[Federal Register Volume 69, Number 240 (Wednesday, December 15, 2004)]
[Rules and Regulations]
[Pages 74957-74973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27449]



[[Page 74957]]

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1310

[Docket No. DEA-137F2]
RIN 1117-AA31


Exemption of Chemical Mixtures

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule with request for comment.

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SUMMARY: On September 16, 1998, the Drug Enforcement Administration 
(DEA) published a Notice of Proposed Rulemaking (NPRM) (63 FR 49506) 
that proposed new regulations concerning chemical mixtures that contain 
any of the 34 listed chemicals subject to DEA control at that time. The 
NPRM was the initial step toward implementation of Controlled 
Substances Act (CSA) provisions that require that only those chemical 
mixtures identified by regulation be exempt from applicable regulatory 
controls. This Final Rule will implement regulations that define those 
chemical mixtures that qualify for automatic exemption for 27 of the 34 
listed chemicals addressed in the NPRM.
    Under separate rulemaking (68 FR 23195) DEA has finalized 
regulations pertaining to six of the listed chemicals addressed in the 
initial NPRM. That rulemaking specifies those chemical mixtures 
qualifying for automatic exemption based upon specific exemption 
categories and concentration limits. That rulemaking also finalized an 
application process for chemical mixtures that do not qualify for 
automatic exemption.
    This Final Rulemaking will add a new provision not previously 
raised in the NPRM. This newly introduced provision will exempt from 
the recordkeeping and reporting requirements both domestic and import 
transactions in mixtures containing the List II chemicals acetone, 
ethyl ether, 2-butanone, and toluene. Because this exemption was not 
discussed in the NPRM published on September 16, 1998, DEA is 
implementing this exemption on an interim basis and requests public 
comment with respect to only this exemption.

DATES: This Final Rule is effective January 14, 2005. Persons seeking 
registration must apply on or before February 14, 2005, in order to 
continue their business pending final action by DEA on their 
application. DEA is seeking comments on new Section 1310.08(l) only. 
Written comments must be postmarked, and electronic comments must be 
sent, on or before January 14, 2005.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-137F2'' on all written and electronic correspondence. 
Written comments being sent via regular mail should be sent to the 
Deputy Administrator, Drug Enforcement Administration, Washington, DC 
20537, Attention: DEA Federal Register Representative/CCD. Written 
comments sent via express mail should be sent to DEA Headquarters, 
Attention: DEA Federal Register Representative/CCD, 2401 Jefferson-
Davis Highway, Alexandria, VA 22301. Comments may be directly sent to 
DEA electronically by sending an electronic message to 
<a href="/cdn-cgi/l/email-protection#2c48494d0248455a495e5f454342025c4340454f556c595f484346024b435a"><span class="__cf_email__" data-cfemail="583c3d39763c312e3d2a2b31373676283734313b21182d2b3c3732763f372e">[email protected]</span></a>. Comments may also be sent 
electronically through http://www.regulations.gov using the electronic 
comment form provided on that site. An electronic copy of this document 
is also available at the http://www.regulations.gov Web site. DEA will 
accept attachments to electronic comments in Microsoft word, 
WordPerfect, Adobe PDF, or Excel file formats only. DEA will not accept 
any file format other than those specifically listed here.

FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, Ph.D., Chief, 
Drug & Chemical Evaluation Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, DC 20537, telephone (202) 307-
7183

SUPPLEMENTARY INFORMATION:

I. Background

Historical Legal Status of Chemical Mixtures

    The Chemical Diversion and Trafficking Act of 1988 (Pub. L. 100-
690) (CDTA) created the definition of ``chemical mixture'' (21 U.S.C. 
802(40)), and exempted chemical mixtures from regulatory control. The 
CDTA established 21 U.S.C. 802(39)(A)(v) to exclude ``any transaction 
in a chemical mixture'' from the definition of a ``regulated 
transaction.'' The exemption of all chemical mixtures, however, 
provided traffickers with an unregulated source for obtaining listed 
chemicals for use in the illicit manufacture of controlled substances.
    To remedy this situation, the Domestic Chemical Diversion Control 
Act of 1993 (DCDCA), enacted in April 1994, subjected chemical mixtures 
containing listed chemicals to CSA regulatory requirements, unless 
specifically exempted by regulation. The DCDCA, therefore, subjected 
all regulated chemical mixtures to recordkeeping, reporting, and 
security requirements of the CSA. Additionally, the DCDCA added a 
registration requirement for handlers of regulated List I chemical 
mixtures.
    The DCDCA, however, also amended 21 U.S.C. 802(39)(A)(v) to provide 
the Attorney General with the authority to establish regulations 
exempting chemical mixtures from the definition of a ``regulated 
transaction'' ``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'' (21 U.S.C. 
802(39)(A)(v)). This authority has been delegated to the Administrator 
of DEA by 28 CFR 0.100 and redelegated to the Deputy Administrator 
under 28 CFR 0.104 (Subpart R) Appendix Sec. 12.
    Prior to publication of a final rulemaking, chemical mixtures 
containing listed chemicals have been treated as exempt from CSA 
regulatory control. This final rulemaking specifies criteria used to 
determine whether chemical mixtures qualify for automatic exemption 
from CSA chemical regulatory controls. Those chemical mixtures that do 
not meet the exemption criteria shall be treated as regulated chemicals 
and therefore subject to CSA chemical regulatory controls.
    Since DEA recognizes that concentration or category criteria alone 
cannot identify all mixtures that warrant exemption, an application 
process has been implemented in 21 CFR 1310.13. This process, finalized 
in a Final Rule published in the Federal Register at 68 FR 23195 (May 
1, 2003), allows manufacturers to apply for exemption from CSA 
regulatory controls, for those chemical mixtures that do not qualify 
for automatic exemption.

Chemical Mixture Definition

    21 U.S.C. 802(40) defines the term ``chemical mixture'' 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.'' 
Therefore, a chemical mixture contains any number of listed chemicals 
along with any number of non-listed chemicals. A combination of only 
listed chemicals is, therefore, not a chemical mixture pursuant to CSA 
definition. As such, the regulatory controls pertaining

[[Page 74958]]

to each individual listed chemical are applicable.
    DEA does not consider a chemical mixture to mean the combination of 
a listed chemical in an inert carrier. An inert carrier can be any 
chemical that does not interfere with the listed chemical's function 
but is present to aid in the delivery of the listed chemical so it can 
be used in some chemical process. Examples include, but are not limited 
to, solutions of listed chemicals such as methylamine in water or 
hydrogen chloride dissolved in water or alcohol. Sassafras oil, an 
essential oil mostly consisting of safrole, is not regarded as a 
chemical mixture containing safrole. It is regulated as the List I 
chemical safrole. These examples have always been treated as listed 
chemicals and are not new to this rulemaking. Persons who question if 
their formulations are chemical mixtures should contact DEA for 
guidance.

Federal Register Publications Pertaining to Chemical Mixture Exemption

    Regulations regarding the exemption of chemical mixtures were 
initially proposed by DEA on October 13, 1994 as part of its proposed 
regulations to implement the DCDCA (59 FR 51888). In response to 
industry concerns, the proposed regulations were withdrawn on December 
9, 1994 (59 FR 63738).
    DEA proposed new regulations regarding the exemption of chemical 
mixtures by publishing a new NPRM entitled ``Exemption of Chemical 
Mixtures'' on September 16, 1998 (63 FR 49506). DEA proposed the 
following three-tiered approach to identify which chemical mixtures 
qualify for automatic exemption: (1) It contains a listed chemical at 
or below an established concentration limit; or (2) it falls within a 
specifically defined category; or (3) the manufacturer of the mixture 
applies for and is granted a specific exemption for the product.
1. Concentration Limits
    DEA proposed that each chemical be assigned a concentration limit 
that, if found at or below the limit, will cause the mixture to be 
treated as a non-regulated chemical. This quantitative approach is 
considered necessary in order to simplify the method of identifying 
regulated chemical mixtures. Identifying regulated chemical mixtures by 
narrative is impractical due to the variety of chemical products. These 
concentration limits are expected to exempt the vast majority of 
chemical mixtures containing listed chemicals.
2. Exemption Categories
    DEA also proposed the creation of three specific categories of 
automatic exemption. They are (1) waste materials regulated by the 
Environmental Protection Agency (EPA); (2) fully formulated paints and 
coatings; and (3) harvested plant material. A chemical mixture that 
falls into one of these three categories is exempt regardless of the 
amount of listed chemical it contains.
    Waste materials were proposed as an exempt category provided there 
is documentation on EPA Form 8700-22 (Uniform Hazardous Waste Manifest) 
and the materials are being distributed to another person solely for 
the purpose of disposal by incineration. 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 is available for inspection and copying by DEA.
    Completely formulated paints and coatings were proposed for 
exemption because they contain ingredients, such as pigments, and other 
components, which render them unsuitable to traffickers. Proposed for 
inclusion in this category were paints, clear coats, topcoats, primers, 
varnishes, sealers, adhesives, lacquers, stains, shellacs, inks, and 
temporary protective coatings.
    The final proposed exempt category is harvested plant material. 
Harvested plant material that contains listed chemicals, while meeting 
the definition of a chemical mixture, was proposed for exemption if the 
plant material is not concentrated or changed from its natural state. 
This provision was finalized in a Federal Register Notice (68 FR 23195) 
published May 1, 2003. Harvested plant material refers to the plant 
itself and not material growing on a plant, such as Ergot, a source for 
the List I chemicals ergonovine and ergotamine.
3. Exemption by Application Process
    As stated above, DEA recognizes that the concentration limit and 
category exemption criteria cannot identify all mixtures that should 
receive exemption status. DEA has implemented an application process to 
exempt additional mixtures (21 CFR 1310.13). This application process 
was also finalized in the Federal Register Notice (68 FR 23195) 
published May 1, 2003. Under the application process manufacturers may 
submit an application for exemption for those mixtures that do not 
qualify for automatic exemption. Exemption status can be granted if DEA 
determines that the mixture is formulated in such a way that it cannot 
be easily used in the illicit production of a controlled substance and 
the listed chemical cannot be readily recovered (i.e., it meets the 
conditions in 21 U.S.C. 802(39)(A)(v)). An application may be for a 
single or a multiple number of formulations.

Actions Being Taken in This Final Rule

a. Exemption Based on Concentration Limits for Each Listed Chemical
    While the September 16, 1998 NPRM (63 FR 49506) pertained to the 
regulation of chemical mixtures which contain any of 34 listed 
chemicals subject to DEA control, this rulemaking finalizes only those 
portions of the NPRM pertaining to the 27 chemicals given in The Table 
of Concentration Limits provided in this rulemaking (hereafter referred 
to as ``The Table''). Six of the 34 listed chemicals--ephedrine, N-
methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, 
phenylpropanolamine, and pseudoephedrine--were addressed in a separate 
rulemaking (68 FR 23195, May 1, 2003). Concentration limits for the 
List I chemical iodine, which were proposed to be established as part 
of the September 16, 1998 rulemaking, will be addressed in a separate 
rulemaking.
    A concentration limit is established for each listed chemical 
provided in The Table. If the concentration of the listed chemical is 
at or below the limit, then the mixture will be automatically exempted 
and treated as a non-regulated chemical mixture. The Table also gives 
conditions for calculating the concentration limit.
    The concentration limits are being finalized as proposed, except 
those for the chemicals benzaldehyde, anthranilic acid, and 
phenylacetic acid. The concentration limits for these three chemicals 
are being increased from the limits which were proposed.
    One comment, which DEA received in response to the NPRM, informed 
DEA that there are a significant number of chemical mixtures in 
anthranilic acid and phenylacetic acid that could be regulated at the 
proposed concentration limit of 20 percent. Since DEA determined that 
these chemical mixtures do not pose a significant risk of being 
diverted, the DEA is increasing the concentration limit to 50 and 40 
percent for anthranilic acid and phenylacetic acid, respectively. The 
comment also suggested increasing the concentration limit for 
benzaldehyde from 35 percent to 85 percent. However, the DEA determined 
that chemical mixtures containing greater than 50 percent benzaldehyde 
are at risk of diversion. Therefore, in order to

[[Page 74959]]

minimize the risk of diversion and provide the maximum amount of 
regulatory relief, the concentration limit for benzaldehyde is being 
finalized at 50 percent (for a discussion see Part II Comment Section 
11. Exempt Formulations Used as Flavor and Fragrances).
b. Exemption by Category
    Two categories that were originally proposed as exempt categories 
of chemical mixtures are distributions to waste disposal facilities and 
completely formulated paints and coatings. These categories may contain 
chemical mixtures that have listed chemical(s) above the established 
concentration limits. However, DEA believes that chemical mixtures in 
these categories are not likely to be diverted.
    Based on comments to the NPRM, DEA modified these categories from 
those originally proposed. The proposed category that includes 
transportation of chemical waste has been modified to include chemical 
mixtures intended for recycling. Added are distributions to waste 
recycling facilities that have a ``paper trail'' as required by the 
United States Environmental Protection Agency.
    The category of paints and coatings is modified to make it clear 
that inks are included in the category. Inks were intended to be 
included, however, a comment pointed out that the inclusion of inks 
could be overlooked under the proposed wording. A comment raised 
concern over distributions of multiple-component paint systems, which 
are not included in this category because they are not completely 
formulated. The DEA agrees that multiple-component paint systems are 
not likely to be diverted in domestic and import transactions. DEA is 
introducing an interim rule that addresses this concern and provides 
regulatory relief for chemical mixtures that are not at risk of 
diversion (see below).
c. Introduction of A New Category of List II Chemical Mixtures as an 
Interim Rule
    Based on comments and DEA's analysis of the potential for 
diversion, this Final Rule also adds a new exemption category. Comments 
informed DEA of a significant number of distributions that may not be 
exempt under the proposed regulations. DEA determined that certain 
solvent based mixtures involving silicon-based products, paint-related 
materials, and other solvent-based chemical mixtures containing 
acetone, ethyl ether, 2-butanone, and toluene are not likely to be 
diverted domestically. These solvent chemicals are mostly a concern 
because they are used in cocaine and heroin processing, which occurs 
outside the United States. These chemical mixtures pose a risk of 
diversion for international transactions for which the requirement of 
21 U.S.C. 802(39)(A)(v) is not met.
    Therefore, DEA is creating a new exemption category for these 
mixtures. Domestic and import transactions in chemical mixtures that 
are regulated solely due to the presence of the List II solvent 
chemicals acetone, ethyl ether, 2-butanone, or toluene are removed from 
the definition of a regulated transaction by adding a new paragraph to 
21 CFR 1310.08. Methyl isobutyl ketone, also a List II solvent 
chemical, is not included because domestic and import transactions in 
that chemical have already been excluded from the definition of a 
regulated transaction at 21 CFR 1310.08.
    DEA is exempting domestic and import transactions in these chemical 
mixtures under 21 CFR 1310.08 pursuant to 21 U.S.C. 802(39) (A) (iii) 
because regulation of such transactions has been determined to be 
unnecessary for the enforcement of the CSA. DEA determined that there 
is not a significant risk of domestic diversion for these chemical 
mixtures. However, exports of these chemical mixtures could have 
significant potential for diversion. Therefore, these chemical 
mixtures, unless otherwise exempt, are subject to the export 
requirements of the CSA. Mixtures containing these List II chemicals 
will not qualify for automatic exemption if the mixture also contains 
another listed chemical above its concentration limit.
    This new exemption (for domestic and import transactions in 
chemical mixtures containing the List II chemicals acetone, ethyl 
ether, 2-butanone, and toluene) was not discussed in the original NPRM. 
Therefore, this exemption will be implemented on an interim basis with 
opportunity for public comment. DEA is soliciting comments only on this 
portion of this final rule. After close of this comment period, DEA 
will publish a Final Rule in the Federal Register to inform interested 
persons if changes are needed or if this regulation will be adopted as 
written.

Other Actions Taken in This Rulemaking

    In addition, other modifications to the original proposed 
regulations are being made. All references to the American Society for 
Testing Materials have been removed and the manufacturers are being 
allowed to determine the unit of measurement in calculating the 
concentration limit for liquid chemicals. These modifications were 
suggested in the comments and DEA agrees that they should be 
implemented.

Chemical Mixture Issues Not Being Addressed in the Rulemaking

a. Iodine
    DEA received comments that chemical mixtures containing seven 
percent iodine are being diverted for the illicit manufacture of 
methamphetamine. Methamphetamine is an addictive Schedule II controlled 
substance and is the primary controlled substance clandestinely 
produced in the United States. It is regarded by DEA as a major threat 
to public health and safety.
    DEA proposed a 20 percent concentration limit for iodine. This 
proposed amount is consistent with the proposed concentration limit for 
other listed chemicals that are used as reagents, as is iodine. Prior 
to the publication of the NPRM and while DEA was formulating the 
proposed regulations, seven percent iodine chemical mixtures were not a 
concern to law enforcement. Although DEA theorized that seven percent 
iodine solutions have the potential to be diverted, DEA lacked 
sufficient evidence to show that these chemical mixtures were being 
diverted prior to establishing the proposed concentration limit.
    In addition to information obtained from law enforcement, public 
sources, and communication with the regulated community, DEA relies on 
comments to the NPRM to help establish regulations. DEA was informed 
that seven percent iodine chemical mixtures are being used in the 
illicit manufacture of methamphetamine. The proposed concentration 
limit of 20 percent is high relative to the concentration of iodine 
contained in mixtures used by traffickers. The approach of the proposed 
rule dictates that the concentration limit be lowered to assure that 
chemical mixtures desirable to traffickers are not automatically 
exempt. Persons who may not have commented on the 20 percent 
concentration limit may have comments on this relatively lower 
concentration limit. In order to ensure that the public has adequate 
opportunity for comment, the DEA is addressing issues relating to the 
regulation of iodine chemical mixtures in a separate NPRM.
b. Ephedrine Alkaloids
    In a separate final rule (68 FR 23195, May 1, 2003), DEA finalized 
those portions of the NPRM pertaining to the

[[Page 74960]]

six List I chemicals ephedrine, N-methylephedrine, N-
methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and 
pseudoephedrine. Like the approach taken in this rulemaking, that Final 
Rule established a concentration limit for each of the above List I 
chemicals. The exempt category of harvested plant material was also 
finalized in that rulemaking.
c. Gamma-butyrolactone (GBL) and Phosphorus-Related Compounds
    This rulemaking does not address the List I chemicals gamma-
butyrolactone (GBL), red phosphorus, white phosphorus, or 
hypophosphorous acid and its salts. When the NPRM ``Exemption of 
Chemical Mixtures'' was published, they were not listed chemicals. 
Therefore, regulations to exempt their chemical mixtures were not 
proposed. DEA will address provisions concerning GBL and the above 
phosphorus chemicals in separate Federal Register publications.
    To that end, on July 19, 2002, DEA published an Advance Notice of 
Proposed Rulemaking soliciting comments from the regulated industry 
regarding chemical mixtures containing GBL (67 FR 47493; corrected at 
67 FR 53842, August 19, 2002; corrected at 67 FR 56776, September 5, 
2002). DEA also published an Advance Notice of Proposed Rulemaking 
soliciting industry comment regarding chemical mixtures containing 
listed forms of phosphorus (68 FR 4968, January 31, 2003). Based on 
comments received from these publications, DEA will develop regulations 
concerning chemical mixtures containing GBL and the phosphorus 
chemicals.

II. Comments Received Regarding the Proposed Regulations

    DEA received fourteen comments in response to the NPRM which was 
published September 16, 1998 (63 FR 49506). Five comments were from 
industry related membership organizations, three from law enforcement 
organizations, and the remaining from commercial interests.

Comment Summary

    In general, the comments supported efforts by DEA to regulate 
chemical mixtures that have potential use to drug traffickers. Some 
comments requested that DEA exempt an additional category or increase 
some concentration limits. Comments also suggested that mixtures be 
exempted based on the type of distribution. Other comments requested 
clarification or suggested ways to ease compliance.

Specific Comments

    1. Reference to the American Society for Testing Materials (ASTM): 
ASTM is a not-for-profit organization that develops test methods, and 
other criteria, with application to 130 areas. Reference to ASTM was 
made in the NPRM section that proposed the exemption of paints/
coatings. That section stated that a paint/coating would be exempt if, 
among other things, it met the ASTM specifications for the product. 
This statement was included to help authenticate the product. 
Authenticity is desired by DEA to prevent this category from being used 
by traffickers as a loophole. However, DEA was informed that such a 
requirement is not practical.
    Although the manufacturer can use some test methods to insure 
quality control, the methods are not definitive in qualifying a 
product. Not all paints/coatings are necessarily subject to these test 
methods in order to be marketed as an authentic product.
    DEA was also informed that ASTM standards are not written to cover 
all applications. Some products can have unique applications where ASTM 
standards are not applicable. Therefore, in response to the comments, 
DEA is removing all references to the ASTM requirement. This action 
does not alter the basic definition of ``completely formulated,'' which 
determines whether such products are automatically exempt.
    2. Request to exempt small container transactions: Three persons 
suggested that DEA exempt chemical mixtures based on container size. 
One comment requested that DEA consider a minimum container volume 
limit to which the rule does not apply. The commenter questioned 
whether the rule applies to a 1-ml vial or a 3-ounce tube. A second 
comment suggested that mixtures of List II solvents in containers of 
five gallons or less be exempt from regulation. A third comment 
suggested that transactions in 55-gallon size containers and less 
should be exempt.
    DEA has considered the request to exempt transactions of regulated 
chemicals based on container size. DEA determined that traffickers have 
and could divert regulated chemicals if packaged in small containers. 
Therefore, an exemption based on container size will not be added.
    DEA regulates transactions of chemicals that are desirable to 
traffickers, in part, by establishing thresholds. Thresholds are 
established so that records do not have to be maintained for certain 
transactions, i.e., those below the threshold to a single customer 
within a calendar month. The thresholds for export of the List II 
solvent chemicals acetone, ethyl ether, 2-butanone, methyl isobutyl 
ketone, and toluene are considered large enough that distributions in 
small container sizes are not likely to be above the established 
threshold.
    The threshold is meant to allow smaller volume distributions 
without the imposition of regulatory controls. However, the threshold 
can be easily reached using gallon size containers, including five and 
55-gallon containers. DEA determined that adopting this suggestion 
would result in unlimited non-regulated export of chemicals desired by 
traffickers, especially those chemicals desired by cocaine traffickers.
    3. Request to adopt a single concentration limit for List II 
chemicals: Three comments requested that List II chemicals be assigned 
a single concentration limit of 35 percent. They believed this would 
allow for better compliance and management of inventory by simplifying 
the process.
    DEA proposed that the List II solvent chemicals, which have the 
same basic application, be assigned the same concentration limit. The 
chemicals acetone, ethyl ether, 2-butanone, methyl isobutyl ketone, and 
toluene all function as solvents. These chemicals have been identified 
to be responsible for the greatest number of List II chemical mixtures, 
some of which may be regulated. This group of chemicals already has 
been assigned a single concentration limit of 35 percent. Thus, the 
argument to ease compliance with a uniform concentration limit is 
addressed by the single value for these chemicals having the same basic 
application.
    The chemicals acetic anhydride and benzyl chloride can be 
considered precursors while hydrochloric acid, iodine, and sulfuric 
acid function as reagents. Except for iodine, which is being addressed 
in a separate NPRM, these are assigned the single concentration limit 
of 20 percent. Potassium permanganate, also a reagent, is assigned the 
concentration limit of 15 percent. The limit is lower for this chemical 
because DEA has not identified any legitimately produced chemical 
mixture containing potassium permanganate greater than 15 percent.
    After careful consideration, DEA decided not to change the 
concentration limit for all List II chemicals to 35 percent. Concerns 
regarding compliance are mostly addressed because the concentration 
limits are the same for List II chemicals that have similar functions. 
In addition, other comments

[[Page 74961]]

have raised the issue of iodine and hydrochloric acid as having 
application to the manufacture of illicit substances at a lower 
concentration than the proposed concentration limit.
    4. Request to allow companies to choose the unit of measure to 
calculate the percent concentration: Two comments suggested that each 
manufacturer should be allowed to determine the unit of measurement to 
use when calculating the percent concentration. There appears to be no 
commercial standard practice that predisposes that a chemical is 
measured by weight or by volume when formulating a mixture. These 
persons are concerned about the possible administrative impact of 
forcing manufacturers to convert existing and extensive records and 
chemical record systems.
    The amount of chemical present in a mixture can vary depending on 
the unit used to measure the chemical when formulating. Chemicals can 
be measured in units of weight or volume. The numerical values of 
weight and volume for chemicals are not usually equal. Therefore, a 
mixture reporting the concentrations of a chemical can actually contain 
different amounts of the chemical, depending on whether the 
concentration is based on weight or volume.
    The comments informed DEA that some manufacturers might already 
have procedures in place to calculate the concentration. They state 
that converting from one unit to another is burdensome. DEA has 
considered this and decided that manufacturers should determine the 
unit of measure when formulating liquid mixtures. Therefore, a 
formulation containing liquid chemicals may have a concentration based 
on the volume or the weight of the chemicals contained.
    DEA determined that accurate measurement of solids and gases by the 
unit of volume is not practical. Therefore, solids and gases should be 
calculated by unit of weight. The ``Table of Concentration Limits'' is 
being amended to reflect this modification.
    5. Request for clarification of issues relating to internal 
transfer and research and development: Two persons requested 
clarification on issues of internal transfers and research and 
development. A third person asked whether research and development 
activities are exempt from this rule.
    Chemical mixtures that do not qualify for automatic exemption are 
regarded and treated like listed chemicals. The term ``regulated 
transaction'' as defined in 21 U.S.C. 802(39), excludes ``a domestic 
lawful distribution in the usual course of business between agents or 
employees of a single regulated person.'' Therefore, such internal 
transfers are not regarded as regulated transactions. However, one must 
understand what a regulated person is to understand what transactions 
are regulated.
    The definition of a ``regulated person'' is given in 21 U.S.C. 
802(38) and means a person who manufactures, distributes, imports, or 
exports a listed chemical. The term ``distribute'' and ``distributor'' 
are defined in 21 U.S.C. 802(11). By definition, a distribution occurs 
when a listed chemical is delivered while a distributor is the person 
who makes the delivery.
    21 U.S.C. 822(e) requires that each site which handles a List I 
chemical must have a separate registration. Each registered location is 
regarded as a ``regulated person.'' A distribution of List I chemicals 
between separate locations, even if owned by the same person, fulfills 
the definition in 21 U.S.C. 802(11). Therefore, above threshold 
distributions of List I chemicals between separately registered sites 
are regulated transactions as defined in 21 U.S.C. 802(39).
    However, different locations that do not require separate 
registration are regarded as a single ``regulated person'' if owned by 
a single business. Because separate site registration for handling List 
II chemicals is not required, distributions of List II chemicals 
between sites owned by a single person are not regulated transactions.
    The CSA does not include provisions that exempt the distribution of 
listed chemicals if associated with research and development. If a 
regulated mixture is distributed at or above threshold quantities, even 
for the purpose of research and development, the transaction is 
regulated.
    6. Request for publication of Chemical Abstract Service numbers for 
listed chemicals: Two persons requested that Chemical Abstract Service 
(CAS) numbers be published for listed chemicals in the ``Table of 
Concentration Limits.'' The commenter stated that CAS numbers are used 
worldwide by industry and should be listed to simplify the 
identification of listed chemicals.
    Although the CAS numbers are used throughout industry and specific 
to a chemical, DEA believes that publishing these numbers in the Code 
of Federal Regulations (CFR) may not be beneficial. CAS numbers are 
specific to a given chemical. If a chemical can exist in the form of a 
salt, for example, there is a separate CAS number for each form of the 
salt. Several listed chemicals include their salts, esters, optical 
isomers, and salts of optical isomers. All of these variations have 
individual CAS numbers. DEA believes it is not practical to list all 
such numbers, as the list will be extensive and possibly non-inclusive. 
Listing only the CAS numbers for the specifically named listed 
chemicals may mislead some to believe the list is all-inclusive. 
Therefore, DEA has decided not to publish CAS numbers in the CFR.
    7. Request for category exemption of multiple-component paint 
systems: DEA proposed the exemption of paints/coatings only if the 
product is ``completely formulated.'' ``Completely formulated'' is 
defined in the proposed rule as ``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 substance except 
possibly a thinner.''
    DEA proposed the exemption of completely formulated paints/coatings 
because these products are complex, high density mixtures having 
several components, including pigments, binders, curing agents, and 
other chemicals in a single system. The numerous additives that make up 
a substantial bulk of the formulation deter the use of these mixtures 
in an illicit operation. In addition, completely formulated paints cure 
upon exposure to air or heat, rendering them unusable by traffickers.
    One comment argued that some paints actually consist of multiple 
components. Multiple-component paint systems consist of one or more 
separate formulations of hardeners, activators, catalysts, polymeric 
material, pigments, accelerators, solvents, or other components. A 
single component may contain one or more of these ingredients mixed, 
suspended, emulsified, dissolved, or somehow formulated into a chemical 
mixture containing a List II chemical(s). The List II chemicals are 
typically solvent chemicals in these formulations. The components are 
kept separate because once mixed, the paint begins to cure. Therefore, 
they are mixed just prior to application. The comment claimed that the 
use of any one of these component mixtures in an illicit operation is 
as difficult as using a completely formulated paint.
    DEA was informed that multiple-component paint systems are a 
predominant technology used in the automobile refinishing market. There 
are approximately 60,000 such body shops in the United States; each one 
engages in a large number of domestic transactions each year. The 
mixtures they utilize may contain one or more of the List II solvent 
chemicals acetone,

[[Page 74962]]

ethyl ether, 2-butanone, methyl isobutyl ketone, and toluene.
    DEA has not found significant examples of diversion of these 
chemical mixtures domestically or through imports. However, traffickers 
in other countries have used related formulations. Therefore, DEA will 
exempt domestic and import distributions of mixtures in the List II 
solvent chemicals acetone, ethyl ether, 2-butanone, and toluene from 
the definition of ``regulated transaction.'' Such an exemption for 
domestic and import distributions of methyl isobutyl ketone already 
exists under 21 CFR 1310.08.
    This exemption will not apply if the mixture contains a List I 
chemical or a List II chemical (other than acetone, ethyl ether, 2-
butanone, methyl isobutyl ketone, or toluene) above its established 
concentration limit. This category exempts chemical mixtures used by 
different industries, not only those associated with paints and 
coatings. Therefore, it will be included separately from the category 
of fully formulated paints and coatings.
    This new exemption (for domestic and import transactions in 
chemical mixtures containing the List II chemicals acetone, ethyl 
ether, 2-butanone, and toluene) was not discussed in the original NPRM. 
Therefore, this exemption will be implemented on an interim basis with 
opportunity for public comment. DEA is soliciting comments only on this 
portion of this final rule. Comments should be submitted on or before 
January 14, 2005. After close of this comment period, DEA will publish 
a notice in the Federal Register to inform interested persons if 
changes are needed or if this regulation will be adopted as written.
    Although DEA is establishing this exemption on an interim basis, an 
alternative means to exempt multiple-component paint systems was 
supplied in this comment. It sets a concentration limit for both the 
solid component and for the listed chemical(s). The commenter suggested 
that a chemical mixture be exempt if it contains at least 10 percent by 
weight of solids, including resins, polymers, or film formers, and less 
than 65 percent cumulative weight of List II solvents.
    Although the above suggestion addresses those concerned about 
multiple-component paint systems, it may only partially address similar 
concerns of other sectors. Also, a dual-exemption criterion that 
considers both the concentration of solids and the listed chemical may 
be confusing and difficult for both industry and law enforcement to 
implement. Therefore, DEA decided to create a new category, as 
explained above, to exempt a broader range of mixtures. The new exempt 
category is easily interpreted and is not limited to a single sector 
but all industries that may use these solvents in chemical mixtures.
    A second comment suggested the inclusion of multiple-component 
paint systems in the category of exempt paints and coatings. The 
comment included suggested wording that is similar to the language 
proposed by DEA except that it includes, in addition to completely 
formulated paints, two-part systems. It is anticipated that perceived 
burdens incurred by regulating distributions of multiple-component 
paint systems will be addressed via the creation of the interim 
exemption of domestic and import transactions of the List II solvents 
discussed above.
    8. Silicone products as exempt mixtures: One comment suggested that 
exempt mixtures should include silicone related products. These 
silicone products are manufactured for downstream customers who produce 
end products and could contain List II solvent chemicals. To exempt 
these products, the commenter suggested that the mixture meet three 
criteria: the mixture is produced and distributed (1) through 
sophisticated, well-established channels; (2) in accordance with 
recognized commercial specifications; and (3) for controlled end-use 
applications.
    The comment did not elaborate on how to define these criteria or 
how to identify if a product is produced in compliance with these 
criteria. DEA concluded that these suggestions regarding the exemption 
of silicone products are overly subjective and open to interpretation.
    In attempting to identify silicone products, DEA learned that 
silicone products cannot be clearly distinguished by the chemical 
content alone. Representative formulations submitted by this industry 
show concentrations of up to 99 percent listed chemical. The example 
formulations contain silicone material from less than 1 percent to 75 
percent while some contain no silicone or other solid material. These 
silicone related chemical mixtures are similar to the multiple 
component paint systems discussed above in relation to their risk of 
diversion. DEA has determined that regulation of domestic and import 
transactions are not at significant risk of diversion.
    DEA is establishing provisions, on an interim basis, to exempt all 
domestic and import transactions in the List II chemicals of concern to 
this industry (see above). Some export transactions in these mixtures 
are exempt via the established concentration limit. Therefore, DEA 
decided that there is no need to take additional action to exempt this 
category because most transactions in these mixtures are addressed in 
the interim portion of this rulemaking. Because the exemption is on an 
interim basis, this interest, as well as others, will have the 
opportunity to inform DEA whether this approach is suitable.
    9. Mixtures intended for recycling: One comment stated that the 
exemption category that includes distributions of waste products to 
incinerators does not include distributions to recycling centers. The 
comment suggested including distributions to authorized waste recyclers 
and reprocessors under the category of exempt waste material. DEA 
agrees with this comment.
    Waste materials were proposed as an exempt category provided there 
is documentation on U.S. Environmental Protection Agency (EPA) Form 
8700-22 (Uniform Hazardous Waste Manifest) and the waste materials are 
being distributed to another person solely for the purpose of disposal 
by incineration. 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 is 
available for inspection and copying by DEA.
    The comment cites Department of Transportation (DOT) regulation 49 
CFR 172.205 to show that records are required for waste-recovery 
shipments. Examination of this section shows that DOT requires the same 
EPA Form 8700-22 that was proposed as a requirement for exemption of 
waste product. Therefore, the same ``paper trail'' is in place for 
distributions sent to incinerators or to recyclers. DEA agrees that 
distributions to recycling facilities should be included in the 
category that exempts distributions to incinerators. DEA is amending 
the language of Section 1310.12(d)(2) to expand the category to include 
distribution to recyclers as requested in the comment.
    DEA proposed the exemption of distributions of waste material 
provided a ``paper trail,'' which is required by another agency, 
already exists. Exemption, if to a recycler or incinerator, is 
contingent on the existence of a hazardous waste manifest (EPA form 
8700-22). It will be the generator's responsibility to maintain records 
if EPA does not already require a hazardous waste manifest.
    Although a distribution to a recycling facility may not be a 
regulated

[[Page 74963]]

transaction, recovering a listed chemical from a chemical mixture in a 
recycling process satisfies the term ``manufacture'' as defined at 21 
U.S.C. 802(15). However, this is not new to this rulemaking. Any person 
who performs a manufacturing operation, including the recovery of a 
listed chemical from a chemical mixture, has been bound to applicable 
regulations since their inception.
    The comment also expressed concerns over distributions that are not 
required to have an EPA Form 8700-22 and, therefore, are not 
automatically exempt under this category. DEA decided not to 
categorically exempt all distributions for waste recycling or 
incineration. Such a category would include any combination of listed 
and non-listed chemical. DEA decided that such an exemption category 
could result in diversion of chemicals desirable to traffickers. Such 
distributions shall be regulated unless the transactions meet other 
exemption criteria.
    10. Clarification as to whether chemical mixtures are included in 
21 CFR Part 1313: One comment requested that DEA clarify whether the 
requirements governing the importation, exportation, transshipment and 
in-transit shipment of listed chemicals pursuant to 21 CFR Part 1313 
apply to regulated chemical mixtures.
    The commenter asserted that Part 1313 includes reference to 
``listed chemicals'' but does not specifically include chemical 
mixtures. Therefore, the commenter concluded, mixtures of List II 
chemicals do not appear to be subject to import/export notification 
requirements.
    DEA disagrees. A chemical mixture, if not exempt by regulation or 
the application process, is regarded and treated as a listed chemical 
pursuant to all provisions of the CSA. This includes provisions of 21 
CFR Part 1313.
    The term ``regulated transaction'' means ``a distribution, receipt, 
sale, importation or exportation of, or an international transaction 
involving shipment of, a listed chemical, or if the Attorney General 
establishes a threshold amount for a specific listed chemical, a 
threshold amount, including a cumulative threshold amount for multiple 
transactions * * * of a listed chemical * * *'' (21 U.S.C. 802(39)). 
The term excludes ``any transaction in a chemical mixture which the 
Attorney General has by regulation designated as exempt * * * 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'' (21 U.S.C. 802(39)(A)(v)). The term ``chemical 
mixture'' is defined in 21 U.S.C. 802(40) as a combination of two or 
more chemicals, at least one of which is not a List I or List II 
chemical.
    This rulemaking is finalizing regulations that identify those 
chemical mixtures that the Attorney General designates as exempt. 
Outside of those exemptions, distributions in chemical mixtures, 
including importation, exportation, transshipment, and in-transit 
shipment, are subject to the regulatory controls of the CSA that 
pertain to listed chemicals. This rulemaking establishes that chemical 
mixtures containing listed chemicals are treated as listed chemicals 
unless exempted by regulation.
    11. Request for exemption of formulations used as flavors and 
fragrances: One commenter, representing both the Flavor and Extract 
Manufacturers Association of the United States and the Fragrance 
Materials Association of the United States (hereafter referred to as 
the flavor and fragrance industries), gave arguments as to why their 
mixtures should be exempt from regulatory controls. The commenter 
suggested that the flavor and fragrance industries be exempt by 
category. As an alternative, the commenter suggested that the 
concentration limits for benzaldehyde, anthranilic acid, and 
phenylacetic acid be increased.
    The commenter stated that an industry exemption should be provided 
because of the manner in which the flavor and fragrance industry 
operates. The commenter stated that while manufacturers work closely 
with customers to develop the necessary flavoring or fragrance, 
routinely their formulations are unknown to the customer. The commenter 
asserted that traffickers would not know what to order because the 
trafficker would not know the mixture's composition. Additionally, the 
commenter stated that these mixtures are expensive because of 
developmental costs and therefore, they would not be a practical source 
of precursor chemicals. The commenter also stated that these mixtures 
are not sold to the public but only to manufacturers of foods and 
toiletries. In addition, the commenter claimed that the mixtures are 
complex formulations that make the extraction of listed chemicals, or 
direct use of the mixture impractical.
    DEA agrees that legitimately traded, expensive, and chemically 
complex chemical mixtures, which are marketed under strict self-imposed 
practices, are at a lower risk of diversion. However, these conditions 
may not be universal to all that trade in these commodities. Therefore, 
DEA has decided that exempting these industries would create a loophole 
for traffickers to divert List I chemicals. Under a blanket exemption 
for these industries, any person could distribute any listed chemical 
they use without restriction.
    The comment requested that, as an alternative to a category 
exemption, the concentration limits for benzaldehyde, anthranilic acid, 
and phenylacetic acid be set to 85, 50, and 40 percent, respectively. 
The concentration limits for these chemicals were proposed at 35 
percent for benzaldehyde and 20 percent for anthranilic acid and 
phenylacetic acid. The concentration limit for benzaldehyde was 
proposed higher than the 20 percent proposed for most other precursor 
chemicals because benzaldehyde was known to be used by food flavoring 
manufacturers in higher concentrations than the other chemicals.
    DEA weighed the degree of regulatory relief, as indicated in the 
comment, against the risk of diversion for the chemicals of concern to 
these industries. Based on the comments and an examination of sample 
formulations, DEA concluded that some, but not all, of the conditions 
requested in the comment could be put into regulation without 
significantly increasing the risk of diversion.
i. Concentration Limits for Anthranilic Acid and Phenylacetic Acid
    The commenter indicated that these industries' formulations contain 
no more than 50 and 40 percent of anthranilic acid and phenylacetic 
acid, respectively, and that these formulations are not at risk of 
diversion. This was the only comment concerned with these List I 
chemicals. DEA has not identified these chemicals as being important in 
the formulation of other chemical mixtures. Formulations that use these 
chemicals are complex and not likely to be diverted. Considering these 
facts, DEA has decided to increase the concentration limits for 
benzaldehyde and anthranilic acid to 50 percent and phenylacetic acid 
to 40 percent.
ii. Increasing the Concentration Limit for Benzaldehyde
    The commenter also requested that the concentration limit be 
increased to 85 percent for benzaldehyde. Benzaldehyde is used in 
clandestine operations to make the Schedule II controlled substances 
amphetamine, phenyl-2-propanone, and methamphetamine. It was once the 
chemical of choice in the synthesis of

[[Page 74964]]

methamphetamine. Currently, over 95 percent of the clandestine 
laboratories seized in the United States are methamphetamine 
laboratories. Although the precursor favored in the clandestine 
synthesis of methamphetamine has changed, the demand for 
methamphetamine and increased controls of the current precursor of 
choice is likely to contribute to increased diversion of benzaldehyde 
if it is not carefully regulated.
    DEA considered increasing the concentration limit for benzaldehyde 
from the proposed 35 percent to the suggested 85 percent. However, 
benzaldehyde may be found in simpler formulations than those alluded to 
in the comment, either within the represented industries or other 
sectors. Increasing the concentration limit will impact all sectors of 
the chemical industry, including those conducting commerce with the 
public. Increasing the concentration limit to 85 percent could result 
in unrestricted trade in exempt mixtures useful to traffickers. DEA 
determined that traffickers would seek simpler formulations containing 
benzaldehyde at the suggested concentration limit if there are no 
regulatory controls governing their distribution. DEA regards an 85 
percent concentration limit in benzaldehyde to be significantly high; 
such mixtures are at risk of diversion.
    DEA re-examined the concentration limit for benzaldehyde in light 
of the comment from the flavor and fragrance industries and decided 
that increasing the concentration limit to 50 percent will not 
significantly increase the risk of diversion. The comment stated that 
the types of formulations containing benzaldehyde are as complex as 
those containing anthranilic acid and phenylacetic acid. DEA has not 
identified benzaldehyde chemical mixtures as being used prominently 
outside the flavor and fragrance industry. A 50 percent concentration 
limit is consistent with objectives of this regulation.
    DEA recognizes that benzaldehyde is important to the food flavoring 
industry and sometimes found in formulations at a higher concentration 
than other List I chemicals. However, DEA decided that an 85 percent 
concentration limit is too high, especially in light of the fact that 
it is a chemical used in the illicit manufacture of methamphetamine, 
the primary illicit controlled substance manufactured in the United 
States.
    The comment also expressed concerns regarding the exemption 
application process (Section 1310.13) and claimed that the application 
process is an impractical means to exempt these formulations because 
hundreds or thousands of new formulations are produced monthly and 
formulations are altered continuously. In addition, the industry 
resists revealing their formulations as required in the application, 
because they are closely guarded trade secrets.
    There should be no concern over the need to reapply for each change 
in formulation or revealing details about a formulation. The 
application process is written to alleviate the need to reapply every 
time a formulation changes. A group of mixtures may be exempted within 
a single application. Formulations having identical function and 
containing the same listed chemical(s) can be part of the same group. 
However, not all formulations are required to have the same non-listed 
chemicals to be included in a group. This approach will eliminate the 
need for persons to reapply every time a formulation changes.
    DEA will allow for partial disclosure in the application process of 
a complex chemical formulation. DEA has learned that formulations used 
by the food and flavoring industries sometimes contain several 
chemicals at a concentration of less than one-percent. DEA will accept 
an application without the need to reveal each chemical present at less 
than one-percent. DEA will work with the applicant to obtain enough 
information to make a decision while minimizing the amount of detail 
necessary to process the application.
    DEA notes that information designated as confidential or 
proprietary will be treated accordingly. 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), 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. DEA has a longstanding 
history of protecting such information from unauthorized disclosure.
    12. Comment stating that mixtures of List II solvent chemicals are 
useful to traffickers regardless of the concentration of listed 
chemical: One comment pointed out how chemical mixtures containing List 
II solvent chemicals can be useful to traffickers regardless of the 
concentration. The List II solvent chemicals are acetone, ethyl ether, 
2-butanone, methyl isobutyl ketone, and toluene. They are referred to 
as solvent chemicals because they are liquids generally used to 
dissolve substances.
    The comment argues that mixtures of these chemicals will have the 
same chemical properties that make the pure List II solvent chemicals 
desirable to traffickers. The reason for this is that different liquids 
are miscible (i.e. susceptible of being mixed) if they have similar 
chemical properties that are related to their behavior as solvents. The 
commenter stated that if they mix, the resultant blend must have 
chemical properties similar to the pure List II solvent chemical, 
otherwise, they would not mix in the first place. Therefore, the blend 
could possibly dissolve whatever the listed chemical could dissolve. 
Likewise, if the solvent properties of different liquids are dissimilar 
they may not mix when brought together.
    A well-known example of this behavior is that of oil and water. The 
solvent properties for oil and water are different. Oil dissolves 
different substances than water. When brought in contact, they form 
separate layers. However, mixing water with vinegar, for example, 
causes the two liquids to blend as one. They have similar solvent 
properties. The resulting blend would be expected to dissolve whatever 
the water would dissolve.
    The commenter stated that the same is true for the List II solvent 
chemicals. Mixing them with other liquids may cause separation or 
result in a single blend. If they blend, it means that the mixture has 
some liquid properties that are similar to the listed solvent chemical. 
However, the resultant blend is not exactly the same as the pure listed 
chemical.
    DEA agrees with the comment in principle. However, the higher the 
concentration of listed chemical(s), the more likely it will be that 
the blend will more closely mimic the properties of the listed 
chemical(s). This means that not all mixtures containing List II 
chemical solvents are equally likely to be used in illicit 
laboratories. Thus, regulating all mixtures that contain any amount of 
a List II solvent chemical is unnecessary to reasonably prevent 
diversion. Further, solvent chemicals are mostly a concern because they 
are used in cocaine and heroin processing, which occurs outside the 
United States. Therefore, instead of regulating all chemical mixtures 
containing List II solvent chemicals, DEA will exempt all such domestic 
and import transactions containing the List II solvents acetone, ethyl 
ether, 2-butanone, and toluene from the definition of regulated 
transaction as discussed earlier. The List II chemical methyl isobutyl 
ketone is not included here because its transactions are already 
excluded. Because a chemical mixture regulated due to the presence of a 
List II solvent chemical is expected to mimic the

[[Page 74965]]

solvent properties of the listed chemical, the threshold will be 
calculated based on the amount of the entire mixture and not just the 
amount of listed chemical in the mixture.
    13. Comment stating that traffickers can use twenty-percent 
solutions of hydrochloric acid or sulfuric acid: One comment mentioned 
that both hydrochloric and sulfuric acids are used to isolate 
methamphetamine. For this purpose, a 20 percent solution of either is 
sufficient to carry out an illicit manufacturing operation.
    In response, DEA notes that domestic and import transactions in 
these acids have been excluded from the definition of regulated 
transactions pursuant to 21 CFR 1310.08. Only transactions to 
designated countries identified in that section are defined as 
regulated transactions. Those provisions also apply to mixtures of 
these chemicals. DEA notes that acids dissolved in water, alcohol 
solutions, or other pure solvents, are not regarded as chemical 
mixtures. Therefore, DEA decided not to lower the concentration limit 
for these acids.
    14. Comment stating that multifunctional formulations containing 
sulfuric acid should be an exempt category: One comment requested that 
formulations containing sulfuric acid should be exempt when used in 
industrial applications. DEA regards this category as too broad and, if 
enacted, will create a loophole for unscrupulous persons to traffic in 
mixtures of sulfuric acid that could be used in illicit laboratories. 
Therefore, DEA has determined that this category is inappropriate for 
exemption.
    These types of mixtures, if not useful to traffickers, may be 
exempt pursuant to Section 1310.13 (i.e. the application process). 
Several such mixtures may be exempt as a group under a single 
application, provided the different formulations have the same basic 
function. DEA notes that domestic transactions in sulfuric acid and, 
therefore, its mixtures, are not regarded as regulated transactions 
pursuant to Section 1310.08(a). Section 1310.08(b) regulates only above 
threshold transactions to certain designated countries. In addition, if 
a person consumes a chemical mixture, then that person is an end user. 
End users are not regarded as regulated persons and are not subject to 
chemical regulatory controls.
    15. Comment expressing concern that iodine concentration limit is 
high and does not capture mixtures being used by traffickers: One 
comment believes that the proposed rule does not adequately address the 
regulation of iodine. The DEA has decided to address iodine issues 
under separate rulemaking.
    The comment points out that the most common method for the 
production of methamphetamine on the West Coast utilizes seven-percent 
iodine solution. The comment states that non-traditional customers 
purchasing large quantities of seven-percent iodine solution have 
inundated retailers in Oregon, Washington, California, and Louisiana. 
Another comment stated that clandestine laboratories often use either 
iodine crystals or a seven-percent iodine tincture as a source for 
iodine crystals.
    Seven-percent iodine solution and tincture are regarded as chemical 
mixtures subject to this final rule but are a viable source of iodine 
crystals. Iodine crystals can be readily extracted from these chemical 
mixtures and used in the illicit manufacture of methamphetamine or 
amphetamine. DEA agrees that regulatory action is necessary to prevent 
the illicit use of iodine readily obtained from these sources.
    At the time that the NPRM was being drafted, the DEA did not regard 
iodine chemical mixtures as an important source of iodine crystals. 
Since publication of the NPRM, the use of iodine chemical mixtures as a 
source for iodine crystals increased dramatically. The El Paso 
Intelligence Center (EPIC) maintains a database on clandestine 
laboratories seized by Federal, State, and local law enforcement 
agencies. Although the database does not account for all seizures in 
clandestine laboratories, it serves as an indicator of what is being 
used by traffickers.
    In 1998, the year in which the NPRM was published, EPIC reported 10 
incidences of iodine tincture out of 1,485 for all sources of diverted 
iodine found in illicit methamphetamine laboratories. In 1999, 2000, 
2001, and 2002, the number of iodine tincture seizures compared to the 
number of all forms of diverted iodine reported by EPIC is 71 out of 
2,888; 397 out of 3,432; 1,147 out of 4,734; and 1,619 out of 4,921, 
respectively. These statistics show that iodine tincture is a 
significant source of iodine crystals for the illicit manufacture of 
methamphetamine.
    Based on the comments to the NPRM and the documented diversion of 
certain chemical mixtures containing iodine, the DEA determined that 
the proposed concentration limit for iodine is relatively high compared 
to the concentration found in chemical mixtures useful to traffickers. 
To address adequately the diversion of iodine, DEA must consider new 
approaches other than what was proposed. Therefore, the regulation of 
iodine chemical mixtures is being addressed in a separate NPRM. This 
will give persons an opportunity to comment on any approach DEA 
suggests.
    16. Request for exemption of crime labs from quantitative analysis 
of mixtures: One comment stated that city and county laboratories in 
California perform qualitative analysis for only controlled substances. 
The commenter requested that local crime laboratories be exempt from 
requirements to analyze the contents of non-controlled substances or 
reporting of mixtures.
    DEA has no role in determining such policy. How state and local 
crime laboratories handle their analysis is based on their own policy. 
Because this rulemaking does not impose mandatory testing, exemption is 
not necessary.
    17. Request for exemption of adhesive intermediates under the 
category of paints/coatings: One comment questioned whether solutions 
that are intermediates for the manufacture of adhesives are exempt 
under the category of paints and coatings. These adhesive intermediates 
are formulated as a vehicle for further additions of chemical 
ingredients that will eventually form an adhesive. DEA determined that 
if these solvent mixtures contain listed chemicals above the 
concentration limit, they are regarded as regulated chemicals. They are 
not ``fully formulated'' as required to be exempt under the category of 
paints and coatings and, therefore, not automatically exempt.
    DEA decided not to exempt all chemical mixtures that are used to 
form adhesives because that would include solvent systems containing 
listed chemicals in any concentration. Unscrupulous persons could then 
distribute solvent blends rich in List II chemicals to traffickers 
unchecked. Adhesive mixtures that contain listed chemicals are regarded 
as exempt when they are completely formulated and have less risk of 
diversion. If not exempt, distributions are regulated only if 
distributed at or above threshold quantities.
    DEA does not impose recordkeeping or reporting requirements for 
listed chemicals that are consumed in a manufacturing process (21 CFR 
1310.03(a)). If the blend is converted to an adhesive on-site, then 
transactions in it are not regulated and, because the listed chemical 
is consumed, recordkeeping and reporting requirements are not required. 
In addition, as stated previously, DEA is exempting, on an interim 
basis, domestic and import transactions of mixtures containing the List 
II solvent chemicals that are a concern to this interest.

[[Page 74966]]

    18. Inks as part of the category of paints and coatings: One 
comment requested the inclusion of inks in the category of paints and 
coatings by changing the category to paints, coatings, and inks. The 
commenter expressed concerns that the public will not recognize inks as 
being within the category of paints and coatings.
    DEA recognizes that inks may be overlooked within Section 
1310.12(d)(2), which identifies the category of paints and coatings as 
being exempt chemical mixtures. It was the intention of DEA to have 
inks included in this category. The preamble of the original NPRM (63 
FR 49510) states that completely formulated inks are included in this 
category.
    DEA determined that adding inks as a new category in addition to 
the existing category of paints and coatings is not appropriate. Inks 
are already included within the category of coatings. This situation 
will be corrected by adding a sentence to section 1310.12(d)(3): 
``Included in this category are clear coats, topcoats, primers, 
varnishes, sealers, adhesives, lacquers, stains, shellacs, inks, and 
temporary protective coatings.'' In this way, all products intended to 
be included in the category of paints and coatings will be apparent.
    19. Request for allowance of a concentration variation of 2 percent 
absolute and 10 percent nominal: One comment suggested that DEA allow a 
plus or minus concentration range of 10 percent nominal and 2 percent 
absolute rather than require a new application for exemption for each 
and every mixture. This range is to reflect variation in raw material 
and inaccuracies in the manufacturing process.
    The exemption application process already allows for a range of 
concentrations without the need to reapply, as long as this 
concentration range is specified in the approved application. 
Therefore, the suggested variation is not necessary to prevent the need 
for reapplication. (Please note, however, that any concentration 
greater than the established range for exemption would cause the 
mixture to be subject to the regulatory provisions of the CSA.)
    For non-exempt mixtures, the concentration limit (as specified in 
the Table of Concentration Limits) is established as a maximum 
concentration of listed chemical that a chemical mixture may contain to 
be automatically exempt. Mixtures containing more than this established 
limit are regarded by DEA as regulated chemicals. Manufacturers that 
produce chemical mixtures having the listed chemical near the 
concentration limit are responsible for knowing whether the actual 
concentration exceeds the limit.

III. Final Regulatory Actions: Individual Discussion for Each Listed 
Chemical

1. Chemical Mixtures Containing List I Chemicals

    List I chemicals compose the largest number of listed chemicals, 
but only a few have been identified that are routinely used in chemical 
mixtures. Mixtures containing those List I chemicals are utilized by a 
small number of industries. DEA identified food flavoring 
manufacturers, fragrance manufacturers, and a segment of the dietary 
supplements industry as the main commercial sectors that utilize 
mixtures containing List I chemicals.
    The food flavoring and fragrance manufacturing sectors handle most 
chemical mixtures containing List I chemicals being addressed in this 
rulemaking. The chemicals of concern to these interests, at the 
proposed concentration limits, are benzaldehyde, anthranilic acid, and 
phenylacetic acid. None of the remaining List I chemicals were 
mentioned in the comments, except those associated with some dietary 
supplements. The comments pertaining to dietary supplements containing 
Ephedra were addressed in a separate final rule (68 FR 23195, May 1, 
2003).
    Only one comment addressed issues relating to the List I chemicals 
benzaldehyde, anthranilic acid, and phenylacetic acid. This comment was 
submitted by an industry group representing both the Flavor and Extract 
Manufacturers Association of the United States and the Fragrance 
Materials Association of the United States (food flavoring and 
fragrance manufacturing sectors).
    DEA originally proposed concentration limits of 35 percent for 
benzaldehyde, and 20 percent for anthranilic acid and phenylacetic 
acid. The concentration limit for benzaldehyde was proposed higher than 
the 20 percent proposed for most other precursor chemicals because DEA 
was aware that the food flavoring manufacturers used benzaldehyde in 
complex formulations not likely to be diverted. The comment from this 
interested party expressed the opinion that their formulations are not 
likely to be diverted even if the concentration limits for 
benzaldehyde, anthranilic acid, and phenylacetic acid are set at 85 
percent, 50 percent, and 40 percent, respectively.
    After a thorough review of the comments, DEA is finalizing 
concentration limits of 50 percent for benzaldehyde, 50 percent for 
anthranilic acid and 40 percent for phenylacetic acid. The DEA 
concluded that chemical mixtures containing lower concentrations of 
these chemicals do not present a significant risk of diversion. (For a 
discussion on what DEA considered in order to exempt this interest, see 
under Comments.)
    This concentration limit is expected to exempt the majority of List 
I chemical mixtures identified by DEA. Most, if not all, mixtures in 
anthranilic acid and phenylacetic acid are expected to be exempt 
because available products are formulated whereby they are not useful 
to traffickers.
    No comments were received concerning other List I chemicals being 
addressed in this rulemaking. Therefore, DEA concludes that the 
concentration limits proposed for the remaining List I chemicals are 
not a major concern to industry. Finalizing regulations based on the 
proposed concentration limits for these chemicals is not expected to 
increase significantly the number of new registrants. Chemical mixtures 
that do not qualify for automatic exemption can be considered for 
exemption based on the application process (21 CFR 1310.13; finalized 
at 68 FR 23195).

2. Chemical Mixtures Containing List II Chemicals

    The List II chemicals being addressed in this rulemaking are 
acetone, ethyl ether, 2-butanone (methyl ethyl ketone), methyl isobutyl 
ketone, toluene, acetic anhydride, benzyl chloride, hydrochloric acid, 
sulfuric acid, potassium permanganate, and iodine. The first five 
chemicals are used as solvents and, based on the comments, are 
responsible for the majority of chemical mixtures addressed by this 
rulemaking. The chemicals acetic anhydride and benzyl chloride have 
limited use as solvents and have not been the subject of any comment. 
The remaining List II chemicals are reagents. DEA received comments on 
iodine, hydrochloric acid, and sulfuric acid. Iodine is being addressed 
under a separate rulemaking. The types of mixtures containing the 
remaining chemicals are limited and will not significantly add to the 
number of newly regulated transactions. There were no comments received 
for mixtures containing potassium permanganate.
a. The List II Solvent Chemicals
    The List II solvent chemicals acetone, ethyl ether, 2-butanone, 
methyl isobutyl

[[Page 74967]]

ketone, and toluene are mostly a concern to DEA because of their use in 
the illicit production of cocaine. Suspicious shipments of mixtures 
containing List II solvents to cocaine producing areas have been 
identified by DEA. Additionally, diversion of 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 samples. The DEA laboratory system is able to detect the 
trace quantities of solvents present in seized cocaine hydrochloride, 
which is a ``street form'' of cocaine. Such solvents are utilized in 
the final stage of cocaine production whereby cocaine base is converted 
to cocaine hydrochloride. Recent data indicates that a broader range of 
solvents and solvent combinations are being used in cocaine processing. 
This laboratory data supports intelligence information that chemical 
mixtures are used in the illicit production of cocaine hydrochloride.
    DEA is aware of chemical mixtures containing List II solvent 
chemicals and solid material. The solids may be dissolved, suspended, 
emulsified, or in some way formulated into the liquid component. These 
mixtures are used by different industries to formulate silicones, 
paints, adhesives, polymers, and various related materials. DEA 
realizes that, in general, mixtures formulated with solids will not 
likely be used ``as is'' in the production of a controlled substance, 
including cocaine. However, recovery of the listed chemical (e.g., 
distillation) may allow the mixture to be used by traffickers. 
Traffickers, especially those involved in the illicit production of 
cocaine, are known to recycle solvents by distillation.
    After considering all comments, DEA has decided to exempt domestic 
and import transactions of all mixtures containing acetone, ethyl 
ether, 2-butanone, and toluene, unless they contain other listed 
chemicals above the concentration limit.
    Since the NPRM did not discuss this exemption for domestic and 
import transactions, the public did not have the opportunity to comment 
on the exclusion of these transactions from the definition of a 
regulated transaction. To avoid unnecessary burdens on affected 
companies during the pendency of proceedings in this matter, DEA has 
decided to implement this exemption on an interim basis, with a request 
for comments. DEA will then publish a final rulemaking regarding this 
exemption after a review of such comments. (See Section V for further 
discussion of this interim exemption). Because of their identified 
potential for use in illicit cocaine production, as discussed above, 
this rulemaking will not automatically exempt by regulation export 
transactions in these mixtures.
b. The List II Chemicals Hydrochloric Acid and Sulfuric Acid
    Distributions of hydrochloric acid (except domestic distributions 
of anhydrous hydrogen chloride) and sulfuric acid are regulated only as 
exports to certain geographical regions. Domestic transactions in 
sulfuric acid and hydrochloric acid (except anhydrous hydrogen 
chloride) are excluded from the recordkeeping and reporting 
requirements of the CSA pursuant to 21 CFR 1310.08(a). Therefore, their 
chemical mixtures are also excluded.
    Anhydrous hydrogen chloride, which is regulated domestically, has 
not been identified as part of any chemical mixture. These chemicals 
are used in synthetic chemistry and to stabilize materials in solution, 
both in legitimate industries and illicit operations. Formulations of 
sulfuric acid have been identified that are used in papermaking, 
treatment of industrial water cooling systems, and for treating oil 
wells.
    Although one comment informed DEA that chemical mixtures at the 
proposed concentration limit of 20 percent for hydrochloric acid could 
be used in the illicit production of methamphetamine, DEA is not 
lowering this concentration limit. Methamphetamine production is mostly 
a domestic concern while domestic transactions in hydrochloric acid are 
not regulated.
    DEA regards any concentration of hydrogen chloride dissolved in an 
inert carrier, such as water or alcohol, as a regulated chemical under 
the heading of hydrochloric acid. The 20 percent concentration limit 
pertains to hydrochloric acid mixed with an additional non-listed 
chemical. The concentration limit is determined by taking the weight of 
hydrogen chloride in the mixture and does not include the weight of the 
carrier solvent.
    DEA received only one comment on mixtures containing sulfuric acid. 
Only exports to South American countries and Panama above threshold are 
regulated transactions. The comment did not state if their mixtures are 
for export to these specific regions. The mixtures, as described in the 
comment, may be suitable for a group exemption by the application 
process. DEA concludes that newly regulated mixtures containing 
hydrochloric acid or sulfuric acid will be minimal at the concentration 
limits proposed.
c. The List II Reagent Chemicals Iodine and Potassium Permanganate
    Iodine and potassium permanganate are List II chemicals that 
function as reagents. Reagents are chemicals that cause, or help to 
cause, a chemical reaction to occur. Iodine and potassium permanganate 
are important in methamphetamine and cocaine production, respectively.
    Iodine is found in a variety of formulations. Strong iodine 
solution and strong iodine tincture contain seven-percent iodine and 
are regarded as chemical mixtures. DEA proposed a 20 percent 
concentration limit for iodine but was informed, by comment, that 
seven-percent solutions are being diverted for their iodine content. In 
addition, DEA has documented the use of seven-percent iodine mixtures 
as a source for iodine crystals in clandestine methamphetamine 
production. Chemical mixtures containing iodine are being addressed 
under a separate NPRM to allow adequate comment on the regulation of 
iodine desirable to traffickers.
    DEA has not identified mixtures of potassium permanganate being 
diverted for illicit drug production or being formulated in a 
concentration greater than the proposed 15 percent. DEA has determined 
that legitimately produced chemical mixtures containing less than 15 
percent potassium permanganate do not have a significant potential for 
diversion. Therefore, the concentration limit for potassium 
permanganate was proposed to be 15 percent. No comments were received 
to suggest that there are any chemical mixtures containing greater than 
15 percent potassium permanganate.
d. The List II Precursor Chemicals Acetic Anhydride and Benzyl Chloride
    The List II chemicals acetic anhydride and benzyl chloride may be 
regarded as precursor chemicals. Precursors are substances that are 
chemically modified to become part of the final product. Acetic 
anhydride is important in the production of heroin while benzyl 
chloride can be used to make methamphetamine. These chemicals also have 
limited use as solvents. No comments were received regarding these 
chemicals and DEA has not identified them as being routinely used in 
chemical mixtures. The concentration limit for acetic anhydride and 
benzyl chloride was proposed to be 20 percent and is being finalized at 
the 20 percent limit.

[[Page 74968]]

IV. Final Rule Provisions

a. Specific Requirements That Will Apply to Regulated Chemical Mixtures 
Containing List I Chemicals Upon Publication of This Final Rule

    A chemical mixture that is regulated because it contains a List I 
chemical will be treated as a List I chemical. Transactions that meet 
or exceed the cumulative monthly threshold for the listed chemical 
shall be regulated transactions. Persons interested in handling a 
regulated mixture must comply with the following:
    Registration. Any person who manufactures or distributes a 
regulated mixture, or proposes to engage in the manufacture or 
distribution of a regulated mixture containing a List I chemical, shall 
obtain a registration pursuant to the CSA (21 U.S.C. 822). Regulations 
describing registration for list I chemical handlers are set forth in 
21 CFR part 1309.
    Separate registration is required for retail distribution, non-
retail distribution, importing, and exporting. A separate registration 
is required for each principal place of business at one general 
physical location where List I chemicals are distributed, imported, or 
exported by a person (21 CFR 1309.23). Effective February 14, 2005, any 
person distributing, importing, or exporting any amount of a regulated 
mixture will become subject to the registration requirement under the 
CSA. DEA recognizes, however, that it is not possible for persons who 
are subject to the registration requirement to immediately complete and 
submit an application for registration and for DEA to immediately issue 
registrations for those activities. Therefore, in order to allow 
continued legitimate commerce in regulated mixtures, DEA is 
establishing in 21 CFR 1310.09 a temporary exemption from the 
registration requirement for persons desiring to engage in activities 
with regulated mixtures that are subject to registration requirements, 
provided that DEA receives a properly completed application for 
registration on or before February 14, 2005. The temporary exemption 
for such persons will remain in effect until DEA takes final action on 
their application for registration.
    Any person whose application for exemption is subsequently rejected 
by DEA must obtain a registration with DEA. A temporary exemption from 
the registration requirement will also be provided for these persons, 
if DEA receives a properly completed application for registration on or 
before 30 days following the date of official DEA notification that the 
application for exemption has not been approved. The temporary 
exemption for such persons will remain in effect until DEA takes final 
action on their registration application.
    The temporary exemption applies solely to the registration 
requirement; all other chemical control requirements, including 
recordkeeping and reporting, are effective on January 14, 2005. 
Therefore, all transactions of the chemical mixture will be regulated, 
if at or above threshold, while an application for registration or 
exemption is pending. This is necessary because not regulating these 
transactions could result in increased diversion of chemicals desirable 
to drug traffickers.
    Additionally, the temporary exemption does not suspend applicable 
federal criminal laws relating to the regulated mixture, nor does it 
supersede state or local laws or regulations. All handlers of a 
regulated mixture must comply with applicable state and local 
requirements in addition to the CSA regulatory controls.
    Records and Reports. The CSA (21 U.S.C. 830) requires certain 
records to be kept and reports to be made involving listed chemicals. 
Regulations describing recordkeeping and reporting requirements are set 
forth in 21 CFR 1310. A record must be made and maintained for two 
years after the date of a regulated transaction involving a List I 
chemical. Only a distribution, receipt, sale, importation, or 
exportation of a regulated mixture at or above the established 
threshold is a regulated transaction (21 CFR 1300.02(b)(28)).
    Each regulated bulk manufacturer of a regulated mixture shall 
submit manufacturing, inventory and use data on an annual basis (21 CFR 
1310.05(d)). Bulk manufacturers producing the mixture solely for 
internal consumption, e.g., formulating a non-regulated mixture, are 
not required to submit this information. Existing standard industry 
reports containing the required information are acceptable, provided 
the information is readily retrievable from the report.
    21 CFR 1310.05 requires that each regulated person shall report to 
DEA any regulated transaction involving an extraordinary quantity, an 
uncommon method of payment or delivery, or any other circumstance that 
causes the regulated person to believe that the listed chemical will be 
used in violation of the CSA.
    Security: All applicants and registrants shall provide effective 
controls against theft and diversion of chemicals as described in 21 
CFR 1309.71.
    Imports/Exports. All import/exports and brokered transactions of 
regulated mixtures shall comply with the CSA (21 U.S.C. 957 and 971). 
Regulations for importation and exportation of List I chemicals are 
described in 21 CFR 1313. Separate registration is necessary for each 
activity (21 CFR 1309.22).
    Administrative Inspection. Places, including factories, warehouses, 
or other establishments and conveyances, where regulated persons may 
lawfully hold, manufacture, or distribute, dispense, administer, or 
otherwise dispose of a regulated mixture or where records relating to 
those activities are maintained, are controlled premises as defined in 
21 CFR 1316.02(c). The CSA (21 U.S.C. 880) allows for administrative 
inspections of these controlled premises as provided in 21 CFR 1316 
Subpart A.

b. Specific Requirements That Will Apply to Regulated Chemical Mixtures 
Containing List II Chemicals Upon Publication of This Final Rule

    A chemical mixture that is regulated because it contains a List II 
chemical will be treated as a List II chemical. Transactions that meet 
or exceed the cumulative monthly threshold for the listed chemical 
shall be regulated transactions. The regulatory requirements for 
regulated chemical mixtures containing List II chemicals are the same 
as for regulated chemical mixtures containing List I chemicals, except 
that registration requirements do not apply. Therefore, the same 
requirements for records and reports, imports/exports (except that 
pertaining to 21 U.S.C. 957), and administrative inspection, as 
outlined above, apply to handlers of List II regulated chemical 
mixtures.
    Persons who submit an application for exemption (Section 1310.13) 
and whose application is pending or subsequently rejected by DEA must 
comply with all chemical control requirements, including recordkeeping 
and reporting, effective on January 14, 2005. Therefore, all 
transactions of the chemical mixture will be regulated, if at or above 
threshold, while an application for exemption is pending or awaiting 
correction. This is necessary because not regulating these transactions 
could result in increased diversion of chemicals desirable to drug 
traffickers.

c. Persons Affected by This Final Rule

    This rulemaking will affect only persons who manufacture, 
distribute, import, or export chemical mixtures containing listed 
chemicals that DEA determined are useful to traffickers for the illicit 
production of controlled substances. DEA received comments on

[[Page 74969]]

only a few specific listed chemicals. Therefore, DEA concludes that the 
concentration limits proposed in the NPRM for the remaining majority of 
listed chemicals were acceptable to chemical handlers.
    The goal of this rulemaking is to deny traffickers unregulated 
access to useful chemical mixtures while minimizing the burden on 
legitimate industry. This final rule seeks to target those chemical 
mixtures having the greatest potential for illicit use.
    Comments to the NPRM informed DEA of ways to provide additional 
regulatory relief to the affected industry. DEA determined that some of 
these suggested changes would not compromise law enforcement 
objectives. Based on this new information, this final rule exempts the 
vast majority of potentially regulated chemical mixtures without 
compromising the needs of law enforcement. Certain chemical mixtures 
that are a concern to the paints and coatings industries, the food 
flavoring industries, fragrance manufacturers, the silicone industries, 
ink manufacturers, and others are being identified by regulation as 
exempt from CSA regulatory controls. Because DEA is able to adjust some 
of its proposed regulations based on information received in the 
comments, those persons who trade in chemical mixtures containing 
listed chemicals should be minimally impacted or not affected at all by 
this rulemaking.
    Of those persons whose mixtures are regulated, only those who 
distribute above the threshold for the listed chemical(s) are regulated 
transactions (21 U.S.C. 802(39)(A)). A threshold is a quantity of 
chemical, as specified in 21 CFR 1310.04. Distributions at or above the 
specified threshold amount are regulated transactions. Thresholds are 
determined by totaling the amount of chemical in all distributions to 
the same person within a calendar month.
    Persons who obtain a regulated chemical but do not distribute the 
chemical are end users. End users are not subject to CSA chemical 
regulatory control provisions such as registration or recordkeeping 
requirements. Some examples of end users are those who chemically react 
the listed chemical and change it into a non-listed chemical or 
formulate it into an exempt chemical mixture.

V. Exemption Authority

    The CSA authorizes DEA, pursuant to 21 U.S.C. 802(39)(A)(iii), to 
remove certain transactions in listed chemicals from the definition of 
a regulated transaction that are unnecessary for enforcement of the 
CSA. Based on comments to the Federal Register proposed rule 
``Exemption of Chemical Mixtures'' (63 FR 49506), DEA identified 
certain transactions in mixtures of acetone, ethyl ether, 2-butanone, 
and toluene that are unlikely sources for diversion. DEA was informed 
that tens of thousands of domestic transactions in these chemical 
mixtures occur annually. DEA has determined that the regulation of 
domestic and import transactions in mixtures containing the chemicals 
acetone, ethyl ether, 2-butanone, and toluene are unnecessary for 
enforcement of the CSA and should be removed from the definition of a 
regulated transaction.
    Since the NPRM to this rulemaking did not discuss this exemption, 
the public did not have the opportunity to comment on the exclusion of 
these transactions from the definition of a regulated transaction. 
However, DEA has determined that good cause exists under the 
Administrative Procedure Act (5 U.S.C. 553 et seq.) (APA) to forgo a 
notice of proposed rulemaking on these exemptions. The APA states that 
an agency may forego a Notice of Proposed Rulemaking if it is 
impracticable, unnecessary, or contrary to the public interest.
    If this rulemaking did not exempt these transactions upon 
publication, DEA would need to establish the exemption by notice and 
comment. If exemption of these transactions were delayed, affected 
parties would need to implement a system of recordkeeping and reporting 
for all these regulated transactions. This would involve several 
thousand transactions annually in chemical mixtures that otherwise may 
not be regulated if the exemptions became effective immediately.
    If a proposed rule were published in the Federal Register to 
exclude these transactions from the definition of regulated 
transactions, each affected entity might find it necessary to establish 
compliance procedures although the requirement might prove to be only 
temporary. To avoid unnecessary burdens on affected companies during 
the pendency of proceedings in this matter, DEA has decided to include 
as part of this rulemaking an interim rule, with request for comment, 
that removes these transactions from the definition of a regulated 
transaction.

VI. Regulatory Certifications

Regulatory Flexibility Act

    DEA, pursuant to 21 U.S.C. 802(39)(A)(v), is finalizing provisions 
to identify exempt chemical mixtures. The chemical mixtures being 
addressed are those that contain one or more of the 27 listed chemicals 
given in the Table of Concentration Limits. A Final Rule establishing 
provisions that exempt chemical mixtures containing ephedrine, N-
methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, 
phenylpropanolamine, and pseudoephedrine was published in a separate 
rulemaking (68 FR 23195, May 1, 2003).
    Provisions to exempt chemical mixtures in the listed chemicals 
gamma-butyrolactone, red phosphorus, white phosphorus, and 
hypophosphorous acid (and its salts) are not being finalized at this 
time. These chemicals were not regulated when the NPRM ``Exemption of 
Chemical Mixtures'' (63 FR 49506) was published. Therefore, regulations 
addressing their mixtures were not proposed. DEA is treating mixtures 
containing these listed chemicals as exempt until promulgation of 
regulations that identify exempt chemical mixtures in these chemicals.
    To identify exempt chemical mixtures, a concentration limit is 
placed on each chemical, or combination of chemicals, which determines 
the mixture's regulatory status. Categories of exempt chemical mixtures 
are also defined. In addition, DEA can determine that a mixture is 
exempt via an application process (Section 1310.13).
    Comments to the NPRM informed DEA that a substantial number of 
chemical mixtures that are not useful to traffickers could potentially 
be regulated if the proposed rule were finalized as written. DEA 
determined that the regulation of these chemical mixtures is not 
necessary for enforcement of the CSA. Therefore, DEA decided to exempt 
these chemical mixtures from regulatory controls by identifying new 
concentration limits and exemption of certain types of transactions.
    DEA notes that the List II solvent chemicals acetone, ethyl ether, 
2-butanone, methyl isobutyl ketone, and toluene contribute to the 
largest number of potentially regulated chemical mixtures of List II 
chemicals. To limit the number of potentially regulated chemical 
mixtures to those necessary for enforcement of the CSA, DEA decided to 
define all domestic and import transactions of mixtures in these List 
II solvent chemicals as exempt transactions. This exemption applies to 
all persons that handle these chemical mixtures and not only to those 
who are represented in the comments. Although effective upon 
publication of this final rule, DEA is accepting post-

[[Page 74970]]

promulgation comments regarding this regulation.
    The regulated industry only expressed concerns through comments to 
the NPRM with respect to three List I chemicals, anthranilic acid, 
benzaldehyde, and phenylacetic acid. The food flavoring and fragrance 
industries use these chemicals, as discussed by a single comment 
representing both the Flavor and Extract Manufacturers Association of 
the United States, and the Fragrance Materials Association of the 
United States. No other List I chemicals were addressed in the 
comments, therefore, DEA concludes that no other List I chemicals are a 
concern to handlers of chemical mixtures at the concentration limits 
proposed.
    The concentration limits are being increased for the List I 
chemicals anthranilic acid and phenylacetic acid to the levels 
suggested by comment. Based on the comment, this increase is expected 
to exempt all chemical mixtures in anthranilic acid and phenylacetic 
acid identified by DEA that are not at substantial risk of diversion. 
However, DEA decided that traffickers could use chemical mixtures 
containing over 50 percent benzaldehyde, although a comment suggested 
that even higher concentrations would not be diverted. Therefore, DEA 
increased the concentration limit of benzaldehyde from 35 percent to 50 
percent to regulate only those chemical mixtures identified by DEA as 
necessary for enforcement of the CSA. Therefore, some commercially 
available chemical mixtures in benzaldehyde are expected to be 
regulated.
    Benzaldehyde is a chemical used in food flavorings. The comment 
states that the number of persons that manufacture or use flavors is 
97. Provided the number of persons that will be newly registered to 
handle chemical mixtures in benzaldehyde is 97, the initial total 
registration cost would be $57,715, based on the current new 
application fee of $595.00 for each company. The total annual re-
registration cost, based on the present renewal fee of $477.00 for each 
company, would be $46,269. In addition to the specific dollar cost, the 
registration requirement would require an annual reporting burden of 
approximately 48.5 hours. This is based on the estimated one-half hour 
required to complete and submit an application for registration or re-
registration.
    The comment stated that 66 members of the commenting industry 
association manufacture or sell fragrances. Assuming that all persons 
involved with the manufacture of food flavorings or fragrances (163) 
must register for each of the three chemicals, the combined current 
estimated cost for all new application fees is $290,955.
    DEA adopted those suggestions that will not adversely impact 
enforcement of the CSA while eliminating the greatest number of 
transactions in List I and List II chemical mixtures identified by DEA. 
Only three List I chemicals and four List II chemicals contribute to 
the largest number of potential newly regulated chemical mixtures.
    The remaining listed chemicals addressed in the rulemaking were not 
addressed in the comments and make up only a small number of new 
potentially regulated chemical mixtures. DEA does not anticipate a 
significant number of regulated chemical mixtures due to the remaining 
listed chemicals. For those chemical mixtures that fall within the 
regulatory parameters, the manufacturer can obtain exempt status for a 
chemical mixture by the application process. Once a chemical mixture 
has been granted exempt status by application, all down-stream 
activities in that unaltered mixture are exempt.
    Therefore, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), the Deputy Administrator has reviewed this regulation 
and by approving it certifies that this regulation will not have a 
significant economic impact upon a substantial number of small 
entities.

Executive Order 12866

    This regulation has been drafted and reviewed in accordance with 
Executive Order 12866, Section 1(b), Principles of Regulation. DEA has 
determined that this rule is a ``significant regulatory action'' under 
Executive Order 12866, Section 3(f), Regulatory Planning and Review, 
and accordingly this rule has been reviewed by the Office of Management 
and Budget.

Executive Order 12988

    This regulation meets the applicable standards set forth in 
Sections 3(a) and 3(b)(2) of Executive Order 12988.

Executive Order 13132

    This rulemaking does not preempt or modify any provision of state 
law; nor does it impose enforcement responsibilities on any state; nor 
does it diminish the power of any state to enforce its own laws. 
Accordingly, this rulemaking does not have federalism implications 
warranting the application of Executive Order 13132.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by state, local, and 
tribal governments, in the aggregate, or by the private sector, of $114 
million 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.

Small Business Regulatory Enforcement Fairness Act of 1996

    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.

Paperwork Reduction Act

    This Final Rule requires that persons handling nonexempt chemical 
mixtures containing a List I chemical must register with DEA to handle 
the regulated mixture. Persons will register using DEA Form 510 
``Application for Registration under Domestic Chemical Diversion 
Control Act of 1993'' addressed in OMB information collection 1117-
0031. As it is not possible for DEA to determine the number of persons 
whose chemical mixtures might be exempted from regulation by one of the 
three criteria established for exempting such mixtures, it is not 
possible for DEA to quantify at this time the number of persons 
affected by the requirement of registration. As information regarding 
the number of persons registering with DEA due to this rule becomes 
available, DEA will adjust its collection of information accordingly.

List of Subjects in 21 CFR Part 1310

    Drug traffic control, List I and List II chemicals, Reporting and 
recordkeeping requirements.

0
For the reasons set out above, 21 CFR part 1310 is amended to read as 
follows:

PART 1310--[AMENDED]

0
1. The authority citation for part 1310 continues to read as follows:

    Authority: 21 U.S.C. 802, 830, 871(b), 890.

0
2. Section 1310.04 is amended by revising paragraph (h) and adding new 
paragraphs (i) and (j) to read as follows:

[[Page 74971]]

Sec.  1310.04  Maintenance of records.

* * * * *
    (h) The thresholds and conditions in paragraphs (f) and (g) of this 
section will apply to transactions involving regulated chemical 
mixtures. For purposes of determining whether the weight or volume of a 
chemical mixture meets or exceeds the applicable quantitative 
threshold, the following rules apply:
    (1) For chemical mixtures containing List I chemicals or List II 
chemicals other than those in paragraph (h)(2) of this section, the 
threshold is determined by the weight of the listed chemical in the 
chemical mixture.
    (2) For the List II chemicals acetone, ethyl ether, 2-butanone, 
toluene, and methyl isobutyl ketone, the threshold is determined by the 
weight of the entire chemical mixture.
    (3) If two or more listed chemicals are present in a chemical 
mixture, and the quantity of any of these chemicals equals or exceeds 
the threshold applicable to that chemical, then the transaction is 
regulated.

0
3. Section 1310.08 is amended by adding a new paragraph (l) to read as 
follows:


Sec.  1310.08  Excluded transactions.

* * * * *
    (l) Domestic and import transactions in chemical mixtures that 
contain acetone, ethyl ether, 2-butanone, or toluene unless regulated 
because of being formulated with another listed chemical above the 
concentration limit.

0
4. Section 1310.09 is amended by adding new paragraphs (f) and (g) to 
read as follows:


Sec.  1310.09  Temporary exemption from registration.

* * * * *
    (f) Except for chemical mixtures containing the listed chemicals in 
paragraph (e) of this section, each person required by section 302 of 
the Act (21 U.S.C. 822) to obtain a registration to distribute, import, 
or export regulated chemical mixtures, pursuant to Sec. Sec.  1310.12 
and 1310.13, is temporarily exempted from the registration requirement, 
provided that DEA receives a proper application for registration or 
application for exemption on or before February 14, 2005. The exemption 
will remain in effect for each person who has made such application 
until the Administration has approved or denied that application. This 
exemption applies only to registration; all other chemical control 
requirements set forth in parts 1309, 1310, and 1313 of this chapter 
remain in full force and effect.
    (g) Any person who distributes, imports, or exports a chemical 
mixture whose application for exemption is subsequently denied by DEA 
must obtain a registration with DEA. A temporary exemption from the 
registration requirement will also be provided for these persons, 
provided that DEA receives a properly completed application for 
registration on or before 30 days following the date of official DEA 
notification that the application for exemption has not been approved. 
The temporary exemption for such persons will remain in effect until 
DEA takes final action on their registration application.

0
5. Section 1310.12 is amended by revising paragraph (c) and adding new 
paragraphs (d)(2) and (3) to read as follows:


Sec.  1310.12  Exempt chemical mixtures.

* * * * *
    (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. The concentration is determined for liquid-
liquid mixtures by using the volume or weight and for mixtures 
containing solids or gases by using the unit of weight.

                                          Table of Concentration Limits
----------------------------------------------------------------------------------------------------------------
                                         DEA chemical
                                          code number         Concentration              Special conditions
----------------------------------------------------------------------------------------------------------------
                                                List I Chemicals
----------------------------------------------------------------------------------------------------------------
N-Acetylanthranilic acid, its salts               8522  20% by Weight............  Concentration based on any
 and esters.                                                                        combination of N-
                                                                                    acetylanthranilic acid and
                                                                                    its salts and esters.
Anthranilic acid, and its salts and               8530  50% by Weight............  Concentration is based on any
 esters.                                                                            combination of anthranilic
                                                                                    acid and its salts and
                                                                                    esters.
Benzaldehyde..........................            8256  50% by Weight or Volume..
Benzyl cyanide........................            8570  20% by Weight or Volume..
Ephedrine, its salts, optical isomers,            8113  5% by Weight, net weight   Concentration based on any
 and salts of optical isomers.                           includes capsule, if any.  combination of ephedrine,
                                                                                    pseudoephedrine, and their
                                                                                    salts, optical isomers and
                                                                                    salts of optical isomers.
Ergonovine and its salts..............            8675  Not exempt at any          Chemical mixtures containing
                                                         concentration.             any amount of ergonovine,
                                                                                    including its salts, are not
                                                                                    exempt.
Ergotamine and its salts..............            8676  Not exempt at any          Chemical mixtures containing
                                                         concentration.             amount of any ergotamine,
                                                                                    including its salts, are not
                                                                                    exempt.
Ethylamine and its salts..............            8678  20% by Weight or Volume..  Ethylamine or its salts in an
                                                                                    inert carrier solvent is not
                                                                                    considered a mixture.
                                                                                    Concentration is based on
                                                                                    ethylamine in the mixture
                                                                                    and not the combination of
                                                                                    ethylamine and carrier
                                                                                    solvent, if any.
Hydriodic acid........................            6695  20% by Weight or Volume..
Isosafrole............................            8704  20% by Weight or Volume..  Concentration in a 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-propanone..            8502  20% by Weight............

[[Page 74972]]

 
N-Methylephedrine, its salts, optical             8115  0.1% by Weight...........  Concentration based on any
 isomers, and salts of optical isomers.                                             combination of salts N-
                                                                                    methylephedrine, N-
                                                                                    methylpseudoephedrine and
                                                                                    their salts, optical isomers
                                                                                    and salts of optical
                                                                                    isomers.
N-Methylpseudoephedrine, its salts,               8119  0.1% by Weight...........  Concentration based on any
 optical isomers, and salts of optical                                              combination of N-
 isomers.                                                                           methylpseudoephedrine, N-
                                                                                    methylephedrine, and their
                                                                                    salts, optical isomers and
                                                                                    salts of optical isomers.
Nitroethane...........................            6724  20% by Weight or Volume..
Norpseudoephedrine, its salts, optical            8317  0.6% by Weight...........  Concentration based on any
 isomers, and salts of optical isomers.                                             combination of
                                                                                    norpseudoephedrine,
                                                                                    phenylpropanolamine and
                                                                                    their salts, optical isomers
                                                                                    and salts of optical
                                                                                    isomers.
Phenylacetic acid, and its salts and              8791  40% by Weight............  Concentration is based on any
 esters.                                                                            combination of phenylacetic
                                                                                    acid and its salts and
                                                                                    esters.
 
Phenylpropanolamine, its salts,                   1225  0.6% by Weight...........   Concentration based on any
 optical isomers, and salts of optical                                              combination of
 isomers.                                                                           phenylpropanolamine,
                                                                                    norpseudoephedrine and their
                                                                                    salts, optical isomers and
                                                                                    salts of optical isomers.
Piperidine, and its salts.............            2704  20% by Weight or Volume..   Concentration based on any
                                                                                    combination of piperidine
                                                                                    and its salts. Concentration
                                                                                    based on weight if a solid,
                                                                                    weight or volume if a
                                                                                    liquid.
Piperonal.............................            8750  20% by Weight or Volume..
Propionic anhydride...................            8328  20% by Weight or Volume..
Pseudoephedrine, its salts, optical               8112  5% by Weight, net weight   Concentration based on any
 isomers, and salts of optical isomers.                  includes capsule, if any.  combination of
                                                                                    pseudoephedrine, ephedrine,
                                                                                    and their salts, optical
                                                                                    isomers and salts of optical
                                                                                    isomers.
Safrole...............................            8323  20% by Volume............  Concentration in a mixture
                                                                                    cannot exceed 20% if taken
                                                                                    alone or in any combination
                                                                                    with isosafrole.
---------------------------------------
                                                List II Chemicals
----------------------------------------------------------------------------------------------------------------
Acetic Anhydride......................            8519   20% by Weight or Volume.
Acetone...............................            6532  35% by Weight or Volume..  Exports only; Limit applies
                                                                                    to acetone or any
                                                                                    combination of acetone,
                                                                                    ethyl ether, 2-butanone,
                                                                                    methyl isobutyl ketone, and
                                                                                    toluene if present in the
                                                                                    mixture by summing the
                                                                                    concentrations for each
                                                                                    chemical.
Benzyl chloride.......................            8568  20% by Weight or Volume..
2-butanone............................            6714  35% by Weight or Volume..  Exports only; Limit applies
                                                                                    to 2-butanone or any
                                                                                    combination of acetone,
                                                                                    ethyl ether, 2-butanone,
                                                                                    methyl isobutyl ketone, and
                                                                                    toluene if present in the
                                                                                    mixture by summing the
                                                                                    concentrations for each
                                                                                    chemical.
Ethyl ether...........................            6584  35% by Weight or Volume..  Exports only; Limit applies
                                                                                    to ethyl ether or any
                                                                                    combination of acetone,
                                                                                    ethyl ether, 2-butanone,
                                                                                    methyl isobutyl ketone, and
                                                                                    toluene if present in the
                                                                                    mixture by summing the
                                                                                    concentrations for each
                                                                                    chemical.
Hydrochloric acid.....................            6545  20% by Weight or Volume..  Hydrogen chloride in an inert
                                                                                    carrier solvent, such as
                                                                                    aqueous or alcoholic
                                                                                    solutions, is not considered
                                                                                    a mixture. Weight is based
                                                                                    on hydrogen chloride in the
                                                                                    mixture and not the combined
                                                                                    weight of the carrier
                                                                                    solvent, if any.
Methyl isobutyl ketone................            6715  35% by Weight or Volume..  Exports only pursuant to Sec.
                                                                                      1310.08; Limit applies to
                                                                                    methyl isobutyl ketone or
                                                                                    any combination of acetone,
                                                                                    ethyl ether, 2-butanone,
                                                                                    methyl isobutyl ketone, and
                                                                                    toluene if present in the
                                                                                    mixture by summing the
                                                                                    concentrations for each
                                                                                    chemical.
Potassium permanganate................            6579   15% by Weight...........

[[Page 74973]]

 
Sulfuric acid.........................            6552  20% by Weight or Volume..  Sulfuric acid in an inert
                                                                                    carrier solvent, such as
                                                                                    aqueous or alcoholic
                                                                                    solutions, is not considered
                                                                                    a mixture. Weight is based
                                                                                    on sulfuric acid in the
                                                                                    mixture and not the combined
                                                                                    weight of the carrier
                                                                                    solvent, if any.
Toluene...............................             594  35% by Weight or Volume..  Exports only; Limit applies
                                                                                    to toluene or any
                                                                                    combination of acetone,
                                                                                    ethyl ether, 2-butanone,
                                                                                    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) * * *
    (2) Chemical mixtures that are distributed directly to an 
incinerator for destruction or directly to an authorized waste recycler 
or reprocessor where such distributions are documented on United States 
Environmental Protection Agency Form 8700-22; persons distributing the 
mixture to the incinerator or recycler must maintain and make available 
to agents of the Administration, upon request, such documentation for a 
period of no less than two years.
    (3) Completely formulated paints and coatings: Completely 
formulated paints and coatings are only those formulations that contain 
all the components of the paint or coating for use in the final 
application without the need to add any additional substances except a 
thinner if needed in certain cases. 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. Included in 
this category are clear coats, topcoats, primers, varnishes, sealers, 
adhesives, lacquers, stains, shellacs, inks, and temporary protective 
coatings.
* * * * *

    Dated: December 9, 2004.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. 04-27449 Filed 12-14-04; 8:45 am]
BILLING CODE 4410-09-P


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