52294 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–CE–61–AD]

RIN 2120–AA64

Airworthiness Directives; The New

Piper Aircraft, Inc. PA–23, PA–30, PA–

31, PA–34, and PA–42 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of proposed rulemaking;

correction.

SUMMARY: This document makes a

correction to a proposed Airworthiness

Directive (AD); notice of proposed

rulemaking (NPRM); Docket No. 97–CE–

61–AD, which was published in the

Federal Register on September 16, 1997

(62 FR 48546), and is applicable to The

New Piper Aircraft, Inc. (Piper) PA–23,

PA–30, PA–31, PA–34, and PA–42

series airplanes. This NPRM incorrectly

shows the proposed applicability in

Section 39.13 of the proposed AD as

Raytheon Aircraft Company (Raytheon)

Models E55, E55A, 58, 58A, 58P, 58PA,

58TC, 58TCA airplanes and 60, 65–B80,

65–B90, 90, F90, 100, 300, and B300

series airplanes. The NPRM currently

proposes airplane flight manual (AFM)

limitations for recognizing and exiting

severe icing conditions. This action

corrects the applicability in Section

39.13 of Docket No. 97–CE–61–AD.

DATES: Comments must be received on

or before October 14, 1997.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Central Region,

Office of the Regional Counsel,

Attention: Rules Docket No. 97–CE–61–

AD, Room 1558, 601 E. 12th Street,

Kansas City, Missouri 64106. Comments

may be inspected at this location

between 8 a.m. and 4 p.m., Monday

through Friday, holidays excepted.

This information also may be

examined at the Rules Docket at the

address above.

FOR FURTHER INFORMATION CONTACT: Mr.

John P. Dow, Sr., Aerospace Engineer,

Small Airplane Directorate, Aircraft

Certification Service, 1201 Walnut, suite

900, Kansas City, Missouri 64106,

telephone (816) 426–6932, facsimile

(816) 426–2169.

SUPPLEMENTARY INFORMATION:

Discussion

On September 9, 1997, the FAA

issued NPRM, Docket 97–CE–61–AD,

(62 FR 48546, September 16, 1997),

which applies to Piper Models PA–23,

PA–23–160, PA–23–235, PA–23–250,

PA–E23–250, PA–30, PA–39, PA–40,

PA–31, PA–31–300, PA–31–325, PA–

31–350, PA–34–200, PA–34–200T, PA–

34–220T, PA–42, PA–42–720, and PA–

42–1000 airplanes. This NPRM

incorrectly references the applicability

in Section 39.13 of the proposed AD as

Raytheon Models E55, E55A, 58, 58A,

58P, 58PA, 58TC, 58TCA airplanes and

60, 65–B80, 65–B90, 90, F90, 100, 300,

and B300 series airplanes.

Need for the Correction

This NPRM Docket No. 97–CE–61–

AD, currently has the wrong

applicability in Section 39.13 of the

proposed AD. If the applicability is not

changed, owners/operators of Piper and

Raytheon model airplanes will not

know which airplanes are effected by

the NPRM.

Correction of Publication

Accordingly, the publication of

September 16, 1997 (62 FR 48546),

which was the subject of FR Doc. 97–

24493, is corrected as follows: On page

48548, in the third column, starting on

the 30th line in Section 39.13, correct:

‘‘Raytheon Aircraft Company: Docket No.

97–CE–61–AD.

Applicability: Models E55, E55A, 58, 58A,

58P, 58PA, 58TC, 58TCA Airplanes and 60,

65–B80, 65–B90, 90, F90, 100, 300, and B300

Series Airplanes, certificated in any

category.’’ to read:

‘‘The New Piper Aircraft, Inc.: Docket No.

97–CE–61–AD.

Applicability: Models PA–23, PA–23–160,

PA–23–235, PA–23–250, PA–E23–250, PA–

30, PA–39, PA–40, PA–31, PA–31–300, PA–

31–325, PA–31–350, PA–34–200, PA–34–

200T, PA–34–220T, PA–42, PA–42–720, and

PA–42–1000 airplanes, certificated in any

category.

Issued in Kansas City, Missouri on October

1, 1997.

Michael Gallagher,

Manager, Small Airplane Directorate, Aircraft

Certification Service.

[FR Doc. 97–26526 Filed 10–6–97; 8:45 am]

BILLING CODE 4910–13–U

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1300, 1309, 1310

[DEA Number 163P]

RIN 1117–AA44

Implementation of the Comprehensive

Methamphetamine Control Act of 1996;

Regulation of Pseudoephedrine,

Phenylpropanolamine, and

Combination Ephedrine Drug Products

and Reports of Certain Transactions to

Nonregulated Persons

AGENCY: Drug Enforcement

Administration (DEA), Justice.

ACTION: Proposed rule.

SUMMARY: DEA is proposing amending

its regulations to implement the

requirements of the Comprehensive

Methamphetamine Control Act of 1996

(MCA) with respect to the regulation of

pseudoephedrine,

phenylpropanolamine, and combination

ephedrine drug products as List I

chemicals and the reporting of certain

transactions involving

pseudoephedrine,

phenylpropanolamine, and ephedrine.

The MCA removed the previous

exemption from regulation as List I

chemicals which had applied to

pseudoephedrine,

phenylpropanolamine, and combination

ephedrine drug products.

This action makes persons who

distribute the products subject to the

registration requirement. Also,

distributions, importations, and

exportations of the products became

subject to the existing chemical controls

relating to regulated transactions, except

in certain circumstances specified in the

MCA. The MCA also requires that

reports be submitted for certain

distributions involving ephedrine,

pseudoephedrine, and

phenylpropanolamine (including drug

products containing those chemicals) by

Postal Service or private or commercial

carrier to nonregulated persons. This

proposed rule amends the regulations to

make them consistent with the language

of the MCA and to establish the specific

procedures to be followed to satisfy the

new reporting requirement.

DATES: Written comments or objections

should be submitted by no later than

December 8, 1997.

ADDRESSES: Comments and objections

should be submitted in quintuplicate to

the Deputy Assistant Administrator,

Office of Diversion Control, Drug

Enforcement Administration,

Washington, D.C. 20537, Attention: DEA

Federal Register Representative/CCR.
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules 52295

FOR FURTHER INFORMATION CONTACT:

G. Thomas Gitchel, Chief, Liaison and

Policy Section, Office of Diversion

Control, Drug Enforcement

Administration, Washington, D.C.

20537, Telephone (202) 307–7297.

SUPPLEMENTARY INFORMATION:

Introduction

The Chemical Diversion and

Trafficking Act of 1988 (CDTA)

provided the framework for DEA’s

programs to control the diversion of the

chemicals that are used in the illegal

manufacture of controlled substances.

The chemical control activities under

the CDTA focused primarily on two

areas: (1) the export of certain

chemicals, mainly solvents, that are

used in the illegal manufacture of

cocaine and heroin, and (2) the

domestic distribution of certain

chemicals, principally precursors, that

are used in the illegal manufacture of

other dangerous drugs, such as

methamphetamine, LSD, PCP, etc.

While the controls under the CDTA

were successful in denying the cocaine

traffickers access to U.S. sources of

chemicals, a loophole was exploited by

the methamphetamine traffickers. The

CDTA contained a provision that

‘‘. . .any transaction in a listed

chemical that is contained in a drug that

may be marketed or distributed lawfully

in the United States under the Federal

Food, Drug, and Cosmetic Act. . .’’ was

not subject to the controls of the CDTA.

Thus, while the traffickers found their

access to supplies of bulk ephedrine,

pseudoephedrine, and other chemicals

restricted by the new chemical controls,

they were able to circumvent the

controls and obtain the necessary source

material for manufacturing

methamphetamine through the purchase

of ephedrine in drug product form,

which remained exempt from the

chemical controls.

Since passage of the CDTA, the

principal focus of Federal and State

legislative/regulatory activities with

respect to domestic chemical control

has been on closing the ‘‘drug product’’

loophole that clandestine

methamphetamine manufacturers and

traffickers have exploited.

As noted earlier, with the

establishment of controls over

transactions involving bulk

pseudoephedrine, ephedrine, and other

chemicals, the methamphetamine

traffickers turned to single-entity

ephedrine drug products for their source

material. In the years following the

implementation of the CDTA,

ephedrine, in drug product form,

became the principal source of

methamphetamine precursor material.

By 1993, domestic clandestine

laboratory seizure data showed that 79

percent of the laboratories seized were

using ephedrine. During the same

period, the use of phenyl-2-propanone

(P2P), also a popular source material in

early laboratories, declined from a high

of 31 percent in 1990 to 16 percent in

1993, and the use of pseudoephedrine

as a precursor was virtually nonexistent.

The primary source of supply of

ephedrine for the traffickers was from

mail order and wholesale distributions

of single-entity ephedrine tablets. One

manufacturer of a popular brand of

single-entity ephedrine drug products

indicated in interviews with DEA

personnel that from January 1991

through September 1992, the company

purchased 35 metric tons of ephedrine

for the manufacture of its drug products.

The company reported that it was

producing 40 million 25mg ephedrine

tablets per ton of ephedrine. Based on

that figure, the company could

manufacture 1.4 billion 25mg ephedrine

tablets from the 35 tons of ephedrine

purchased between the beginning of

1991 and September 1992. During the

same period, a rival company purchased

27.5 metric tons of ephedrine, also for

the manufacture of ephedrine tablets.

The enormous volume of product and

the lack of controls over its distribution

provided the traffickers with a

convenient source of supply.

DEA’s initial domestic chemical

control efforts focused on stemming the

flow of material from the wholesale/

mail order industry to the traffickers.

While some investigations ultimately

resulted in conviction of some of the

more eregious violators of the law, DEA

and State efforts were hampered by the

exemption from regulation granted to

the drug products, the lack of other

controls under the CDTA, such as

registration, and the increasing

knowledge of the traffickers and their

suppliers in how to shelter themselves

from the criminal sanctions of the

CDTA.

The Domestic Chemical Diversion

Control Act of 1993 (DCDCA) was

enacted, in part, to address these

shortcomings in the CDTA. Two major

elements in the DCDCA were the

removal of the exemption from List I

controls for single-entity ephedrine drug

products and establishment of the

registration requirement for distributors,

importers, and exporters of List I

chemicals. The DCDCA did establish

control of the diversion of single-entity

ephedrine drug products to clandestine

laboratories (combination ephedrine

products remained exempt); however,

the traffickers switched to

pseudoephedrine drug products, which

remained exempt from chemical

controls and are directly

interchangeable with ephedrine drug

products in the manufacture of

methamphetamine. Companies that had

previously been identified as

distributors of large volumes of singleentity ephedrine drug products became

distributors of large volumes of

pseudoephedrine drug products, which

has become the primary source material

of choice in clandestine laboratories.

In 1993, the year the DCDCA was

passed, ephedrine was identified as the

source material in 79 percent of the

methamphetamine laboratories seized

and pseudoephedrine was identified as

the source material in less than 2

percent of the seized laboratories. As is

shown in the following chart, both the

number of clandestine laboratories

seized and number of laboratories using

pseudoephedrine increased significantly

between 1993 and 1996. In 1996, DEA

seized 879 methamphetamine

laboratories, of which 422 were

positively identified as using

pseudoephedrine. Of the remainder,

there are 246 laboratories for which

analysis of the source material has not

yet been received, however it is

anticipated that most, if not all, were

using pseudoephedrine. In all of the

identified cases, pseudoephedrine drug

products were the source material.

For 1997, 392 clandestine

methamphetamine laboratories have

been seized as of April 30th, as

compared to the 327 laboratories that

were seized in all of 1995. At that rate,

the total seizures for 1997 could exceed

1300 methamphetamine laboratories.

The dramatic increase in seizures is

due, in part, to the expansion of the

methamphetamine laboratories into the

Midwest.

BILLING CODE 4410–09–M
52296 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules

BILLING CODE 4410–09–C

Pseudoephedrine Regulations

By 1995, it had become clear that

action would have to be taken to stem

the flow of pseudoephedrine drug

products to the clandestine laboratories.

DEA proposed regulations to control

certain types of pseudoephedrine drug

products on October 31, 1995 (60 FR

55348), including reduction of the

threshold for pseudoephedrine from 1

kilogram to 24 grams and removal of the

exemption from the chemical controls

for certain drug products containing

pseudoephedrine. DEA’s proposal

limited the controls to those products

which could be readily used for the

clandestine manufacture of

methamphetamine. The exemption

remained in place for gel capsules,

liquids, and solid dosage form products

containing pseudoephedrine in

combination with acetaminophen,

aspirin, or ibuprofen in therapeutically

significant quantities. Further, DEA

proposed to exempt retail distributors

from the registration requirement if their

activities were restricted to subthreshold (24 grams) sales of

pseudoephedrine drug products.

Following comment, DEA published a

Final Rule in the Federal Register on

August 7, 1996 (61 FR 40981). In

response to comments, the threshold for

pseudoephedrine was raised from the

proposed 24 grams to 48 grams and, for

retail distributors, application of the

cumulative transaction provision was

lifted.

The Final Rule was scheduled to

become effective on October 7, 1996,

however, as discussed below, the rule

did not go into effect and was

superseded by the provisions of the

MCA.

Comprehensive Methamphetamine

Control Act of 1996

Paralleling DEA’s rulemaking process,

the United States Congress, also

concerned with the illicit traffic in

methamphetamine, introduced

legislation to control the diversion of

chemicals to clandestine laboratories.

The result was the Comprehensive

Methamphetamine Control Act of 1996

(Pub. L. 104–237) (MCA), which was

enacted on October 3, 1996. The MCA

superseded DEA’s Final Rule, discussed

above, declaring that the regulations

were ‘‘* * * null and void, and of no

force and effect.’’ (MCA, Section 210.)

The MCA legislatively replaced DEA’s

proposed rulemaking action with a more

comprehensive system of controls

relating to the distribution, importation,

and exportation of pseudoephedrine,

phenylpropanolamine, and combination

ephedrine drug products, along with

other strong tools to attack the illicit

traffic. The MCA retained the existing

Controlled Substances Act (CSA)

requirements for distributors of List I

chemicals and added the following

changes to the CSA with respect to

regulation of drug products containing

these three chemicals:

Removal of Certain Drug Product

Exemptions

The definition of ‘‘regulated

transaction’’ (21 U.S.C. 802(39)) is

amended in paragraph (A)(iv)(I)(aa) to

provide that the exemption for drug

products that contain ephedrine,

pseudoephedrine, or

phenylporpanolamine is removed. The

new definition also provides that the

sale of ‘‘ordinary over-the-counter
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules 52297

pseudoephedrine or

phenylproanolamine’’ products by

‘‘retail distributors’’ shall not be a

regulated transaction. The definition is

also amended in paragraph (A)(iv)(II) to

provide that the threshold for the sale of

pseudoephedrine or

phenylpropanolamine products by a

retail distributor or a distributor

required to submit reports by section

310(b)(3) of the CSA (21 U.S.C.

830(b)(3)) shall be 24 grams of

pseudoephedrine base or 24 grams of

phenylporpanolamine base in a single

transaction. This threshold does not

affect the reports required to be filed

under 21 U.S.C. 830(b)(3) and 21 CFR

1310.03(c), 1310.05(e), and 1310.06(i),

as amended herein.

Creation of a New Category of

Distributor and Category of Product To

Which Certain Exceptions Apply

Two new definitions are added under

section 102 of the CSA (21 U.S.C. 802),

as follows:

The term ordinary over-the-counter

pseudoephedrine or

phenylpropanolamine product is

defined in section 102(45) of the Act (21

U.S.C. 802(45)) as a product containing

pseudoephedrine or

phenylpropanolamine that is regulated

pursuant to the CSA and, except for

liquids, packaged with not more than 3

grams of pseudoephedirne or

phenylpropanolamine base per package,

contained in blister packs, with not

more than two dosage units per blister,

or where the use of blister packs is not

technically feasible, packaged in unit

dose packets or pouches. For liquids,

the product is sold in package sizes of

not more than 3 grams of

pseudoephedrine or

phenylpropanolamine base. In the

context of sales by retail distributors,

this has been referred to as the ‘‘safe

harbor’’ provision, because of the

exemption from the definition of

‘‘regulated transaction’’ in section

102(39) of the Act (21 U.S.C. 802(39)).

The term retail distributor is defined

in section 102(46) of the Act (21 U.S.C.

802(46)) as a grocery store, general

merchandise store, drug store, or other

entity or person whose activities as a

distributor relating to pseudoephefrine

or phenylpropanolamine products are

limited almost exclusively to sales for

personal use, both in number of sales

and volume of sales, either directly to

walk-in customers or in face-to-face

transactions by direct sales. Sale for

personal use is defined by the MCA as

the sale of below-threshold quantities in

a single transaction to an individual for

legitimate medical use. Further, certain

entities are defined by reference to the

following Standard Industrial

Classification (SIC) codes: a grocery

store is an entity within SIC code 5411,

a general merchandise store is an entity

within SIC codes 5300 through 5399

and 5499, and a drug store is an entity

within SIC code 5912.

It is worth noting at this point that

while the definition of ‘‘retail

distributor’’ specifically references

general merchandise stores, grocery

stores, and drug stores and their

respective SIC codes, it also refers to

‘‘* * * or other entity or person * * *’’

who engages in the described activities.

As a result, a retail distributor is any

person (not just a general merchandise

store, grocery store, or drug store) whose

activities as a distributor relating to

pseudoephedrine or

phenylpropanolamine products are

limited almost exclusively to sales for

personal use, both in number of sales

and volume of sales, either directly to

walk-in customers or in face-to-face

transactions by direct sales.

Expands the Opportunities for Product

Specific Exemptions

The MCA amends the CSA to provide

that the exemption with respect to a

particular ephedrine, pseudoephedrine

or phenylpropanolamine drug product

shall be reinstated if it is determined

that the drug product is manufactured

and distributed in a manner that

prevents diversion.

Defines Specific Controls for

‘‘Combination Ephedrine Products’’

The MCA defines combination

ephedrine product as a drug product

containing ephedrine or its salts, optical

isomers, or salts of optical isomers and

therapeutically significant quantities of

another active medicinal ingredient; and

establishes a 24-gram single transaction

limit, notwithstanding the form in

which the product is packaged, for sales

by retail distributors and by distributors

required to submit a report under

section 310(b)(3) of the CSA (21 U.S.C.

830(b)(3)), and a 1-kilogram threshold

for transactions by other distributors,

importers and exporters.

Requires Reporting of Certain

Distributions by Mail or Carrier

The MCA amends section 310 of the

CSA (21 U.S.C. 830) to add a new

paragraph (b)(3), which requires that

each regulated person who engages in a

transaction with a nonregulated person

(that is, someone who does not further

distribute the product) which involves

ephedrine, pseudoephedrine or

phenylpropanolamine, including drug

products, and uses or attempts to use

the Postal Service or any private or

commercial carrier shall submit a report

of all such transactions each month. The

reports shall reflect the name of the

purchaser, the quantity and form of the

ephedrine, pseudoephedrine or

phenylpropanolamine purchased, the

address to which the chemicals were

shipped, and such other information as

is established by regulation.

Effective Dates

The MCA provides that the

requirements with respect to the

regulation of combination ephedrine

products and the reporting requirement

became effective on October 3, 1996.

The requirements with respect to

pseudoephedrine and

phenylpropanolamine products become

effective on October 3, 1997.

Regulatory Changes To Implement the

MCA

Many of the legislative details of the

MCA are provided in sufficient detail to

be self-implementing without additional

regulation. Thus, many of the regulatory

amendments to implement the MCA are

conforming amendments by which the

definitions of ‘‘regulated transaction’’

and ‘‘retail distributor’’ are updated to

parallel the new language in the MCA

and the definitions of 1 ‘‘ordinary overthe-counter pseudoephedrine or

phenylpropanolamine product’’ and

‘‘combination ephedrine product’’ are

inserted in the regulations; 21 CFR

1310.04 is updated to reflect the new

record retention period of two years for

List I chemical transactions and the

thresholds for transactions involving

regulated drug products; and 21 CFR

1310.04–06 are updated to reflect the

new reporting requirement. Finally, 21

CFR 1309.71 is being amended to reflect

that in retail settings open to the public

only ephedrine drug products, in both

single-entity and combination form, just

be stored behind a counter where only

employees will have access;

pseudoephedrine and

phenylpropanolamine products are not

required to be kept behind the counter.

In addition to the above amendments,

DEA is proposing to amend 21 CFR Part

1309 to consolidate the various

exemptions from the registration

requirement into one section, expand

the current exemption for retail

distributors of combination ephedrine

products to include retail distributors of

pseudoephedrine and

phenylpropanolamine products, and to

add a temporary exemption from the

registration requirement for persons

who distribute, import, or export

pseudoephedrine or

phenylpropanolamine drug products,

provided that they submit an
52298 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules

application for registration on or before

December 3, 1997. Any person who

engages in such activities and is not

subject to an existing or proposed

exemption from the registration

requirement should submit an

application for registration at the

earliest possible time, to ensure that

they may continue to distribute these

products pending issuance of their

registration.

Effect of the MCA

While the regulatory changes

necessary to implement the MCA are

primarily conforming regulations, the

scope of the effect of the MCA’s

requirements is quite broad. The

removal of the exemption for

pseudoephedrine,

phenylpropanolamine, and combination

ephedrine drug products makes any

person who distributes, imports, or

exports them subject to the established

chemical registration, recordkeeping,

and reporting requirements already in

effect for List I chemical handlers, as set

out in 21 CFR parts 1309, 1310, and

1313. The MCA, however, created an

exemption from the existing chemical

controls for sales of ordinary over-thecounter pseudoephedrine and

phenylpropanolamine products by retail

distributors. Additionally, following the

MCA’s creation within the law of the

category of ‘‘retail distributor’’, DEA has

provided an exemption from registration

for retail distributors whose activities

are limited to the activities provided for

by the MCA.

With respect to no-retail distributors,

various segments of the affected

distribution industry have offered

varying interpretations of the law,

proposing that distributors that only

engage in sub-threshold transactions, or

distributors that only supply corporately

owned retail outlets are not subject to

registration and concomitant controls.

The CSA requires a registration for

activities as a distributor. These two

issues are addressed in the final

rulemaking entitled ‘‘Comprehensive

Methamphetamine Control Act of 1996;

Possession of List I Chemicals,

Definitions, Record Retention, and

Temporary Exemption From Chemical

Registration for Distributors of

Combination Ephedrine Products’’,

which will by published in the Federal

Register on or about October 3, 1997.

Interest persons are encouraged to

obtain a copy of the final rule, which

contains a detailed discussion of the

issues.

Within this framework, importers,

exporters, and distributors (other than

retail distributors) of pseudoephedrine

and phenylpropanolamine drug

products (including ordinary over-thecounter pseudoephedrine and

phenylpropanolamine products) become

subject to the registration requirement of

the MCA on October 3, 1997, and also

the recordkeeping requirements for

those transactions that either singly or

cumulatively meet the threshold

requirements in a calendar month.

However, the allow for implementation

of these regulations and issuance of the

registrations, DEA is providing a

temporary exemption from the

registration requirement for persons

who submit their applications on or

before December 3, 1997. For

combination ephedrine products, the

requirements became effective on

October 3, 1996.

Retail distributors of ordinary overthe-counter products are not subject to

the registration, recordkeeping and

reporting requirements.

For retail distributors whose sales of

other pseudoephedrine and

phenylpropanolamine products, or

combination ephedrine products remain

exclusively below the single transaction

limit, DEA has established an

exemption from the registration

requirement in 21 CFR 1309.29.

However, retail distributors are subject

to the registration, recordkeeping, and

reporting requirements to the extent that

their transactions equal or exceed the

single transaction limit of 24 grams.

Additionally, the existing provision that

any person who is registered with DEA

to distribute or dispense controlled

substances is not required to obtain a

separate chemical registration applies to

distributions of pseudoephedrine,

phenylpropanolamine, or combination

ephedrine products, as set forth in 21

CFR 1309.25.

They are, however, still subject to the

recordkeeping requirements.

Reports of ‘Mail Order’ Transactions

The MCA requires that a regulated

person must report, on a monthly basis,

all transactions with non-regulated

persons (those persons who do not

redistribute the product) that involve

ephedrine, pseudoephedrine, or

phenylpropanolamine (including drug

products that contain these chemicals),

and who use or attempt to use the Postal

Service or any private or commercial

carrier. Each report must contain the

name of the purchaser, the quantity and

form of the material purchased, and the

address to which the material was sent,

as well as such other data as may be

established by regulation. MCA, Section

401, 21 U.S.C. 830(b)(3). The language

of the requirement clearly establishes

that all persons engaging in any such

transactions must report them. There is

no statutory provision for exclusion of

any class of person or transaction from

the requirement.

DEA is proposing to amend 21 CFR

1310.03, 1310.05, and 1310.06 to

incorporate the new reporting

requirement. Section 1310.03 reflects

who must file, Section 1310.05 reflects

when and where the reports shall be

filed, and Section 1310.06 reflects the

information the report must contain.

The MCA requires monthly reports.

DEA is proposing that the reports shall

be submitted on or before the 15th day

of the month following the month in

which the reportable transaction took

place; shall be submitted to the Drug

Enforcement Administration, Office of

Diversion Control, Chemical Operations

Section, Washington, D.C. 20537; and

shall contain the following information.

1. Supplier’s Name and Registration Number

2. Purchaser’s Name and Address

3. Name/Address Shipped To (if different

from purchaser’s name/address)

4. Name of the Chemical Shipped

5. Product Name

6. Dosage Form (if any)

7. Dosage Strength (if any)

8. Number of Dosage Units (if applicable)

9. Package Type

10. Package Quantity

11. Lot Number (for drug products)

12. Date of Shipment

As noted earlier, the MCA requires

the name of the purchaser (item 2), the

quantity and form of the material (items

4–10), and the address to which the

material was shipped (item 3). In

addition to the required information,

DEA is proposing to include the

supplier name and registration number

(item 1), to identify the person making

the report and their authority to

distribute the material; the address of

the purchaser (item 2), to assist in

identifying the party; the name of the

person to which the material is shipped

(item 3), if different from the purchaser,

to identify the actual recipient of the

material in instances where dropshipment is requested; the lot number of

the product (item 11), if a drug product,

to assist DEA in tracking products that

are diverted; and, the date of the

shipment (item 12) to identify when the

specific transaction occurred.

While submission of a hard copy

report will be adequate to satisfy the

requirement, DEA is proposing that

electronic reporting, initially via

computer disk, also be allowed.

Electronic reporting would minimize

the burden by eliminating the time and

expense necessary to print, package, and

mail hard copy reports and would allow

for more efficient processing of the data

reported. DEA is proposing that persons

interested in submitting reports by
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules 52299

electronic means contact the Chemical

Operations Section, Office of Diversion

Control, DEA at (202) 307–7204 to

arrange for submission of electronic

reports.

It is important to keep in mind that

the reporting requirement applies only

to distributions of ephedrine,

pseudoephedrine, and

phenylpropanolamine via the postal

service or private or commercial carrier

to nonregulated persons. A distributor

does not have to report distributions to

regulated persons. In this regard, it is

critical that distributors take the

appropriate steps to ascertain whether

their customers are regulated or

nonregulated persons. The failure of a

distributor to report a transaction based

on a customer’s mere representation that

they are a regulated person, without

further inquiry to confirm that status,

may be grounds for administrative, civil,

or criminal action. Therefore, the

distributor should take appropriate

steps to confirm the customer’s status as

a regulated person. Steps may include

verification of the customer’s DEA

registration status or, if they are not a

registrant, inquiry as to whether the

products are being obtained solely for

use by the customer or whether they

will be distributed to others.

Clarification of MCA and CSA

Chemical Control Requirements

The MCA’s removal of the exemption

for pseudoephedrine,

phenylpropanolamine, and combination

ephedrine products makes a new

segment of industry, which is not

familiar with DEA’s programs and

requirements, subject to the chemical

controls under the CSA. DEA has

received numerous contacts from, and

engaged in substantial discussions with,

both individual companies and

associations regarding the requirements

of the MCA and of the chemical controls

under the CSA with respect to

combination ephedrine products. The

upcoming control of pseudoephedrine

and phenylpropanolamine products on

October 3, 1997, will probably result in

further questions and need for

clarification of the requirements. DEA

remains, as always, available to affected

persons to clarify the requirements of

the MCA and of the existing chemical

controls. Inquiries should be addressed

to DEA in writing to the attention of: G.

Thomas Gitchel, Chief, Liaison and

Policy Section, Office of Diversion

Control, Drug Enforcement

Administration, Washington, D.C.

20537.

Small Business Impact and Regulatory

Flexibility Concerns

The MCA mandates a system of

controls (including registration,

recordkeeping, and reporting) over the

distribution, importation, and

exportation of pseudoephedrine,

phenylpropanolamine, and combination

ephedrine products. Within this system

of controls, the MCA does provide an

exemption for retail sales of ordinary

over-the-counter pseudoephedrine and

phenylpropanolamine products;

however, wholesale distributions,

importations, and exportations of these

products are subject to the controls.

The specific mandates of the MCA, if

applied as written, would have a farreaching and significant impact.

Pseudoephedrine and

phenylpropanolamine over-the-counter

products are a common part of everyday life, available in most supermarkets,

drug stores, convenience stores, and

other retail outlets. Combination

ephedrine products are somewhat less

common, due to their limited use as a

bronchodilator for the treatment of

asthma.

DEA consulted with industry

organizations associated with over-thecounter drug manufacture and

marketing in an effort to determine the

potential size of the impacted industry.

According to industry sources there are

approximately 750,000 retail

distributors of pseudoephedrine,

phenylpropanolamine, and combination

ephedrine products. Accurate

identification of the number of

wholesale distributors has been

somewhat more difficult; however,

following consultations with

representatives of the food marketing,

drug wholesale, and retail supplier

industries, DEA estimates that there are

approximately 3,000 to 3,500 wholesale

locations distributing the products.

In considering the implementation of

the MCA, DEA considered the impact of

applying various levels of controls, from

no application through full application

of the requirements of the law, from the

perspective of their impact on the

industry, on the public health and

safety,and on the ability of both

industry and the government to

administer the controls.

Of the available options, it is readily

apparent that imposition of either no

controls or the full level of controls

would be unrealistic. With respect to no

controls, the simple fact that the

legislation was deemed necessary is

recognition enough of the threat to the

public health and safety that the

diversion of pseudoephedrine,

phenylpropanolamine, and combination

ephedrine products to the illicit

manufacture of methamphetamine

represents and the intent to impose

restrictions and monitoring controls on

the distribution. At the same time, full

application of the controls of the MCA

would result in monetary and

administrative burdens on the industry

and DEA that would be out of

proportion with the benefits to be

derived and may unnecessarily interfere

with legitimate public access to the

products. Therefore, alternatives that

avoided unnecessary burdens while still

accomplishing the mandate of the MCA

were explored.

Exploring the alternatives and

exceptions required consideration of the

scope of commerce, business practices,

and capabilities of the different

segments of the industry; the scope of

diversion from each segment of

industry; the activities of the traffickers;

and the relative impact of different

controls, both on the industry and DEA.

The MCA recognizes two distinct

segments within industry: retail

distributors, who, by definition, sell

small amounts of product in face-to-face

transactions to individuals for their

personal use; and manufacturers/

wholesalers (including importers/

exporters), who introduce generally

larger quantities of the products into

commerce and distribute to other

commercial concerns for further

distribution, and some of whom also

distribute larger quantities to noncommercial concerns without regard or

consideration of the intended use.

Collectively, retail distributors are

responsible for as great a scope of

distribution as manufacturers/

wholesalers, serving as they do as the

principal source of supply for the

individual consumers of the products.

Individually, however, their scope of

commerce, by definition, is very small,

due to the fact that their activities are

restricted to sales to individuals of

small, personal use quantities of the

products. Despite the collective volume

of commerce at the retail level, the new

controls of the MCA should, as a

practical matter, significantly reduce the

potential for major diversion from this

level (provided retailers comply with

the law and are alert to attempts to

circumvent the controls). Because to the

limited amount of product permitted to

be distributed in an individual

transaction, attempts to divert the

products by the retail distributors

should be noticeable, given that the

volume of material required is out of

proportion with any reasonable amount

that might be purchased for personal

use. However, traffickers have, on

occasion, succeeded in obtaining tens of
52300 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules

thousands of dosage units of products

by preying upon unsophisticated or

negligent owners or employees of retail

establishments who are not aware of, or

are unconcerned with, the illicit use to

which the products can be put. In

addition, there are those unscrupulous

individuals who will always be eager to

profit from a transaction, capitalizing on

the fact that, even with a 24 gram

threshold for retail distributors, many of

the smaller clandestine laboratories

which DEA and state and local

authorities are encountering could

adequately satisfy their needs for

precursor material be obtaining legal

drug products at the retail level. This is

a situation in which voluntary industry

programs to prevent diversion at the

retail level will be an important factor

in achieving the goals of the MCA.

While far fewer in number (est. 3,000–

3,500) and engaging in a lesser number

of transactions, manufacturer/

wholesalers account for as great a part

of the distributions as retail distributors

through the volume of products moved

in each transaction. The significantly

larger transaction sizes, which would be

cause for concern at the retail level but

are commonplace at the wholesale level,

coupled with the relative anonymity of

the transaction, have resulted in this

segment of industry becoming the

source of choice for the traffickers.

Through conspiracy and deception, as

well as carelessness on the part of some

wholesalers, traffickers have been able

to obtain large volumes of product

without having their transactions stand

out against the normal commerce.

Against this backdrop, and in

recognition of the effectiveness of the

new controls provided by the MCA,

chemical controls for the consumer drug

products should be focused on the

wholesale level, and the retail level

should be granted additional exemption

as long as they operate within the new

limits of the MCA. However, given the

opportunistic nature of the traffickers

and their preference for an unregulated

source of supply, there exists the

potential that, with the control of the

wholesale distributors, traffickers may

intensely focus on the retail level as a

source of supply. Therefore, the

exemption from the registration

requirement applies to retail distributors

that limit their activities exclusively to

sales below the 24 gram threshold

established by the MCA for those

products. Retail distributors that engage

in the distribution of ordinary over-thecounter pseudoephedrine and

phenylpropanolamine products are also

exempt from the registration

requirement. Thus, it is likely that most,

if not all, of the estimated 750,000 retail

distributor will qualify and be exempt

from registration.

The final element to be addressed was

the impact that the controls would have

on the industry and DEA. The

determining factor in this assessment

proved to be the types of transactions

conducted and the business practices in

the different segments of the industry.

The principal controls required under

the MCA are recordkeeping and

registration. The recordkeeping

requirement applies to any person who

engages in a regulated transaction

involving a pseudoephedrine,

phenylpropanolamine, or combination

ephedrine product, other than a retail

distribution of an ordinary over-thecounter pseudoephedrine or

phenylpropanolamine product. The

registration requirement applies to any

person who distributes imports, or

exports a pseudophedrine,

phenylpropanolamine, or combination

ephedrine product, except for the

exemptions previously discussed.

The recordkeeping requirement

would represent a minimal burden for

both segments of industry. While retail

distributors do not keep records of their

sales to individuals as a matter of

business practice, their sales are almost

exclusively sub-threshold; therefore, the

recordkeeping requirement would not

apply for their distributions. Wholesale

distributors, on the other hand, often

engage in transactions that would be

subject to the recordkeeping

requirement. However, such distributors

generally do keep detailed records of

their transactions as a matter of good

business practice. Such records can be

made readily retrievable through the

marking of the transactions involving

regulated products with an asterisk or

other unique code. Further, under the

MCA, the record retention period for

List I records has been reduced from

four years to two years, thus reducing

the regulatory burden of List I chemical

controls. Additionally, recordkeeping at

the wholesale level is further mitigated

by a threshold of one kilogram for

ephedrine combination and

pseudoephedrine products, and 2.5

kilograms for phenylpropanolamine

products. Transactions below these

thresholds do not require records.

The registration requirement, on the

other hand, would have a significant

financial impact if applied across the

board. The cost of initial registration (at

$255.00 each) for 750,000 retail

distributors would be over $190 million;

annual reregistration (at $116.00 each)

would cost approximately $87 million.

For the estimated 3,500 manufacturers/

wholesalers the cost for initial

registration (at $595.00 each) would be

slightly more than $2 million; annual

reregistration (at $477.00 each) would

cost approximately $1.7 million. The

respective annual paperwork burdens

associated with filing the applications

for registration would be 150,000 hours

for all retail distributors and 700 hours

for all manufacturers/wholesalers.

Further, the administrative burden for

DEA of having to receive and process

over 750,000 applications per year

would be enormous.

The cost and administrative burden of

requiring registration at the retail level,

which is predominantly small business,

would be significant, while the potential

of large scale diversion at the retail level

following implementation of the MCA is

greatly reduced given the limited

amounts of products being distributed

in face-to-face sales to individuals.

Therefore, to best achieve the

intended results of the MCA, while

minimizing the burden on industry,

DEA has determined to propose that: (a)

the registration and recordkeeping

provisions will apply at the

manufacturer/wholesale level, and (b)

the exemptions will apply to retail

distributors who operate exclusively

within the retail quantity limits

established by the MCA, irrespective of

whether the form of packaging meets the

definition of ‘‘ordinary over-the-counter

pseudoephedrine or

phenylpropanolamine product’’ under

Section 102(45) of the Act (21 U.S.C.

802(45)). The large volumes of products

per transaction at wholesale, the

opportunity for relatively anonymous

transactions, and the existing history of

diversion point to the need for adequate

registration and recordkeeping at this

level of industry. As noted earlier, the

cost of imposing the full controls of the

MCA on this segment of the industry

will consist of slightly more than $2

million for initial registration,

approximately $1.7 million for annual

reregistration, and an estimated 700

burden hours per year. The

recordkeeping requirement will not

result in substantial additional burden

due to the fact that the information

required can be found in the normal

business records (provided they are

marked in such a way as to make them

readily retrievable) that would be

maintained as part of good business

practice.

With respect to retail distributors, the

determination was made to provide a

waiver from the registration, and, thus,

recordkeeping, requirement due to the

small size and face-to-face nature of the

transactions and the limited future

potential of diversion from this segment

of the industry. The waiver of the

registration applies, regardless of the
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules 52301

form of packaging of the drug product,

only to those retail distributors whose

activities are restricted to below

threshold transactions, to ensure that

this segment of industry does not

become the source of supply for the

traffickers. If a retail distributor intends

to engage in above-threshold

transactions in the course of business,

then a registration should be obtained.

However, it is understood that

unintentional sales which exceed the

threshold are possible. In that regard,

DEA wishes to note that the chemical

control program is focused on

preventing the diversion of chemicals to

clandestine laboratories and not on

identification of an action against the

rare, inadvertent, non-egregious abovethreshold sale of drug products by a

checkout clerk or similar employee of

an unregistered retail distributor in the

normal course of legitimate business.

Firms should, however, to protect their

registration exemption, maintain

programs to guard against such

inadvertent sales.

In total, the proposed regulations,

coupled with the existing exemption

from chemical registration for controlled

substances registrants and the exception

from the regulations provided for

distributors of prescription drug

products that contain List I chemicals,

provide a system of controls that

minimize the financial and

administrative burden on the industry

while still allowing effective

enforcement of the requirements of the

MCA.

The Acting Deputy Administrator

hereby certifies that this proposed

rulemaking has been drafted in a

manner consistent with the principles of

the Regulatory Flexibility Act (5 U.S.C.

601 et seq.). As discussed in the

preceding section regarding Small

Business Impact And Regulatory

Flexibility Concerns, consideration was

given to the potential impact of varying

levels of regulation, the population that

would be impacted, and the nature of

the problem to be addressed by the

regulations. These proposed regulations

will provide a system of controls to

prevent the diversion of the drug

products to clandestine laboratories that

is consistent with the intent of the MCA,

while providing regulatory relief for the

approximately 750,000 retail

distributors, most of whom are small

businesses. For the remaining 3,000 to

4,000 wholesale distributors, importers,

and exporters that will be subject to

regulation, the primary impact will be

the requirement that they obtain an

annual registration from DEA and make

occasional reports. A copy of this

proposed rulemaking has been provided

to the Chief Counsel for Advocacy at the

Small Business Administration.

This proposed rulemaking has been

drafted and reviewed in accordance

with Executive Order 12866. This

proposed rulemaking has been

determined to be a significant action

because the requirements of the MCA

affect a broad spectrum of businesses

distributing widely used products to the

public. This proposed rule would

establish specific exemptions to

significantly reduce that impact.

Therefore, this proposed rulemaking has

been reviewed and approved by the

Office of Management and Budget.

This action has been analyzed in

accordance with the principles and

criteria in Executive Order 12612, and it

has been determined that this rule does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

This rule will not result in the

expenditure by State, local, and tribal

governments, in the aggregate, or by the

private sector, of $100,000,000 or more

in any one year, and will not

significantly or uniquely affect small

governments. Therefore, no actions were

deemed necessary under the provisions

of the Unfunded Mandates Reform Act

of 1995.

This rule is not a major rule as

defined by Section 804 of the Small

Business Regulatory Enforcement

Fairness Act of 1996. This rule will not

result in an annual effect on the

economy of $100,000,000 or more; a

major increase in costs or prices; or

significant adverse effects on

competition, employment, investment,

productivity, innovation, or on the

ability of United States-based

companies to compete with foreignbased companies in domestic and

export markets.

List of Subjects

21 CFR Part 1300

Definitions, Drug traffic control.

21 CFR Part 1309

Administrative practice and

procedure, Drug traffic control, List I

and II chemicals, Security measures. 21

CFR Part 1310

Drug traffic control, List I and II

chemicals, Reporting and recordkeeping

requirements.

For the reasons set out above, 21 CFR

Parts 1300, 1309, and 1310 are proposed

to be amended as follows:

PART 1300—[AMENDED]

1. The authority citation for Part 1300

continues to read as follows:

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

958(f).

2. Section 1300.02 is proposed to be

amended by revising paragraphs

1300.2(b)(28)(i)(D)(1) and (2) and by

adding new paragraphs 1300.02(b) (31)

and (32) to read as follows:

§ 1300.02 Definitions relating to listed

chemicals.

* * * * *

(b) * * *

(28) * * *

(i) * * *

(D) * * *

(1)(i) The drug contains ephedrine or

its salts, optical isomers, or salts of

optical isomers, pseudoephedrine or its

salts, optical isomers, or salts of optical

isomers, or phenylpropanolamine or its

salts, optical isomers, or salts of optical

isomers unless otherwise exempted

under § 1310.11 of this chapter, except

that any sale of ordinary over-thecounter pseudoephedrine or

phenylpropanolamine products by retail

distributors shall not be a regulated

transaction; or

(ii) The Administrator has determined

pursuant to the criteria in § 1310.10 of

this chapter that the drug or group of

drugs is being diverted to obtain the

listed chemical for use in the illicit

production of a controlled substance;

and

(2) The quantity of ephedrine,

pseudoephedrine,

phenylpropanolamine, or other listed

chemical contained in the drug

included in the transaction or multiple

transactions equals or exceeds the

threshold established for that chemical,

except that the threshold for any sale of

products containing pseudoephedrine

or phenylpropanolamine by retail

distributors or by distributors required

to submit reports by § 1310.03(c) shall

be 24 grams of pseudoephedrine or 24

grams of phenylpropanolamine in a

single transaction.

* * * * *

(31) The term ordinary over-thecounter pseudoephedrine or

phenylpropanolamine product means

any product containing

pseudoephedrine or

phenylpropanolamine that is—

(i) Regulated pursuant to the Act; and

(ii)(A) Except for liquids, sold in

package sizes of not more than 3.0

grams of pseudoephedrine base or 3.0

grams of phenylpropanolamine base,

and that is packaged in blister packs,

each blister containing no more than

two dosage units, or where the use of

blister packs is technically infeasible,

that is packaged in unit dose packets or

pouches, and
52302 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules

(B) For liquids, sold in package sizes

of not more than 3.0 grams of

pseudoephedrine base or 3.0 grams of

phenylpropanolamine base.

(32) The term combinaiton ephedrine

product means a drug product

containing ephedrine or its salts, optical

isomers, or salts of optical isomers, and

therapeutically significant quantities of

another active medicinal ingredient.

PART 1309—[AMENDED]

1. The authority citation for part 1309

continues to read as follows:

Authority: 21 U.S.C. 821, 822, 823,

824, 830, 871(b), 875, 877, 958.

2. Section 1309.22 is proposed to be

amended by revising paragraph (b) to

read as follows:

§ 1309.22 Separate registration for

independent activities.

* * * * *

(b) Every person who engages in more

than one group of independent activities

shall obtain a separate registration for

each group of activities, unless

otherwise exempted by the Act or

§§ 1309.24 through 1309.26, except that

a person registered to import any List I

chemical shall be authorized to

distribute that List I chemical after

importation, but no other chemical that

the person is not registered to import.

3. Section 1309.24 is proposed to be

revised to read as follows:

§ 1309.24 Waiver of registration

requirement for certain activities.

(a) The requirement of registration is

waived for any agent or employee of a

person who is registered to engage in

any group of independent activities, if

such agent or employee is acting in the

usual course of his or her business or

employment.

(b) The requirement of registration is

waived for any person who distributes

a product containing a List I chemical

that is regulated pursuant to

§ 1300.02(b)(28)(i)(D), if that person is

registered with the Administration to

manufacture, distribute or dispense a

controlled substance.

(c) The requirement of registration is

waived for any person who imports or

exports a product containing a List I

chemical that is regulated pursuant to

§ 1300.02(b)(28)(i)(D), if that person is

registered with the Administration to

engage in the same activity with a

controlled substance.

(d) The requirement of registration is

waived for any person who distributes

a prescription drug product containing

a List I chemical that is regulated

pursuant to § 1300.02(b)(28)(i)(D) of this

chapter.

(e) The requirement of registration is

waived for any retail distributor whose

activities with respect to List I

chemicals are limited to the distribution

of below-threshold quantities of a

pseudoephedrine,

phenylpropanolamine, or combination

ephedrine product that is regulated

pursuant to § 1300.02(b)(28)(i)(D) of this

chapter, in a single transaction to an

individual for legitimate medical use,

irrespective of whether the form of

packaging of the product meets the

definition of ‘‘ordinary over-the-counter

pseudoephedrine or

phenylpropanolamine product’’ under

§ 1300.02(b)(31) of this chapter. The

threshold for a distribution of a product

in a single transaction to an individual

for legitimate medical use is 24 grams of

pseudoephedrine,

phenylpropanolamine, or ephedrine

base.

(f) The requirement of registration is

waived for any manufacturer of a List I

chemical, if that chemical is produced

solely for internal consumption by the

manufacturer and there is no

subsequent distribution or exportation

of the List I chemical.

(g) If any person exempted under

paragraph (b), (c), (d), or (e) of this

section also engages in the distribution,

importation or exportation of a List I

chemical, other than as described in

such paragraph, the person shall obtain

a registration for such activities, as

required by § 1309.21.

(h) The Administrator may, upon

finding that continuation of the waiver

would not be in the public interest,

suspend or revoke a waiver granted

under paragraph (b), (c), (d), or (e) of

this section pursuant to the procedures

set forth in §§ 1309.43 through 1309.46

and 1309.51 through 1309.57. In

considering the revocation or

suspension of a person’s waiver granted

pursuant to paragraph (b) or (c) of this

section, the Administrator shall also

consider whether action to revoke or

suspend the person’s controlled

substance registration pursuant to 21

U.S.C. 824 is warranted.

(i) Any person exempted from the

registration requirement under this

section shall comply with the security

requirements set forth in §§ 1309.71

through 1309.73 and the recordkeeping

and reporting requirements set forth

under parts 1310 and 1313 of this

chapter.

4. Section 1309.25 is proposed to be

revised to read as follows:

§ 1309. Temporary exemption from

registration for chemical registration

applicants.

(a) Each person required by section

302 of the Act (21 U.S.C. 822) to obtain

a registration to distribute, import, or

export a combination ephedrine product

is temporarily exempted from the

registration requirement, provided that

the person submits a proper application

for registration on or before July 12,

1997. 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.

(b) Each person required by section

302 of the Act (21 U.S.C. 822) to obtain

a registration to distribute, import, or

export a pseudoephedrine or

phenylpropanolamine drug product is

temporarily exempted from the

registration requirement, provided that

the person submits a proper application

for registration on or before December 3,

1997. 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.

5. Sections 1309.27, 1309.28 and

1309.29 are proposed to be removed.

6. Section 1309.71 is proposed to be

amended by revising paragraph (a)(2) to

read as follows:

§ 1309.71 General security requirements.

(a)* * *

(2) In retail settings open to the public

where drug products containing

ephedrine or its salts, optical isomers, or

salts of optical isomers are distributed,

such drugs will be stocked behind the

counter where only employees have

access.

* * * * *

PART 1310—[AMENDED]

1. The authority citation for part 1310

continues to read as follows:

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

2. Section 1310.03 is proposed to be

amended by adding a new paragraph (c)

to read as follows:

§ 1310.03 Persons required to keep

records and file reports.

* * * * *

(c) Each regulated person who

engages in a transaction with a
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules 52303

nonregulated person which involves

ephedrine, pseudoephedrine, or

phenylpropanolamine (including drug

products containing these chemicals),

and uses or attempts to use the Postal

Service or any private or commercial

carrier shall file monthly reports of each

such transaction as specified in

§ 1310.05.

3. Section 1310.04 is proposed to be

amended by removing paragraph (g) and

revising paragraph (f)(1) to read as

follows:

§ 1310.04 Maintenance of records.

* * * * *

(f) * * *

(1) List I chemicals:

(i) Except as provided in paragraph

(f)(1)(ii) of this section, the following

thresholds have been established for

List I chemicals:

Chemical Threshold by base

weight

(A) Anthranilic acid, its esters, and its salts .............................................................................................................................. 30 kilograms.

(B) Benzyl cyanide ..................................................................................................................................................................... 1 kilogram.

(C) Ephedrine, its salts, optical insomers, and salts of optical isomers .................................................................................... No threshold-All

transactions Regulated.

(D) Ergonovine and its salts ...................................................................................................................................................... 10 grams.

(E) Ergotamine and its salts ...................................................................................................................................................... 20 grams.

(F) N-Acetylanthranilic acid, its esters, and its salts ................................................................................................................. 40 kilograms.

(G) Norpseudoephedrine, its salts, optical isomers, and salts of optical isomers .................................................................... 2.5 kilograms.

(H) Phenylacetic acid, its esters, and its salts ........................................................................................................................... 1 kilogram.

(I) Phenlpropanolamine, its salts, optical isomers, and salts of optical isomers ....................................................................... 2.5 kilograms.

(J) Piperidine and its salts ......................................................................................................................................................... 500 grams.

(K) Pseudoephedrine, its salts, optical isomers, and salts of optical isomers .......................................................................... 1 kilogram.

(L) 3, 4-Methylenedioxyphenyl-2-propanone ............................................................................................................................. 4 kilograms.

(M) Methylamine and its salts .................................................................................................................................................... 1 kilogram.

(N) Ethylamine and its salts ....................................................................................................................................................... 1 kilogram.

(O) Propionic anhydride ............................................................................................................................................................. 1 gram.

(P) Isosafrole .............................................................................................................................................................................. 4 kilograms.

(Q) Safrole .................................................................................................................................................................................. 4 kilograms.

(R) Piperonal .............................................................................................................................................................................. 4 kilograms.

(S) N-Methylephedrine, its salts, optical isomers, and salts of optical isomers (N-Methylephedrine ....................................... 1 kilogram.

(T) N-Methylpseudoephedrine, its salts, optical isomers, and salts of optical isomers ............................................................ 1 kilogram.

(U) Hydriodic Acid ...................................................................................................................................................................... 1.7 kilogrmas (or 1

liter by volume.

(V) Benzaldehyde ....................................................................................................................................................................... 4 kilograms.

(W) Nitroethane .......................................................................................................................................................................... 2.5 kilograms.

(ii) Notwithstanding the thresholds established in paragraph (f)(1)(i), the following thresholds will apply for the

following List I chemicals that are contained in drug products that are regulated pursuant to § 1300.02(b)(28)(i)(D) (Retail

distribution thresholds are for a single transaction; the cumulative threshold provision does not apply. All other distributions are subject to the cumulative threshold provision.):

Chemical Threshold by base

weight

(A) Ephedrine, its salts, optical isomers, and salts of optical isomers as the sole therapeutically significant medicinal ingredient.No threshold-All

transactions Regulated.

(B) Ephedrine, its salts, optical isomers, and salts of optical isomers in combination with therapeutically significant

amounts of another medicinal ingredient:

(1) Distributions by retail distributors .................................................................................................................................. 24 grams.

(2) Distributions by person required to report under § 1310.03(c) ..................................................................................... 24 grams.

(3) All other domestic distributions (other than (B) (1) and (2)) ......................................................................................... 1 kilogram.

(4) Imports and Exports ...................................................................................................................................................... 1 kilogram.

(C) Pseudoephedrine, its salts, optical isomers, and salts of optical isomers (other than ordinary over-the-counter products):

(1) Distributions by retail distributors .................................................................................................................................. 24 grams.

(2) Distributions by person required to report under § 1310.03(c) ..................................................................................... 24 grams.

(3) All other domestic distributions (other than (C) (1) and (2)) ......................................................................................... 1 kilogram.

(4) Imports and Exports ...................................................................................................................................................... 1 kilogram.

(D) Pseudoephedrine, its salts, optical isomers, and salts of optical isomers (Ordinary over-the-counter products):

(1) Distributions by retail distributors .................................................................................................................................. Exempt.

(2) Distributions by person required to report under § 1310.03(c) ..................................................................................... 24 grams.

(3) All other domestic distributions (other than (D) (1) and (2)) ......................................................................................... 1 kilogram.

(4) Imports and Exports ...................................................................................................................................................... 1 kilogram.

(E) Phenylpropanolamine, its salts, optical isomers, and salts of optical isomers (other than ordinary over-the-counter

products):

(1) Distributions by retail distributors .................................................................................................................................. 24 grams.

(2) Distributions by person required to report under § 1310.03(c) ..................................................................................... 24 grams.

(3) All other domestic distributions (other than (E) (1) and (2)) ......................................................................................... 2.5 kilograms.

(4) Imports and Exports ...................................................................................................................................................... 2.5 kilograms.

(F) Phenylpropanolamine, its salts, optical isomers, and salts of optical isomers (Ordinary over-the-counter products):

(1) Distributions by retail distributors .................................................................................................................................. Exempt.
52304 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Proposed Rules

Chemical Threshold by base

weight

(2) Distributions by person required to report under § 1310.03(c) ..................................................................................... 24 grams.

(3) All other domestic distributions (other than (F) (1) and (2)) ......................................................................................... 2.5 kilograms.

(4) Imports and Exports ...................................................................................................................................................... 2.5 kilograms.

4. Section 1310.05 is proposed to be amended by adding a new paragraph (e) to read as follows:

§ 1310.05 Reports.

* * * * *

(e) Each regulated person required to report pursuant to § 1310.03(c) shall either:

(1) Submit a written report,

containing the information set forth in

§ 1310.06(i), on or before the 15th day

of each month following the month in

which the distributions took place. The

report shall be submitted under

company letterhead, signed by the

person authorized to sign the

registration application forms on behalf

of the registrant, to the Chemical

Operations Section, Office of Diversion

Control, Drug Enforcement

Administration, Washington, D.C.

20537; or

(2) Upon request to and approval by

the Administration, submit the report in

electronic form, either via computer

disk or direct electronic data

transmission, in such form as the

Administration shall direct. Requests to

submit reports in electronic form should

be submitted to the Chemical

Operations Section, Office of Diversion

Control, Drug Enforcement

Administration, Washington, D.C.

20537, ATTN: Electronic Reporting.

5. Section 1310.06 is proposed to be

amended by adding a new paragraph (i)

to read as follows:

§ 13.10.06 Content of records and reports.

* * * * *

(i) Each monthly report required by

§ 1310.05(e) shall provide the following

information for each distribution:

(1) Supplier’s name and registration

number;

(2) Purchaser’s name and address;

(3) Name/address shipped to (if

different from purchaser’s name/

address);

(4) Name of the Chemical and total

amount shipped;

(5) Date of shipment;

(6) Product name (if drug product);

(7) Dosage form (if drug product);

(8) Dosage strength (if drug product);

(9) Number of dosage units (if drug

product);

(10) Package type (if drug product);

(11) Package quantity (if drug

product);

(12) Lot number (if drug product).

6. Section 1310.10 is proposed to be

amended by revising paragraph (d)

introductory text to read as follows:

§ 1310.10 Removal of the exemption of

drugs distributed under the Food, Drug, and

Cosmetic Act.

* * * * *

(d) Any manufacturer seeking

reinstatement of a particular drug

product that has been removed from an

exemption may apply to the

Administrator for reinstatement of the

exemption for that particular drug

product on the grounds that the

particular drug product is manufactured

and distributed in a manner that

prevents diversion. In determining

whether the exemption should be

reinstated the Administrator shall

consider:

* * * * *

Dated: September 26, 1997.

James S. Milford,

Acting Deputy Administrator.

[FR Doc. 97–26150 Filed 10–6–97; 8:45 am]

BILLING CODE 4410–09–M

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 61

RIN 3067–AC73

National Flood Insurance Program

(NFIP); Standard Flood Insurance

Policy

AGENCY: Federal Emergency

Management Agency (FEMA).

ACTION: Proposed rule.

SUMMARY: This proposed rule would

increase the amount of the deductible

under the Standard Flood Insurance

Policy—from $750 to $1,000—for

structures with subsidized coverage.

DATES: All comments received on or

before November 7, 1997 will be

considered before final action is taken

on the proposed rule.

ADDRESSES: Please submit any written

comments to the Rules Docket Clerk,

Office of General Counsel, Federal

Emergency Management Agency, 500 C

Street, S.W., room 840, Washington, DC

20472, (facsimile) 202–646–4536.

FOR FURTHER INFORMATION CONTACT:

Charles M. Plaxico, Jr., Federal

Emergency Management Agency,

Federal Insurance Administration, (202)

646–3422, (facsimile) (202) 646–4327.

SUPPLEMENTARY INFORMATION: This

proposal is the result of an ongoing

review and reappraisal of the National

Flood Insurance Program (NFIP) to

achieve greater administrative and fiscal

effectiveness in the NFIP’s operations.

The proposed amendment is also

intended to help the NFIP increase its

capability to build reserves for

catastrophic loss years. This can be

handled either by rate increases, or by

other means such as imposing coverage

limitations or increasing deductibles, or

by both.

Section 1308(b)(2) of the National

Flood Insurance Act of 1968, as

amended, charges the Director of FEMA

with the responsibility of establishing

‘‘chargeable premium rates’’ which are

‘‘ * * * adequate, on the basis of

accepted actuarial principles, to provide

reserves for anticipated losses, or if less

than such amount, consistent with the

objective of making flood insurance

available where necessary at reasonable

rates so as to encourage prospective

insureds to purchase such insurance

* * * ’’.

Since there have been three premium

increases in the last three years—two in

the subsidized premium rates and a

premium surcharge mandated by § 555

of the National Flood Insurance Reform

Act of 1994, for the addition of

increased cost of compliance coverage,

FEMA believes that the better approach

to enhancing fiscal soundness would be

by adjustment to the deductible

provisions for policies which are issued

using subsidized rates. Therefore, this

proposed rule would increase the

standard deductible for structures

covered by insurance at subsidized

premium rates from $750 to $1,000.

Concurrent with this proposed change,

insureds would be provided the option

to pay a higher premium at full-risk

rates to ‘‘buy back’’ a reduced

deductible under their Standard Flood

Insurance Policy (SFIP).