Manufacturer Reporting

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1310

[DEA-135F]

RIN 1117-AA30

Manufacturer Reporting

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final Rule.

-----------------------------------------------------------------------

SUMMARY: This rule is issued by the Deputy Administrator of the Drug

Enforcement Administration (DEA) to implement provisions of the

Domestic Chemical Diversion Control Act of 1993 (Pub. 103-200) (DCDCA)

to specify certain reporting requirements for manufacturers of listed

chemicals. This rule requires bulk manufacturers of listed chemicals to

provide annual reports containing certain production data to the DEA.

EFFECTIVE DATE: April 29, 1996. The first annual reports which detail

data for calendar year 1995, shall be submitted on or before June 27,

1996.

FOR FURTHER INFORMATION CONTACT: Howard McClain Jr., Chief, Drug and

Chemical Evaluation Section, Office of Diversion Control, Drug

Enforcement Administration, Washington, D.C. 20537 Telephone (202) 307-

7183.

SUPPLEMENTARY INFORMATION: The Domestic Chemical Diversion Control Act

1993 (Pub. 103-200) (DCDCA) amended 21 U.S.C. 830(b) to require that

regulated persons who manufacture listed chemicals (other than a drug

product that is exempted under 21 U.S.C. 802(39)(A)(iv)) report

annually to DEA information detailing the specific quantities

manufactured. This rule specifies certain reporting requirements for

manufacturers of listed chemicals and finalizes a proposed rule

published in the Federal Register on September 26, 1995 (60 FR 49529).

Interested parties were given 60 days to submit written comments

regarding the proposed rule.

Comments

Five organizations submitted comments in response to the proposed

regulations. One comment suggested that Section 1310.03(b) be modified

in order to clarify that the reporting requirements pertain to both

List I and List II chemicals. Therefore Section 1310.01(b) has been

amended to clarify that ``Each regulated person who manufactures a List

I or List II chemical shall file reports regarding such manufacture as

specified in Section 1310.05.''

Another comment stated that DEA had not clearly established its

basis for needing information requested under the reporting

requirement. This requirement, which was established by the Domestic

Chemical Diversion Control Act of 1993, will provide the DEA with

information on the amounts of listed chemicals available in the U.S.

and provide specific strategic information and parameters on the size

and direction of the legitimate listed chemical market and the

availability of such chemicals for diversion. It will also enable the

DEA to provide the International Narcotics Control Board (INCB) with

aggregate data regarding the production and availability of chemicals

controlled under provisions of the 1988 United Nations Convention

Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.

Two comments requested that hydrochloric acid be exempted and one

comment suggested that sulfuric acid be exempted since only exports of

these chemicals to certain countries are currently regulated. However,

both these chemicals are controlled in Table II of the 1988 United

Nations Convention Against Illicit Traffic in Narcotic Drugs and

Psychotropic Substances. This reporting provision will enable the DEA

to provide the INCB with aggregate manufacturing data on hydrochloric

and sulfuric acid.

The DEA recognizes that bulk manufacturers must file other similar

reports to other government agencies. For example, one of the comments

stated that the requested information is provided to the U.S.

Environmental Protection Agency (EPA) four times per year. Therefore,

as stated in the Notice of Proposed Rulemaking, if an existing standard

industry report contains the information required in Section 1310.06(h)

and such information is separate or readily retrievable from the

report, that report may be submitted in satisfaction of this

requirement. Each report shall be submitted to the DEA under company

letterhead and signed by an appropriate, responsible official.

One comment stated that even though the DEA has specified that an

existing standard industry report may satisfy the reporting

requirements, the reporting obligation would end up as a special report

for each listed material at each location and therefore would be

extremely burdensome. In addition, two comments dealt with the issue of

whether data must be reported by individual facility, as opposed to

submitting one corporate report which includes data for all facilities.

In response to these concerns, the DEA has determined that either

reporting method is acceptable. Therefore, each business entity which

manufactures a listed chemical may elect to (1) report separately by

individual location or (2) report as an aggregate amount for the entire

business entity. These manufacturers, however, must inform the DEA of

which method they will use.

One commentor asked whether inventories should be reported for

listed chemicals stored in foreign locations. The DEA has determined

that such foreign inventories are not subject to the inventory

reporting requirements since such material would have already been

reported to the DEA under existing export notification requirements if

it were manufactured in the U.S. and shipped to a foreign location.

One commentor requested clarification of the term year-end

inventory as used in Section 1310.06(h)(3). For purposes of this annual

reporting requirement, inventory shall reflect the quantity of listed

chemicals, whether in bulk or non-exempt product form, held in storage

for later distribution. Inventory does not include waste material for

destruction, material stored as an in-process intermediate or other in-

process material. The DEA recognizes that bulk manufacturers may have

specific situations which will affect the complexity of inventory

reporting. Therefore, the Drug and Chemical Evaluation Section, Office

of Diversion Control, Drug Enforcement Administration is available to

provide guidance in response to questions bulk manufacturers may have

regarding what material should be included as inventory.

One commentor requested clarification of the terms ``product'' and

``converted'' as used in Section 1310.06(h)(5). The term product refers

to all pharmaceutical preparations and chemical mixtures exempted under

Sections 1310.01(f)(1)(iv) or 1310.01(f)(1)(v) intended for later

distribution. In order to provide clarification of Section

1310.06(h)(5), the term ``converted'' is being removed. This section

will now specify that each annual report required by Section 1310.05(d)

shall provide ``[t]he aggregate quantity of each listed chemical

manufactured which becomes a component of a product exempted

[[Page 14023]]

under Section 1310.01(f)(1)(iv) or 1310.01(f)(1)(v) during the

preceding calendar year.''

One commentor requested clarification that the reporting

requirements do not apply to formulators of chemical mixtures. In

response to this comment, a bulk manufacturer is defined under the

proposed rule, as a person who produces a listed chemical by means of

chemical synthesis or by extraction from other substances. Unless a

formulator of chemical mixtures produces a listed chemical by means of

chemical synthesis or by extraction from other substances, that

formulator is not considered a bulk manufacturer and therefore is not

subject to these reporting requirements.

One firm noted that the proposed rule stated that quantities be

reported to the nearest kilogram. The comment further stated that this

was not feasible due to the large volumes of some of the listed

chemicals. In response to this inquiry, be advised that the reference

to reporting ``to the nearest kilogram'' was intended to mean that

quantities should be reported in kilogram units of measure and was not

intended to specify the precision with which data should be supplied.

The DEA is therefore modifying the regulatory language to read that

information should be reported ``in kilogram units of measure''.

One firm commented that an exemption should be provided for bulk

manufacturers that produce listed chemicals solely for internal

consumption. The DEA has determined that bulk manufacturers that

produce a listed chemical solely for internal consumption shall not be

required to report for that listed chemical. For purposes of these

reporting requirements, internal consumption shall consist of any

quantity of a listed chemical otherwise not available for further

resale or distribution. Internal consumption shall include (but not be

limited to) quantities used for quality control testing, quantities

consumed in-house or production losses. Internal consumption does not

include the quantities of a listed chemical consumed in the production

of exempted products. (These quantities used in the production of

exempted products shall be reported separately.) Section 1310.05 has

been modified to reflect this reporting exemption.

One firm commented that the proposed rule establishes a DEA code

number for each listed chemical and made a suggestion regarding the use

of an alternate numbering system. However, the proposed rule only

clarifies and implements manufacturer reporting requirements and does

not deal with the issue of DEA code numbers. This issue was previously

addressed under the regulations which implemented the Chemical

Diversion and Trafficking Act (60 FR 32447). In that notice, DEA

responded that it had considered the use of other numbering systems

such as the Chemical Abstract Services (CAS) and Harmonized Tariff

System (HTS). However, in reviewing these systems DEA determined that

they were designed for other purposes and that their use could lead to

confusion and jeopardize the accuracy of information reported to DEA.

In the HTS numbering system there are multiple chemicals that are

assigned the same number and in the CAS numbering system there are

chemicals that are assigned multiple codes. The DEA has produced and

made available a chemical reference guide that provides a cross

reference to the CAS and HTS numbers.

Conclusion

These reporting requirements will apply only to bulk manufacturers

of listed chemicals. The term bulk manufacturer as used in this

regulation means a person who manufactures a listed chemical by means

of chemical synthesis or by extraction from other substances. It does

not include persons whose sole activity consists of repackaging or

relabeling listed chemical products or the manufacture of drug dosage

form products which contain a listed chemical. For each listed

chemical, each manufacturer is required to report annually to DEA (1)

the year-end inventory, (2) the aggregate quantity manufactured, (3)

the aggregate quantity used for internal consumption and (4) the

aggregate quantity of each listed chemical manufactured which becomes a

component of a product exempted under Section 1310.01(f)(1)(iv) or

1310.01(f)(1)(v) during the preceding calendar year. While

manufacturers are required to report the quantities of listed chemicals

used in the production of exempted products (e.g. exempted drug

products and chemical mixtures), the manufacturer is not required to

report data regarding the aggregate quantity of the exempted products

produced.

Data provided under these reporting requirements shall be submitted

annually to the Drug and Chemical Evaluation Section, Drug Enforcement

Administration, Washington D.C. 20537, on or before the 15th day of

March of the year immediately following the calendar year for which

submitted. However, in order to provide sufficient time for preparation

of the initial annual reports which detail manufacturing data for

calendar year 1995, these initial reports shall not be due until June

27, 1996.

The Attorney General has delegated authority under the CSA and all

subsequent amendments to the CSA to the Administrator of the DEA (28

CFR 0.100). The Administrator, in turn, has redelegated this authority

to the Deputy Administrator pursuant to 28 CFR 0.104. The Deputy

Administrator hereby certifies that this rulemaking will have no

significant impact upon entities whose interests must be considered

under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. The DEA

estimates that only approximately 210 manufacturers of listed chemicals

will be impacted by these reporting requirements. The impact is minimal

since the requested information is frequently maintained in the normal

course of business operation. In an effort to further minimize the

impact of these reporting requirements and avoid duplicate reporting,

the DEA will accept existing reports which contain the required data,

provided the data is separate or readily retrievable from other data in

the report.

This final rule is not a significant regulatory action and

therefore has not been reviewed by the Office of Management and Budget

pursuant to Executive Order 12866.

This action has been analyzed in accordance with the principles and

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

not have sufficient federalism implications to warrant the preparation

of a Federalism Assessment.

List of Subjects in 21 CFR Part 1310

Drug traffic control, Reporting and recordkeeping requirements,

List I and List II Chemicals.

For reasons as set out above, 21 CFR Part 1310 is amended as

follows:

PART 1310--[AMENDED]

1. The authority citation for Part 1310 continues to read as

follows:

Authority: 21 U.S.C. 801, 830, 871(b).

2. Section 1310.03 is amended by redesignating the existing text as

paragraph (a) and adding a new paragraph (b) to read as follows:

Sec. 1310.03 Persons required to keep records and file reports.

(a) * * *

(b) Each regulated person who manufactures a List I or List II

chemical shall file reports regarding such

[[Page 14024]]

manufacture as specified in Section 1310.05.

3. Section 1310.05 is amended by adding a new paragraph (d) to read

as follows:

Sec. 1310.05 Reports.

* * * * *

(d) Each regulated bulk manufacturer of a listed chemical shall

submit manufacturing, inventory and use data on an annual basis as set

forth in Sec. 1310.06(h). This data shall be submitted annually to the

Drug and Chemical Evaluation Section, Drug Enforcement Administration

(DEA), Washington, D.C. 20537, on or before the 15th day of March of

the year immediately following the calendar year for which submitted. A

business entity which manufactures a listed chemical may elect to

report separately by individual location or report as an aggregate

amount for the entire business entity provided that they inform the DEA

of which method they will use. This reporting requirement does not

apply to drug or other products which are exempted under

Secs. 1310.01(f)(1)(iv) or 1310.01(f)(1)(v) except as set forth in

Sec. 1310.06(h)(5). Bulk manufacturers that produce a listed chemical

solely for internal consumption shall not be required to report for

that listed chemical. For purposes of these reporting requirements,

internal consumption shall consist of any quantity of a listed chemical

otherwise not available for further resale or distribution. Internal

consumption shall include (but not be limited to) quantities used for

quality control testing, quantities consumed in-house or production

losses. Internal consumption does not include the quantities of a

listed chemical consumed in the production of exempted products. If an

existing standard industry report contains the information required in

Sec. 1310.06(h) and such information is separate or readily retrievable

from the report, that report may be submitted in satisfaction of this

requirement. Each report shall be submitted to the DEA under company

letterhead and signed by an appropriate, responsible official. For

purposes of this paragraph only, the term regulated bulk manufacturer

of a listed chemical means a person who manufactures a listed chemical

by means of chemical synthesis or by extraction from other substances.

The term bulk manufacturer does not include persons whose sole activity

consists of the repackaging or relabeling of listed chemical products

or the manufacture of drug dosage from products which contain a listed

chemical.

4. Section 1310.06 is amended by adding a new paragraph (h) to read

as follows:

Sec. 1310.06 Content of records and reports.

* * * * *

(h) Each annual report required by Section 1310.05(d) shall provide

the following information for each listed chemical manufactured:

(1) The name, address and chemical registration number (if any) of

the manufacturer and person to contact for information.

(2) The aggregate quantity of each listed chemical that the company

manufactured during the preceding calendar year.

(3) The year-end inventory of each listed chemical as of the close

of business on the 31st day of December of each year. (For each listed

chemical, if the prior period's ending inventory has not previously

been reported to DEA, this report should also detail the beginning

inventory for the period.) For purposes of this requirement, inventory

shall reflect the quantity of listed chemicals, whether in bulk or non-

exempt product form, held in storage for later distribution. Inventory

does not include waste material for destruction, material stored as an

in-process intermediate or other in-process material.

(4) The aggregate quantity of each listed chemical used for

internal consumption during the preceding calendar year, unless the

chemical is produced solely for internal consumption.

(5) The aggregate quantity of each listed chemical manufactured

which becomes a component of a product exempted from Section

1310.01(f)(1)(iv) or 1310.01(f)(1)(v) during the preceding calendar

year.

(6) Data shall identify the specific isomer, salt or ester when

applicable but quantitative data shall be reported as anhydrous base or

acid in kilogram units of measure.

Dated: March 19, 1996.

Stephen H. Greene,

Deputy Administrator, Drug Enforcement Administration.

[FR Doc. 96-7739 Filed 3-28-96; 8:45 am]

BILLING CODE 4410-09-M