Exemption of Chemical Mixtures

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1300 and 1310

[DEA Number 137P]

RIN 1117-AA31

Exemption of Chemical Mixtures

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Proposed rule.

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SUMMARY: The DEA is proposing regulations to implement those portions

of the Domestic Chemical Diversion Control Act of 1993 [Pub. L. 103-

200] (DCDCA) that exempt from regulation under the Controlled

Substances Act (CSA) certain chemical mixtures that contained regulated

chemicals. The DCDCA amended the CSA to require that only those

chemical mixtures identified by regulation shall be exempt from

application of DEA's regulatory controls. These proposed regulations

identify those mixtures, or categories of mixtures, that will be exempt

from regulation. This proposal also defines an application process that

can be used to exempt chemical mixtures that do not meet the criteria

for automatic exemption.

DATES: Written comments or objections must be submitted on or before

November 16, 1998.

ADDRESSES: Comments and objections should be submitted in quintuplicate

to the Acting Deputy Administrator, Drug Enforcement Administration,

Washington, DC 20537, Attention: DEA Federal Register Representative/

CCR.

FOR FURTHER INFORMATION CONTACT:

Frank Sapienza, Chief, Drug and Chemical Evaluation Section, Office of

Diversion Control, Drug Enforcement Administration, Washington, DC

20537, Telephone (202) 307-7138.

SUPPLEMENTARY INFORMATION: The Chemical Diversion and Trafficking Act

of 1998 (PL 100-690) (CDTA) was passed by Congress to curtail the

diversion of specific chemicals used in the illicit manufacture of

controlled substances. The CDTA established recordkeeping and reporting

requirements necessary for DEA to identify and track chemical

diversion. While the CDTA achieved initial success in curtailing the

diversion of chemicals, traffickers soon found and took advantage of

certain shortcomings in the law. In the United States (U.S.),

traffickers were able to obtain needed supplies by purchasing products

that were exempted from regulation under the CDTA. Foreign traffickers

were able to obtain chemicals from sources outside the U.S., while

taking advantage of U.S. brokers and traders because of these

shortcomings. Additionally, taking action against unscrupulous

suppliers proved difficult.

To address the weaknesses in the CDTA, Congress passed the Domestic

Chemical Diversion Control Act of 1993 (DCDCA), which was enacted in

April of 1994. One provision of the DCDCA dealt with the exemption of

chemical mixtures, which are defined as ``a combination of two or more

chemical substances, at least one of which is not a list I chemical or

a list II chemical, except that such term does not include any

combination of a list I chemical or a list II chemical with another

chemical that is present solely as an impurity.''

Prior to the enactment of the DCDCA, the term regulated transaction

was defined to exclude `any transaction in a chemical mixture' (21

U.S.C. 802 (39)(A)(v)). Therefore, transactions involving all chemical

mixtures were exempt from recordkeeping and other chemical regulatory

control requirements of the CSA. This exemption provided traffickers

with an unregulated source for obtaining chemicals for use in the

manufacture of controlled substances. Furthermore, this exemption was

inconsistent with the requirements of Article 12, Paragraph 14 of the

United Nations 1988 Convention on Psychotropic Substances. Article 12

states, in part, that ``The provisions of this article shall not apply

to pharmaceutical preparations, nor to other preparations containing

substances in Table I or Table II that are compounded in such a way

that such substances cannot be easily used or recovered by readily

applicable means''. To address these problems, the DCDCA amended the

exemption to provide that only those chemical mixtures specified by

regulation would be exempt.

The DCDCA amended the definition of a regulated transaction to

exclude only those mixtures which the Attorney General has by

regulation designated as exempt. This designation is ``based on a

finding that the mixture is formulated in such a way that it cannot be

easily used in the illicit production of a controlled substance and

that the listed chemical or chemicals contained in the mixture cannot

be readily recovered''. Accordingly, with this proposal, the DEA is

seeking to enact regulations that prevent diversion of mixtures which

contain listed chemicals, while removing from the regulatory scheme

mixtures which meet the above legal criteria [21 U.S.C. 802(39)(A)(v)].

Chemical mixtures which contain listed chemicals are of concern to

DEA if they can be used in the manufacturing of controlled substances.

Laboratory operators have continually searched for unregulated sources

of materials in their efforts to illegally manufacture controlled

substances. These efforts have led to the diversion and illicit

utilization of chemical mixtures.

Chemical mixtures can and do play a role in the illicit production

of controlled substances such as heroin, cocaine and amphetamine

related compounds, including methamphetamine. Some examples follow.

The chemicals used in the production of cocaine are included

primarily on list II of the CSA. Suspicious shipments of mixtures

containing solvents in list II to cocaine producing areas have been

identified by DEA. Additionally, diversion of such chemical mixtures

for the illicit production of cocaine in foreign countries has been

established by DEA. DEA continually monitors the chemical composition

of seized cocaine hydrochloride. The DEA laboratory system is able to

detect the trace quantities of solvents present in seized cocaine

hydrochloride. Such solvents are utilized in the final stage of cocaine

production whereby cocaine base is converted to cocaine hydrochloride.

Recent data indicate that a broader range of solvents and solvent

combinations are being caused in cocaine processing. This laboratory

data supports intelligence information that chemical mixtures are used

in the production of cocaine hydrochloride.

Chemical mixtures also play a role in the production of

methamphetamine, the most prevalent controlled substance illicitly

synthesized in the United States. During calendar years 1994 through

1997, the DEA was involved in the domestic seizure of over 2,800

clandestine methamphetamine laboratories. The chemicals ephedrine and/

or pseudoephedrine were utilized as the precursor material at the vast

majority of these laboratories.

The clandestine manufacture, distribution and abuse of

methamphetamine are serious public

[[Page 49507]]

health problems. Nationally, the Drug Abuse Warning Network (DAWN) has

documented approximately 2,900 methamphetamine/speed related deaths in

the United States between January 1992 and December 1996.

Despite considerable efforts by Federal, state and local law

enforcement, the illicit production, distribution and abuse of

methamphetamine continue. Recent DEA seizure statistics indicate that

the number of methamphetamine laboratory seizures has increased

dramatically in 1996 and 1997. During 1997, the DEA participated in

more than 1,400 methamphetamine laboratory seizures. This figure does

not take into account the many laboratory seizures conducted

independently by state and local law enforcement agencies. The problem

continues into 1998.

During the 1970's and early 1980's, P2P was the primary precursor

used in the clandestine production of methamphetamine in the U.S. P2P

was controlled as a Schedule II controlled substance in 1980 through

the administrative provision authorizing control of immediate

precursors under the CSA (21 U.S.C. 811(e)). In an attempt to

circumvent the control of P2P, traffickers sought P2P in unregulated

international markets and resorted to the manufacture of P2P in

clandestine laboratories utilizing phenylacetic acid and acetic

anhydride.

In the middle 1980's, U.S. clandestine laboratory operators began

utilizing the ephedrine reduction method of manufacturing

methamphetamine. Since ephedrine was unregulated at the time, most

laboratory operators abandoned the P2P method and instead moved to the

use of bulk ephedrine powder as their source of precursor material.

The Chemical Diversion and Trafficking Act of 1988 (CDTA) modified

the Controlled Substances Act (CSA) to give DEA authority to exercise

regulatory control of the chemicals used for the refinement and

synthesis of illicitly manufactured controlled substances. The CDTA

imposed recordkeeping, reporting, and import/export notification

requirements for regulated transactions of listed chemicals in order to

prevent the diversion of these chemicals to the illicit manufacture of

controlled substances. The CDTA included bulk ephedrine and

pseudoephedrine as listed chemicals.

However, under the CDTA, products containing a listed chemical

which were marketed or distributed lawfully under the Federal Food,

Drug, and Cosmetic Act were exempt from the CSA's chemical regulatory

control provisions. This included over-the-counter (OTC) products which

contained ephedrine and pseudoephedrine. Clandestine laboratory

operators soon learned that they could obtain the needed precursor

materials through the unregulated purchase of millions of dosage units

of single-entity OTC ephedrine products.

This loophole in the law was closed by the passage of the Domestic

Chemical Diversion Control Act (DCDCA) which became effective on April

16, 1994. This Act further amended the CSA and removed the exemption

for those transactions involving products which are marketed or

distributed lawfully under the Federal Food, Drug, and Cosmetic Act, if

these products contain ephedrine as the only active medicinal

ingredient. Thus, single entity ephedrine products became subject to

the chemical regulatory control requirements of the CSA.

In response to these actions taken against OTC ephedrine products,

clandestine laboratory operators again attempted to circumvent CSA

chemical controls in an effort to obtain precursor material. The search

for unregulated source of precursor material led to the diversion and

illicit utilization of OTC pseudoephedrine products and combination OTC

ephedrine products. In response, the Comprehensive Methamphetamine

Control Act of 1996 placed regulatory controls on the sale and

distribution of such OTC products.

Today, the vast majority (approximately 97 percent) of U.S.

clandestine laboratories continue to utilize ephedrine and/or

pseudoephedrine as the precursor material. At practically all of these

laboratories, the precusor material was obtained via the diversion of

ephedrine or pseudoephedrine products marketed in tablet and capsule

form and was not obtained through the diversion of bulk powder.

While the vast majority of products seized at illicit

methamphetamine laboratories were OTC drug products, dietary supplement

products containing ephedrine and/or pseudoephedrine (i.e ephedra) have

been seized at clandestine methamphetamine laboratories. At this time,

the frequency with which these products are encountered is small.

However, DEA studies indicate that the ephedrine/pseudoephedrine

contained in this material can be readily recovered and ephedra

material can be easily used in the production of methamphetamine.

Ephedra (in the form of dietary supplements or ephedra extract),

therefore, can and is being used as the source of precursor material

for the illicit production of methamphetamine.

Regulation of chemical mixtures is appropriate to guard against

their diversion if the products are not formulated in such a way that:

(1) they cannot be easily used in the illicit production of a

controlled substance; or (2) the listed chemicals cannot be readily

recovered. The DCDCA provides DEA with the means to regulate the

mixtures and yet allows enough flexibility to ensure that the impact of

the regulations can legitimate commerce is minimized.

Regulations regarding the exemption of chemical mixtures were

initially proposed by DEA on October 13, 1994 (59 FR 51888). In

response to industry concerns, the proposed regulations regarding the

exemption of chemical mixtures were withdrawn on December 9, 1994 (59

FR 63738). Between withdrawal of the proposed regulations regarding the

exemption of chemical mixtures and the publication of this action as a

final rule, all transactions involving chemical mixtures as defined in

21 U.S.C. 802(40) remain exempt from the definition of regulated

transaction under the CSA. Based on the discussions and input from

industry, DEA is proposing new regulations regarding the exemption of

chemical mixtures.

Following withdrawal of the initial proposal, DEA solicited input

from, and engaged in discussions with, organizations representing the

manufacturers and distributors of products containing listed chemicals.

DEA met with representatives from associations (and affiliated members)

representing chemical manufacturers, the paint and coating industry,

flavor and fragrance manufacturers, chemical distributors and the

dietary supplements industry. These different groups expressed unique

concerns that the DEA attempted to address within this notice. More

recently, however, the DEA has become aware of additional concerns

raised by other segments of the affected industries including the

dietary supplement industry. While DEA has received input from several

associations and firms within these industries, because of the

diversity of these industries, the DEA believes that others may have

information that the DEA should consider. The DEA is therefore

soliciting input from all sectors of the chemical and dietary

supplements industry potentially affected by this proposed rulemaking.

The DEA recognizes that there may be situations within unique segments

of one or more of the affected industries which may not be specifically

addressed in this

[[Page 49508]]

proposed rulemaking. These may involve products which are not

automatically exempt and entities which would not likely be sources of

diversion since their products cannot be easily used in the illicit

production of a controlled substance or the listed chemicals, which

they contain, cannot be readily recovered. In the event that not all

exemption provisions for chemical mixtures are included, specific

mixtures can be exempted by an application process. The application

process is designed to exempt those chemical mixtures that are not

automatically exempted under this proposal, but meet the criteria of

Title 21 U.S.C. 802(39)(a)((v). As described below, these are processes

which individual firms can use to apply for exemption from some or all

regulatory controls.

One of the potentially affected industries is the dietary

supplement industry which markets non-drug products containing

ephedrine/pseudoephedrine. DEA has recently received information from a

coalition of direct marketers of these dietary supplements regarding

the perceived impact of the proposed regulations on their industry. The

principal concern of the direct marketers is how the chemical

registration, recordkeeping, reporting requirements may affect those

individuals engaged in the direct marketing of the products to the

public. DEA emphasizes that it does not foresee the need for the

regulation of individuals engaged in the direct marketing of the

products to the public, provided certain basic conditions are met. This

is consistent with the established intent of the Comprehensive

Methamphetamine Control Act of 1966 (MCA) with respect to OTC drug

products. While the MCA placed certain regulatory controls on the sale

and distribution of pseudoephedrine, phenylpropanolamine and

combination ephedrine drug products, it went to great lengths to ensure

continued public access to these products at the retail level for face-

to-face transactions.

Correspondingly, DEA is proposing in this notice a process by which

manufacturers may request exemption for their products. Additionally,

DEA can exempt a category of transaction from regulation if it is

determined to be unnecessary for enforcement of the CSA (21 U.S.C.

802(39)(a)(iii)) and can exempt any manufacturers or distributors, from

the registration requirement if it is consistent with the public health

and safety (21 U.S.C. 822(d)). DEA has already received and responded

favorably to a request from a direct marketing organization of

regulated drug products, excluding the individual marketers from

regulations and requiring only that the wholesale activities be

regulated. The information submitted by the coalition regarding the

manner in which their dietary supplement products are marketed does not

to be significantly different from the manner in which these OTC drug

products are distributed.

Listed chemicals cover a wide sector of industry because of their

varied uses. Some are routinely utilized in legitimately produced

chemical formulations while others are not. The DEA has attempted to

better understand the degree with which specific listed chemicals are

formulated in chemical mixtures that are legitimately produced. An

accurate assessment has proved difficult for various reasons. One

reason is that, although some examples of formulated products were made

available, many manufacturers either did not have this information or

were reluctant to discuss their formulations due to concerns regarding

the disclosure of trade secrets. Another reason is that chemical

mixtures are used in a wide variety of industrial sectors. A complete

assessment would involve many diverse sectors such as those involved in

paints, coatings, plastics, refineries, and other industrial processes.

Additionally, many chemical mixtures are intended for human

consumption. These include food and dietary supplements, food

additives, flavorings and fragrances.

After careful consideration of the available information, including

the input from the chemical industry, DEA is proposing a three-tiered

approach to the exemption of chemical mixtures. This approach best

captures those chemical mixtures that are ``formulated in such a way

that they cannot be easily used in the illicit production of a

controlled substance and that the listed chemical or chemicals

contained in the mixture cannot be readily recovered'', in accordance

with Title 21 U.S.C. Section 802 (39)(A)(v). A mixture will be exempt

if: (1) it contains a listed chemical at or below an established

concentration limit; or (2) it falls within a specifically defined

category; and (3) the manufacturer of the mixture applies for and is

granted a specific exemption for the product.

I. Concentration Limits

DEA is proposing to use a system of concentration limits as the

primary means to determine the regulatory status of chemical mixtures.

The use of such a quantitative system is necessary due to the

complexity of chemical-based commodities and the huge variety of

products. The use of a narrative approach is too subjective and would

be in danger of inconsistent interpretation, both by industry and DEA.

Use of the concentration limit eliminates subjective interpretation; if

the amount of listed chemical in a mixture is less than, or equal to,

the concentration limit, then the mixture is exempt.

The concentration of a chemical in a mixture can be determined by

either volume or weight, depending on the physical state of the

mixture. It is more common to determine the concentration of a solid or

gas based on weight, as this more accurately reflects the relative

amounts of components in the mixture. The relative amount of a solid or

gas in a mixture may not be accurately reflected if based on volume

because the weight may change disproportionally relative to volume. The

volume is commonly used to determine concentration in liquid--liquid

mixtures. For listed chemicals that are liquids, the volume is proposed

to be used in determining concentration. The density parameter allows

for easy conversion between volume and weight for liquids.

Concentration limits are proposed to be determined by weight if the

listed chemical exist as a solid or gas at ambient temperature. The

weight of the free base or acid will be used to determine the

concentration of a listed chemical if it is a salt. A mixture is exempt

if the listed chemical or chemicals are less than or equal to the

percentages and other conditions described in the ``Table of

Concentration Limits.''

Where a mixture contains more than one listed chemical, determining

the concentration limit will depend on the properties of the chemicals

included in the mixture. Some chemicals, such as the different

solvents, are cumulative, i.e., the concentration of the mixture will

be determined by adding the concentrations of each individual solvent

in the mixture. This approach is necessary when chemicals can be

interchanged to carry out an illicit manufacturing procedure. The

combined volume of two or more such chemicals would be functionally

equivalent to the same volume of either one of the chemicals. If the

chemicals are not cumulative, then the concentration of each chemical

is considered individually in determining if the mixture is regulated.

Those chemicals that are cumulative are identified in the ``Table of

Concentration Limits'' in the proposed new Section 1310.12(c).

List I Chemicals

The DEA proposes that N-acetylanthranilic acid, anthranilic acid,

[[Page 49509]]

benzyl cyanide, ethylamine, hydriodic acid, 3 4-methylenedioxyphenyl-2-

propane, methylamine, nitroethane, phenylacetic acid, piperidine,

piperonal, propionic anhydride, isosafrole and safrole have a

concentration limit of 20 percent. List I chemicals are used as

precursors with the exception of hydriodic acid which is a reagent in

the production of controlled substances. These chemicals are extremely

valuable to traffickers and, in concentrations of greater than 20

percent, represent a viable source of material for the illegal

manufacture of controlled substances. The concentration limit proposed

by the DEA takes into consideration the information supplied by the

private sector and DEA concerns. The 20 percent limit for these

chemicals maintains exemption status for chemical mixtures that are not

likely to be diverted while excluding from regulation the majority of

the present commerce in these mixtures, as identified by DEA. Safrole

and isosafrole are sufficiently similar precursors when used

clandestinely, that they will be cumulative. DEA is proposing the

following concentration limits for the remaining List I chemicals:

Ephedrine and Pseudoephedrine--2 Percent

Combinations of ephedrine and pseudoephedrine will be cumulative

because these two chemicals are completely interchangeable as

precursors in the same reaction to make methamphetamine and

methcathinone. Thus, if the total concentration of ephedrine and

pseudoephedrine is greater than 2 percent, the mixture is treated by

DEA as a regulated chemical.

Ephedrine and pseudoephedrine are major precursors for clandestine

mathamphetamine and methcathinone production. As previously noted,

clandestine laboratory operators have migrated to unregulated sources

of precursor material. This has led to the diversion of marketed tablet

and capsule pharmaceutical products containing ephedrine and

pseudoephedrine. While OTC drug products have been a major source for

these chemicals in clandestine laboratories, DEA has also identified

non-drug products (i.e. ephedra extracts and dietary supplements) in

seized laboratories.

Regulations pertaining to OTC drug products containing ephedrine

and pseudoephedrine have been established under separate rulemaking.

Non-drug products, including dietary and nutritional supplements are

chemical mixtures and therefore shall be subject to these proposed

provisions.

Representatives of retail sectors from the dietary and nutritional

supplement industry have represented that their products contain

amounts consistent with those found in most natural sources. The 2

percent limit has been deliberately proposed at a level greater than

the concentrations found in most natural sources. Representatives of

the dietary and nutritional supplement retail industry have represented

in meetings that the proposed concentration limit would be adequate,

however, DEA has subsequently become aware of concerns from other,

previously unidentified segments of the dietary and nutritional

supplement industry that the proposed regulations could have a

significant impact on their operations. This new information revealed

that the proposed limit may not be appropriate to exempt certain

distributions from the regulatory process.

Of great concern to DEA, however, is the seizure of dietary

supplements and ephedra bulk material at clandestine laboratories. Some

of this seized material has been found to contain concentrations as low

as 3 to 4 percent ephedrine/pseudoephedrine. The 2 percent threshold

would therefore capture such material.

Under this proposal, products and material containing less than 2

percent would be automatically exempt. Additionally, harvested plant

material will be exempt provided that it is unaltered from its natural

state. Manufacturers of products containing greater than 2 percent

would be able to apply for exemption based on the criteria in 21 U.S.C.

802(39)(A)(v). In meetings with dietary supplement firms and

association, the DEA has requested information on the specific types,

composition and volume of dietary supplement products in the

marketplace. Responses to these inquires have been sparse.

The 2 percent concentration threshold was established in the

consideration of a single entity product containing ephedrine/

pseudoephedrine and combination products from which ephedrin/

pseudoephedrine can be easily removed. It is likely that multiple

ingredient products containing higher concentrations of ephedrin/

pseudoephedrine may, in fact, be more difficult to use in the

clandestine synthesis of methamphetamine. As such, these products would

likely qualify for exemption.

To ensure that DEA has all possible information regarding both the

extent and volume of this industry and the impact of any regulations on

it, DEA is requesting comments from interested persons who market

products that contain ephedrine and/or pseudoephedrine (either as

dietary/nutritional supplements or as other products). Comments should

identify the type of industry, including the number of companies/

individuals involved and the annual volume of business they conduct;

how the proposed regulatory requirements would impact that industry,

(through the registration, recordkeeping, and reporting requirements),

and within the confines of statutory requirements, any suggestions or

comments on how the final regulations might better be tailored to the

industry without compromising the basic mandate of the law to prevent

the diversion of ephedrine and pseudoephedrine for the illicit

manufacture of controlled substances.

The DCDCA initiated provisions for the regulatory control of

chemical mixtures. However, the DCDCA included exemption provisions for

chemical mixtures formulated in such a way that they cannot be easily

used in the illicit production of a controlled substance and the listed

chemical or chemicals contained in the mixture cannot be readily

recovered. Accordingly, if a dietary supplement or any other

formulations meet the exemption criteria, these chemical mixtures will

receive exemption status. Therefore, the dietary and nutritional

supplement industry is requested to provide information as to the

nature of these products in relation to the exemption criteria and

specify any unique attributes such as formulation, composition, or

method of distribution which would prevent diversion for illicit uses.

Additionally, the DEA invites comments in response to its concerns

regarding the seizure of dietary supplements and ephedra bulk material

at clandestine laboratories and the potential expanded role that these

products may play in the illicit production of methamphetamine.

Norpseudoephedrine/Phenylpropanolamine--0.6 Percent

N-methylephedrine/N-Methylpseudoephedrine--0.1 Percent

In each set of the above chemical pairs, the chemicals are

interchangeable in the clandestine synthesis of controlled substances.

Therefore, the concentration limit is proposed to be determined by

adding the concentration of each chemical in the pair.

These chemicals can be used in the manufacture of amphetamine and

methamphetamine. Commercially, they are used in the manufacture of drug

products and can appear in dietary and

[[Page 49510]]

nutritional supplements. As with ephedrine and pseudoephedrine, the

limits are set higher than concentrations found in most natural

sources, even when paired. Therefore, the limit should not affect the

dietary and nutritional supplement products.

Benzaldehyde--30 Percent

Benzaldehyde is used for the clandestine manufacture of amphetamine

and methamphetamine. DEA has identified it as being widely used in

flavoring and as a source of derivatives.

Mixtures containing more than 30 percent benzaldehyde can be

readily used in clandestine synthesis, especially when the other

chemicals are solvents. This is also true when benzaldehyde is mixed

with several other chemicals if those additional chemicals are not

reactive in the synthetic pathways used to manufacture illicit

substances. DEA is aware that this concentration limit may not capture

most mixtures, especially with respect to flavoring and fragrance

products. However, with the increasing effectiveness of the chemical

controls against the diversion of other amphetamine/methamphetamine

source materials, the potential for diversion of benzaldehyde,

including mixtures, may increase significantly. The DEA is interested

in soliciting comments from interested persons involved with chemical

mixtures containing benzaldehyde. For products which contain greater

than 30 percent benzaldehyde, the proposal establishes an application

process by which individual or group exemptions can be obtained.

Ergonovine and Ergotamine--No Concentration Limit

DEA is proposing to regulate all mixtures containing ergonovine and

ergotamine. The natural concentrations of these chemicals is on the

order of a few hundredths of a percent. The alkaloids are precursors

for the manufacture of hallucinogens that are potent in microgram

dosages; little material is required to manufacture viable quantities

of illicit drugs. Commercially, these chemicals are only found in

prescription drug products, which are already exempt; therefore their

regulation in chemical mixtures should not have any impact.

List II Chemicals

List II chemicals, while not precursors of the controlled

substances, are essential for carrying out the illegal manufacture of

controlled substances. DEA is proposing the following concentration

limits for List II chemicals:

Acetone, Methyl Ethyl Ketone (MEK), Methyl Isobutyl Ketone (MIBK),

Toluene, and Ethyl Ether--35 Percent

These chemicals are interchangeable and also are effective when

used in combination in clandestine operations; therefore, they are

cumulative.

These solvents are used, either singly or in combination, in the

processing of cocaine hydrochloride. Commercially, they are used in a

wide variety of industrial processes and represent the majority of

mixtures affected by the chemical regulations. In reviewing the

properties of these solvents, DEA has determined that in mixtures with

concentrations of greater than 35 percent, either individually or in

combination with another solvent, the mixture emulates the properties

of the listed solvent. Therefore, the concentration limit for such

mixtures is proposed to be 35 percent.

Acetic Anhydride, Benzyl Chloride, Hydrochloric Acid, Iodine and

Sulfuric Acid--20 Percent

Potassium Permanganate--15 Percent

These chemicals are used as reagents and precursors in the process

of manufacturing controlled substances. Reagents and precursors are

typically solutes which are dissolved in a solvent in order for a

chemical reaction to be carried out. Because they are dissolved, the

amount of listed precursor or reagent needed is less than the amount of

listed solvent needed to manufacture a controlled substance. This puts

mixtures containing less than the 35 percent concentration limit, as

set for solvents, at risk of diversion. Consequently, a 20 percent

concentration limit is proposed for these chemicals, except for

potassium permanganate, for which the proposed concentration limit is

15 percent. DEA has not identified any mixtures that contain potassium

permanganate in concentrations greater than 15 percent.

II. Specific Mixture Categories

While the concentration limits will suffice for the majority of

chemical mixtures, there are certain categories of mixtures that fall

outside of the limits provided, but are not considered to be likely

sources for diversion. DEA has identified three such categories: (1)

waste materials regulated by the Environmental Protection Agency (EPA);

(2) paints and coatings; and (3) harvested plant material.

(1) Waste mixtures that: (a) are subject to the requirements of 40

CFR Sections 262 and 263.20-22; (b) must be documented on U.S.

Environmental Protection Agency Form 8700-22/22A (Uniform Hazardous

Waste Manifest); and (c) are being distributed to another person solely

for the purpose of disposal by incineration are exempt. These mixtures

include only those that are covered by EPA regulations and have a

`cradle to grave' paper trail. Further, the exemption applies only to

the extent that the Form 8700-22/22A is available for inspection and

copying by DEA. If the generator fails to release, or permit the

release, of the necessary information required by DEA, then the

mixtures will be treated as a regulated mixture. Finally, any change in

the requirements with respect to Form 8700-22/22A, including EPA

exemption of a mixture or a waste management site, could result in

modification or removal of the exemption.

(2) Completely formulated paints and coatings. DEA recognizes that

while paints and coatings, as defined below, may contain a higher

concentration of a listed chemical than allowed for exemption, they

also contain other ingredients, such as pigments, that render them

unsuitable as a source of supply for chemical traffickers.

For purposes of the exemption, a completely formulated paint or

coating is defined as any clear or pigmented liquid, liquefiable, or

mastic composition designed for application to a substrate in a thin

layer which is converted to a clear or opaque solid protective,

decorative, or functional adherent film after application. A completely

formulated paint or coating contains all the components of the paint/

coating mixed without the need to add any other material except a

thinner for use in the final application. Included in this category are

paints, clear coats, topcoats, primers, varnishes, sealers, adhesives,

lacquers, stains, shellacs, inks and temporary protective coatings. To

qualify for the exemption, a paint or coating must meet the American

Society for Testing Materials specifications for the specific product.

(3) Harvested plant material. Harvested plant material that

contains listed chemicals, while meeting the definition of chemical

mixture, will be exempt provided that the plant material is unaltered

from its natural state. Changes in the physical state that preserve the

natural composition of the material, such as grining, chopping,

mulching, or cutting, do not affect the exemption status. However,

changes that alter the natural composition of the material, such as

that resulting from chemical or physical extraction, concentrating,

enhancement, or by chemical reaction or any such

[[Page 49511]]

treatment, will disqualify the mixture from exemption.

III. Exemption By Application

For those chemical mixtures that may not otherwise qualify for an

exemption, but are formulated in such a manner that the listed

chemicals cannot be readily recovered from the mixture and the mixture

itself cannot be used for illicit drug manufacture, DEA is proposing a

procedure by which the manufacturer of the mixture may apply for an

exemption of the mixture or group of mixtures. The application may be

submitted for a single mixture or a group of mixtures containing the

same listed chemical at equal concentration with variations in the

concentration of the other non-listed chemicals in the mixture.

Consideration will also be given to applications for mixtures in which

the concentration of the listed chemical varies without regard to the

specific concentrations of the other non-listed chemicals in the

mixture. In either group, variation of the concentration of any

chemical within the mixture that will result in a change in the

function of the mixture will disqualify the mixture from the group. The

Administrator may determine that a specific mixture does not qualify as

part of a group. Each manufacturer must request exemption status for

its particular products; exemption of a product for one manufacturer

does not carry over to the same or similar products for another

manufacturer.

An application for exemption must contain identifying information

about the applicant, qualitative and quantitative data regarding the

mixture, and justification as to why the mixture should be exempted.

DEA may request additional information on the formulation and

distribution of the mixture or clarification of any submitted

information, as needed. The application for exemption will contain a

consent for the termination of exemption by decision of the

Administrator upon evidence that the product has been diverted for the

use of producing a controlled substance.

Termination of Exemption

The Administrator may terminate or modify the exemption for any

chemical mixture that has been granted an exemption if evidence of

diversion or attempted diversion is found. Evidence that a chemical

mixture has been or is being used in the manufacuturing of a controlled

substance will be adequate reason to revoke exemption status for a

specific product or all similar chemical mixtures which the DEA

determines can be used in the illicit manufacdturing process for which

the evidence is obtained.

Procedures are given in this proposed rule for the termination of

an exemption granted pursuant to 21 CFR 1310.12 or 1310.13 and differ

according to whether removal of exemption status is product specific or

by change of any criterion in 21 CFR 1310.12(c) or 1310.12(d). The DEA

will issue and publish in the Federal Register notification of the

termination of exemption of a specific exempt product or group of

exempt products for which evidence of diversion has been found. This

order shall specify the date on which the termination of exemption

shall take effect. The Administrator shall permit any interested party

to file written comments on or objections to the notice within 60 days

of the date of publication of the order in the Federal Register. If any

such comments or objections raise significant issues regarding any

finding of fact or conclusion of law upon which the order is based, the

Administrator shall immediately suspend the effectiveness of the order

until reconsideration of the order in light of comments and objections

filed. Thereafter, the Administrator shall reinstate, terminate, or

amend the original order as deemed appropriate. The DEA shall send

written notification to the manufacturer only in instances where the

manufacturer of affected products has been readily identified, advising

of an action prior to publication in the Federal Register.

Trade Secrets

Information required by the DEA to exempt a product includes

qualitative and quantitative data for the product. Industry groups

expressed concern regarding confidenticality and trade secrets. The DEA

has considerable experience in safeguarding trade secrets. The issue of

protection of confidential business information has been addressed by

the DEA in the Federal Register Final Rule published on June 22, 1995

which finalized specific provisions of the DCDCA (60 FR 32453). The

release of confidential business information that is protected from

disclosure under Exemption 4 of the Freedom of Information Act, 5

U.S.C. 552(b)(4) (FOIA), is governed by Section 310 (c) of the CSA (21

U.S.C. 830(c)) and the Department of Justice procedures set forth in 28

CFR 16.7.

Section 310(c) of the CSA provides that information collected under

Section 310 that is protected from disclosure under Exemption 4 may

only be released in circumstances related to the enforcement of

controlled substance or chemical laws, custom laws, or for compliance

with U.S. obligations under treaty or international agreements. The

Department of Justice procedures establish that if a FOIA request is

received for release of information that is protected under Exemption

4, the submitter of the protected information must be notified of such

a request, given an opportunity to object to the disclosure and allowed

to provide justification as to why the information should not be

disclosed.

Regulation of Chemical Mixtures

There are some chemical mixtures that will not meet the proposed

exemption criteria and will be subject to regulation. It is proposed

that the threshold be determined by taking the entire weight or volume

of the regulated mixture for mixtures regulated due to the presence of

acetone, ethyl ether, methyl ethyl ketone, methyl isobutyl ketone and

toluene. In mixtures that contain two or more listed chemicals, other

than acetone, ethyl ether, methyl ethyl ketone, methyl isobutyl ketone

and toluene, each chemical shall be compared against its respective

threshold. Where the mixture contains two or more chemicals that are

cumulative, other than acetone, ethyl ether, methyl ethyl ketone,

methyl isobutyl ketone and toluene, then the summed concentration of

the listed chemicals that are cumulative will be considered; where the

total weight of the cumulative listed chemicals exceeds the threshold

for any one of the listed chemicals contained in the mixture, then the

transaction will be regulated. Thresholds are proposed to be determined

by taking the weight or volume of listed chemical contained in the

mixture for all other listed chemicals.

Further, the provisions regarding excluded transactions, as set out

in 21 CFR 1310.08, will apply equally to mixtures containing the

specified chemicals.

Regulatory Flexibility and Small Business Concerns

The Domestic Chemical Diversion Control Act of 1993 replaced the

existing blanket exemption from regulation for chemical mixtures with a

provision that only those chemical mixtures specifically identified by

regulation would be exempt from DEA's chemical controls, based on a

finding that each mixture cannot be easily used in the illicit

manufacture of a controlled substance and that the chemical(s)

contained in the mixtures cannot be readily recovered. This change was

necessary to make the U.S.'s chemical controls consistent with Article

12,

[[Page 49512]]

Paragraph 14 of the United Nations 1998 Convention Against Illicit

Traffic in Narcotic Drugs and Psychotropic Substances (1988

Convention), which requires that chemical controls apply to the

chemicals themselves and to products containing the chemicals that are

compounded in such a way that such chemicals cannot be easily used or

recovered by readily applicable means.

In considering application for the new requirement, DEA recognized

that neither regulation nor exemption of all mixtures were a feasible

approach. Regulation of all chemical mixtures would cast too broad a

net, encompassing products that are not of significant concern to DEA

as sources for the diversion of listed chemicals and resulting in an

unnecessary regulatory burden on both industry and DEA. Also of

significance, exemption of all chemical mixtures would leave products

that are suitable for use in the illicit manufacture of controlled

substances open for diversion. With the growing effectiveness of

chemical controls, such unregulated mixtures could become a significant

source of chemicals for diversion, which would be inconsistent with

both DEA's mandate and the U.S.'s responsibilities under the 1988

Convention. Therefore, it was necessary to identify some middle ground

that would minimize the impact on industry while still satisfying the

intent of the requirement and the U.S.'s obligations under the 1988

Convention.

Originally, DEA proposed a system whereby manufacturers would

request exemptions for their specific products. However, industry

expressed concerns that the administrative burdens, for both industry

and DEA, would be too great, given the number of chemical mixtures in

commerce. Based on those concerns, DEA withdrew the proposal and opened

a dialogue with representative from the manufacturing, distributing,

and related segments of the chemical industry regarding how to best

address the matter of exemption.

An important DEA objective in establishing exemption criteria was

to obtain recommendations from the affected industry. The DEA met with

several interested parties including associations representing chemical

manufacturers, paint and coatings industry, flavor and extract

manufacturing, dietary supplement manufacturers and distributors, and

chemical distributors and affiliated members. These discussions, along

with available DEA information pertaining to the illicit manufacture of

controlled substances, were considered in the establishment of

exemption criteria under this proposal. The DEA realizes that, because

of the diverse industries affected by these regulations, not all

interested persons may have been fully represented prior to the

publication of this proposal. The DEA is therefore requesting that

comments be submitted to help ensure that the concerns of all

interested parties are considered.

Comments should identify the type of industry, including the number

of companies/individuals involved and the annual volume of business

they conduct; how the proposed regulatory requirements would impact

that industry (through the registration, recordkeeping, and reporting

requirements), and within the statutory requirements, any suggestions

or comments on how the final regulations might better be tailored to

the industry without compromising the basic mandate of the law to

prevent the diversion of listed chemicals for the illicit manufacture

of controlled substances.

The initial concern in addressing the matter of exemption was to

establish a system for the identification of the categories of chemical

mixtures to be exempted that would be objective and specific enough to

allow nontechnical personnel to easily understand and apply the

criteria and to allow accurate identification of those mixtures that

could readily be used in the illicit manufacture of controlled

substances while not encumbering those that could not.

Two options were considered: (1) The used of general product

categories, such as paints, coatings, adhesives, and sealants; refinery

and chemical plant streams; waste products; insecticides, pesticides,

and herbicides; consumer products, including cosmetics; and solutions

containing more than 5 percent solids by weight; and (2) the use of

concentration limits, expressed as the percentage of chemical, either

by volume or weight, that a mixture may contain.

Examination of the use of product categories revealed problems

involving their subjective nature, which could lead to confusion

regarding whether certain products might be included in the category.

In addition, the lack of specificity in such a system would cause

difficulties in identifying products that should not be included in a

category because of the manner in which they are formulated. It quickly

became apparent that use of product categories as the primary means to

identify exempt chemical mixtures would require the development of a

cumbersome, highly technical, and complicated set of definitions and

criteria in order to identify the mixtures to be granted exemption.

The concentration limits, by contrast, provide a clear cut,

objective means to identify whether a chemical mixture is or is not

exempt. By focusing specifically on the amount of chemical contained in

a given amount of mixture, which is of primary concern to DEA, the

system provides and unequivocal standard that is easily understood by

expert and layman alike. There is no need to establish a large, complex

and highly technical set of definitions and crtiera that must be used

to make a subjective determinations to what category a mixture belongs

in and whether it meets the exemptions criteria or not.

While the system of concentration limits can be used satisfactorily

with most chemical mixtures, it does not address those circumstances

where the formulation of the mixture or the manner in which the mixture

is distributed may be factors for consideration in determining

exemption status. Therefore, DEA is proposing the use of certain

limited categories for exemption. Additionally, DEA recognizes that

there will be those individual products which may not meet the

established exemption criteria but are deserving of consideration for

exemption due to specific factors that may limit their use in the

illicit manufacture of controlled substances. Therefore, provisions

have been made in the proposed regulations for a system for which a

manufacture may request exemption of a specific mixture.

Once the basic framework for the exemption process had been

established, DEA consulted with representatives of the regulated

industry, including chemical manufacturers and distributors, as well as

the paint and coatings, the flavoring and fragrances, and the dietary

and nutritional supplements industries, to identify the concentration

limits or other criteria that would satisfy the requirements of the law

with the least possible burden on regular commerce. The proposed

concentration limits were based on consideration of how useful the

mixtures would be in the illicit manufacture of controlled substances

and how great a percentage of the mixtures in regular commerce could be

exempted from regulation; the proposed limits provide a good balance

between the requirements of the law and the need to minimize the impact

of the law on legitimate commerce. Representatives of the chemical

manufacturers and distributors have indicated that the proposed

concentration limits should provide for

[[Page 49513]]

exemption of the majority of chemical mixtures in commerce.

In those instances where a chemical mixture will be subject to

regulation, the regulatory requirements are not unduly burdensome and

should not present any restriction on regular commerce. The primary

requirement, recordkeeping, applies only to those transactions that

meet or exceed the threshold established for the chemical contained in

the mixture. The information required to be maintained in the records

is minimal and can usually be found in the normal business records

maintained by anyone following good business practices. Additionally,

the chemicals contained in the mixture may be subject to other Federal

or state recordkeeping requirements, in which case the records

maintained may be used to satisfy DEA's requirement, provided the

necessary information is readily available. In addition, this proposed

rule will exempt persons from registration if the only List I chemicals

which they distribute, import or export are contained in exempt

mixtures; it is DEA's understanding that the bulk of chemical mixtures

in commerce contain List II, rather than List I chemicals.

In summary, the proposed system provides for the exemption of the

greatest possible population of mixtures while remaining consistent

with the requirements of the law and obligations under the U.N.

Convention. The combination of exemptions, together with the threshold

system and requirement that registration be obtained only for

activities involving List I chemicals allows for the lease possible

burden and cost to industry. Therefore the Acting Deputy Administrator,

in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)),

has reviewed this proposed rule and by approving it certifies that it

will not have a significant economic impact on a substantial number of

small business entities.

With respect to the specific economic and regulatory burdens

associated with the regulation of chemical mixtures (in those instances

where exemption is not possible), there are three different

requirements to be considered:

Registration

This requirement applies solely to persons who distribute, import,

or export List I chemicals, including those contained in regulated

chemical mixtures. Registration is required on an annual basis. The

initial registration cost is $595.00 and the annual registration

renewal cost is $477.00. Completion of the application requires

approximately 30 minutes.

The impact of the registration requirement will vary depending on

the type of industry and type of transactions. As noted, the

registration requirement applies only to List I chemicals.

Recordkeeping

Regulated persons must keep records regarding regulated

transactions. The records must reflect the name, address, and, if

required, DEA registration number of each party to the transaction; the

date of the transaction; the name, quantity, and form of packaging of

the listed chemical; the method of transfer (company truck, picked up

by customer, etc.); and the type of identification used by the

purchaser and any unique number on that identification.

As noted in 21 CFR 1310.06(b), normal business records shall be

considered adequate for satisfying the recordkeeping requirement, if

they contain the required information and are readily retrievable from

the other business records of the regulated person. It has been DEA's

experience that regulated persons at the non-retail level maintain such

information in their normal business records; therefore, no additional

burden is considered to apply. At the retail level, such information is

not normally kept, therefore, any records to be maintained would have

to be considered as part of the regulatory burden.

Reporting

Regulated persons must make reports of any regulated transactions

involving an extraordinary quantity of a listed chemical, an uncommon

method of payment or delivery, or any other circumstance that the

regulated person believes may indicate that the listed chemical will be

used in violation of the regulations (21 CFR 1310.05(a)(1)).

Additionally, any unusual or excessive loss or disappearance of a

listed chemical must be reported. It must be emphasized that this

requirement does not apply to all sales of listed chemicals; it applies

only to those sales involving suspicious/unusual circumstances or

thefts/losses.

In addition to the above reporting requirement, the Comprehensive

Methamphetamine Control Act of 1996 (MCA) established the requirement

that each regulated person who engages in a transaction with a

nonregulated person which involves ephedrine, pseudoephedrine, or

phenylpropanolamine (including drug products containing those

chemicals) and uses or attempts to use the Postal Service or any

private or commercial carrier, shall, on a monthly basis, submit a

report of each such transaction conducted during the previous month to

the Attorney General (21 U.S.C. 830(b)(3)). This requirement has been

the subject of much discussion and it is generally accepted that the

manner in which it is written provides DEA with no discretion to

exclude any person from the requirement. Legislative amendment of this

requirement to allow DEA some measure of discretion in its application

is being explored.

Total Regulatory Impact

The total regulatory impact of these requirements will vary based

on the type of industry involved and the types of transactions being

conducted. With the chemical industry, the total impact should be

limited. DEA has been informed by representatives of the chemical

industries that the bulk of chemical mixtures will contain List II

chemicals. Further, many of the companies that handle List I chemical

mixtures are already registered to handle List I chemicals. Therefore,

the registration requirement will have limited impact on that industry.

With respect to the recordkeeping requirements, the bulk of the

chemical mixture transactions are commercial in nature and involve

materials that are subject to stringent Federal and state requirements;

the information required to satisfy DEA's recordkeeping requirements

will already be available as part of the business records being

maintained by the regulated persons. Therefore, no additional burden is

anticipated to satisfy the recordkeeping requirement. With respect to

reporting, DEA is adjusting its existing, OMB approved information

collection regarding Reports of Suspicious Orders or Theft/Loss of

Listed Chemicals/Machines (OMB Number 1117-0024), to increase the

estimated number of annual reports by 2,000 and the estimated burden

hours by 340 hours per year.

With the dietary and nutritional supplement industry, the issue is

somewhat less clear. DEA has been informed by the manufacturers and

distributors of products that are sold at retail that their products

contain concentrations of ephedrine that are consistent with the

proposed exemption limit; therefore, the retail side of the industry

should experience little, if any, regulatory impact. However, DEA was

recently contacted by representatives of a segment of the industry

involved in the direct marketing of these products, who expressed grave

concern regarding the potential impact of the requirements on direct

marketers, especially the individual marketers selling small

[[Page 49514]]

amounts of the product to friends and neighbors.

DEA is well aware of the potential impact that the regulations

could have on such operations, having dealt with the issue with respect

to the direct marketing of drug products containing ephedrine,

pseudoephedrine, and phenylpropanolamine. As was stated in the

discussion regarding Exemption by Application earlier in this document,

it is not the intent of DEA to regulate those individuals engaged in

direct marketing sales of small amounts of these products in face-to-

face transactions. In addition to the proposed regulations allowing for

exemption by application, there are existing exemption procedures

available for types of transactions and categories of persons. An

exemption has already been provided to one direct marketing

organization and discussions are underway with another to also provide

an exemption provided certain circumstances are met. It must be noted

that the exemptions apply to individuals engaged in direct marketing

sales of small amounts of these products in face-to-face transactions;

manufacturers and wholesale distributors of the products remain subject

to the regulatory requirements.

Assessing the overall impact of the regulations on the dietary and

nutritional supplement industry has been hampered by the lack of

information regarding the overall scope and population of the industry.

DEA has, along with others, requested demographic information from the

industry; however, to date, we have not received the details necessary

to adequately estimate the potential impact of the regulations. As

stated elsewhere in this document, interested persons are invited to

submit comments identifying the scope and population of the industry;

the effect of the regulations on the industry, both in terms of the

extent to which proposed and existing exemptions will exclude the

industry from regulation and, where the exemptions do not extend, how

the above requirements will impact the industry; and any comments or

suggestions on how the regulations might be adjusted to address

industry concerns without compromising their intent to prevent the

diversion of listed chemicals to the illicit manufacture of controlled

substances.

This proposed rule has been reviewed pursuant to Executive Order

12866 and has been determined to be a significant regulatory action.

Therefore, it has been reviewed and approved by the Office of

Management and Budget.

This action has been analyzed in accordance with the principles and

criteria in Executive Order 12612, and it has been determined that this

proposed rule does not have sufficient federalism implications to

warrant the preparation of a Federalism Assessment.

This rule will not result in the expenditure by state, local, and

tribal governments, in the aggregate, or by the private sector, of

$100,000,000 or more in any one year, and will not significantly or

uniquely affect small governments. Therefore, no actions were deemed

necessary under the provisions of the Unfunded Mandates Reform Act of

1995.

This rule is not a major rule as defined by Section 804 of the

Small Business Regulatory Enforcement Fairness Act of 1996. This rule

will not result in an annual effect on the economy of $100,000,000 or

more; a major increase in costs or prices; or significant adverse

effects on competition, employment, investment, productivity,

innovation, or on the ability of United States-based companies to

compete with foreign-based companies in domestic and export markets.

List of Subjects

21 CFR Part 1300

Definitions, Drug traffic control, Controlled substances, List I

and List II chemicals.

21 CFR Part 1310

Drug traffic control, List I and List II chemicals, Reporting and

recordkeeping requirements.

For the reasons set out above, it is proposed that 21 CFR parts

1300 and 1310 be amended as follows:

PART 1300--[AMENDED]

1. The authority citation for part 1300 continues to read as

follows:

Authority: 21 U.S.C. 802, 871(b), 951, 958(f).

2. Section 1300.02 is proposed to be amended by revising the

paragraph (b)(28)(i)(E) to read as follows:

Sec. 1300.02. Definitions relating to listed chemicals.

* * * * *

(b) * * *

(28) * * *

(i) * * *

(E) Any transaction in a chemical mixture designated in

Secs. 1310.12 and 1310.13 that the Administrator has exempted from

regulation.

* * * * *

PART 1310--[AMENDED]

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

follows:

Authority: 21 U.S.C. 802, 830, 871(b).

2. Section 1310.04 is proposed to be amended by adding a new

paragraph (h) as follows:

Sec. 1310.04 Maintenance of records.

* * * * *

(h) The thresholds and conditions in 21 CFR 1310.04(f) and

1310.04(g) will apply to transactions involving regulated chemical

mixtures. All regulated chemical mixtures containing List I and List II

chemicals with the exception of acetone, ethyl ether, methyl ethyl

ketone, toluene and methyl isobutyl ketone will have the threshold

determined by taking the weight of the listed chemical in the regulated

mixture. Regulated chemical mixtures that contain one or more of the

List II chemicals acetone, ethyl ether, methyl ethyl ketone, toluene

and methyl isobutyl ketone will have the threshold determined by taking

the entire weight of the mixture. The threshold for these mixtures will

be 1500 kilograms for export to the western hemisphere except Canada

and 150 kiograms for domestic transactions.

3. Part 1310 is proposed to be amended by adding new sections

1310.12 and 1310.13 as follows:

Sec. 1310.12 Exempt chemical mixtures.

(a) The chemical mixtures meeting the criteria in paragraphs (c),

(d) and (g) of this section are exempted by the Administrator from

application of sections 302, 303, 310, 1007, and 1008 of the Act (21

U.S.C. 822-3, 830, and 957-8) to the extent described in paragraphs (b)

and (c) of this section.

(b) No exemption granted pursuant to Sec. 1310.12 or Sec. 1310.13

affects the criminal liability of illegal possession, distribution,

exportation, or importation of listed chemicals contained in the exempt

chemical mixture.

(c) Mixtures containing a listed chemical in concentrations equal

to or less than those specified in the `Table of Concentration Limits'

are designated as exempt chemical mixtures for the purpose set forth in

this section. Calculation of percent by weight or by volume is given in

the Table along with the concentration limit and other relative

information.

[[Page 49515]]

Table of Concentration Limits

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

The DEA

List I chemicals chemical Concentration Special conditions

code no. (percent)

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

N-Acetylanthranilic acid, its 8522 20% by weight........ Concentration based on any combination

salts and esters. of N-acetylanthranilic acid and its

salts and esters.

Anthranilic acid, and its salts 8530 20% by weight........ Concentration based on any combination

and esters. of anthranilic acid and its salts and

esters.

Benzaldehyde...................... 8256 30% by volume........

Benzyl cyanide.................... 8570 20% by volume........

Ephedrine, its salts, optical 8113 2% by weight......... Concentration based on any combination

isomers, and salts of optical of ephedrine, pseudoephedrine, and

isomers. their salts, optical isomers and salts

of optical isomers.

Ergonovine and its salts.......... 8675 Not exempt at any Chemical mixtures containing any amount

concentration. of ergonovine, including its salts, are

not exempt.

Ergotamine and its salts.......... 8676 Not exempt at any Chemical mixtures containing any amount

concentration. of ergotamine, including its salts, are

not exempt.

Ethylamine and its salts.......... 8678 20% by weight........ Ethylamine or its salts in an inert

carrier solvent is not considered a

mixture. Weight is based on ethylamine

in the mixture and not the combined

weight of carrier solvent, if any.

Hydriodic acid.................... 6695 20% by weight........ Aqueous or alcoholic solutions are not

considered mixtures.

Isosafrole........................ 8704 20% by volume........ Concentration in mixture cannot exceed

20% if taken alone or in any

combination with safrole.

Methylamine, and its salts........ 8520 20% by weight........ Methylamine or its salts in an inert

carrier solvent is not considered a

mixture. Weight is based on methylamine

in the mixture and not the combined

weight of carrier solvent, if any.

3,4-Methylenedioxyphenyl-2- 8502 20% by weight........

propanone.

N-Methylephedrine, its salts, 8115 0.1% by weight....... Concentration based on any combination

optical isomers, and salts of of N-methylephedrine, N-

optical isomers. methylpseudoephedrine and their salts,

optical isomers and salts of optical

isomers.

N-Methylpseudoephedrine, its 8119 0.1% by weight....... Concentration based on any combination

salts, optical isomers, and salts of N-methylpseudoephedrine N-

of optical isomers. methylephedrine, and their salts,

optical isomers and salts of optical

isomers.

Nitroethane....................... 6724 20% by volume........

Norpseudoephedrine, its salts, 8317 0.6% by weight....... Concentration based on any combination

optical isomers, and salts of of norpseudoephedrine,

optical isomers. phenylpropanolamine and their salts,

optical isomers and salts of optical

isomers.

Phenylacetic acid, and its salts 8791 20% by weight........ Concentration based on any combination

and esters. of phenylacetic acid and its salts and

esters.

Phenylpropanolamine, its salts, 1225 0.6% by weight....... Concentration based on any combination

optical isomers, and salts of of phenylpropanolamine,

optical isomers. norpseudoephedrine and their salts,

optical isomers and salts of optical

isomers.

Piperidine, and its salts......... 2704 20% by volume........ Concentration based on any combination

of piperidine and its salts.

Piperonal......................... 8750 20% by weight........

Propionic anhydride............... 8328 20% by volume........

Pseudoephedrine, its salts, 8112 2% by weight......... Concentration based on any combination

optical isomers, and salts of of pseudoephedrine, ephedrine, and

optical isomers. their salts, optical isomers and salts

of optical isomers.

Safrole........................... 8323 20% by volume........ Concentration in mixture cannot exceed

20% if taken alone or in any

combination with isosafrole.

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

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

The DEA

List II chemicals chemical Concentration Special conditions

code no. (percent)

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

Acetic Anhydride.................. 8519 20% by volume........

Acetone........................... 6532 35% by volume........ Limit applies to acetone or any

combination of acetone, ethyl ether,

methyl ethyl ketone, methyl isobutyl

ketone and toluene if present in the

mixture by summing the concentrations

for each chemical.

Benzyl chloride................... 8568 20% by volume.

Ethyl ether....................... 6584 35% by volume........ Limit applies to ethyl ether or any

combination of acetone, ethyl ether,

methyl ethyl ketone, methyl isobutyl

ketone and toluene if present in the

mixture by summing the concentrations

for each chemical.

Hydrochloric acid................. 6545 20% by weight........ Aqueous or alcoholic solutions are not

considered mixtures.

Iodine............................ 6699 20% by weight........

Methyl ethyl ketone............... 6714 35% by volume........ Limit applies to methyl ethyl ketone or

any combination of acetone, ethyl

ether, methyl ethyl ketone, methyl

isobutyl ketone and toluene if present

in the mixture by summing the

concentrations for each chemical.

[[Page 49516]]

Methyl isobutyl ketone............ 6715 35% by volume........ Limit applies to methyl isobutyl ketone

or any combination of acetone, ethyl

ether, methyl ethyl ketone, methyl

isobutyl ketone and toluene if present

in the mixture by summing the

concentrations for each chemical.

Potassium permanganate............ 6579 15% by weight........

Sulfuric acid..................... 6552 20% by weight........ Aqueous solutions are not considered

mixtures.

Toluene........................... 6594 35% by volume........ Limit applies to toluene or any

combination of acetone, ethyl ether,

methyl ethyl ketone, methyl isobutyl

ketone and toluene if present in the

mixture by summing the concentrations

for each chemical.

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

(d) The following categories of chemical mixtures are automatically

exempt from the provisions of the Controlled Substances Act as

described in paragraph (a) of this section:

(1) Chemical mixtures that are distributed directly to an

incinerator for destruction and are subject to the United States

Environmental Protection Agency documentation on EPA Form 8700-22 and

8700-22A, provided that the person distributing the mixture to the

incinerator maintains and makes available to agents of the

Administration upon request such documentation for a period of no less

than two years.

(2) Completely formulated paints/coatings that meet the American

Society for Testing Materials specifications for the product. A

completely formulated paint/coating are only those formulations that

contain all the components of the paint/coating for use in the final

application without the need to add any additional substances except

possibly a thinner. A completely formulated paint or coating is defined

as any clear or pigmented liquid, liquefiable or mastic composition

designed for application to a substrate in a thin layer that is

converted to a clear or opaque solid protective, decorative or

functional adherent film after application.

(3) Harvested plant material that is in its natural state or has

been processed in a way that preserves the natural constituents in the

ratios that are found in the plant's natural state. Plant material

subjected to chemical or physical extraction, concentration, chemical

reaction or other treatment that alters the plant's natural

constituents or the ratios of the plant constituents are not exempt.

(e) The Administrator may at any time terminate or modify the

exemption for any chemical mixture which has been granted an exemption

pursuant to the concentration limits as specified in Sec. 1310.12(c);

or the exemption provisions for specific categories of chemical

mixtures as specified in Sec. 1310.12(d), if evidence of diversion or

attempted diversion is found. In terminating or modifying an exemption,

the Administrator shall issue and publish in the Federal Register

notification of the removal of an exempt product or group of exempt

products for which evidence of diversion has been found. This order

shall include a reference to the legal authority under which the order

is based and shall specify the date on which the termination of

exemption shall take effect. The Administrator shall permit any

interested party to file written comments on or objections to the order

within 60 days of the date of publication of the order in the Federal

Register. If any such comments or objections raise significant issues

regarding any finding of fact or conclusion of law upon which the order

is based, the Administrator shall immediately suspend the effectiveness

of the order until he may reconsider the order in light of comments and

objections filed. Thereafter, the Administrator shall reinstate,

terminate, or amend the original order as determined appropriate.

(f) The Administrator may upon evidence of diversion or attempted

diversion modify any part of the criteria for exemption as specified in

Sec. 1310.12(c) and Sec. 1310.12(d). In doing so, the Administrator

shall issue and publish a Notice of Proposed Rulemaking in the Federal

Register. The Administrator shall permit any interested persons to file

written comments on or objections to the proposal. After considering

any comments or objections filed, the Administrator shall publish in

the Federal Register a final order.

Sec. 1310.13 Exemption of chemical mixtures; application.

(a) The Administrator may, by publication of a Final Rule in the

Federal Register, exempt from the application of all or any part of the

Act, a chemical mixture consisting of two or more chemical components,

at least one of which is not a List I or List II chemical, if:

(1) The mixture is formulated in such a way that it cannot be

easily used in the illicit production of a controlled substance; and

(2) The listed chemical or chemicals contained in the chemical

mixture cannot be readily recovered.

(b) Any manufacturer seeking an exemption for a chemical mixture,

not exempt under Sec. 1310.12, from the application of all or any part

of the Act, pursuant to paragraph (a) of this section, may apply to the

Administrator, Drug Enforcement Administration, Department of Justice,

Washington, D.C. 20537.

(c) An application for exemption under this section shall contain

the following information:

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

applicant;

(2) The date of the application;

(3) The exact trade name(s) of the applicant's chemical mixture

and, if the applicant formulates or manufactures the chemical mixture

for other entities, the exact trade names of the chemical mixtures and

the names of the entities for which the chemical mixtures were

prepared;

(4) The complete qualitative and quantitative composition of the

chemical mixture (including all listed and all non listed chemicals)

and its intended use;

(5) The chemical and physical properties of the mixture and how

they differ from the properties of the listed chemical or chemicals;

(6) A statement which the applicant believes is justification for

granting an exemption for the chemical mixture. The statement must

explain how the chemical mixture meets the exemption criteria set forth

in paragraph (a) of this section.

(7) The application will include a statement that the applicant

accepts the right of the Administrator to terminate exemption from

regulation for the chemical mixture granted exemption

[[Page 49517]]

under Sec. 1310.13 if evidence of diversion of the mixture, or similar

mixture, is found.

(8) The identification of any information on the application which

is considered by the applicant to be a trade secret or confidential and

entitled to protection under U.S. laws restricting the public

disclosure of such information.

(d) The Administrator may require the applicant to submit such

additional documents or written statements of fact relevant to the

application which he deems necessary for determining if the application

should be granted.

(e) Within a reasonable period of time after the receipt of an

application for an exemption under this section, the Administrator will

notify the applicant of acceptance or nonacceptance of the application.

If the application is not accepted, an explanation will be provided.

The Administrator is not required to accept an application if any

information required pursuant to paragraph (c) of this section or

requested pursuant to paragraph (d) of this section is lacking or not

readily understood. The applicant may, however, amend the application

to meet the requirements of paragraphs (c) and (d) of this section. If

the exemption is granted the applicant shall be notified in writing and

the Administrator shall issue and publish in the Federal Register an

order on the application, which shall include a reference to the legal

authority under which the order is based. This order shall specify the

date on which it shall take effect. The Administrator shall permit any

interested persons to file written comments on or objections to the

order. If any comments or objections raise significant issues regarding

any findings of fact or law upon which the order is based, the

Administrator shall immediately suspend the effectiveness of the order

until he has reconsidered the application in light of the comments and

objections filed. Thereafter, the Administrator shall reinstate,

terminate, or amend the original order as deemed appropriate.

(f) The Administrator may at any time terminate or modify any

product or product line granted an exemption pursuant to paragraph (e)

of this section. In terminating or modifying an exemption, the

Administrator shall issue and publish in the Federal Register

notification of the removal of an exempt product or group of exempt

products for which evidence of diversion has been found. This order

shall include a reference to the legal authority under which the order

is based and shall specify the date on which the termination of

exemption shall take effect. The Administrator shall permit any

interested party to file written comments on or objections to the order

within 60 days of the date of publication of the order in the Federal

Register. If any such comments or objections raise significant issues

regarding any finding of fact or conclusion of law upon which the order

is based, the Administrator shall immediately suspend the effectiveness

of the order until he may reconsider the order in light of comments and

objections filed. Thereafter, the Administrator shall reinstate,

terminate, or amend the original order as determined appropriate.

(g) Any change in the quantitative or qualitative composition of a

chemical mixture which has been granted an exemption by application

will require a new application for exemption unless such change causes

the newly formulated mixture to be automatically exempt by definition

in Sec. 1310.12. A new application is not necessary for a change in

name or other designation, code, or any identifier. For such changes or

additions a written notification is required. The DEA must be notified

of any changes at least 60 days in advance of the effective date for

the change.

(h) Each manufacturer which desires a mixture to be exempt must

apply separately as only those products specifically named in this

exempted category will be recognized. Companies which have similar

products to those in an exempted category must request and receive

separate approval for their product line.

(i) The following chemical mixtures, in the form and quantity

listed in the application submitted (indicated as the ``date'') are

designated as exempt chemical mixtures for the purposes set forth in

this section:

Exempt Chemical Mixtures

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

Product

Manufacturer name Form Date

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

[Reserved]................................ ........ ........ ........

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

Dated: September 1, 1998.

Donnie R. Marshall,

Acting Deputy Administrator.

[FR Doc. 98-24293 Filed 9-15-98; 8:45 am]

BILLING CODE 4410-09-M