties and recommends and adopts resolutions to

maintain the safeguards against trafficking, with which the United

States is obliged to comply. The United States participates in the

debates and discussions to insure that its interests are considered.

The United States' obligations under the conventions are recognized

in the specific language of the CSA and the implementing regulations

(see 21 USC 801, 801(a), 811(d)(1), 823(a) and 958(a), and 21 CFR

1307.02). Further, upon the United States becoming a signatory to the

Psychotropic Convention, Congress acknowledged that before the Senate

could ratify the convention, the CSA would have to be amended to bring

it into compliance with the requirements of the convention,

acknowledging that the conventions are an integral part of the United

States' programs regarding the registration and control of the

manufacture, distribution, dispensing, import, and export of controlled

substances. By implementing the CSA and ratifying the international

treaties, Congress recognized that a strong domestic program relating

to the registration and control of the manufacture, distribution,

dispensing, import, and export of controlled substances is inter-

dependent on the establishment and maintenance of strong international

controls.

In meeting the U.S. treaty obligations, the DCP participates in

international policy activities, including the development and

formulation of United Nations (UN) resolutions, position papers, other

background documents, and briefing materials relating to controlled

substances for use by U.S. delegations to several UN bodies. DCP

personnel also participate in a number of international conferences and

meetings related to drug control. For example, in Fiscal Year (FY) 1995

there were two such conferences which were organized, sponsored, and

funded jointly by DEA and the European Union (EU): the first was held

in Austria to improve the design and administration of, and cooperation

regarding, controlled substance and chemical controls in the

Commonwealth of Independent States (CIS) [the former Soviet Republics]

which was attended by representatives from the CIS, EC and the INCB.

The second conference was held in Istanbul regarding illicit drug

traffic, the diversion of psychotropic substances, and chemical

controls in the Middle East, which was attended by national authorities

in the region, the EC, Interpol, and the INCB. The DEA share of the

costs for these multi-topic conferences (approximately 50% of total

conference cost) was split between the free account and appropriated

funds in approximation to the subject matter covered. In FY 1995, DCP

personnel also participated in the annual Commission on Narcotic Drugs

meeting in Austria, a meeting with EC officials in Spain to discuss

programs to control the manufacture and distribution of steroids, and

an INCB drug training seminar for African drug control authorities

regarding the establishment of effective national controls of the

manufacture and distribution of controlled substances. The fee account

expenditures for these activities totaled less than $150,000 in FY

1995.

In addition to those activities directly related to the

administration of the controls under the international conventions, DCP

personnel conduct conferences and operational initiatives with

representatives from the appropriate foreign governments regarding

specific controlled substances to provide and collect information

regarding the use and abuse of the substances and, where necessary, to

promote the strengthening of controls of the manufacture, distribution,

dispensing, import, and export of the substances to prevent their

diversion from international sources into the United States. Recent

examples include meetings with officials of several European

governments to discuss programs relating to pain management, the

distribution and use of methylphenidate, narcotic treatment programs,

and the medical use of marihuana, and meetings with officials in

Colombia and Mexico regarding the manufacture and distribution of

products containing flunitrazepam which are being illegally distributed

and abused in the U.S.

The DCP compiles and analyzes information on the U.S. production

and distribution of, and estimated needs for narcotic and psychotropic

substances, as well as trafficking data, and prepares periodic reports

for submission to the UN.

The above demonstrates the variety of international activities that

fall within the purview of the Diversion Control Fee Account by virtue

of the United States' obligations under the international conventions

relating to the

[[Page 68629]]

registration and control of the manufacture, distribution, and

dispensing of controlled substances. However, these activities, as

funded through the fee account, are limited to those carried out by

personnel assigned to domestic offices of DEA; expenses of diversion

personnel assigned to overseas positions are funded by appropriated

funds, not through the Diversion Control Fee Account, even though they

may conduct activities in support of the DCP.

Enforcement Activities

(21 U.S.C. 841, 842, 843, 853, 875, 876, 878, 879, 880, 881, 883,

886, 960, 961, and Related Penalty and Enforcement Proceedings

Sections--Penalties for violations of the CSA, and related enforcement

proceedings; 1961 CONVENTION, ARTICLES 36 AND 37--Penal provisions;

Seizure and Confiscation; 1971 CONVENTION, ARTICLE 22--Penal

provisions)

The DCP has responsibility for monitoring, in large part through

investigations, all activities related to legitimately manufactured

substances for which registration is required or excepted and where

those controls are circumvented or disregarded. As such, it initiates

and conducts investigations of individuals and institutions which are

suspected of violating the CSA or which undermine public confidence in

the safety and authenticity of controlled substances found within

pharmaceutical and health care channels. The targets and types of

investigations conducted by the DCP pursuant to 21 U.S.C. 821 are

identified below.

(1) Registrants and their agents or employees suspected of

diverting controlled substances from legitimate channels;

(2) Persons who engage in the smuggling, theft, robbery and/or

trafficking of pharmaceutical controlled substances, including, where

appropriate, identifying and immobilizing their sources of supply,

whether domestic or foreign, through enforcement of the controls

relating to the manufacture, distribution, import, export, and

dispensing of controlled substances;

(3) Persons, both registered and non-registered, who conduct

controlled substances activities for which they do not have the

required DOA or state authorization;

(4) Persons who obtain pharmaceutical controlled substances from

registrants through fraud, deceit, or circumvention of the controls on

manufacturing, distribution, or dispensing, i.e. fraudulent use of

another person's DEA registration number to obtain controlled

substances, doctor shoppers, prescription forgers, etc.;

(5) The trafficking by non-registrants in controlled substances

which are fraudulently promoted as legitimate therapies (such as

``herbal remedies'' sold ``under the counter'' which actually contain a

controlled substance);

(6) Persons who use their DEA registrations to assist in the

diversion or misuse of controlled substances for other than medical

purposes, such as health care fraud, self-abuse, trading controlled

substances for non-medical purposes, etc.

A majority of the efforts of the field elements of the DCP is

devoted to the investigation of manufacturing, distributing,

dispensing, importing, and exporting activities under the requirements

of the law and regulations and to collecting evidence and preparing

material in support of administrative, civil, and criminal proceedings

against violators. The investigations conducted by DCP personnel fall

into three categories.

Pre-Registrant Investigations

The CSA requires that all individuals and institutions proposing to

manufacture, distribute, or dispense controlled substances must obtain

a registration from the Attorney General who is further authorized to

inspect the establishment of a registrant or applicant for

registration. DEA Diversion Investigators and registration personnel

must insure that all applicants for registration and reregistration are

authorized to conduct the activities for which they are applying within

their jurisdiction. DEA Diversion Investigators are required to inspect

the physical premises, interview appropriate applicant personnel,

conduct employee background checks, and review record-keeping and

security procedures for manufacturers, distributors, importers,

exporters, and narcotic treatment programs to determine if the proposed

registration is consistent with the public interest.

Cyclic Investigations

In exercising the controls of the CSA, DCP personnel conduct

periodic investigations of all controlled substance manufacturers,

distributors, importers, exporters, and narcotic treatment programs for

the purpose of (1) ensuring that the registrants are complying with the

requirements of the CSA by maintaining effective controls and

procedures to prevent the diversion of controlled substances, and (2)

detecting criminal or civil violations by such registrants or practices

which undermine or neglect such controls. See 21 CFR 1316.01-1316.13.

In the course of conducting such investigations, DCP personnel perform

a wide variety of activities. These include taking a physical inventory

of controlled substances; interviewing the appropriate registrant

personnel; reviewing records relating to the receipt, distribution, and

disposal of controlled substances; verifying transactions against the

records of other registrants; reviewing manufacturing/distribution

records and reports to ascertain their accuracy and validity;

inspecting and testing the adequacy of physical and procedural

safeguards to detect and deter diversion; identifying and pursuing

questionable or illegal distributions; and collecting samples of

controlled substances.

Complaint Investigations

Complaint investigations are those investigations that may result

in an administrative, civil, or criminal complaint being filed against

the subject for violations of the CSA or regulations. Complaint

investigations are initiated upon information or evidence received from

public sources, other law enforcement or regulatory personnel, or

review of registrant records or reports, etc., that violations of the

CSA have, or may have, occurred. DCP personnel undertake investigative

activities to determine the type and extent of the violations, the

identity of the violators, and the source and methods of diversion. The

types of investigative activities performed include: audits of

controlled substance records, examination and collection of related

business records, prescription surveys, interviews and debriefings,

undercover purchases of evidence, reviews of manufacturer/distribution

records and reports, service of administrative inspection warrants and

search warrants, and intelligence gathering and analysis.

The conduct of complaint investigations often involves cooperation

and coordination with other Federal, state, and local law enforcement

and regulatory officials and occasionally international officials. In

some instances, investigations may also involve cooperation and

coordination with members of the legitimate drug industry.

Investigators, in conjunction with other agencies, evaluate and pursue

evidence of health care fraud, falsification of records, and other

crimes that can establish key elements of proof that controlled

substance violations have occurred.

Upon completion of the investigation, a number of actions may be

undertaken depending on the severity of the

[[Page 68630]]

violations. The case may be referred to the United States Attorney's

Office or State's Attorney for civil or criminal prosecution. Violators

may be referred for an enforcement hearing pursuant to 21 U.S.C. 883

and 21 CFR 1316.31, at which the registrant is provided with details

regarding alleged violations and afforded the opportunity to present

his/her views and proposed actions to come into compliance with the

law. The investigation may result in an administrative hearing,

pursuant to a show cause order, to determine whether registration of

the person should be revoked or denied.

Cooperative Efforts

(21 U.S.C. 801, 801a, 872, and 873--Congressional findings;

Education and research programs of Attorney General; Cooperative

Arrangements; 1961 Convention, Preamble; 1971 Convention, Article 21--

Action against the illicit traffic)

DEA is not alone in the efforts to combat the diversion of

controlled substances. There are related authorities regarding the

control of the manufacture, distribution, dispensing, import, and

export of controlled substances in other Federal, state, and local

regulatory and law enforcement agencies. In addition, the national and

local organizations representing the pharmaceutical and health care

industry actively participate in diversion control efforts.

Internationally, there are foreign government agencies and

international organizations, such as the United Nations International

Narcotics Control Board and the Drug Control Program which administer

the requirements of the international conventions; the World Health

Organization, which is involved with international drug scheduling

matters; and Interpol which helps coordinate international law

enforcement activities directed against the international traffic in

licitly produced controlled substances, committed to the establishment

and maintenance of consistent international control of the manufacture,

distribution, and dispensing of controlled substances. The CSA and the

international treaties, recognizing the need for a coordinated effort

against diversion, demand cooperative efforts between the interested

parties.

As noted, the DCP engages in extensive cooperative efforts with

other officials involved in diversion control activities. DCP personnel

meet regularly with state and local law enforcement and regulatory

personnel to share information, identify areas of concern, and

coordinate joint initiatives and investigations. DCP personnel also

provide special training regarding controlled substances diversion to

local regulatory and law enforcement personnel and hold a national

conference regarding the control and diversion of controlled substances

approximately every 24 months, to which regulatory and law enforcement

administrators from each state and territory are invited. DCP personnel

also engage in a variety of activities with UN bodies, international

organizations, and foreign governments in meeting the U.S.

responsibilities under the international conventions.

In addition to its activities with other law enforcement and

regulatory agencies, the DCP maintains an active program of liaison

with the pharmaceutical industry. DCP activities in this area include

scheduling biannual workgroup meetings with five different industry

groups (manufacturers, distributors, pharmacies, practitioners, and

mid-level practitioners) and a national industry conference held

approximately every 24 months, which is attended by representatives

from the national associations representing the controlled substances

industry and by individual registrants. DCP personnel also prepare and

conduct training sessions at universities for medical and pharmacy

students, make presentations to industry conferences and meetings,

participate in the development of pharmacy certification examinations;

and draft for publication articles regarding the controlled substances

laws and programs.

To assist registrants in understanding and complying with the

controlled substances laws, DCP personnel create informational manuals

(Pharmacist's Manual, Practitioner's Manual, Mid-Level Practitioner's

Manual, and the Security Outline to the Controlled Substances Act)

which are distributed to registrants. Where new laws or regulations

require, specific guides and informational circulars are prepared and

made available to the affected parties. DCP personnel also meet

directly with individual registrants to provide information and

assistance regarding the controlled substances laws.

New Initiatives

Since publication of the proposed rule in 1993, DEA has established

two new initiatives, the National Forensic Laboratory Information

System (NFLIS) and the Tactical Diversion Squads (TDS), which were not

previously identified in the rulemaking. Each of these initiatives will

enhance the DCP's ability to administer and enforce the program

relating to the registration and control of the manufacture,

distribution, and dispensing of controlled substances, and investigate

and act against persons who would violate those controls, as discussed

above. Congress has been notified of these new initiatives and has

approved funding for them.

The collection of accurate and validated data concerning the abuse

of controlled substances and the scientific review of actual or

potential drugs of abuse is a necessary function for scheduling

controlled substances, setting quotas for manufacturing levels, and to

provide more effective leadership in establishing drug policy under the

CSA. The NFLIS will provide in a single system information from

analyzed drug evidence associated with criminal activity collected from

non-Federal forensic laboratories across the country. That information

must currently be obtained by separate contacts with individual

laboratories across the country. The system will also enhance the

investigative ability of DCP personnel by allowing efficient and quick

identification of local, regional, and national division and abuse

trends and distribution patterns of diverted and abused controlled

substances.

The TDS program is a modernization of a program that was operated

in the late 1970's and early 1980's in as many as 24 states in a form

designed to address present diversion trends. DEA has received approval

to fund the formation of two enforcement teams consisting of Federal,

state, and local law enforcement personnel fully dedicated to the

investigation and prosecution of persons involved in the diversion of

controlled substances from legitimate manufacturing, distributing, and

dispensing sources. The program will allow the unification of separate,

and sometimes disparate, Federal, state, and local information,

authorities, and enforcement programs; provide State and local law

enforcement authorities with assistance in developing more effective

enforcement programs against diversion; and help coordinate the various

jurisdictional responsibilities of agencies that otherwise may hinder

investigations and prosecutions of those involved in the diversion of

controlled substances. Funding has also been provided to establish

another 2 to 3 TDS's in 1997.

Budget and Appropriations

In order to accomplish the mandates of the CSA and the

international treaties, Congress in past years authorized and

appropriated funds within the ``Diversion Control Decision Unit'' of

the DEA Salaries and Expenses Appropriation. The President's annual

budget request to Congress contained

[[Page 68631]]

proposed appropriations for the Department of Justice, including the

DEA. DEA's budget requests are required to meet OMB policy guidelines

for budget preparation. [OMB Circular No. A-11]

Once Congress and the President approve the appropriation level,

funds are made available from the appropriate source in the U.S.

Treasury. Prior to fiscal year 1993, registration fees collected under

the CSA were deposited into the general fund of the U.S. Treasury.

Prior to fiscal year 1993, registration fees collected under the CSA

were deposited into the general fund of the U.S. Treasury and scored to

DEA's Salaries and Expenses Appropriation. [31 U.S.C. 3302; 21 U.S.C.

821; OMB Circular No. A-25 (1959)].

On October 6, 1992, the President signed the Departments of

Commerce, Justice and State, the Judiciary and Related Agencies

Appropriations Act of 1993, Pub. L. No. 102-395, 102d Cong. 2d Sess.,

106 Stat. 1828, 1835 (1992) (``Appropriations Act'') (DEA Salaries and

Expenses Appropriation). Section 111(b) of the Appropriations Act

established in the U.S. Treasury, for fiscal year 1993 and thereafter,

a separate account, to be known as the Diversion Control Fee Account.

The Appropriations Act directed that ``[n]otwithstanding [a]ny [o]ther

[p]rovision of [l]aw * * *] fees charged by the Drug Enforcement

Administration under its Diversion Control Program shall be set at a

level that ensures the recovery of the full costs of operating the

various aspects of that program''. Congress specified that the amount

``required to be refunded'' to DEA from the Diversion Control Fee

Account for fiscal year 1994 and thereafter ``shall be refunded in

accordance with estimates made in the budget request of the Attorney

General for those fiscal years''.

For fiscal year 1993, in order to provide the opportunity to

establish and implement a new fee structure to meet the legislative

requirement, Congress appropriated funds, as it had in past years, for

the DCP from the general fund of the U.S. Treasury, less $12 million.

The $12 million was to be funded through increased CSA registration

fees established as a result of the creation of the Diversion Control

Fee Account in 1993. Congress further directed in the Appropriations

Act that ``[a]ny proposed changes in the amounts designated in said

budget requests shall only be made after notification to the Committees

on Appropriations of the House of Representatives and the Senate

fifteen days in advance''.

The fiscal year 1997 resources for the DCP, as authorized by

Congress, include 598 full-time employees charged with the

responsibility for overseeing the activities of one of the largest

pharmaceutical industries in the world to ensure controlled substances

are manufactured, imported, exported, distributed, and dispensed for

legitimate medical and scientific reasons.

These resources includes a staff of Diversion Investigators,

Special Agents, Administrative Law Judges, program analysts,

pharmacologists, chemists, information systems specialists,

registration assistants, examiners, and management and support staff

assigned to field offices across the country and assigned to DEA

Headquarters. Overhead and program expenses include salaries and

employee benefits (retirement, health and life insurance); travel; rent

and utilities; equipment and supplies, including vehicles, computers,

communications, furniture, etc.

In the overall Budget process, the estimated cost per full time

employee is based on a module which includes salary and overhead items.

Modular costs are part of the specific Congressionally approved

positions, as they are with the positions within the rest of the DEA

Budget. For example, when Congress authorized 588 positions for the DCP

in 1994, included therein are the modular costs of maintaining those

positions (such as rent, equipment, per diem and travel, background

investigation costs, etc.)

There are separate DEA activities which support the DCP, but are

covered elsewhere in the DEA Salaries and Expenses Budget and are

therefore not supported by CSA Registration Fees. Examples of this

include: Support provided by the Attorneys in DEA's Office of Chief

Counsel Diversion/Regulatory Section; laboratory Services support; DEA

Automated Data Processing systems support (except ARCOS and CSA);

Office of Training staff, DEA Management and Administrative support;

Office of Congressional and Public Affairs; Intelligence Support and

Diversion Investigators assigned overseas.

Resources not initially identified in the 1993 Federal Register

establishing the fee (57 FR 60,148 and 58 FR 15,272) which have been

subsequently approved and funded through CSA registration fees as part

of the above discussed DCP components include: (1) Congressional

approval in FY 1994 for 11 Special Agents to enforce the Anabolic

Steroid Control Act; (2) Transfer of 7 positions and associated costs

previously provided for in the DEA Salaries and Expenses Budget for

operation of the ARCOS and CSA data systems--these systems exist at DEA

solely to support the DCP; (3) Authorization to establish a National

Forensic Laboratory Information System (as discussed above); (4)

Authorization to expand assistance and cooperation with state and local

law enforcement with the establishment of Tactical Diversion Squads (as

discussed above).

While DEA's budget is formulated, reviewed, and approved on an

annual basis, the majority of DEA registrations, from which the fees to

fund DCP activities are derived, are issued for a three year term.

Further, the registrant population is not evenly distributed across the

three year registration cycle; current figures indicate approximately

320,103 renewals will be received for October 1996 to September 1997,

305,200 renewals for October 1997 to September 1998, and 290,698 for

October 1998 to September 1999. Thus, attempting to calculate the fee

on an annual basis would preclude a uniform application of the costs of

the DCP for each year across either the entire registrant population or

the registrants that would renew in each of the individual years.

Either a return to a one year registration term for all registrants or

a multi-year fee schedule would be necessary.

Rather than establish an annual registration, which would impose an

enormous burden on both the registrants and DEA, a fee schedule which

averages income over three years was adopted. Use of the three year fee

schedule allows for (1) uniform application of fees necessary to cover

the costs of the DCP across the entire registrant population, (2)

accommodation of such factors as inflation and an uneven number of

registration renewals in each of the individual years, and (3)

minimizing the administrative burden associated with frequent

adjustment to the fee schedule. Use of a multi-year cycle does,

however, require that estimated fee collection and funding

authorization figures be used in calculating the fees.

During the transition to the Diversion Fee Account (DFA) system in

FY 93, funding was provided from the general fund in the United States

Treasury to cover the period leading up to the implementation date of

the DFA. Because the rule implementing the Diversion Fee Account system

became effective two months early, a $7 million surplus resulted.

Additional surplus funds have accrued as a result of DEA estimates of

the costs of the program, as reflected in the Congressional Budget

Authorization, that were greater than the actual expenses, in part due

to

[[Page 68632]]

hiring constraints within DEA that resulted in a diversion investigator

vacancy rate of between 50 and 70 positions from 1993 to present; and

DEA estimates of fee income that were less than the actual income. As a

result, the DFA surplus was 45 million dollars as of September, 1996.

While some surplus in the DFA is necessary to cover the variations

in the fees collected each year and the need for some carry-over funds

from one fiscal year to the next, the current surplus exceeds the

amounts necessary to insure the fiscal continuity of the DCP. However,

the surplus will delay the need for any fee increases for a number of

years; based on out-year projections for collections and

appropriations, the surplus will begin to be drawn down in FY 98 and

will be exhausted by FY 2001.

Conclusion

In sum, DEA is mandated to maintain a multi-faceted endeavor

encompassing scientific, cooperative, regulatory, criminal, and

international programs to prevent the diversion of controlled

substances to illicit uses. The DCP has been authorized and has served

for the past 25 years as an effective vehicle for carrying out these

mandates. Creation of the Diversion Control Fee Account in 1993 altered

the funding mechanism of the program, but not its duties, objectives,

or priorities.

The Acting Deputy Administrator of the Drug Enforcement

Administration hereby certifies that this rule will not have a

significant economic impact upon entities whose interests must be

considered under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

The majority of DEA registrants are practitioners, pharmacies, and

hospital/clinics, for whom the annual impact of the fee increase is

$50.00 per registrant. Further, the total annual impact of the fee

increase for the entire registrant population is less than $50 million.

However, consistent with the principles of the Regulatory Flexibility

Act, DEA gave consideration to alternative approaches to the fee

schedule.

Since 1971, the CSA has permitted the Attorney General to collect

fees relating to the registration and control of the manufacture,

distribution, import, export and dispensing of controlled substances

(21 U.S.C. 821 and 958). DEA and its predecessor agency have collected

such fees pursuant to a schedule based upon the five basic activities

cited in the law. That fee schedule was proposed for public comment as

part of the regulations to implement the CSA which were finalized in

1971. The ration of fees was: A distributor's fee is 50% of the

manufacturer's fee and a dispenser's fee is 16-20% of the distributor's

fee. The fee ratios have remained consistent for the past 25 years and

have not been the subject of any substantive comment or objection by

the regulated industry.

The Federal Register notice proposing the new fee structure (57 FR

60148, December 18, 1992) specifically noted that this fee schedule was

to be continued since the administrative structure to collect it was

well established and operating efficiently. There were no practical or

substantive alternative proposals submitted on the record regarding the

fee structure. Individual interest groups questioned the possibility of

alternative structures after the rule was finalized.

In reaching the decision to propose the existing fee ratio as the

basis for establishing the new fees, several alternatives were

discussed by DEA, including:

(1) Establish a fee based on volume of drugs handled by individual

registrants. This was rejected as impractical on several grounds: (a)

DEA has no way of determining the volume handled; (b) the volume

changes due to a variety of market, health care, and competition

issues, thus requiring frequent modification of individual fees; and

(c) DEA would be unable to budget due to income fluctuations.

(2) Establish a fee based upon DEA work hours expended per class of

registrant. This was rejected as impractical because: (a) Work hours

vary from year to year based upon particular drug problems,

identification of violative firms, political or mandated priorities,

travel restrictions, and many other factors; (b) due to the degree of

control established over the past years, less work hours are currently

expended at the wholesale level than at the retail level; however

indications of diversion at the wholesale level will always receive

priority attention. Therefore, this measure would fluctuate year to

year, causing an administrative burden on both the registrants and DEA

due to frequent fee modifications.

(3) Establish a different fee for various types of practitioner

activities (i.e., hospital, medical doctor, dentist, veterinarian,

narcotic treatment program, teaching institution). Again , this was

rejected as impractical because: (a) Many of the same issues in items 1

and 2 above apply equally; (b) a new administrative system to handle 8-

10 registration categories, rather than five, would have to be created,

with attendant costs of computer programming, staffing, form design,

printing, inventory, etc.; and (c) an entirely new system of criteria

would have to be developed to distinguish between categories (i.e., a

general practice dentist may prescribe less than a general practice

M.D., but an oral surgeon may prescribe more; a small rural hospital/

clinic my utilize less controlled substances than an M.D. specialist in

cancer treatment).

(4) Charge for Order Forms (DEA 222) used to order Schedule II

drugs. This was impractical because: (a) A substantial number of

registrants are not registered for Schedule II so an additional fee

system would have to be used for registrants in Schedules III-V; and

(b) order form volume is not reflective of activity, i.e.,

practitioners who prescribe rather than dispense do not use many order

forms.

Therefore, although various options were considered, none offered a

feasible alternative, each would require the establishment of complex,

labor-intensive, expensive new programs (the cost of which would be

borne by the registrants) with complicated fee schedules that would be

difficult to understand and administer. The existing fee structure,

which is operating efficiently and is well understood by the registrant

population, remained the most suitable choice.

This document has been drafted and reviewed in accordance with

Executive Order 12866. The Acting Deputy Administrator of the Drug

Enforcement Administration has determined that this is not a

significant action under the provisions of Executive Order 12866,

section 3(f); accordingly this rule has not been reviewed by the Office

of Management and Budget. This action involves the implementation of

non-discretionary mandate under the Departments of Commerce, Justice,

and State, the Judiciary, and Related Agencies Appropriations Act of

1993 (Pub. L. 102-395), the annual impact of which is less than $100

million.

This action has been analyzed in accordance with the principles and

criteria contained in E.O. 12612, and it has been determined that the

rule has no implications which would warrant the preparation of a

Federalism Assessment.

Dated: December 20, 1996.

James S. Milford,

Acting Deputy Administrator, Drug Enforcement Administration.

[FR Doc. 96-32953 Filed 12-27-96; 8:45 am]

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