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[Federal Register Volume 75, Number 129 (Wednesday, July 7, 2010)]
[Rules and Regulations]
[Pages 38915-38922]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16388]

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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 75, No. 129 / Wednesday, July 7, 2010 / Rules 
and Regulations

[[Page 38915]]

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1310

[Docket No. DEA-296F]
RIN 1117-AB10

Removal of Thresholds for the List I Chemicals Pseudoephedrine 
and Phenylpropanolamine

AGENCY: Drug Enforcement Administration, Department of Justice.

ACTION: Final rule.

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

SUMMARY: The Drug Enforcement Administration (DEA) is removing the 
thresholds for importation, exportation, and domestic distributions of 
the List I chemicals pseudoephedrine and phenylpropanolamine. This 
rulemaking is being conducted as part of DEA's implementation of the 
Combat Methamphetamine Epidemic Act of 2005 and is needed to implement 
the Act's requirements for import and production quotas and to address 
the potential diversion of these chemicals. DEA is also clarifying that 
all transactions of drug products containing ephedrine, 
pseudoephedrine, and phenylpropanolamine, except retail transactions, 
are considered to be regulated transactions.

DATES: Effective Date: This rule is effective August 6, 2010.

FOR FURTHER INFORMATION CONTACT: Mark W. Caverly, Chief, Liaison and 
Policy Section, Office of Diversion Control, Drug Enforcement 
Administration, 8701 Morrissette Drive, Springfield, VA 22152, (202) 
307-7297.

SUPPLEMENTARY INFORMATION:

DEA's Legal Authority

    DEA implements the Comprehensive Drug Abuse Prevention and Control 
Act of 1970, often referred to as the Controlled Substances Act (CSA) 
and the Controlled Substances Import and Export Act (CSIEA) (21 U.S.C. 
801-971), as amended. DEA publishes the implementing regulations for 
these statutes in Title 21 of the Code of Federal Regulations (CFR), 
parts 1300 to end. These regulations are designed to ensure that there 
is a sufficient supply of controlled substances for legitimate medical, 
scientific, research, and industrial purposes and deter the diversion 
of controlled substances to illegal purposes. The CSA mandates that DEA 
establish a closed system of control for manufacturing, distributing, 
and dispensing controlled substances. Any person who manufactures, 
distributes, dispenses, imports, exports, or conducts research or 
chemical analysis with controlled substances must register with DEA 
(unless exempt) and comply with the applicable requirements for the 
activity. The CSA, as amended, also requires DEA to regulate the 
manufacture, distribution, retail sale, import, and export of chemicals 
that may be used to manufacture controlled substances illegally. Listed 
chemicals that are classified as List I chemicals are important to the 
manufacture of controlled substances. Those classified as List II 
chemicals may be used to manufacture controlled substances.

Combat Methamphetamine Epidemic Act of 2005

    On March 9, 2006, the President signed the Combat Methamphetamine 
Epidemic Act of 2005 (CMEA), which is Title VII of the USA PATRIOT 
Improvement and Reauthorization Act of 2005 (Pub. L. 109-177). Among 
other actions, CMEA imposed new requirements regarding the retail sale 
of scheduled listed chemical products (drugs containing ephedrine, 
pseudoephedrine, or phenylpropanolamine, that may be marketed or 
distributed lawfully in the United States under the Federal Food, Drug 
and Cosmetic Act as nonprescription products) (21 U.S.C. 802(45)(A)). 
In a separate rulemaking, ``Retail Sales of Scheduled Listed Chemical 
Products; Self-Certification of Regulated Sellers of Scheduled Listed 
Chemical Products'' [Docket No. DEA-291, RIN 1117-AB05] (71 FR 56008, 
September 26, 2006; corrected at 71 FR 60609, October 13, 2006), DEA 
promulgated regulations implementing these provisions (21 U.S.C. 
830(d), (e); 21 CFR part 1314).
    The CMEA also subjects material containing ephedrine, 
pseudoephedrine, and phenylpropanolamine to manufacturing and import 
restrictions. Specifically, CMEA amended section 1002 of the CSA (21 
U.S.C. 952(a)(1)) by adding the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine to those narcotic raw 
materials whose importation into the United States is prohibited except 
for such amounts as the Attorney General finds to be necessary to 
provide for medical, scientific, or other legitimate purposes. CMEA 
also amended section 306 of the Act (21 U.S.C. 826) to establish the 
total annual needs of ephedrine, pseudoephedrine, and 
phenylpropanolamine to provide for the estimated medical, scientific, 
research, and industrial needs of the United States, for lawful export 
requirements, and for the establishment and maintenance of reserve 
stocks. Individual manufacturing and procurement quotas for ephedrine, 
pseudoephedrine, and phenylpropanolamine were also required to be 
established for persons conducting manufacturing activities with those 
chemicals. In a separate rulemaking, ``Import and Production Quotas for 
Certain List I Chemicals'' [Docket No. DEA-293, RIN 1117-AB08] (72 FR 
37439, July 10, 2007; Final Rule 73 FR 73549, December 3, 2008), DEA 
promulgated regulations to implement these provisions (21 CFR part 
1315).
    Further, the CMEA requires that importers, exporters, and persons 
involved in international transactions of all listed chemicals, 
including ephedrine, pseudoephedrine, and phenylpropanolamine, provide 
DEA with information regarding the transferee (i.e., the downstream 
customer), of the chemical, as well as information regarding the 
quantity of the chemical to be transferred. Importers, exporters, and 
persons involved in international transactions are further required to 
provide DEA with a return declaration regarding each import, export, or 
international transaction after the transaction is completed (CMEA 
Sec.  716, 21 U.S.C. 971(d) and (g), as amended). In a separate 
rulemaking, ``Implementation of the Combat Methamphetamine Epidemic Act 
of 2005; Notice of

[[Page 38916]]

Transfers Following Importation or Exportation'' [Docket No. DEA-292, 
RIN 1117-AB06] (72 FR 17401, April 9, 2007; Temporary Stay of Certain 
Provisions 72 FR 28601, May 22, 2007), DEA promulgated regulations 
implementing these provisions (21 CFR 1313.16, 1313.17, 1313.26, 
1313.27, 1313.32, 1313.35).
    Finally, the CMEA requires that the notice of importation (DEA Form 
486) for ephedrine, pseudoephedrine, and phenylpropanolamine ``shall 
include all information known to the importer on the chain of 
distribution of such chemical from the manufacturer to the importer.'' 
(CMEA Sec.  721, 21 U.S.C. 971(h) as amended). In a separate 
rulemaking, ``Information on Foreign Chain of Distribution for 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine'' [Docket No. DEA-
295, RIN 1117-AB07] (73 FR 16793, March 31, 2008), DEA proposed 
regulations to implement this provision.
    The List I chemicals ephedrine, pseudoephedrine, and 
phenylpropanolamine as single entity or combination products all serve 
as precursor chemicals for the illicit manufacture of controlled 
substances. Ephedrine and pseudoephedrine are the primary precursors 
used in the illicit synthesis of methamphetamine, a schedule II 
controlled substance, and methcathinone, a schedule I controlled 
substance. Phenylpropanolamine is the primary precursor used in the 
illicit synthesis of amphetamine, a schedule II controlled substance.

Licit Use

    Ephedrine, pseudoephedrine, and phenylpropanolamine all have 
therapeutic uses in both over-the-counter and prescription drug 
products. Ephedrine is lawfully marketed under the Federal Food, Drug, 
and Cosmetic Act as an ingredient in nonprescription (``over-the-
counter'' (OTC)) drugs as a bronchodilator for the treatment of asthma. 
Ephedrine is also available as a nonprescription product in combination 
with the active ingredient guaifenesin, which is an expectorant.
    As a prescription drug, ephedrine is used in parenteral 
(injectable) form in hospitals as part of anesthesiology kits. 
Ephedrine has the beneficial effect of increasing blood pressure very 
rapidly in the event of hypotensive crisis (i.e., sudden loss of blood 
pressure sometimes experienced during surgery). Parenteral ephedrine is 
also sometimes used to relieve acute bronchospasm. Oral dosage forms of 
ephedrine are also available as prescription drugs for the treatment of 
asthma. These prescription drug products primarily consist of ephedrine 
in combination with other active ingredients such as potassium iodide 
(an expectorant) and/or theophylline (a bronchospamolytic).
    Pseudoephedrine is lawfully marketed under the Federal Food, Drug, 
and Cosmetic Act for over-the-counter use as a decongestant. 
Phenylpropanolamine has historically been marketed in the United States 
for OTC use as a decongestant and diet aid and there have been many 
legend (prescription) drug products that contain pseudoephedrine or 
phenylpropanolamine. In the vast majority of these preparations, 
pseudoephedrine or phenylpropanolamine were in combination with other 
active ingredients, such as antihistamines, expectorants, and/or 
antitussives.
    In November 2000, the U.S. Food and Drug Administration (FDA) 
issued a public health advisory concerning phenylpropanolamine and 
requested that all drug companies discontinue marketing products 
containing phenylpropanolamine due to risk of hemorrhagic stroke. In 
response, many companies have voluntarily reformulated their products 
to exclude phenylpropanolamine. Subsequently, on December 22, 2005, the 
FDA published a Notice of Proposed Rulemaking (70 FR 75988) proposing 
to categorize all over-the-counter nasal decongestants and weight 
control drug products containing phenylpropanolamine preparations as 
Category II, nonmonograph, i.e., not generally recognized as being safe 
for human consumption. Most products containing phenylpropanolamine 
intended for humans have been withdrawn from the market, but 
phenylpropanolamine is still sold by prescription for veterinary uses.
    While ephedrine and pseudoephedrine are pharmacologically different 
(and have quite different therapeutic uses), they are directly 
substitutable in the production of methamphetamine. This is because of 
the similarity of the chemical structures of the two drugs.

Discussion of the NPRM

    On November 20, 2007, DEA published a Notice of Proposed Rulemaking 
(NPRM) (72 FR 65248) addressing two issues related to CMEA 
implementation. First, DEA proposed to eliminate the thresholds for 
distribution, importation, and exportation of pseudoephedrine and 
phenylpropanolamine; the threshold for distribution, importation, and 
exportation of ephedrine was eliminated previously. Limits on retail 
transactions are set in the CMEA and were addressed in DEA's Interim 
Rule regarding the retail provisions of the CMEA (71 FR 56008, 
September 26, 2006; corrected at 71 FR 60609, October 13, 2006). 
Second, DEA proposed to clarify that all distribution, importation, and 
exportation transactions involving drug products containing ephedrine, 
pseudoephedrine, or phenylpropanolamine are regulated transactions.
    The comment period for the NPRM closed on January 22, 2008. DEA 
received one comment on the NPRM.

Thresholds

    Under the existing regulations (21 CFR 1310.04), the threshold for 
non-retail distribution, import, export, and international transactions 
of pseudoephedrine is 1 kilogram and for phenylpropanolamine, 2.5 
kilograms. A single transaction or multiple transactions in a month 
with a single customer that equal or exceed the threshold are 
considered regulated transactions and trigger the reporting and 
recordkeeping requirements of 21 CFR part 1310. If DEA has not 
established a monthly threshold for a List I chemical, then all 
transactions must be reported. DEA has not established a threshold for 
ephedrine; thus all non-retail distribution, import, and export 
transactions involving ephedrine are already subject to recordkeeping 
and reporting requirements.
    CMEA mandates that DEA establish the total annual need for 
ephedrine, pseudoephedrine, and phenylpropanolamine to be manufactured 
or imported each calendar year to provide for the estimated medical, 
scientific, research, and industrial needs of the United States, for 
lawful export requirements, and for the establishment and maintenance 
of reserve stocks (21 U.S.C. 826). These requirements apply equally to 
products containing these three List I chemicals as they do to the List 
I chemicals themselves. To limit the supply of the chemicals to the 
amount needed to meet the national need, CMEA requires DEA to establish 
import and production quotas for all three chemicals. DEA published 
regulations implementing procedures for import and production quotas 
for the List I chemicals ephedrine, pseudoephedrine, and 
phenylpropanolamine on July 10, 2007 (72 FR 37439; Final Rule 73 FR 
73549, December 3, 2008). DEA established the 2008 assessment of annual 
national needs for the List I chemicals ephedrine, pseudoephedrine, and 
phenylpropanolamine on December

[[Page 38917]]

26, 2007 (72 FR 73361) and has established the assessment of annual 
national needs every year thereafter.
    To obtain the information needed to assess the national need and 
set quotas to limit imports and production to meet that need, DEA 
identified two inadequacies regarding its existing regulations. First, 
persons who manufacture or import prescription drugs containing the 
chemicals are not registered. In a separate rulemaking, ``Registration 
Requirements for Importers and Manufacturers of Prescription Drug 
Products Containing Ephedrine, Pseudoephedrine, or 
Phenylpropanolamine'' [Docket No. DEA-294, RIN 1117-AB09] (73 FR 3432, 
January 18, 2008), DEA proposed to revise its registration requirements 
to cover manufacturers and importers of prescription drugs containing 
these chemicals and will issue quotas to them although the distribution 
and export of prescription drugs containing the chemicals will continue 
to be exempt from DEA regulatory control.
    The second inadequacy involves the thresholds that apply to 
pseudoephedrine and phenylpropanolamine. To determine the annual 
national need and set quotas, DEA must obtain information on all 
imports and production involving the chemicals, not just those that 
exceed the existing thresholds. The existing thresholds, although 
relatively low, potentially allow a considerable market in the 
chemicals to continue unregulated. For example, under the current 1 
kilogram (2.2 pound) threshold for pseudoephedrine, a person could 
import or distribute more than 2 pounds a month, or approximately 25 
pounds a year, of pseudoephedrine without exceeding the threshold and 
triggering DEA's controls. Assuming a conservative 50 percent 
conversion of pseudoephedrine to methamphetamine, a person could 
annually manufacture approximately 12.5 pounds of methamphetamine with 
that total sum of sub-threshold quantities. DEA trend reporting for 
2008 indicated that the national price for one pound of methamphetamine 
hydrochloride (powder) ranged from as low as $5,000 per pound in the 
DEA New Orleans and Washington DC Field Divisions, to as much as 
$26,000 and $27,000 per pound in the DEA New York and Atlanta Field 
Divisions, respectively. To further implement the CMEA, this rule seeks 
to curb the availability of pseudoephedrine at the wholesale level for 
illicit purposes.
    Additionally, under the current 2.5 kilogram (5.5 pound) threshold 
for phenylpropanolamine, a person could import or distribute more than 
5 pounds a month, or approximately 66 pounds a year of 
phenylpropanolamine without exceeding the threshold and triggering 
DEA's controls. Assuming a conservative 50 percent conversion of 
phenylpropanolamine to amphetamine, a person could annually manufacture 
approximately 33 pounds of amphetamine with that total sum of sub-
threshold quantities. To the extent that amphetamine is marketed on the 
street as methamphetamine, amphetamine often has a street value 
comparable to methamphetamine. To further implement the CMEA, this rule 
seeks to curb the availability of phenylpropanolamine at the wholesale 
level for illicit purposes.
    Currently, DEA is notified of all imports, exports, and 
international transactions of these chemicals which exceed the 
established thresholds or for which no threshold is established. DEA 
does not, however, receive import, export, and international 
transaction notifications for imports, exports, and international 
transactions of listed chemicals less than established thresholds. If 
DEA does not eliminate the threshold for imports, exports, and 
international transactions of pseudoephedrine and phenylpropanolamine, 
DEA will not have complete and accurate information regarding the 
quantities of these chemicals imported into, and exported from, the 
United States. Further, manufacturers and distributors are not required 
to maintain records of distributions of listed chemicals at or below 
established thresholds. Without the maintenance of these records, DEA 
will not have complete and accurate information regarding the 
quantities of these chemicals being distributed domestically.

Comments Regarding Removal of Thresholds for Pseudoephedrine and 
Phenylpropanolamine

    DEA did not receive any comments regarding the proposed removal of 
thresholds for the List I chemicals pseudoephedrine and 
phenylpropanolamine and therefore, is finalizing those provisions as 
proposed.
    Thus, to establish the controls that Congress mandated and limit 
imports and production to that needed for legitimate uses, DEA is 
eliminating the thresholds for all transactions involving the List I 
chemicals pseudoephedrine and phenylpropanolamine. As discussed 
previously, no threshold currently exists for transactions involving 
the List I chemical ephedrine; thus, all transactions are regulated. 
Any registrant manufacturing, distributing, importing, or exporting 
pseudoephedrine or phenylpropanolamine, in any quantity, either as bulk 
chemicals or in over-the-counter drug products, will be subject to the 
reporting and recordkeeping requirements. Any manufacturer or importer 
of prescription drug products containing one of the chemicals will also 
be subject to reporting and recordkeeping requirements. Importation of 
the chemicals is allowed only if it is within an import quota that the 
importer has applied for and been granted by DEA. The one exception to 
the import limits provided in the CMEA is that an individual may import 
not more than 7.5 grams in any 30-day period of a scheduled listed 
chemical product (i.e., a product containing ephedrine, 
pseudoephedrine, or phenylpropanolamine which may be marketed or 
distributed lawfully in the United States under the Federal Food, Drug, 
and Cosmetic Act as a nonprescription drug) by means of the U.S. Postal 
Service or a private or commercial carrier (21 U.S.C. 844(a)).
    The distribution and export of prescription drug products 
containing the chemicals are not covered because DEA will be able to 
obtain the information it needs for the assessment of annual national 
needs from importers and manufacturers of these products. DEA has not 
determined that prescription drug products are being diverted.

Regulated Transactions

    The definition of ``regulated transaction'' as amended by CMEA (21 
U.S.C. 802(39)(A)(iv)) excludes:
    (iv) 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 (21 U.S.C. 301 et seq.), 
subject to clause (v), unless--
    (I) The Attorney General has determined under section 204 of the 
Act (21 U.S.C. 814) 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
    (II) The quantity of the listed chemical contained in the drug 
included in the transaction or multiple transactions equals or exceeds 
the threshold established for that chemical by the Attorney General.
    Section 814 (b) states that:
    In removing a drug or group of drugs from exemption * * * the 
Attorney General shall consider, with respect to a drug or group of 
drugs that is

[[Page 38918]]

proposed to be removed from exemption--
    (1) The scope, duration, and significance of the diversion;
    (2) Whether the drug or group of drugs is formulated in such a way 
that it cannot be easily used in the illicit production of a controlled 
substance; and
    (3) Whether the listed chemical can be readily recovered from the 
drug or group of drugs.
    DEA in this rule is clarifying that nonprescription (OTC) drug 
products containing ephedrine, pseudoephedrine, and phenylpropanolamine 
do not qualify for the exemption from the definition of ``regulated 
transaction'' based on the three factors listed in 21 U.S.C. 814(b) for 
the reasons discussed below.

Evaluation of Statutory Factors for Removal of Exemption From the 
Definition of ``Regulated Transaction''

    Note: For a more detailed discussion of DEA's analysis regarding 
each factor, see the NPRM preamble (72 FR 65248, November 20, 2007).

Factor 1: Scope, Duration, and Significance of Diversion

    Throughout the late 1970s, methamphetamine was illicitly produced 
primarily through the use of the precursor phenylacetone (phenyl-2-
propanone (P2P)) by outlaw motorcycle gangs in the United States. In 
response to the use of P2P, DEA controlled P2P as a schedule II 
controlled substance in 1980, under the immediate precursor provisions 
of the CSA, specifically 21 U.S.C. 811(e). Clandestine laboratory 
operators responded by developing a variety of synthetic methods for 
producing P2P and also migrated to the use of ephedrine as precursor 
material.
    In 1989, DEA control of chemicals was initiated with passage of the 
Chemical Diversion and Trafficking Act of 1988 (CDTA) (Subtitle A of 
Title VI of Pub. L. 100-690). This law placed recordkeeping and 
reporting requirements on a wide variety of precursors and essential 
chemicals used in every aspect of clandestine drug manufacture, 
including bulk powder ephedrine, pseudoephedrine, and 
phenylpropanolamine. In response to the regulations, traffickers moved 
to the illicit use of single-entity ephedrine OTC tablets as an 
unregulated source of precursor material for the production of 
methamphetamine.
    In the early 1990s, a number of well-publicized seizures of rogue 
businesses (and prosecutions of their owners) began to impact the 
tablet manufacturing industry, and a loophole allowing the sale of 
single-entity ephedrine products was closed in late 1993 with the 
passage of the Domestic Chemical Diversion Control Act of 1993 (DCDCA) 
(Pub. L. 103-200).
    In 1996, the existing controls on precursor and essential chemicals 
imposed by the CDTA and DCDCA were further tightened with the passage 
of the Comprehensive Methamphetamine Control Act of 1996 (MCA) (Pub. L. 
104-237). What followed was a series of legislative actions on both the 
Federal and State levels to tighten controls on pharmaceutical products 
that serve as precursor material for clandestine methamphetamine 
laboratories. At the Federal level, this effort included passage of the 
Methamphetamine Anti-Proliferation Act of 2000 (MAPA) (Title XXXVI of 
Pub. L. 106-310). Today, however, ephedrine and pseudoephedrine OTC 
products continue to serve as the primary precursor source for the 
illicit production of methamphetamine, which has spread across the 
entire United States in epidemic proportions.

Current Seizures

    As DEA discussed in the NPRM, methamphetamine remains the primary 
drug produced in illicit laboratories within the United States. Data 
from the El Paso Intelligence Center's (EPIC) Clandestine Laboratory 
Database indicates that 10,022 methamphetamine laboratories were seized 
in calendar year 2004, 6,021 laboratories in calendar year 2005, 3,977 
laboratories in calendar year 2006, 3,097 laboratories in calendar year 
2007, and 3,924 laboratories in calendar year 2008 (as reported to EPIC 
through November 27, 2009). According to EPIC, from January 1, 2000, 
through December 31, 2008, there were at least 7,385 laboratories 
reportedly using ephedrine and 51,102 reportedly using pseudoephedrine 
as precursor material for methamphetamine production. Additionally EPIC 
reports the seizure of 48 amphetamine laboratories (using 
phenylpropanolamine) during the same period. The vast majority of these 
laboratories used pharmaceutical products containing pseudoephedrine, 
ephedrine, and phenylpropanolamine as the source of precursor material.

Illicit Uses

Factor 2: Whether the Drug or Group of Drugs Is Formulated in Such a 
Way That It Cannot Be Easily Used in the Illicit Production of a 
Controlled Substance

Factor 3: Whether the Listed Chemical Can Be Readily Recovered From the 
Drug or Group of Drugs

    As DEA discussed in the NPRM, the production of methamphetamine 
from ephedrine or pseudoephedrine can be accomplished via a series of 
reactions using widely available ``recipes'' and can be accomplished 
with little or no chemistry expertise. A variety of different methods 
exist to convert the precursor material to methamphetamine. If very 
small batches are made, there is not even a requirement to heat the 
reactants. For example, quantities of ephedrine or pseudoephedrine, 
iodine, and red phosphorous can be reacted with the addition of water 
and small quantities of methamphetamine can be produced. For larger 
batches the reactants are combined and heated for several hours. A 
variety of different reagents can be used to make the conversion to 
methamphetamine if the precursors ephedrine and pseudoephedrine are 
obtained. These reactants can also be used to convert 
phenylpropanolamine to amphetamine. Manufacturing procedures are 
readily available on the Internet and even unskilled persons can obtain 
a 50-70 percent yield of methamphetamine or amphetamine.
    Pseudoephedrine and ephedrine can also serve as precursor material 
for the manufacture of the schedule I controlled substance 
methcathinone. From January 1, 2000, through December 31, 2008, there 
were 202 methcathinone laboratory seizures reported to EPIC.
    As DEA discussed in the NPRM, there is a common misconception in 
industry and among some in the public that OTC drug products, 
particularly pseudoephedrine or ephedrine products in combination with 
other medically active ingredients (``combo products''), are somehow 
less likely to be diverted or are less desirable among clandestine 
laboratory operators for the manufacture of methamphetamine. This is 
not the case.
    Most of the clandestine laboratories found in the United States are 
using tablets, either single-entity or combination. In many of the 
methamphetamine exhibits analyzed by DEA analytical laboratories, the 
presence of antihistamines is detected, indicating that combination 
products were used in the reactions.
    While the vast majority of clandestine laboratories seized have 
used tableted pseudoephedrine and ephedrine products, gel caps and 
liquid dosage form products can easily serve as the source of precursor 
material for the production of methamphetamine. DEA

[[Page 38919]]

scientific studies show that liquid, gel cap, and combination products 
are easily used as the source of precursor material and the 
pseudoephedrine/ephedrine from these products can be easily extracted 
with appropriate reagents/solvents. These reagents/solvents are all 
readily available at hardware and auto parts stores in the United 
States.
    The controlled substances produced from these chemicals, 
methamphetamine and amphetamine, have a high abuse potential. The 
public health consequences of the manufacture, trafficking, and abuse 
of these two substances are well known and documented.

Comments Regarding Clarification of Regulated Transactions

    In response to the November 20, 2007, NPRM (72 FR 65248), DEA 
received one comment. The commenter expressed concerns regarding the 
findings made by DEA that concluded that OTC products containing either 
pseudoephedrine or ephedrine (in combination with other active 
ingredients) are (1) Easily used in the illicit production of a 
controlled substance (e.g. methamphetamine) and (2) the listed chemical 
can be readily recovered. The commenter further expressed concerns 
regarding the applicability of these findings to combination products 
in the form of liquids, gel caps and solid dosage forms. The commenter 
expressed concerns that the NPRM did not provide sufficient data to 
substantiate DEA's findings, including OTC combination product seizures 
and evidence of diversion of such materials. Additionally, the 
commenter asserted that ephedrine/guaifenesin combination products 
warrant special treatment and should not be subject to the proposed 
rulemaking.
    DEA disagrees with the commenter's basic premise that ephedrine and 
pseudoephedrine combination products (in liquid, soft-gel capsule, and 
solid dosage form) have less utility in clandestine laboratory 
processing of methamphetamine. DEA laboratory extraction studies have 
scientifically demonstrated that such materials are easily used as 
precursor material in the production of methamphetamine. Additionally, 
such materials have been identified at seized clandestine 
methamphetamine laboratories, and contaminants identified in seized 
methamphetamine exhibits document the use of such products as precursor 
material. These data demonstrate that these materials are (1) easily 
used in the illicit production of methamphetamine and (2) the listed 
chemical can be readily recovered. This has been documented in both DEA 
laboratory studies and in actual seizures.

Use of OTC Combination Products as Precursor Material

    DEA's Office of Forensic Sciences has performed extraction studies 
demonstrating that combination OTC pseudoephedrine/ephedrine products 
(in soft-gel capsules, liquids, and solid forms, and containing 
combination ingredients) can be readily extracted and utilized as the 
source of precursor material for production of methamphetamine. These 
studies illustrated that such extractions were readily achievable and 
precursor materials were readily extractible.
    Furthermore, the DEA Special Testing and Research Laboratory 
conducts in-depth analyses of seized methamphetamine samples. The 
information obtained from these analyses is derived from samples 
obtained and analyzed from a selective sampling of domestic and foreign 
seizures, and is not necessarily representative of all methamphetamine 
samples submitted to the DEA laboratory system. Among other things, the 
in-depth analytical procedures enable analysts to determine when 
combination OTC ephedrine and/or pseudoephedrine products are used as 
the source of precursor chemicals, due to impurities present in seized 
methamphetamine. The crude isolation procedures used in clandestine 
methamphetamine laboratories to extract l-ephedrine or d-
pseudoephedrine from OTC products usually co-extract some of the other 
active ingredients commonly found in combination products. As a result, 
methamphetamine samples often contain one or more of the following co-
ingredients: brompheniramine, chlorpheniramine, triprolidine, 
loratadine, carbinoxamine, and other common co-ingredients or their 
respective reaction by-products. Between Calendar Year 2005 and 
Calendar Year 2007, combination ephedrine and pseudoephedrine products 
were utilized as precursor material in 760 out of 1343 samples 
analyzed. For the reporting period ending July 2009, 78 out of 145 
additional methamphetamine samples analyzed contained these co-
ingredients, therefore illustrating that 54 percent of these samples 
were made using combination ephedrine or pseudoephedrine products.
    Additionally, DEA's System to Retrieve Information on Drug Evidence 
(STRIDE) indicates that such products have been utilized as precursor 
material in the manufacture of methamphetamine. For the period January 
2004 through November 2009, approximately 725 methamphetamine exhibits 
analyzed by DEA laboratories contained the common OTC combination 
product ingredients chlorpheniramine, diphenhydramine, guaifenesin or 
triprolidine. The number of guaifenesin exhibits accounted for 
approximately 5 percent of these samples. For the period January 2004 
through November 2009, approximately 299 additional exhibits were 
identified as containing ephedrine and/or pseudoephedrine in 
combination with guaifenesin.
    Based upon DEA scientific extraction studies, actual seizures of 
OTC ephedrine and/or pseudoephedrine combination products (including 
gel capsules, liquids and tablets) and the analysis of seized 
methamphetamine containing co-ingredients commonly found in OTC 
products, DEA finds that such materials are (1) Easily used in the 
illicit production of a controlled substance (e.g., methamphetamine) 
and (2) the listed chemical can be readily recovered. DEA therefore 
finds that these sources of precursor material should be subject to 
regulatory controls under the CSA.

Findings

    Therefore, based on the above discussion, the Administrator of the 
Drug Enforcement Administration, under the authority delegated by the 
Attorney General, finds, after considering the factors specified in 21 
U.S.C. 814(b), that drug products containing the List I chemicals 
ephedrine, pseudoephedrine, and phenylpropanolamine are being diverted 
for the illicit production of controlled substances, namely 
methamphetamine and amphetamine. As DEA has discussed, these products 
have a demonstrated history over the past 20 years of diversion for 
illicit purposes. These List I chemicals are diverted regardless of 
formulation--liquid, nonliquid, gel capsule--and regardless of dosage 
strength. Accordingly, the Administrator of the Drug Enforcement 
Administration removes drug products containing the List I chemicals 
ephedrine, pseudoephedrine, and phenylpropanolamine from exemption from 
the definition of ``regulated transaction'' under 21 U.S.C. 
802(39)(a)(iv). As such, unless otherwise exempted, such materials are 
subject to the chemical regulatory control provisions of the CSA. DEA 
is adding a new section 1310.14 that removes these drugs from the 
exemption.

[[Page 38920]]

    The CSA has specifically exempted retail transactions involving 
scheduled listed chemical products from the definition of regulated 
transaction (21 U.S.C. 802(39)(a)(v)) and established a separate set of 
regulations, 21 CFR part 1314, that control those retail transactions 
(71 FR 56008, September 26, 2006; corrected at 71 FR 60609, October 13, 
2006).

Technical Correction

    While drafting this rulemaking, DEA became aware of an inaccurate 
citation in 21 CFR 1310.10, the section paralleling the criteria to be 
considered in evaluating the statutory factors for removal of exemption 
from the definition of ``regulated transaction'' at 21 U.S.C. 814 and 
discussed above. Specifically, the definition of ``regulated 
transaction'' cited in 21 CFR 1310.10 is inaccurate. Therefore, to 
alleviate any confusion, DEA is correcting this citation.

Regulatory Certifications

Regulatory Flexibility Act

    The Deputy Administrator hereby certifies that this rulemaking has 
been drafted in accordance with the provisions of the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612). Without this rule, DEA would 
not be able to effectively implement the quota and import provisions of 
CMEA.
    As DEA has demonstrated throughout this document, traffickers and 
others in search of the chemicals necessary for clandestine manufacture 
of methamphetamine and amphetamine, are actively looking to exploit any 
loophole in chemical controls.
    DEA notes that the effect of eliminating the thresholds for 
pseudoephedrine and phenylpropanolamine could impose a minimal burden 
on regulated entities. Although it is likely that many of the 
registrants who handle the two chemicals are small businesses under the 
Small Business Administration definition of small entities, the changes 
impose virtually no burden on these entities for three reasons. First, 
most, if not all, legitimate transactions at the import, export, 
manufacturing, and distribution level are in excess of the previous 
thresholds. Second, although it is possible that some registrants may 
have some transactions that will be newly regulated, the recordkeeping 
for these can be met with standard business records. The only 
information required in records for regulated transactions is the name 
and address of the seller and purchaser (plus their DEA registration 
numbers, if applicable); the date of the transaction; the name, 
quantity, and form of packaging of the listed chemical; the method of 
transfer; and the method of identification used by the customer and any 
unique identification number associated with the identification. This 
information is normally included on purchase orders or invoices and the 
shipping papers and is needed to complete and track the transaction. As 
long as the purchaser can extract the records for examination, if 
necessary, no additional effort is needed. Because almost all business 
records for manufacturers, importers, and distributors are now 
generated and transmitted electronically, DEA does not expect that any 
registrant will need additional recordkeeping.
    Third, if any person is importing or exporting in very small 
quantities, there may be some additional import/export declarations 
required, but these forms require less than half an hour to complete 
and file. The only other requirement is to report suspicious 
transactions. These reports also require less than a half hour to 
complete and file.
    As noted above, DEA does not believe that legitimate importers or 
exporters are handling such small quantities. The purpose of this rule 
is to close a loophole that could be exploited by those seeking the 
chemicals for illicit purposes and to ensure that DEA can accurately 
assess the legitimate need. The Deputy Administrator, therefore, 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities.

Executive Order 12866

    The Deputy Administrator further certifies that this rulemaking has 
been drafted in accordance with the principles in Executive Order 12866 
section 1(b). It has been determined that this is ``a significant 
regulatory action.'' Therefore, this action has been reviewed by the 
Office of Management and Budget. This rule supports implementation of 
provisions of the CMEA. The CMEA is expansive in its breadth, 
essentially reclassifying ephedrine, pseudoephedrine, and 
phenylpropanolamine as schedule II controlled substances for purposes 
of importation and production, imposes new retail restrictions on these 
products, and mandates new domestic and import quotas. Without this 
rule, traffickers could exploit below-threshold transactions, which are 
not reported to DEA and for which records are not required to be 
maintained, to divert valuable quantities of pseudoephedrine and 
phenylpropanolamine for the clandestine manufacture of methamphetamine 
and/or amphetamine. Further, without this rule, DEA will not have 
complete information on which to base its assessment of the annual 
national needs for the List I chemicals ephedrine, pseudoephedrine, and 
phenylpropanolamine as DEA does not receive information regarding 
below-threshold transactions. This lack of information would create a 
loophole in the quota system, and would prevent DEA from fulfilling its 
legislative mandate that imports of pseudoephedrine and 
phenylpropanolamine be prohibited except for medical, scientific, or 
other legitimate purposes. Without this rule, DEA will not be able to 
effectively and fully implement the quota and import provisions of the 
CMEA.
    As discussed above, DEA does not anticipate that this change will 
impose more than the minimal costs that would be associated with 
reporting transactions that the registrant thought suspicious and 
possibly filing forms for import and export notifications. The benefits 
of the rule are those associated with controlling access to chemicals 
used to manufacture methamphetamine, and other controlled substances, 
illicitly. As has been discussed extensively throughout this document, 
traffickers and others are actively looking to exploit any loophole in 
chemical controls to continue their operations. As noted previously, 
the current thresholds could permit a person to divert approximately 25 
pounds of pseudoephedrine and 66 pounds of phenylpropanolamine 
annually, without exceeding existing thresholds. This rule closes a 
loophole that could result in the undocumented diversion of these 
chemicals for illicit production of significant quantities of 
methamphetamine and/or amphetamine. As noted previously in this rule, 
below-threshold transactions are not documented to DEA; the diversion 
of below-threshold quantities of these precursor chemicals could result 
in the illicit production of significant quantities of methamphetamine 
and/or amphetamine.

Executive Order 12988

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order, 12988 Civil Justice 
Reform.

Executive Order 13132

    This rulemaking does not impose enforcement responsibilities on any 
State; nor does it diminish the power of

[[Page 38921]]

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 
$120,000,000 or more (adjusted for inflation) 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.

Congressional Review Act

    This rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996 
(Congressional Review Act). 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 rule requires that records be maintained regarding 
distributions of the List I chemicals pseudoephedrine and 
phenylpropanolamine. These records are maintained as a normal course of 
business.
    The rule also reduces the thresholds for the List I chemicals 
pseudoephedrine and phenylpropanolamine from 1 kilogram and 2.5 
kilograms, respectively, to zero, thereby requiring that DEA receive 
advance notification of all importations and exportations of these List 
I chemicals. DEA notes that it already receives some Import/Export 
Declarations if the cumulative amount of the transactions exceeds the 
thresholds on a monthly basis. Therefore, DEA does not believe that 
this change will significantly increase the burden associated with this 
information collection. Specifically, DEA estimates that 53 additional 
export notifications and 53 additional export return declarations will 
be received annually. Further, DEA estimates that 50 additional import 
declarations and 55 additional import return declarations will be 
received annually. DEA assumes 10 percent of all imports will not be 
transferred in the first thirty days and will necessitate submission of 
a subsequent return declaration. The receipt of these additional forms 
increases the hour burden by 55 hours annually. DEA did not receive any 
comments regarding the Paperwork Reduction Act aspects of the Notice of 
Proposed Rulemaking. Therefore, DEA is revising its existing 
information collection [OMB approval number 1117-0023 ``Import/Export 
Declaration for List I and List II Chemicals'', DEA Form 486] to 
reflect the increased burden associated with receipt of these import/
export declarations.
    The Department of Justice, Drug Enforcement Administration, 
submitted the following information collection request to the Office of 
Management and Budget for review and clearance in accordance with 
review procedures of the Paperwork Reduction Act of 1995. The proposed 
information collections were published in the NPRM to obtain comments 
from the public and affected agencies

Overview of Information Collection 1117-0023

    (1) Type of Information Collection: Revision of a Currently 
Approved Collection.
    (2) Title of the Form/Collection: Import/Export Declaration for 
List I and List II Chemicals.
    (3) Agency form number, if any, and the applicable component of the 
Department sponsoring the collection:
    Form number: DEA Form 486 and DEA Form 486A.
    Component: Office of Diversion Control, Drug Enforcement 
Administration, U.S. Department of Justice
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: Business or other for-profit.
    Other: None.
    Abstract: Persons importing, exporting, and conducting 
international transactions with List I and List II chemicals must 
notify DEA of those transactions in advance of their occurrence, 
including information regarding the person(s) to whom the chemical will 
be transferred and the quantity to be transferred. Persons must also 
provide return declarations, confirming the date of the importation, 
exportation, or international transaction and transfer, and the amounts 
of the chemical transferred. For the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine, importers must report all 
information known to them on the chain of distribution of the chemical 
from the foreign manufacturer to the United States importer. This 
information is used to prevent shipments not intended for legitimate 
purposes.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: A respondent 
may submit multiple responses. The table below presents information 
regarding the number of respondents, responses, and associated burden 
hours.

----------------------------------------------------------------------------------------------------------------
                                      Number of    Number of      Average time per
                                     respondents   responses          response                   Total
----------------------------------------------------------------------------------------------------------------
Form 486 (export).................           193       10,380  0.283 hour (17         2,941 hours.
                                                                minutes).
Form 486 (export Return                      193       10,380  0.166 hour (10         1,730 hours.
 Declaration).                                                  minutes).
Form 486 (import).................           120        1,268  0.333 hour (20         422.6 hours.
                                                                minutes).
Form 486 (import return                      120        1,395  0.2 hour (12 minutes)  279 hours.
 declaration) *.
Form 486A (import) *..............            30          400  0.4 hour (24 minutes)  160 hours.
Form 486A (import return                      30          440  0.2 hour (12 minutes)  88 hours.
 declaration)*.
Form 486 (international                       14           14  0.2 hour (12 minutes)  2.8 hours.
 transaction).
Form 486 (international                       14           14  0.08 hour (5 minutes)  1.2 hours.
 transaction return declaration).
Quarterly reports for imports of             110          440  0.5 hour (30 minutes)  220 hours.
 acetone, 2-butanone, and toluene.
                                   -----------------------------------------------------------------------------
    Total.........................           193  ...........  .....................  5,844.6 hours.
----------------------------------------------------------------------------------------------------------------
* DEA assumes 10 percent of all imports will not be transferred in the first 30 days and will necessitate
  submission of a subsequent return declaration.

[[Page 38922]]

    (6) An estimate of the total public burden (in hours) associated 
with the collection: 5,845 annual burden hours.
    If additional information is required, contact: Lynn Bryant, 
Department Clearance Officer, United States Department of Justice, 
Justice Management Division, Policy and Planning Staff, Patrick Henry 
Building, Suite 1600, 601 D Street, NW., Washington, DC 20530.

List of Subjects in 21 CFR Part 1310

    Drug traffic control, Exports, Imports, Reporting and recordkeeping 
requirements.

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

PART 1310--RECORDS AND REPORTS OF LISTED CHEMICALS AND CERTAIN 
MACHINES

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

    Authority: 21 U.S.C. 802, 827(h), 830, 871(b), 890.

0
2. Section 1310.04 is amended by revising paragraphs (f)(1)(i) table 
and (ii), (g)(1)(i) through (vii), and adding paragraphs (g)(1)(viii) 
and (ix) to read as follows:

Sec.  1310.04  Maintenance of records.

* * * * *
    (f) * * *
    (1) * * *
    (i) * * *

------------------------------------------------------------------------
                                                          Threshold by
             Code                      Chemical            base weight
------------------------------------------------------------------------
8522..........................  N-Acetylanthranilic     40 kilograms.
                                 acid, its esters, and
                                 its salts.
8530..........................  Anthranilic acid, its   30 kilograms.
                                 esters, and its salts.
8256..........................  Benzaldehyde..........  4 kilograms.
8735..........................  Benzyl cyanide........  1 kilogram.
8675..........................  Ergonovine and its      10 grams.
                                 salts.
8676..........................  Ergotamine and its      20 grams.
                                 salts.
8678..........................  Ethylamine and its      1 kilogram.
                                 salts.
6695..........................  Hydriodic acid........  1.7 kilograms
                                                         (or 1 liter by
                                                         volume).
8704..........................  Isosafrole............  4 kilograms.
8520..........................  Methylamine and its     1 kilogram.
                                 salts.
8502..........................  3,4-Methylenedioxyphen  4 kilograms.
                                 yl-2-propanone.
8115..........................  N-Methylephedrine, its  1 kilogram.
                                 salts, optical
                                 isomers, and salts of
                                 optical isomers.
8119..........................  N-Methylpseudoephedrin  1 kilogram.
                                 e, its salts, optical
                                 isomers, and salts of
                                 optical isomers.
6724..........................  Nitroethane...........  2.5 kilograms.
8317..........................  Norpseudoephedrine,     2.5 kilograms.
                                 its salts, optical
                                 isomers, and salts of
                                 optical isomers.
8791..........................  Phenylacetic acid, its  1 kilogram.
                                 esters, and its salts.
2704..........................  Piperidine and its      500 grams.
                                 salts.
8750..........................  Piperonal (also called  4 kilograms.
                                 heliotropine).
8328..........................  Propionic anhydride...  1 gram.
8323..........................  Safrole...............  4 kilograms.
------------------------------------------------------------------------

     (ii) For List I chemicals that are contained in scheduled listed 
chemical products as defined in Sec.  1300.02(b)(34)(i) of this 
chapter, the thresholds established in paragraph (g) of this section 
apply only to non-retail distribution, import, and export. Sales of 
these products at retail are subject to the requirements of part 1314 
of this chapter.
* * * * *
    (g) * * *
    (1) * * *
    (i) Ephedrine, its salts, optical isomers, and salts of optical 
isomers;
    (ii) Gamma-Butyrolactone (Other names include: GBL; Dihydro-2(3H)-
furanone; 1,2-Butanolide; 1,4-Butanolide; 4-Hydroxybutanoic acid 
lactone; gamma-hydroxybutyric acid lactone)
    (iii) Hypophosphorous acid and its salts (including ammonium 
hypophosphite, calcium hypophosphite, iron hypophosphite, potassium 
hypophosphite, manganese hypophosphite, magnesium hypophosphite, and 
sodium hypophosphite)
    (iv) Iodine
    (v) N-phenethyl-4-piperidone (NPP)
    (vi) Pseudoephedrine, its salts, optical isomers, and salts of 
optical isomers
    (vii) Phenylpropanolamine, its salts, optical isomers, and salts of 
optical isomers
    (viii) Red phosphorus
    (ix) White phosphorus (Other names: Yellow Phosphorus)
* * * * *

0
3. Section 1310.10 is amended by revising paragraph (a) introductory 
text to read as follows:

Sec.  1310.10  Removal of the exemption of drugs distributed under the 
Food, Drug and Cosmetic Act.

    (a) The Administrator may remove from exemption under Sec.  
1300.02(b)(28)(i)(D) of this chapter any drug or group of drugs that 
the Administrator finds is being diverted to obtain a listed chemical 
for use in the illicit production of a controlled substance. In 
removing a drug or group of drugs from the exemption the Administrator 
shall consider:
* * * * *

0
4. Section 1310.14 is added to read as follows:

Sec.  1310.14  Removal of exemption from definition of regulated 
transaction.

    The Administrator finds that the following drugs or groups of drugs 
are being diverted to obtain a listed chemical for use in the illicit 
production of a controlled substance and removes the drugs or groups of 
drugs from exemption under Sec.  1300.02(b)(28)(i)(D) of this chapter 
pursuant to the criteria listed in Sec.  1310.10 of this part:
    (a) Nonprescription drugs containing ephedrine, its salts, optical 
isomers, and salts of optical isomers.
    (b) Nonprescription drugs containing phenylpropanolamine, its 
salts, optical isomers, and salts of optical isomers.
    (c) Nonprescription drugs containing pseudoephedrine, its salts, 
optical isomers, and salts of optical isomers.

    Dated: June 19, 2010.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. 2010-16388 Filed 7-6-10; 8:45 am]
BILLING CODE 4410-09-P
```