69474 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

Installation of Cockpit Placard for RPM 

Restriction 

(f) Within 10 hours time-in-service (TIS) 

after the effective date of this AD, install a 

placard on the pilot’s console in front of the 

pilot, that states, in 1⁄4 inch-high or higher 

characters, ‘‘Continuous propeller operation 

between 2,350 rpm and 2,450 rpm at 24 

inches Hg and higher manifold pressure is 

prohibited’’. 

Propellers With Unknown Total Hours TIS, 

or 10,000 or More Hours Total TIS on the 

Effective Date of This AD 

(g) For propellers that the total TIS is 

unknown, or that have 10,000 or more hours 

total TIS on the effective date of this AD, 

remove the propeller from service within 50 

hours TIS after the effective date of this AD. 

Propellers With Fewer Than 10,000 Hours 

Total TIS on the Effective Date of This AD 

(h) For propellers with fewer than 10,000 

total hours TIS on the effective date of this 

AD, do the following: 

(1) Perform an inspection of the propeller 

blades and repair if necessary, within 100 

hours after the effective date of this AD, 

using paragraphs 2.B. through 2.F. of 

Accomplishment Instructions of McCauley 

ASB No. ASB248, dated January 17, 2005. 

(2) At the next propeller overhaul or next 

major propeller disassembly, life-limit-stamp 

the letter ‘‘L’’ on the propeller hub and 

blades, using paragraph 3 of 

Accomplishment Instructions of McCauley 

Propeller Systems Alert Service Bulletin 

(ASB) No. ASB248, dated January 17, 2005. 

(3) Thereafter, within every 100 hours TIS 

or at next annual inspection, whichever 

occurs first, inspect, and repair if necessary, 

the propeller blades using paragraphs 2.B. 

through 2.F. of Accomplishment Instructions 

of McCauley ASB No. ASB248, dated January 

17, 2005. 

(4) Remove the propeller from service at or 

before reaching the life limit of 10,000 hours 

total TIS. 

Alternative Methods of Compliance 

(i) The Manager, Chicago Aircraft 

Certification Office, has the authority to 

approve alternative methods of compliance 

for this AD if requested using the procedures 

found in 14 CFR 39.19. 

Related Information 

(j) None. 

Issued in Burlington, Massachusetts, on 

November 7, 2005. 

Peter A. White, 

Acting Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. 05–22712 Filed 11–15–05; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Parts 47 and 159 

[Docket No. RM06–3–000] 

Prohibition of Energy Market 

Manipulation 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Notice of proposed rulemaking; 

correction. 

SUMMARY: The Federal Energy 

Regulatory Commission published in 

the Federal Register of October 27, 

2005, a document proposing to add a 

part 47 and part 159 to Title 18 of the 

CFR. Two clauses in the proposed 

regulatory language for parts 47 and 159 

were inadvertently incorporated into 

subparagraph text, but were intended to 

start a new line in the text since they are 

to modify all three subparagraphs. As 

such formatting is inconsistent with 

Federal Register requirements, these 

modifying clauses will be moved to the 

beginning of the paragraph. 

FOR FURTHER INFORMATION CONTACT: 

Frank Karabetsos, Office of the General 

Counsel, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426. (202) 502– 

88133. 

SUPPLEMENTARY INFORMATION: The 

Federal Energy Regulatory Commission 

published in the Federal Register of 

October 27, 2005 (70 FR 61930), a 

document adding a part 47 under 

subchapter B (Regulations under the 

Federal Power Act) and a part 159 

(Regulations under the Natural Gas Act) 

to Title 18 of the CFR. The proposed 

regulatory text for the two parts failed 

to set out certain sentences as modifying 

clauses. This document corrects that 

error. 

Correction 

In proposed rule FR Doc. 05–21423, 

beginning on page 61930 in the issue of 

October 27, 2005, make the following 

corrections: 

§ 47.1 [Corrected] 

1. On page 61933, in column 2, 

correct § 47.1(a) to read as follows: 

§ 47.1 Prohibition of energy market 

manipulation. 

(a) It shall be unlawful for any entity, 

directly or indirectly, in connection 

with the purchase or sale of electric 

energy or the purchase or sale of 

transmission services subject to the 

jurisdiction of the Commission, 

(1) To use or employ any device, 

scheme, or artifice to defraud, 

(2) To make any untrue statement of 

a material fact or to omit to state a 

material fact necessary in order to make 

the statements made, in the light of the 

circumstances under which they were 

made, not misleading, or 

(3) To engage in any act, practice, or 

course of business that operates or 

would operate as a fraud or deceit upon 

any person. 

* * * * * 

§ 159.1 [Corrected] 

2. On page 61933, in column 3, 

correct § 159.1(a) to read as follows: 

§ 159.1 Prohibition of energy market 

manipulation. 

(a) It shall be unlawful for any entity, 

directly or indirectly, in connection 

with the purchase or sale of natural gas 

or the purchase or sale of transportation 

services subject to the jurisdiction of the 

Commission, 

(1) To use or employ any device, 

scheme, or artifice to defraud, 

(2) To make any untrue statement of 

a material fact or to omit to state a 

material fact necessary in order to make 

the statements made, in the light of the 

circumstances under which they were 

made, not misleading, or 

(3) To engage in any act, practice, or 

course of business that operates or 

would operate as a fraud or deceit upon 

any person. 

* * * * * 

Dated: November 10, 2005. 

Magalie R. Salas, 

Secretary. 

[FR Doc. 05–22755 Filed 11–15–05; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

21 CFR Parts 1301 and 1309 

[Docket No. DEA–266P] 

RIN 1117–AA96 

Controlled Substances and List I 

Chemical Registration and 

Reregistration Application Fees 

AGENCY: Drug Enforcement 

Administration (DEA), Department of 

Justice. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: DEA is proposing to adjust 

the fee schedule for DEA registration 

and reregistration application fees 

relating to the registration and control of 

the manufacture, distribution and 

Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 69475 

dispensing of controlled substances and 

listed chemicals to appropriately reflect 

all costs associated with its Diversion 

Control Program as mandated by 21 

U.S.C. 822. Specifically, DEA proposes 

to revise the fee schedule for controlled 

substances and List I chemical handlers 

so that all manufacturers, distributors, 

importers, exporters, and dispensers of 

controlled substances and of List I 

chemicals pay an annual fee, by 

registrant category, irrespective of 

whether they handle controlled 

substances or List I chemicals. This 

action responds to recent amendments 

to the Diversion Control Fee Account 

provisions in the Controlled Substances 

Act (CSA) and will bring DEA’s fee 

collections into line with the new 

requirements. 

DATES: Written comments must be 

postmarked, and electronic comments 

must be sent, on or before January 17, 

2006. 

ADDRESSES: To ensure proper handling 

of comments, please reference ‘‘Docket 

No. DEA–266’’ on all written and 

electronic correspondence. Written 

comments sent via regular mail should 

be sent to the Deputy Administrator, 

Drug Enforcement Administration, 

Washington, DC 20537, Attention: DEA 

Federal Register Representative/ODL. 

Written comments sent via express mail 

should be sent to DEA Headquarters, 

Attention: DEA Federal Register 

Representative/ODL, 2401 JeffersonDavis Highway, Alexandria, VA 22301. 

Comments may be sent directly to DEA 

electronically by sending an electronic 

message to 

dea.diversion.policy@usdoj.gov. 

Comments may also be sent 

electronically through http:// 

www.regulations.gov using the 

electronic comment form provided on 

that site. An electronic copy of this 

document is also available at the 

http: //www.regulations.gov Web site. 

DEA will accept attachments to 

electronic comments in Microsoft Word, 

WordPerfect, Adobe PDF, or Excel file 

formats only. DEA will not accept any 

file format other than those specifically 

listed above. 

FOR FURTHER INFORMATION CONTACT: 

Patricia M. Good, Chief, Liaison and 

Policy Section, Office of Diversion 

Control, Drug Enforcement 

Administration, Washington, DC 20537; 

Telephone (202) 307–7297. 

SUPPLEMENTARY INFORMATION: 

I. Introduction and Background 

The Controlled Substances Act (CSA) 

requires that all manufacturers, 

distributors, dispensers, importers and 

exporters of controlled substances and 

List I chemicals obtain an annual 

registration with DEA (21 U.S.C. 822 

and 958(f)). In addition, the CSA, as 

codified in 21 U.S.C. 821, authorizes the 

Attorney General, who in turn 

redelegates this authority to the 

Administrator of DEA, to ‘‘promulgate 

rules and regulations and to charge 

reasonable fees relating to the 

registration and control of the 

manufacture, distribution, and 

dispensing of controlled substances and 

listed chemicals’’ (21 U.S.C. 821 as 

amended by Pub. L. 108–447). 

In October 1992, Congress passed the 

Departments of Commerce, Justice and 

State, the Judiciary and Related 

Agencies Appropriations Act of 1993 

which changed the source of funding for 

DEA’s Diversion Control Program (DCP) 

from being part of DEA’s Congressional 

appropriation to full funding by 

registration and reregistration fees 

through the establishment of the 

Diversion Control Fee Account (DCFA). 

The Appropriations Act of 1993 

required that ‘‘[f]ees charged by the 

Drug Enforcement Administration under 

its diversion control program shall be 

set at a level that ensures the recovery 

of the full costs of operating the various 

aspects of that program.’’ The legislation 

did not, however, provide clarification 

on what constituted the ‘‘Diversion 

Control Program,’’ thus leaving open the 

issue as to what fee-setting criteria 

should be used to determine which 

costs could be reimbursed from the 

DCFA. 

In response to the Appropriations Act 

of 1993, DEA published a Notice of 

Proposed Rulemaking (NPRM) in 

December 1992 to adjust the registration 

and reregistration fees for controlled 

substance registrants (57 FR 60148, 

December 18, 1992). In the absence of 

guidelines from Congress regarding the 

specific criteria to be followed in 

identifying costs and setting the fees, 

DEA relied on the plain language of the 

Appropriations Act of 1993 and 

proposed fees necessary to cover the 

costs of the activities that were 

identified within the budget decision 

unit known as the ‘‘Diversion Control 

Program.’’

At the time that the Appropriations 

Act of 1993 was passed, 21 U.S.C. 821 

did not extend to chemical control 

activities; accordingly, there were no 

registration or fee requirements for 

handlers of List I chemicals. DEA 

therefore excluded chemical control 

costs from its Final Rule implementing 

the requirements of the Appropriations 

Act of 1993 (58 FR 15272, March 22, 

1993). Congress amended 21 U.S.C. 821 

on December 17, 1993 to require 

reasonable fees relating to ‘‘the 

registration and control of regulated 

persons and of regulated transactions’’

(Domestic Chemical Diversion Control 

Act of 1993, 3(a), Pub. L. 103–200, 107 

Stat. 2333); however, despite this 

amendment, DEA has continued to 

endeavor to maintain separate funding 

for its controlled substances diversion 

control and its chemical diversion 

control activities. 

Following publication of DEA’s Final 

Rule, the American Medical Association 

(AMA) and others filed a lawsuit 

objecting to the increase in registration 

and reregistration fees on the grounds 

that DEA had failed to provide adequate 

information as to what activities were 

covered by the fees and how they were 

justified. Upon appeal, the United States 

Court of Appeals for the District of 

Columbia Circuit remanded, without 

vacating, the rule to the DEA, requiring 

the agency to provide an opportunity for 

meaningful notice and comment on the 

fee-funded components of the DCP. In 

doing so, the court confirmed the 

boundaries of the DCP that DEA can 

fund by registration fees, finding that 

the current statutory scheme (21 U.S.C. 

821 and 958) required DEA to set 

reasonable registration fees to recover 

the full costs of the DCP. (AMA v. Reno, 

57 F.3d 1129, 1135 (D.C. Cir. 1995)). 

Thus, in the absence of a simple, 

objective measure by which DCP costs 

could be identified and the appropriate 

fees calculated, both DEA and the courts 

have looked to 21 U.S.C. 821 and 958 

to define the guidelines for determining 

what costs should be included in the 

calculation of the fees and from whom 

the fees might be collected. 

On November 20, 2004, Congress 

passed the Departments of Commerce, 

Justice, and State, the Judiciary, and 

Related Agencies Appropriations Act of 

2005 which provided clarification as to 

the activities constituting the DCP (Pub. 

L. 108–447). This Act was included in 

the Consolidated Appropriations Act of 

2005, which was signed into law by the 

President on December 8, 2004 (Pub. L. 

108–447). The Act amends 21 U.S.C. 

886a to define the Diversion Control 

Program as ‘‘the controlled substance 

and chemical diversion control 

activities of the Drug Enforcement 

Administration,’’ which are further 

defined as the ‘‘activities related to the 

registration and control of the 

manufacture, distribution and 

dispensing, importation and exportation 

of controlled substances and listed 

chemicals.’’ It also amends the section 

to provide that reimbursements from the 

DCFA ‘‘* * * shall be made without 

distinguishing between expenses related 

to controlled substances activities and 

expenses related to chemical activities.’’

69476 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

Finally, the Act amends 21 U.S.C. 821 

and 958(f) to make the language of those 

sections consistent with the definition 

of the DCP (Pub. L. 108–447). The net 

effect of the amendments is to allow 

DEA to deposit all registration and 

reregistration fees (controlled substance 

and chemical) into the Fee Account and 

fund all controlled substance and 

chemical diversion control activities 

from the account without distinguishing 

as to the type of activity (controlled 

substance or chemical) being funded. 

Independent of the passage of the 

Appropriations Act, DEA undertook an 

internal reorganization to increase 

operational efficiencies and overall 

effectiveness. The resulting internal 

reorganization removes the focus from 

the single business decision unit of the 

DCP to a focus on diversion control 

activities irrespective of the business 

decision unit. That is, the diversion 

control activities of DEA are no longer 

contained in a single business decision 

unit identified as the Diversion Control 

Program. Thus, in identifying the 

activities that constitute the DCP, DEA 

must now look across the whole agency 

at all functions related to the 

registration and control of the 

manufacture, distribution, dispensing, 

importation and exportation of 

controlled substances and listed 

chemicals. This approach adheres both 

to the definition of the DCP contained 

in 21 U.S.C. 821 and 958 and to the 

court’s requirement that there must be a 

nexus between the DCP activities 

funded through fees and the registration 

and control of the manufacture, 

distribution, and dispensing of 

controlled substances and of regulated 

persons and regulated transactions (now 

‘‘listed chemicals’’). 

In keeping with this organizational 

and functional change, DEA has reassessed the diversion control activities 

to be funded by the Diversion Control 

Fee Account (DCFA). Accordingly, this 

Notice of Proposed Rulemaking 

identifies all of the activities that 

constitute the DCP irrespective of 

organizational structure within the 

agency and in compliance with 21 

U.S.C. 821 and 958, and 21 U.S.C. 886a 

that require that DEA charge reasonable 

fees relating to the registration and 

control of the manufacture, distribution, 

dispensing, importation and exportation 

of controlled substances and listed 

chemicals and that DEA collect fees 

adequate to fully fund the controlled 

substances and chemical diversion 

control activities that constitute the 

DCP. This rule also proposes a revised 

fee structure for manufacturers, 

distributors, dispensers, importers and 

exporters of controlled substances and 

List I chemicals, proposing that all 

handlers of controlled substances and 

listed chemicals pay an annual fee, by 

registrant category to support the DCP 

irrespective of whether they handle 

controlled substances or List I 

chemicals. While the Appropriations 

Act of 2005 specifies changes to the DCP 

effective immediately, the proposed 

new fee schedule would not take effect 

until Fiscal Year 2006. While all DCP 

activities will be supported by the 

DCFA, for Fiscal Year 2005 effective 

February 1, 2005, the combination of 

available DCFA funds together with the 

anticipated fee revenues from existing 

registrants will be sufficient to cover the 

additional costs being transferred to the 

fee-fundable aspects of the DCP. 

Under the current fee structure, DEA 

would collect a total of approximately 

$161,005,104 from registrant fees to 

support the DCP in Fiscal Year 2006. 

The estimated Fiscal Year 2006 cost of 

operating the DCP according to the 

clarified definition contained in the 

Consolidated Appropriations Act of 

2005 is $201,673,000 as further 

described below. To this figure, DEA is 

required to add $15 million to be 

transferred to the U.S. Treasury (see 

below for further explanation), 

necessitating that DEA collect through 

registrant fees a total of $216,673,000 to 

‘‘fully fund’’ the DCP in Fiscal Year 

2006. Without an increase in registrant 

fees to support the DCP DEA would fall 

short by about $55,667,896 and would 

not have sufficient funds to operate the 

DCP. Therefore, the following rule 

proposes to adjust the current registrant 

fee schedule to ensure the full funding 

of the DCP through registrant fees. 

In addition, because of the statutory 

clarification that now includes all 

chemical diversion control activities as 

part of the DCP, DEA is modifying the 

fee structure for DCP registrants to 

include chemical registrants as 

explained below. To date, chemical 

registrants have paid fees ranging from 

a subsidized $116 to $595 (initial 

registration fee) that covered only the 

costs of registration and reregistration 

and not the actual costs of operating the 

chemical diversion control program. 

These fees are user fees in contrast to 

the fees paid for by controlled 

substances registrants. User fees are 

required under the Independent Offices 

Appropriations act (IOAA) and the 

guidelines set forth in OMB Circular A–

25. User fees are paid when a special 

benefit is conferred to a particular 

group, individual, etc. OMB Circular A–

25, Section 6 describes a special benefit 

as a government service which ‘‘enables 

the beneficiary to obtain more 

immediate or substantial gains or values 

(which may or may not be measurable 

in monetary terms) than those that 

accrue to the general public (e.g., 

receiving a patent, insurance, or 

guarantee provision, or a license to carry 

on a specific activity or business or 

various kinds of public land use).’’

The section specifies that ‘‘[a] user 

charge * * * will be assessed against 

each identifiable recipient for special 

benefits derived from Federal activities 

beyond those received by the general 

public.’’ The section further requires 

that the user charge be sufficient to 

‘‘recover the full cost to the Federal 

Government for providing the special 

benefit.’’

Under this definition, a registration to 

manufacture, distribute, import or 

export List I chemicals is a special 

benefit; and therefore, the fees paid by 

chemical handlers are user fees subject 

to the IOAA. In contrast, because the 

IOAA applies ‘‘only when there is no 

independent statutory source for the 

charging of a fee or where a fee statute 

fails to define fee setting criteria’’ (AMA 

v. Reno, 857 F. Supp. at 84 (D.D.C. 

1994)), the fees paid to date by 

controlled substances registrants are not 

user fees. That is, because Congress 

established the DCFA by passing the 

1993 Appropriations Act with its 

collection and spending criteria 

established by prior law (21 U.S.C. 821 

and 958(f)), the registration fees charged 

by DEA pursuant to the 1993 

Appropriations Act are not user fees 

subject to the IOAA because the act 

constitutes an independent statutory 

source for charging the fee and it defines 

fee-setting criteria, i.e., to cover the full 

costs of the DCP (AMA v. Reno, 857 F. 

Supp. 80 (D.D.C. 1994)). 

To comply with the clarified 

definition of the DCP and the statutory 

requirement that the operating costs of 

the DCP be fully funded through 

registrant fees, DEA must fund all 

aspects of the DCP, including the 

chemical diversion program, through 

fees. Because there is an independent 

statutory source for charging fees 

relating to all activities of the DCP 

(controlled substances and chemical), 

the fees charged to chemical registrants 

are no longer considered user fees 

subject to IOAA provisions, and DEA 

must collect fees from both chemical 

and controlled substances registrants to 

support the DCP. 

Diversion Control Program 

Responsibilities 

The mission of DEA’s Diversion 

Control Program (DCP) is to enforce the 

provisions of the Controlled Substances 

Act as they pertain to ensuring the 

availability of controlled substances and 

Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 69477 

listed chemicals for legitimate uses in 

the United States while exercising 

controls to prevent the diversion of 

these substances and chemicals for 

illegal uses. 

DCP activities include: Program 

priorities and field management 

oversight; coordination of major 

investigations; drafting and 

promulgating of regulations relating to 

the enforcement of the CSA and other 

legislation; establishment of national 

policy on diversion; fulfillment of U.S. 

obligations under drug control treaties; 

advice and leadership on state 

legislation/regulation; legal control of 

drugs and chemicals not previously 

under Federal control; control of 

imports and exports of licit controlled 

substances and chemicals; and program 

resource planning and allocation, 

among other activities. 

Current Fee-Funding 

As described above, in the absence of 

specific guidance as to which activities 

were encompassed within the DCP and 

thus fee-fundable, DEA to date has 

adhered to the plain language of the 

Appropriations Act of 1993 and used 

the budget categories that have 

historically been included in the DCP 

budget request of the Attorney General. 

As described in DEA’s 1996 Federal 

Register Final Rule, for the purposes of 

budget formulation and appropriation 

DEA historically has identified only 

those resources (with their overhead 

costs) that were specifically devoted to 

diversion control efforts as part of the 

DCP (to include only its controlled 

substances activities) in its annual 

budget submission to Congress (61 FR 

68624, December 30, 1996). 

DCP activities funded to date through 

the DCFA have been limited to those in 

the DCP business decision unit and 

constituted controlled substances 

scheduling, registration, investigation, 

inspection, data collection and analysis, 

training, establishing production quotas, 

cooperative efforts with state, local and 

other Federal agencies, cooperative 

efforts with the regulated industry, 

international activities relating to the 

registration and control of the 

manufacture, distribution and 

dispensing of controlled substances, and 

attendant management, personnel, 

administrative and clerical oversight for 

the DCP. Fee-fundable activities also 

have included travel, rent, utilities, 

supplies, equipment and services 

associated with the above-listed 

activities and activities related to the 

control of licit controlled substances in 

the U.S. in which the initial source is 

foreign. 

DEA had not included the chemical 

control activities of the DCP among 

those funded through the DCFA for the 

reasons outlined previously. However, 

with the clarification in 21 U.S.C. 886a, 

as amended by Public Law 108–447, of 

the activities that constitute the DCP 

and that must be fully funded through 

registrant fees, DEA is now proposing to 

include activities related to the 

registration and control of the 

manufacture, distribution, importation 

and exportation of listed chemicals 

among those activities to be funded 

through the DCFA. That is, DEA would 

no longer distinguish, for the purposes 

of fee funding, between its diversion 

control activities relating to controlled 

substances and those relating to 

chemicals. These chemical diversion 

control activities include the overall 

control of listed chemicals, registration, 

investigation, inspection, data collection 

and analysis, cooperative efforts with 

the regulated industry, related 

management and administrative 

positions devoted to diversion control 

activities, other personnel, and 

administrative and clerical oversight. 

Activities also include a portion of the 

Office of Training (TR) that specifically 

supports the activities of the DCP. The 

TR develops, prepares and provides 

training, guidance and instruction for 

Diversion Investigators, Diversion Task 

Force Officers, regulatory agencies, state 

and local law enforcement, and DCP 

personnel on controlled substances and 

chemical diversion control, advance 

skills and technical knowledge, and 

systems applications. The total cost of 

the transfer of chemical diversion 

control activities to the DCFA in Fiscal 

Year 2005 was $15,773,000. This figure 

is specified in the Appropriations Act 

and excludes $7.6 million in 

Congressionally-appropriated funds that 

have been provided for the chemical 

diversion control activities for Fiscal 

Year 2005. While the chemical program 

costs would be transferred to the DCP to 

comply with the clarification in 21 

U.S.C. 886a and therefore paid for out 

of DCFA (fee) funds, for Fiscal Year 

2005 these additional chemical 

diversion control costs to the DCP 

would be supported through available 

DCFA funds combined with anticipated 

fee collections from existing registrants. 

That is, while upon enactment the 

Appropriations Act of 2005 provides for 

the inclusion of chemical diversion 

control activities as part of the DCP and 

therefore subject to fee-funding and 

support through the DCFA, there will be 

no changes to registration and 

reregistration fees for Fiscal Year 2005 

to accommodate the transfer of these 

activities to the DCP. 

Beginning in Fiscal Year 2006, DEA 

proposes to include the additional 

chemical diversion control costs in the 

calculation of DCFA registration and 

reregistration fees, as shown below in 

the proposed new fee schedule. The 

chemical diversion control costs that 

would be supported through the DCFA 

total $24,499,000 for Fiscal Year 2006, 

$24,874,000 for Fiscal Year 2007, and 

$25,223,000 for Fiscal Year 2008, 

accounting for salary growth and 

inflation. 

In addition to the TR costs described 

above, these chemical costs also include 

188 chemical diversion control 

positions; 12 overseas diversion 

investigators dedicated to the DCP; and 

costs associated with the chemical 

transaction system (CTRANS). 

Historically, the DEA has funded 

diversion investigator positions overseas 

through appropriated funds, rather than 

the DCFA, despite the fact that these 

positions directly support the activities 

of the DCP. Diversion investigators in 

foreign posts conduct similar activities 

to domestic diversion investigators to 

prevent the diversion of legal controlled 

substances and listed chemicals to 

illegal uses. These individuals’ activities 

include, but are not limited to, 

conducting background investigations of 

foreign companies involved in the 

importation into or exportation from the 

U.S. of controlled substances and listed 

chemicals; working with foreign 

governments on matters relating to the 

international controls on controlled 

substances and listed chemicals; advise 

the U.S. mission and DEA management 

regarding diversion of controlled 

substances and listed chemicals within 

foreign territory; training foreign law 

enforcement and regulatory 

counterparts to detect, investigate and 

prevent diversion of controlled 

substances and listed chemicals and 

working with foreign law enforcement 

and regulatory authorities regarding 

issues involving the illegal exportation 

from or illegal importation into the 

United States of controlled substances 

pharmaceuticals or listed chemicals. (It 

is the responsibility of the DCP to 

prevent the diversion of controlled 

substances and listed chemicals 

regardless of geographic source.) 

The Fiscal Year 2006 cost of the 

foreign diversion investigator positions 

described above is $3,107,000. 

Accounting for inflation and salary 

growth, the Fiscal Year 2007 cost to be 

fee-funded would be $3,181,000, and 

the Fiscal Year 2008 cost would be 

$3,222,000. 

69478 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

DEA also is proposing to include as 

fee-fundable activities certain other 

internal resources that support the 

DEA’s diversion control activities but 

that have not been considered part of 

the DCP in the past because of separate 

budget delineations. As was discussed 

more fully in previous rulemakings 

regarding the DCFA, while these 

elements support diversion control 

efforts, because the overall functions of 

the business decision units in which 

these activities are located are not 

devoted primarily to diversion control 

and because they have historically not 

been included as part of the DCP budget 

requests of the Attorney General, these 

elements have been supported by 

appropriated funds and not by the 

DCFA (61 FR 68624, December 30, 

1996). 

DEA identified several of these 

resources in its Final Rule published on 

October 10, 2003, including two 

sections within the Office of Chief 

Counsel that support DCP activities and 

a portion of the Office of Forensic 

Sciences Special Testing Laboratory that 

supports authentic sample analyses for 

licit drugs (68 FR 58587, October 10, 

2003). Other elements of DEA diversion 

control operations that support the DCP 

but have been traditionally funded 

through appropriated funds, and 

therefore not through the DCFA, also 

include diversion investigators assigned 

to overseas posts. 

Following the internal reorganization 

of the DEA to increase operational 

efficiencies and shift the focus from 

business decision units to activities that 

support the registration and control of 

the manufacture, dispensing and 

distribution of controlled substances 

and listed chemicals and in response to 

revisions to 21 U.S.C. 886a, DEA 

reviewed all activities relating to the 

registration and control of the 

manufacture, distribution, importation, 

exportation and dispensing of 

controlled substances and listed 

chemicals across the agency. As 

described above, with the internal 

reorganization, the agency’s diversion 

control activities are no longer 

contained in an operational entity or 

office but rather the DCP now comprises 

all diversion control activities across the 

agency. Accordingly, the proposed, new 

fee structure includes all costs 

associated with the registration and 

control of the manufacture, distribution 

and dispensing of controlled substances 

and listed chemicals, including some 

diversion control costs previously 

funded through appropriated funds and 

not through registrant fees, regardless of 

the business decision unit in which 

these activities are located within the 

DEA. These costs include portions of 

the Office of Chief Counsel, the Office 

of Forensic Sciences Special Testing 

Laboratory, and the Special Operations 

Division; 12 foreign diversion 

investigator positions; additional special 

agent and intelligence analyst costs not 

currently supported through the DCFA; 

and ten new risk management positions 

to meet new mandates for the DCP. 

These components and associated costs 

are described below. A portion of DEA’s 

internal computer system, Firebird, 

which already is supported through the 

DCFA, is included in the fee-fundable 

costs. The total cost of these nonchemical additions for Fiscal Year 2006 

is $28,243,000. 

In the Office of Chief Counsel, two 

components—the Diversion and 

Regulatory Policy Section and the 

Diversion and Regulatory Litigation 

Section—provide diversion control 

support through the litigation of 

administrative actions related to DEA 

registrants and through legal support on 

regulatory policy matters. The Diversion 

and Regulatory Policy Section serves as 

the principal legal advisor on all policy 

issues related to controlled substances 

and chemical diversion control. The 

Diversion and Regulatory Litigation 

Section represents DEA in 

administrative hearings regarding the 

revocation or denial of DEA 

registrations to handle controlled 

substances or listed chemicals and 

provides legal advice related to the 

regulation of DEA registrants. DEA has 

identified 12 positions in these two 

sections (11 attorneys and one support 

position) that support the DCP. The 

Fiscal Year 2006 costs of the Chief 

Counsel support that would be funded 

through registrant fees totals $2,085,000, 

as contained in the President’s Budget 

Request. The Fiscal Year 2007 costs 

would be $2,118,000, and the Fiscal 

Year 2008 costs are anticipated to be 

$2,149,000 to account for inflation and 

annual salary increases. 

DEA’s Office of Forensic Sciences 

Special Testing Laboratory supports 

authentic sample analyses for licit 

controlled substances. Fifty-one percent 

of the current Source Determination 

receipts handled by the Laboratory 

relate to licit drugs; that is, 51 percent 

of the costs of the Laboratory’s eight 

positions directly relate to the control of 

the manufacture, distribution and 

dispensing of controlled substances as 

part of the DCP and therefore would be 

subject to fee funding under the 

proposed, revised fee structure. The 

Fiscal Year 2006 Laboratory costs that 

would be supported through fee funds 

total $820,000. The anticipated Fiscal 

Year 2007 Laboratory costs to be feefunded would be $832,000, and the 

Fiscal Year 2008 costs would be 

$844,000, to account for inflation and 

annual salary increases. 

Based on Fiscal Year 2004 work hour 

analyses, DEA determined that there 

were 42 special agent work years 

utilized on investigations related to the 

diversion of pharmaceutical drugs. In 

Fiscal Year 2004, the DCFA funded the 

equivalent of 13 special agent work 

years on these investigations. DEA 

proposes to fully fund through the 

DCFA the support that is being provided 

for diversion investigations by including 

an additional 29 special agent positions. 

Special agents support the DCP by 

serving warrants, providing undercover 

support, making arrests, and providing 

other functions that diversion 

investigators are prohibited from 

executing but that are core elements of 

diversion control. The additional 29 

positions would be added to the DCFA 

costs and would support both controlled 

substances and chemical diversion 

control efforts. The Fiscal Year 2006 

cost for these additional special agent 

positions totals $6,530,000 (as contained 

in the President’s Budget Request). 

Accounting for inflation and growth in 

salaries, the Fiscal Year 2007 cost would 

be $6,627,000, and the anticipated 

Fiscal Year 2008 cost would be 

$6,727,000. 

In addition, for Fiscal Years 2006, 

2007, and 2008 DEA proposes to add a 

total of 23 special agent positions to the 

budget supported by the DCFA. These 

positions include five special agents 

dedicated to the Office of Enforcement 

Operations to serve as Diversion Control 

Enforcement Coordinators for diversion 

control activities and 18 special agents 

to serve as part of Diversion 

Investigation Groups. The Fiscal Year 

2006 cost of these positions will be 

$4,704,000. The Fiscal Year 2007 and 

Fiscal Year 2008 costs are anticipated to 

be $4,598,000 and $5,607,000, 

respectively, accounting for the phase-in 

of these positions over time and 

inflation and salary increases. 

DEA also proposes to fee-fund a total 

of 73 intelligence analyst positions of 

which 67 positions are in the field, four 

positions are located in the Special 

Operations Division, and two positions 

support the Office of Enforcement 

Operations. Intelligence analysts 

support the DCP by providing 

investigative and analytical support for 

domestic and international diversion 

control investigations, including the 

collection and evaluation of 

investigative intelligence information 

and the development of innovative 

techniques and solutions to assist the 

investigative process. Other duties of 

Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 69479 

intelligence analysts include 

researching business records, financial 

documents and person histories of 

diversion targets; analyzing emails, and 

related communications; researching 

compiling and analyzing import and 

export data to identify potential 

diversion targets; and determining 

associates of criminal targets and 

criminal organizations. The additional 

intelligence analysts in the field offices 

will free up diversion investigators who 

currently perform much of their own 

intelligence analysis. Freeing up 

diversion investigator time will allow 

them to focus more on investigative 

activities, including interviewing 

potential witnesses, conducting 

pharmacy surveys, conducting audits, 

and coordinating investigative activities 

with state and local law enforcement. 

Among the field positions, 34 

intelligence analysts would be phased 

in during Fiscal Year 2006, and 33 

intelligence analysts would be phased 

in during Fiscal Year 2007. The total 

cost of the intelligence analyst positions 

to the DCFA in Fiscal Year 2006 would 

be $4,465,000, as indicated in the 

President’s Budget Request. As the 

positions continue to be phased in, the 

Fiscal Year 2007 fee-fundable 

intelligence analyst costs would be 

$8,761,000. The anticipated intelligence 

analysts cost in Fiscal Year 2008 would 

be $11,105,000. 

DEA also must request DCFA funding 

for ten risk management positions to 

support a coordinated, governmentwide approach to address prescription 

drug diversion and abuse. During 2003, 

more than six million Americans abused 

prescription drugs. To better address 

this problem, the Appropriations Act of 

2005 created, without funding, 10 risk 

management positions and directed 

DEA to work cooperatively with other 

Federal agencies to ensure that drugs 

with a high risk of abuse are marketed 

appropriately (Pub. L. 108–447). The 

Fiscal Year 2006 cost of these positions 

to be fee-funded is $1,247,000. The 

Fiscal Year 2007 cost of these additional 

10 diversion control staff for this effort 

is anticipated to be $1,589,000, and the 

anticipated Fiscal Year 2008 cost for 

these positions to be fee-funded is 

$1,613,000. 

In calculating the revised fee 

schedule, DEA used the DCFA Budget 

Request for Fiscal Year 2006 and the 

expected DCFA Budget Requests for 

Fiscal Year 2007 and Fiscal Year 2008 

in addition to the required annual $15 

million transfer to the U.S. Treasury as 

mandated by the CSA (21 U.S.C. 886a). 

In addition to covering with fee funds 

all program elements and activities 

related to the registration and control of 

the manufacture, distribution and 

dispensing of controlled substances and 

listed chemicals, DEA must transfer the 

first $15 million of fee revenue to the 

General Fund of the Treasury each year 

(21 U.S.C. 886a(1)). For each fiscal year 

between Fiscal Year 1993 through Fiscal 

Year 1998, Congress appropriated an 

additional $15 million to offset this 

requirement (a total infusion to the 

DCFA of $90 million). However, 

beginning in Fiscal Year 1999, Congress 

discontinued this additional 

appropriation. 

The Fiscal Year 2006 cost of the DCP 

is $201,673,000, including a base of 

$148,931,000 for controlled substances 

diversion control activities, $24,499,000 

in chemical diversion control activities, 

and $28,243,000 for the additional nonchemical DCP support activities 

described above; that is: 

• 29 existing special agent positions 

to be dedicated to investigations of 

trafficking in pharmaceutical controlled 

substances (FY06 cost of $6,530,000); 

• 23 new special agent positions also 

to be dedicated to diversion control 

investigations (FY06 cost of $4,704,000); 

• 51% of eight Office of Forensic 

Sciences Special Testing Laboratory 

positions that support authentic sample 

analyses for licit controlled substances 

(FY06 cost of $820,000); 

• 12 Chief Counsel positions to 

provide diversion control support 

through the litigation of administrative 

actions related to DEA registrants and 

through legal support on regulatory 

policy matters (FY06 cost of 

$2,085,000); 

• 10 new risk management positions, 

mandated by the 2005 Appropriations 

Act, to support a coordinated, 

government-wide approach to address 

prescription drug diversion and abuse 

(FY06 cost of $1,247,000) 

• 67 field intelligence analysts and 6 

Headquarters intelligence analysts to 

support domestic and international 

diversion control investigations (FY06 

cost of $4,465,000 for 34 of these 

analysts) 

• 1 professional/administrative 

position and non-personnel support for 

the Special Operations Division directly 

related to diversion control efforts 

(FY06 cost of $4,392,000) 

• Firebird operations costs to support 

communication and infrastructure of the 

diversion control program (FY06 cost of 

$4,000,000) 

With the addition of the required $15 

million transfer to the U.S. Treasury, the 

total amount necessary to collect 

through registrant fees in Fiscal Year 

2006 is $216,673,000. 

The anticipated costs of the DCP for 

Fiscal Year 2007, including all activities 

relating to the registration and control of 

the manufacture, distribution and 

dispensing of controlled substances and 

listed chemicals, is $213,723,000. DEA 

used an inflation figure of 1.5 percent, 

based on the President’s Economic 

Assumptions, to account for increases in 

costs against the Fiscal Year 2006 costs 

described above. Including the required 

$15 million transfer to the U.S. 

Treasury, the total amount necessary to 

collect through registrant fees in Fiscal 

Year 2007 is $228,723,000. The 

anticipated costs of the DCP for Fiscal 

Year 2008, including all activities 

relating to the registration and control of 

the manufacture, distribution and 

dispensing of controlled substances and 

listed chemicals, is $219,964,000. 

Including the required $15 million 

transfer to the U.S. Treasury, the total 

amount necessary to collect through 

registrant fees in Fiscal Year 2008 is 

$234,964,000. 

The total amount necessary to collect 

through fee funds for the Fiscal Year 

2006–2008 period to fully fund the DCP 

as mandated by statute is $680,360,000. 

Under the current fee structure (without 

the proposed changes included in this 

rule), DEA would collect only 

$491,944,464 for the Fiscal Year 2006–

2008 period through registrant fees and 

would therefore fall short by 

$188,415,536 of the necessary costs of 

operating the DCP. DEA’s proposed new 

fee structure, therefore, would provide 

the necessary additional funds to ensure 

that the operational costs of the DCP are 

fully funded through registrant fees as 

mandated by statute. 

Based on the total amount necessary 

to collect for Fiscal Years 2006–2008, 

DEA developed the specific fee levels 

for each registrant category reflected in 

the table below. To calculate these fees, 

DEA first estimated the number of 

paying registrants for this period and 

then used this figure combined with the 

amount required to be collected (with 

the new fees) to set the new fee rate. To 

calculate the number of paying 

registrants, DEA used logarithmic 

regression analysis to project the yearly 

registrant figures based on historical 

registrant data for the period of Fiscal 

Year 1994 through Fiscal Year 2004 

combined with conservative estimates 

for future registration activity. 

DEA then estimated the number of 

registrants for each registrant category 

since different registrant categories pay 

different fees. Because there were 

insufficient data for some activities to 

perform regression analysis, DEA used 

the percentage for each category using 

data from the corresponding cycle years 

in the past. 

69480 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

Finally, based on the analyses 

conducted, DEA developed the fees for 

each registrant category consistent with 

its current fee structure and fee-paying 

ratios that have been in existence since 

the inception of registrant fees. During 

this time, DEA has evaluated other 

options to apportion registrant fees, 

including, for example, basing fees on 

the usage level of controlled substances 

or listed chemicals. However, in each 

case, DEA determined that any potential 

benefits to an alternative fee structure 

system would be more than offset by 

greater administrative costs and burdens 

which must be borne by registrants. For 

more discussion on this topic, please 

see DEA’s 2002 Final Rule (67 FR 

51988, August 9, 2002) and its 1996 

Final Rule (61 FR 68624, December 30, 

1996). 

In developing the proposed fee 

schedule, DEA opted to set the fee level 

for a three-year period (FY 2006–2008) 

for two reasons. First, the vast majority 

of registrants are practitioners who pay 

a three-year registration fee. These 

registrants are divided into roughly 

three separate groups who pay their 

three-year registration fees on alternate 

year cycles. Accordingly, the fees below 

reflect the total amount necessary to be 

collected for the full three-year period 

(FY 2006–2008), divided by projected 

registrants and accounting for projected 

registrant growth by category for each 

fiscal year. Because different categories 

of registrants pay different amounts, 

DEA weighted the number of registrants 

in each category to ensure the 

appropriate reflection in the fee 

schedule. Because the fees reflect the 

total amount necessary for collection 

over a three year period (Fiscal Years 

2006–2008) and because the type and 

number of registrants varies from year to 

year, the total amount of fees collected 

may not equal the requested budget 

level for any given year. Surplus fees 

collected in one year are used to offset 

fee collection shortfalls in another year. 

In no case are fees spent in excess of the 

levels enacted by Congress. 

In evaluating options to structure the 

fee schedule, DEA opted to remain with 

the current fee structure to reduce 

reporting burdens on registrants and 

operational costs associated with the 

DCP which would then be passed on to 

registrants through annual fees. One 

option suggested in the past by 

registrants is to structure fees based on 

total usage of controlled substances and/ 

or listed chemicals. Such an option 

would require significant reporting by 

registrants and oversight by DEA and 

would greatly increase the 

administrative costs of operating the 

DCP. 

Current Fees Paid by Registrants 

Currently, both handlers of controlled 

substances and of List I chemicals pay 

annual registration and reregistration 

fees. Under the current structure and 

prior to the passage of the Consolidated 

Appropriations Act of 2005 which 

clarified the activities constituting the 

DCP, fees paid by controlled substances 

registrants fully supported all costs of 

the DCP which to date have excluded 

chemical diversion control activities 

and other activities that support the 

DCP but have traditionally been funded 

through Congressional appropriations. 

In contrast, fees paid by chemical 

registrants supported only the costs 

associated with registration and 

reregistration and the administration of 

the chemical diversion control 

program—that is not the full costs of 

chemical diversion control activities. 

Currently, handlers of controlled 

substances pay annual registration and 

reregistration fees ranging from $130 to 

$1,625 depending on the category of 

registrant. Practitioners, mid-level 

practitioners, dispensers, researchers, 

and narcotic treatment programs pay an 

annual registration or reregistration fee 

of $130 (practitioners pay a three-year 

registration fee of $390). Distributors, 

importers and exporters pay an annual 

fee of $813, and manufacturers pay an 

annual fee of $1,625. The DEA last 

adjusted the fee schedule for controlled 

substances handlers in October 2003 (68 

FR 58587, October 10, 2003). DEA 

anticipates that even without the 

statutory changes prompting the 

proposed fee adjustments contained in 

this rule, the agency would have needed 

to adjust the fees for controlled 

substances registrants to account for 

inflation and normal growth in 

operational costs in Fiscal Year 2006. 

Approximating a 15 percent increase in 

fees due to inflation and increases in 

program costs would have raised the 

annual practitioner fee, for example, 

from $130 to $150. 

Chemical handlers pay different 

annual fees for initial registration and 

subsequent reregistrations and 

depending on the category of registrant. 

Manufacturers, non-retail distributors, 

importers and exporters of List I 

chemicals currently pay $595 for each 

initial annual registration and $477 for 

each subsequent annual reregistration. 

Retail distributors pay an annual fee of 

$248 plus a $7 application processing 

fee for each initial registration to 

conduct business and $116 per year for 

each reregistration (60 FR 32447, June 

22, 1995). Since October 1997, nonretail distributors of pseudoephedrine, 

phenylpropanolamine, and combination 

ephedrine drug products have been 

required to pay only $116 of the initial 

$595 registration fee (62 FR 53958, 

October 17, 1997). Fees for chemical 

registrants have not been adjusted since 

passage of the DCDCA in 1995, and DEA 

has not revisited the fees except with 

regard to the waiver of a portion of the 

fees in 1997 (62 FR 53958). 

The current chemical fees reflected 

only the operational costs of registering 

and reregistering List I chemical 

handlers and not the full costs of the 

chemical diversion control program; 

however, with the revisions to 21 U.S.C. 

886a that specifically defines the DCP to 

include both controlled substances and 

chemical diversion control activities, 

the DEA must collect fees from both 

controlled substances and chemical 

registrants at a level sufficient to fully 

fund the operations of the DCP (21 

U.S.C. 886a). DEA estimates that if 

chemical registrants were required to 

pay for the full operating costs of the 

chemical diversion control program, 

registration and reregistration fee for all 

categories of non-retail chemical 

registrants would be in excess of $6,400. 

This calculation is based on the current 

population of registered non-retail 

chemical handlers. 

Development of the Proposed New Fee 

Schedule 

To recover the full costs of the DCP 

as required by statute and as outlined in 

the preceding sections, DEA proposes to 

incrementally raise the fees in 

accordance with its existing fee 

structure as shown in the following 

table. The table also includes the 

current fees paid by each category and 

the total increase in fees. 

Registrant class Proposed new 

annual fee 

Current 

annual fee Difference 

Manufacturers (controlled substances) ....................................................................................... $2,386 $1,625 $761 

Manufacturers (chemical) ............................................................................................................ 2,386 **595 1,791 

Distributors, Importers/Exporters (controlled substances), including reverse distributors .......... 1,193 813 380 

Distributors, Importers/Exporters (chemical) ............................................................................... 1,193 **595 598 

Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 69481 

Registrant class Proposed new 

annual fee 

Current 

annual fee Difference 

Chemical Retail Distributors ........................................................................................................ 1,193 **255 938 

Dispensers/Practitioners* ............................................................................................................. 191 130 61 

Researchers, Narcotic Treatment Programs ............................................................................... 191 130 61 

*Practitioners, mid-level practitioners, pharmacies, hospitals/clinics, and teaching institutions would pay a fee of $573 for a three-year registration period. 

**Registration. 

Although these fees did not go into 

effect on October 1, 2005, the first day 

of Fiscal Year 2006, DEA will publish a 

Final Rule in as timely a manner as 

possible. Under the proposed, new fee 

schedule, controlled substances 

registrants and chemical registrants in 

the same registrant category (e.g., 

manufacturers) would pay the same fee 

regardless of the substance or chemical 

being handled. Moreover, by this 

Notice, DEA proposes to remove 

differentiation between retail and nonretail distributors of List I chemicals; 

that is, both retail and non-retail 

distributors would pay the same fee as 

described above. 

The fee structure above would 

supplant the current fee structure for 

controlled substances and for chemical 

registrants. To clarify further, in 

establishing the new fee structure above, 

DEA also would be withdrawing, by this 

notice, its Notice of Proposed 

Rulemaking issued on December 1, 

1999, which proposed changes in 

registration and reregistration fees for 

manufacturers, distributors, importers, 

exporters and retail distributors of List 

I chemicals (64 FR 67216, December 1, 

1999). DEA also would be rescinding, by 

this notice, the 1997 Notice of Fee 

Waiver published on October 17, 1997 

(62 FR 53958). By this notice DEA had 

waived a portion of the registration fee 

for non-retail distributors of 

pseudoephedrine, 

phenylpropanolamine, and combination 

ephedrine drug products. 

DEA also is removing the registration 

waiver for persons who distribute, 

import or export a product containing a 

List I chemical if that person is 

registered with the DEA to manufacture, 

distribute or dispense, import or export 

a controlled substance, since the 

registration to handle List I chemicals 

and the registration to handle controlled 

substances, while both supporting the 

DCP and therefore subject to the same 

fees per the Appropriations Act of 2005, 

cover different regulatory, legal and 

business requirements and also relate to 

different customer bases. 

With the changes to 21 U.S.C. 821 and 

958, and 21 U.S.C. 886a (summarized 

above) that require that DEA charge 

reasonable fees relating to the 

registration and control of the 

manufacture, distribution, dispensing, 

importation and exportation of 

controlled substances and listed 

chemicals and that DEA collect fees 

adequate to fully fund the controlled 

substances and chemical diversion 

control activities that constitute the 

DCP, the DEA must calculate the full 

costs of the DCP based on the full 

operating costs of its controlled 

substances diversion activities and its 

chemical diversion activities. 

Accordingly, persons who handle 

(manufacture, dispense, distribute, 

import or export) both controlled 

substances and List I chemicals must 

maintain a separate registration for each 

business activity. 

Regulatory Analysis 

The rulemaking actions contained in 

this notice are necessary to ensure the 

full funding of the DCP through 

registrant fees as required by 21 U.S.C. 

886a(3). Recent statutory clarification as 

to what constitutes the DCP and an 

internal reorganization of the DCP to 

improve operational efficiencies 

prompted DEA to conduct a review of 

the activities and costs constituting the 

DCP and to recalculate the registrant 

fees accordingly. This action was 

necessary despite the last fee adjustment 

on October 10, 2003. 

By registering with the DEA to handle 

controlled substances and List I 

chemicals (as required by 21 U.S.C. 822) 

and paying the annual registration fee 

(or three-year registration fee for some 

registrants), registrants receive the 

benefit of being able to manufacture, 

distribute import, export, and/or 

dispense controlled substances and/or 

listed chemicals. Entities that have not 

registered or do not maintain a current 

registration with the DEA to handle 

controlled substances and/or List I 

chemicals are, in general, not permitted 

to handle these substances (certain 

exceptions apply as delineated in 21 

U.S.C. 822(c)). 

Registration of controlled substances 

and List I chemical handlers is a key 

element of the system of controls related 

to the manufacture and distribution of 

these substances. Congress established 

this system of controls through the 

Controlled Substances Act, the 

Chemical Diversion and Trafficking Act, 

and subsequent legislation in an effort 

to prevent, detect and eliminate the 

diversion of controlled pharmaceuticals 

and listed chemicals from legitimate 

channels to illegal use, while at the 

same time ensuring their availability for 

legitimate purposes. This system has 

proven effective in reducing the 

diversion of these substances from 

legitimate channels to the illicit market. 

Components of this system include the 

registration of all controlled substances 

and listed chemicals and their handlers 

(Handlers of List II chemicals 

exclusively are not required to register 

with the DEA), recordkeeping, security, 

and manufacturing quotas, all under 

DEA DCP oversight. This proposed rule 

does not change the requirement to 

register to handle controlled substances 

and/or List I chemicals but rather 

changes the annual fee associated with 

registration and reregistration. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act as 

amended (5 U.S.C. 601–612), requires 

agencies to determine whether a 

proposed rule will impose a significant 

economic impact on a substantial 

number of small entities. The proposed 

fees affect a wide variety of entities. The 

following table indicates the sectors 

affected by the proposed rule. 

TABLE 1.—INDUSTRIAL SECTORS OF DEA REGISTRANTS

Sector NAICS code Controlled 

substance Chemical 

Chemical Manufacturing (organic, inorganic) .............................................................................. 3251 ........................ X 

Medicinal and Botanical Manufacturing ....................................................................................... 325411 X X 

69482 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

TABLE 1.—INDUSTRIAL SECTORS OF DEA REGISTRANTS—Continued 

Sector NAICS code Controlled 

substance Chemical 

Pharmaceutical Manufacturing .................................................................................................... 325412 X X 

Adhesive Manufacturing .............................................................................................................. 325520 ........................ X 

Toilet Preparation Manufacturing ................................................................................................ 325620 ........................ X 

Other Chemical Manufacturing .................................................................................................... 325998 ........................ X 

Drugs and Druggist Sundries Wholesalers ................................................................................. 424210 X X 

General Line Grocery Wholesalers ............................................................................................. 424410 X X 

Confectionary Merchant Wholesalers .......................................................................................... 414450 ........................ X 

Chemical Wholesalers ................................................................................................................. 424690 ........................ X 

Tobacco Wholesalers .................................................................................................................. 424940 ........................ X 

Miscellaneous Wholesalers ......................................................................................................... 424990 ........................ X 

Supermarkets ............................................................................................................................... 445110 X X 

Drug Stores .................................................................................................................................. 446110 X X 

Discount Stores ........................................................................................................................... 452112 X X 

Warehouse Clubs and Superstores ............................................................................................ 452910 X X 

Testing Labs ................................................................................................................................ 541380 X X 

Packaging and Labeling Services ............................................................................................... 561910 ........................ X 

Colleges, Universities, Professional Schools .............................................................................. 611310 X ........................

Ambulatory Health Care Services ............................................................................................... 621 X ........................

Hospitals ...................................................................................................................................... 622 X ........................

Controlled substances are prescription 

drugs; firms manufacturing and 

distributing them usually specialize in 

prescription pharmaceuticals. The 

supermarkets, discount stores, 

warehouse clubs, and superstores 

handle controlled substances through 

their distribution centers and their 

pharmacies. The listed chemical 

registrants are more diverse for two 

reasons. First, most of the listed 

chemicals have non-drug uses, such as 

chemical intermediates, flavorings, 

fragrances, and adhesives. Second, the 

drug products containing List I 

chemicals are primarily over-thecounter (OTC) medicines. These are 

distributed by drug wholesalers who 

specialize in non-prescription drugs, 

wholesalers who supply convenience 

stores, and grocery, pharmacy, and 

discount stores (e.g., superstores) that 

operate their own distribution centers. 

Of the 460 registered manufacturers, 

importers, exporters, and distributors 

who hold multiple registrations, only 70 

hold both a controlled substance and a 

chemical registration. 

As of December 2004 there are 

1,178,361 controlled substances 

registrants and 2,998 chemical 

registrants, as shown in Table 2. 

TABLE 2.—NUMBER OF REGISTRANTS BY BUSINESS ACTIVITY

Controlled 

substances Chemicals 

Practitioners ............................................................................................................................................................. 984,271 ........................

Midlevel Practitioners ............................................................................................................................................... 103,239 ........................

Retail Pharmacy ...................................................................................................................................................... 62,865 * 

Hospital/Clinic .......................................................................................................................................................... 15,650 ........................

Teaching Institution .................................................................................................................................................. 443 ........................

Manufacturer ............................................................................................................................................................ 485 208 

Distributor ................................................................................................................................................................. 823 2,413 

Researcher .............................................................................................................................................................. 7,458 ........................

Analytical Laboratory ............................................................................................................................................... 1,541 ........................

Importer .................................................................................................................................................................... 159 195 

Exporter ................................................................................................................................................................... 253 181 

Narcotic Treatment Program ................................................................................................................................... 1,174 ........................

Total .................................................................................................................................................................. 1,178,361 2,998 

*Retail distributor. 

Not all registrants listed in Table 2 are 

subject to the fees. Publicly owned 

institutions, law enforcement agencies, 

and military personnel are exempt from 

fees. In addition, DEA waives fees for 

charitable organizations, some of which 

are registered as chemical distributors 

(OTC medicines are distributed by some 

food banks and exported by aid 

organizations). 

The number of registrations overstates 

the number of individual registrants. 

The CSA requires a separate registration 

for each location where controlled 

substances are handled and a separate 

registration for each business activity; 

that is a registration for activities related 

to the handling of controlled substances 

and a registration for activities relating 

to the handling of List I chemicals. 

Some registrants may conduct multiple 

activities under a single registration 

(e.g., manufacturers may distribute 

without being registered as a 

distributor), but firms may hold 

multiple registrations for a single 

location. Individual practitioners who 

prescribe, but do not store controlled 

substances, may use a single registration 

at multiple locations within a state, but 

need separate registrations for each state 

in which they practice and are 

authorized to dispense controlled 

substances. Firms with multiple 

locations must have separate 

registrations for each location. 

Small Entities. Most DEA registrants 

are small entities under the Small 

Business Administration (SBA) 

Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 69483 

standards. Almost all practitioners 

would be considered small (annual 

revenues of less than $6 million to $8.5 

million, depending on specialty). 

Narcotic treatment programs and many 

clinics would be considered small 

(revenues of less than $8.5 million). 

According to the American Hospital 

Association, there are currently 5,764 

registered hospitals; 1,360 are operated 

by Federal, state, or local governments 

and are exempt from fees. Of the 

remaining hospitals, the rural hospitals 

(2,166 including publicly owned 

hospitals) are more likely to be small 

(revenues less than $29 million). About 

20,000 of the pharmacies are 

independent and are likely to be small 

(revenues less than $6 million); some of 

the small chain pharmacy firms may 

also be considered small. The teaching 

institutions and researchers are 

generally associated with large 

institutions and are not expected to be 

small. Importers and exporters are 

frequently manufacturers; these are 

likely to be the larger companies. The 

remaining importers and exporters, 

however, will generally be classified as 

wholesalers and would probably be 

small under the SBA standard for 

wholesalers (100 employees). The 

manufacturing sector includes the major 

companies, but many of the firms are 

small under SBA standards (500 to 

1,000 employees). The distributors have 

the widest variety of sizes, from the few 

large wholesalers that handle almost 90 

percent of drugs to very small 

wholesalers handling an array of 

products. In general, because of the cost 

of security for controlled substances, 

controlled substances manufacturers 

and distributors are larger than chemical 

manufacturers and distributors. DEA 

has no basis for estimating the total 

number of small entities affected, but it 

is clearly a substantial number. 

Impacts. As noted above, the 

proposed new registration fees range 

from $191 to $2,386 annually. These 

fees are per location and per registered 

business activity. DEA data indicate that 

63 percent of controlled substances 

manufacturers hold at least two 

registrations (as a manufacturer, 

importer, exporter, or distributor); the 

highest number of registrations 

identified for a manufacturer was 67. 

For chemical manufacturers, 66 percent 

hold at least two registrations, with the 

highest number being 30. The percent of 

multiple registrations for controlled 

substance importers is 91 percent, for 

exporters, 88 percent, for distributors 55 

percent; for chemical importers it is 77 

percent, exporters 95 percent, and 

distributors 29 percent. The chain 

pharmacies hold registrations for each 

of their locations. The largest chain 

holds retail pharmacy registrations for 

more than 5,000 locations as well as 

almost 40 registrations for its 

distribution centers. The fees paid to 

DEA will range from $191 for 

dispensing registrants holding a single 

registration to more than $900,000 for 

the largest chain pharmacy with 

multiple locations. Most small 

registrants are expected to pay a single 

registration fee of either $191, $1,193 or 

$2,386 per year (or per year equivalent). 

To assess whether the fees could 

impose a significant economic impact 

on a small entity, DEA considered 

whether the fees represent more than 

one percent of annual revenues for the 

registrant groups. For dispensers, the 

annual revenues would have to be 

below $17,900 to have the registration 

represent more than one percent of 

revenues. Medical practitioners granted 

authority to handle controlled 

substances have annual incomes well 

above that level; physician assistants, 

the mid-level practitioner with the 

lowest average salary, have annual 

salaries of about $65,000. The average 

independent pharmacy has sales of 

almost $2 million according to the 

National Association of Chain Drug 

Stores. The smallest clinics have 

revenue streams higher than $17,900. 

Consequently the higher fees will not 

impose a significant burden on 

dispensers. 

For manufacturers, the 2002 Census 

data indicate that the value of 

shipments for the smallest chemical 

manufacturers (including drugs) ranged 

from $477,000 to $1.1 million per 

location (establishment). For this 

registrant group, therefore, the fee of 

$2,386 does not represent more than one 

percent of revenues and will not impose 

a significant burden. 

The one registrant group for which 

the fees could exceed one percent of 

revenues is chemical distributors. 

Controlled substance distributors are 

generally larger drug wholesalers in part 

because of the cost of security they need 

to prevent theft of controlled substances 

and other prescription drugs. According 

to 2004 Duns data, between one percent 

and 11 percent of the wholesale sectors 

handling listed chemicals have revenues 

below $100,000. DEA does not collect 

financial data on its registrants, but it is 

possible that some chemical distributor 

registrants have revenues below 

$100,000. The proposed increase in 

annual reregistration fee for chemical 

distributors (from $477 to $1,193) could 

impose a significant burden on these 

registrants. The proposed increase in the 

initial registration fee (from a subsidized 

$116 to $1,193 annually) also could be 

a barrier to entrance for these very small 

firms. Based on its experience, however, 

DEA considers it unlikely that any firm 

that lacked the resources to pay the 

initial registration fee would be granted 

a registration because it would be 

unlikely to have the resources to 

maintain the records and provide the 

security necessary to prevent diversion 

of the products. Moreover, the proposed 

new registration fees for all wholesale 

level activities are far less than the 

estimated annual fee of $6,400 that 

chemical registrants would be charged if 

they were required to independently 

fund the chemical portion of the 

diversion control program. Combining 

all diversion control activities into a 

single Diversion Control Program, as 

mandated by the Consolidated 

Appropriations Act of 2005, results in 

scale efficiencies and overall reduced 

costs to all registrants. 

The Deputy Administrator hereby 

certifies that this rulemaking has been 

drafted in accordance with the 

Regulatory Flexibility Act (5 U.S.C. 

605(b)) and has provided above detailed 

regulatory analysis on the effects of this 

rulemaking on small entities. While 

DEA recognizes that this regulation will 

have a financial effect on registrants 

with the increase in fees, the change in 

fees is necessary to fully comply with 21 

U.S.C. 886a and related statutes 

governing the Diversion Control 

Program and the Diversion Control Fee 

Account by which DEA is legally 

mandated to collect fees to cover the full 

costs of the Diversion Control Program 

as defined by all activities relating to the 

registration and control of the 

manufacture, distribution, and 

dispensing of controlled substances and 

listed chemicals. 

Executive Order 12866 

The Deputy Administrator certifies 

that this rulemaking has been drafted in 

accordance with the principles in 

Executive Order 12866 1(b). DEA has 

determined that, because the proposed 

increased fees will result in a total 

increase of less than $70 million 

annually to be collected through fees 

(that is the difference between the 

amount collected annually under the 

current fee structure and the amount 

proposed to be collected under the 

proposed, new fee structure), this is not 

a significant regulatory action; however, 

it has been reviewed by the Office of 

Management and Budget. The fees to be 

collected represent only an increase of 

less than $70 million each year for the 

Fiscal Year 2006–2008 period (based on 

estimated fee collection figures) and are 

required to fully support the President’s 

69484 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

budget for the DCP, as approved by 

Congress through the appropriations 

process. Therefore, DEA has no 

discretion in the establishment of the 

new fees and is required by law to 

collect registration and reregistration 

fees of sufficient amount to fully 

support the DCP. 

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 preempt or 

modify any provision of state law; nor 

does it impose enforcement 

responsibilities on any state; nor does it 

diminish the power of any state to 

enforce its own laws. Accordingly, this 

rulemaking does not have federalism 

implications warranting the application 

of Executive Order 13132. 

Unfunded Mandates Reform Act of 

1995 

This rule will not result in the 

expenditure by State, local, and tribal 

governments, in the aggregate of 

$115,000,000 or more in any one year, 

and will not significantly or uniquely 

affect small governments. The proposed 

increase in fees for private sector 

entities and individuals will result in a 

total increase of less than $70 million 

annually to be collected through fees 

(that is the difference between the 

amount collected annually under the 

current fee structure and the amount 

proposed to be collected under the 

proposed, new fee structure). Moreover, 

the effect on individual entities and 

practitioners is minimal. The majority of 

the affected entities will pay a fee of 

$573 for a three year registration period 

(the equivalent of $191 per year) which 

equates to about 0.14 percent of annual 

income for most practitioners (the vast 

majority of all registrants). This rule is 

promulgated in compliance with 21 

U.S.C. 886a that the full cost of 

operating the DCP be collected through 

registrant fees. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

This rule is not a major rule as 

defined by § 804 of the Small Business 

Regulatory Enforcement Fairness Act of 

1996. While this rule will result in an 

annual effect on the economy of 

$100,000,000 or more, it will not result 

in a major increase in costs or prices or 

cause significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of U.S.-based companies to 

compete with foreign-based companies 

in domestic and export markets. This 

rule is not a discretionary action but 

rather responds to statutory clarification 

as to the activities constituting the DCP 

which, by law, must be fully funded 

through registrant fees (21 U.S.C. 821 

and 21 U.S.C. 886a, respectively). 

Moreover, the individual effect on small 

business registrants is minimal. The 

majority of registrants considered to be 

small businesses are practitioners who 

will pay a three-year registration fee of 

$573 or the equivalent of $191 per year. 

For the majority of these practitioners, 

who compose the vast majority of 

registrants and registrants qualifying as 

small businesses, this fee represents 

about 0.14 percent of their annual mean 

salary. The impact on other small 

business entities is described in greater 

detail in the preceding regulatory 

analysis. 

List of Subjects 

21 CFR Part 1301 

Administrative practice and 

procedure, Drug traffic control, Security 

measures. 

21 CFR Part 1309 

Administrative practice and 

procedure, Drug traffic control, Exports, 

Imports, Security measures. 

For the reasons set out above, 21 CFR 

Parts 1301 and 1309 are proposed to be 

amended as follows: 

PART 1301—REGISTRATION OF 

MANUFACTURERS, DISTRIBUTORS 

AND DISPENSERS OF CONTROLLED 

SUBSTANCES 

1. The authority citation for part 1301 

continues to read as follows: 

Authority: 21 U.S.C. 821, 822, 823, 824, 

871(b), 875, 877, 951, 952, 953, 956, 957. 

2. Section 1301.13 is proposed to be 

amended by revising paragraph (e)(1) to 

read as follows: 

§ 1301.13 Application for registration; time 

for application; expiration date; registration 

for independent activities; application 

forms, fees, contents and signature; 

coincident activities. 

* * * * * 

(e) * * * 

(1) 

Business activity Controlled 

substances 

DEA application 

forms 

Application 

fee 

($) 

Registration 

period 

(years) 

Coincident activities allowed 

(i) Manufacturing ......... Schedules I–V ....... New—225 .............

Renewal—225a ....

2,386 

2,386 

1 Schedules I–V: May distribute that substance 

or class for which registration was issued; 

may not distribute or dispose any substance or class for which not registered. 

Schedules II–V: Except a person registered 

to dispose of any controlled substance may 

conduct chemical analysis and preclinical 

research (including quality control analysis) 

with substances listed in those schedules 

for which authorization as a mfg. was 

issued. 

(ii) Distributing ............. Schedules I–V ....... New—225 .............

Renewal—225a ....

1,193 

1,193 

1 

(iii) Reverse distributing Schedules I–V ....... New—225 .............

Renewal—225a ....

1,193 

1,193 

1 

Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 69485 

Business activity Controlled 

substances 

DEA application 

forms 

Application 

fee 

($) 

Registration 

period 

(years) 

Coincident activities allowed 

(iv) Dispensing or instructing (includes 

Practitioner, Hospital/ 

Clinic, Retail Pharmacy, Central fill 

pharmacy, Teaching 

institution).

Schedules II–V ...... New—224 .............

Renewal—224a ....

573 

573 

3 May conduct research and instructional activities with those substances for which registration was granted, except that a midlevel practitioner may conduct such research only to the extent expressly authorized under state statute. A pharmacist may 

manufacture an aqueous or oleaginous solution or solid dosage form containing a 

narcotic controlled substance in Schedule 

II–V in Schedule II–V in a proportion not 

exceeding 20% of the complete solution, 

compound or mixture. A retail pharmacy 

may perform central fill pharmacy activities. 

(v) Research ................ Schedule I ............. New—225 .............

Renewal—225a ....

191 

191 

1 A researcher may manufacture or import the 

basic class of substance or substances for 

which registration was issued, provided 

that such manufacture or import is set forth 

in the protocol required in § 1301.18 and to 

distribute such class to persons registered 

or authorized to conduct research with 

such class of substance or registered or 

authorized to conduct chemical analysis 

with controlled substances. 

(vi) Research ............... Schedules II–V ...... New—225 .............

Renewal—225a 1

191 

191 

1 May conduct chemical analysis with controlled substances in those schedules for 

which registration was issued; manufacture 

such substances if and to the extent that 

such manufacture is set forth in a statement filed with the application for registration or reregistration and provided that the 

manufacture is not for the purposes of dosage form development; import such substances for research purposes; distribute 

such substances to persons registered or 

authorized to conduct chemical analysis, 

instructional activities or research with such 

substances, and to persons exempted from 

registration pursuant to § 1301.24; and conduct instructional activities with controlled 

substances. 

(vii) Narcotic Treatment 

Program (including 

compounder).

Narcotic Drugs in 

Schedules II–V.

New—363 .............

Renewal—363a ....

191 

191 

1 

(viii) Importing .............. Schedules I–V ....... New—225 .............

Renewal—225a ....

1,193 

1,193 

1 May distribute that substance or class for 

which registration was issued; may not distribute any substance or class for which not 

registered. 

(ix) Exporting ............... Schedules I–V ....... New—225 .............

Renewal—225a ....

1,193 

1,193 

1 

(x) Chemical Analysis Schedules I–V ....... New—225 .............

Renewal—225a ....

191 

191 

1 May manufacture and import controlled substances for analytical activities or instructional activities; may distribute such substances to persons registered or authorized 

to conduct chemical analysis, instructional 

activities, or research with such substances 

and to persons exempted from registration 

pursuant to § 1301.24; may export such 

substances to persons in other countries 

performing chemical analysis or enforcing 

laws related to controlled substances or 

drugs in those countries; and may conduct 

instructional activities with controlled substances. 

* * * * * 

69486 Federal Register / Vol. 70, No. 220 / Wednesday, November 16, 2005 / Proposed Rules 

PART 1309—REGISTRATION OF 

MANUFACTURERS, DISTRIBUTORS, 

IMPORTERS, AND EXPORTERS OF 

LIST I CHEMICALS [AMENDED] 

3. The authority citation for Part 1309 

is proposed to be amended to read as 

follows: 

Authority: 21 U.S.C. §§ 821, 822, 823, 824, 

830, 871(b), 875, 877, 886a, 958. 

4. Section 1309.11 is proposed to be 

revised to read as follows: 

§§ 1309.11 Fee amounts. 

(a) For each application for 

registration or reregistration to 

manufacture for distribution the 

applicant shall pay an annual fee of 

$2,386. 

(b) For each application for 

registration or reregistration to 

distribute (either retail distribution or 

non-retail distribution), import, or 

export a List I chemical, the applicant 

shall pay an annual fee of $1,193. 

5. Section 1309.12 is proposed to be 

revised to read as follows: 

§§ 1309.12 Time and method of payment; 

refund. 

(a) For each application for 

registration or reregistration to 

manufacture for distribution, distribute 

(either retail distribution or non-retail 

distribution), import, or export a List I 

chemical, the applicant shall pay the fee 

when the application for registration or 

reregistration is submitted for filing. 

(b) Payment should be made in the 

form of a personal, certified, or cashier’s 

check or money order made payable to 

‘‘Drug Enforcement Administration.’’

Payments made in the form of stamps, 

foreign currency, or third party 

endorsed checks will not be accepted. 

These application fees are not 

refundable. 

6. 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 whose activities 

with respect to List I chemicals are 

limited to the distribution of red 

phosphorus, white phosphorus, or 

hypophosphorous acid (and its salts) to: 

another location operated by the same 

firm solely for internal end-use; or an 

EPA or State licensed waste treatment or 

disposal firm for the purpose of waste 

disposal. 

(c) The requirement of registration is 

waived for any person whose 

distribution of red phosphorus or white 

phosphorus is limited solely to residual 

quantities of chemical returned to the 

producer, in reusable rail cars and 

intermodal tank containers which 

conform to International Standards 

Organization specifications (with 

capacities greater than or equal to 2,500 

gallons in a single container). 

(d) 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. 

(e) 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. 

(f) If any person exempted under 

paragraph (b), (c) or (d) 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 of this part. 

(g) 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), or (d) of this 

section pursuant to the procedures set 

forth in §§ 1309.43 through 1309.46 and 

§§ 1309.51 through 1309.55 of this part. 

(h) Any person exempted from the 

registration requirement under this 

section shall comply with the security 

requirements set forth in §§ 1309.71–

1309.73 of this part and the 

recordkeeping and reporting 

requirements set forth under parts 1310 

and 1313 of this chapter. 

Dated: November 8, 2005. 

Michele M. Leonhart, 

Deputy Administrator. 

[FR Doc. 05–22681 Filed 11–15–05; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

28 CFR Part 16 

[AAG/A Order No. 015–2005] 

Privacy Act of 1974; Implementation 

AGENCY: Department of Justice. 

ACTION: Proposed rule. 

SUMMARY: The Department of Justice, 

Tax Division, proposes to amend 28 

CFR part 16 to exempt a newly revised 

Privacy Act system of records entitled 

‘‘Files of Applicants For Attorney and 

Non-Attorney Positions with the Tax 

Division, Justice/TAX–003,’’ as 

described in today’s notice section of 

the Federal Register, from 5 U.S.C. 

552a(c)(3), (d)(1), and (e)(1). The 

exemptions will be applied only to the 

extent that information in a record is 

subject to exemption pursuant to 5 

U.S.C. 552a(k)(2) and (k)(5). The 

exemptions are necessary to protect the 

confidentiality of employment records. 

The Department also proposes to delete 

as obsolete provisions exempting two 

former Tax Division systems of records: 

‘‘Freedom of Information/Privacy Act 

Request Files, Justice/TAX–004;’’ and 

‘‘Tax Division Special Project Files, 

Justice/TAX–005.’’ The records in Tax004 are now covered by a 

Departmentwide system notice, 

‘‘Freedom of Information Act, Privacy 

Act, and Mandatory Declassification 

Review Requests and Administrative 

Appeals, DOJ–004’’. The relevant 

records in TAX–005 are now part of the 

revised system entitled ‘‘Criminal Tax 

Case Files, Special Project Files, Docket 

Cards, and Associated Records, Justice/ 

TAX–001.’’

DATES: Submit any comments by 

December 27, 2005. 

ADDRESSES: Address all comments to 

Mary Cahill, Management and Planning 

Staff, Justice Management Division, 

Department of Justice, Washington, DC 

20530 (1400 National Place Building), 

Facsimile Number (202) 307–1853. To 

ensure proper handling, please 

reference the AAG/A Order No. on your 

correspondence. You may view an 

electronic version of this proposed rule 

at http://www.regulations.gov. You may 

also comment via the Internet to the 

DOJ/Justice Management Division at the 

following e-mail address: 

DOJPrivacyACTProposed

Regulations@usdoj.gov; or by using the 

http://www.regulations.gov comment 

form for this regulation. When 

submitting comments electronically, 

you must include the AAG/A Order No. 

in the subject box. 

FOR FURTHER INFORMATION CONTACT: 

Mary Cahill, (202) 307–1823.