Date="06/14/94" Citation="59 FR 30555" Group="" Type="PROPOSED RULE" Department="DEPARTMENT OF JUSTICE" Agency="DRUG ENFORCEMENT ADMINISTRATION (DEA)" Subject="Registration of Manufacturers and Importers of Controlled Substances"

DEPARTMENT OF JUSTICE Drug Enforcement Administration 21 CFR Part 1301 Registration of Manufacturers and Importers of Controlled Substances AGENCY: Drug Enforcement Administration (DEA). ACTION: Supplemental notice of proposed rulemaking (SNPRM).

DEPARTMENT OF JUSTICE Drug Enforcement Administration 21 CFR Part 1301 Registration of Manufacturers and Importers of Controlled Substances AGENCY: Drug Enforcement Administration (DEA). ACTION: Supplemental notice of proposed rulemaking (SNPRM). + ------------------------------------------------------------ SUMMARY: On October 7, 1993, DEA published a notice a proposed rulemaking (NPRM) in the Federal Register (58 FR 52246) to amend its regulations to eliminate the mandatory administrative hearing requirement for objections to the registration of certain bulk manufacturers and importers of controlled substances. This SNPRM revises the NPRM by proposing to eliminate the hearing provision relating to bulk manufacturers altogether and leave unaltered the hearing provision relating to registration of importers. DATES: Written comments and objections to this SNPRM must be received on or before August 15, 1994. ADDRESSES: Comments and objections should be submitted in quintuplicate to the Administrator, Drug Enforcement Administration, Washington, DC 20537, Attention: DEA Federal Register Representative/CCR. FOR FURTHER INFORMATION CONTACT: Julie C. Gallagher, Associate Chief Counsel, Diversion and Regulatory Section, Office of Chief Counsel, Drug Enforcement Administration, Washington, DC 20537, telephone (202) 307-8010. SUPPLEMENTARY INFORMATION: On October 7, 1993, DEA published a NPRM in the Federal Register (58 FR 52246). The DEA proposed to amend two sections of its regulations, specifically 21 CFR 1301.43(a) and 1311.42(a), in which the Administrator is required to hold an administrative hearing on an application for registration to manufacture or import a bulk Schedule I or II controlled substance when requested to do so by any current bulk manufacturer of the substance(s) or by any other applicant for a similar registration. Because the proposals in this SNPRM differ in some respects from the NPRM, DEA encourages interested persons to file comments in response to this SNPRM even if they have already commented on the NPRM. Comments previously received under the NPRM will be considered under the SNPRM to the extent they are relevant to the changes in the SNPRM. Section 1311.42(a) In the NPRM, DEA proposed to remove the provision which enabled a person registered as a bulk manufacturer of a controlled substance or applicant thereof to request a hearing on the application of an importer of that controlled substance. As several commentators argued, the proposed amendment to 21 CFR 1311.42, cannot be reconciled with the hearing provisions of 21 U.S.C. 958(i). The relevant portion of 21 U.S.C. 958(i) states: "prior to issuing a registration under this section . . . the Attorney General shall give manufacturers holding registrations for the bulk manufacture of the substance an opportunity for a hearing.'' In keeping with the above requirement, 21 CFR 1311.42, allows current bulk manufacturer registrants to request an administrative hearing regarding their objections to the registration of certain importers of Schedule I and II controlled substances. With an existing statute in effect, DEA is not empowered to adopt regulations that contravene the express language of that statute. Therefore, based on the hearing provisions under 21 U.S.C. 958(i), 21 CFR 1311.42, Application for importation of Schedule I and II controlled substances, shall remain unchanged. Section 1301.43(a) Unlike the registration of importers, the Controlled Substances Act (21 U.S.C. 801, et seq.) does not require that current registrants be allowed to request a hearing on an application for registration as a bulk manufacturer of a controlled substance. The NPRM proposed to modify sec 1301.43(a) and provide for a hearing only when "the Administrator determines that a hearing is necessary to receive factual evidence and/or expert testimony with respect to issues raised by the application or objections thereto.'' The SNPRM goes one step further and eliminates this hearing provision entirely. However, the Administrator would still be required to hold hearings when requested by the applicant pursuant to an order to show cause, sec 1301.44, and current registrants and applicants would still be permitted to submit comments or objections concerning an application for registration. In addition, current registrants and applicants would be granted an opportunity to participate in any hearings conducted pursuant to sec 1301.44. DEA recognizes that the antecedent for this hearing provision derives from statutory acknowledgement that limiting the number of registrants may increase the capability to control diversion. The regulations clearly state, however, that the Administrator is not required to limit the number of manufacturers even if the current registrants can provide an adequate supply, as long as DEA can maintain effective controls against diversion. 21 CFR 1301.43(b). In addition, as stated in the NPRM, the Administrator has never denied an application solely on the basis of increased danger of diversion or adverse impact upon domestic competition. DEA also agrees that current registrants and applicants should be allowed to object to an additional registration by filing comments on grounds that it would adversely affect diversion or competition in a highly regulated industry. But DEA finds that registrants and applicants have abused the mandatory hearing requirement in the past and it remains a future source of abuse where these individuals deter or delay new registrations and retaliate by opposing annual renewals. Most important, the proposed change as provided herein does not violate statutory intent but instead comports with sound principles of substantive and procedural due process. First, eliminating the hearing requirement except when requested by the applicant after issuance of an order to show cause, supports the statutory and regulatory mandate that an applicant for registration as a bulk manufacturer shall have the burden of proof at "any hearing'' that the requirements of registration are met. See 21 CFR 1301.55. The Administrative Procedure Act (APA) which controls these matters further provides that "[e]xcept as otherwise provided by statute, the proponent of a rule or order has the burden of proof.'' See 5 U.S.C. 556(d). Second, the proposed change eliminates the potential for multiple hearings which not only promotes judicial economy but also avoids the anomalous result of DEA conducting administrative hearings which are not dispositive of the ultimate issue of whether an applicant should be registered. For example, because DEA must issue an order to show cause whenever it takes action to deny an application, 21 U.S.C. 824(c), under the current regulation a second hearing would likely be required when DEA decided to deny an application after a hearing held pursuant to a "third-party'' request. Further, this second hearing would involve many of the same issues raised in the prior proceeding. Finally, the proposed change continues to permit current registrants and applicants to submit written comments and objections concerning an applicant's registration. There is no reason to believe that this procedure does not provide an adequate mechanism for these individuals to convey the substance and criticality of any objections or that DEA would fail to consider such evidence prior to making a final determination. Moreover, these individuals could still participate in any hearing conducted contemporaneous with an application, thereby providing an additional opportunity to present evidence. Accordingly, the Deputy Assistant Administrator for Diversion Control is proposing to delete the hearing requirement from this regulation. The notice requirement and the opportunity to comment upon and oppose applications shall be retained, while current registrants and other applicants will retain the opportunity to participate in any hearing requested by the Applicant pursuant to an order to show cause. The Deputy Assistant Administrator hereby certifies that the SNPRM will have no significant impact upon those entities whose interests must be considered under the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The registrants and applicants who use, or are affected by, the hearing covered by these regulations are typically not small entities. The proposed rule is not a significant regulatory action pursuant to Executive Order 12866 and therefore, has not been submitted to the Office of Management and Budget centralized review. This action has been analyzed in accordance with the principles and criteria in E.O. 12612, and it has been determined that the proposed rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. List of Subjects in 21 CFR Part 1301 Administrative practice and procedure, Drug traffic control and security measures. Therefore, pursuant to the authority vested in the Attorney General by 21 U.S.C. 821 and 871(b), as delegated to the Administrator of the Drug Enforcement Administration, and redelegated to the Deputy Assistant Administrator, Office of Diversion Control by 28 CFR 0.100 and 0.104, the Deputy Assistant Administrator, Office of Diversion Control hereby proposes that part 1301 of Title 21, Code of Federal Regulations be amended as follows: PART 1301-[AMENDED] 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. 2. Section 1301.43 is proposed to be amended by revising paragraph (a) to read as follows: sec 1301.43 Application for bulk manufacture of Schedule I and II substances. (a) In the case of an application for registration or reregistration to manufacture in bulk a basic class of controlled substance listed in Schedule I or II, the Administrator shall, upon the filing of such application, publish in the Federal Register a notice naming the applicant and stating that such applicant has applied to be registered as a bulk manufacturer of a basic class of narcotic or nonnarcotic controlled substance, which class shall be identified. A copy of said notice shall be mailed simultaneously to each person registered as a bulk manufacturer of that basic class and to any other applicant therefor. Any such person may, within 30 days from the date of publication of the notice in the Federal Register, file with the Administrator written comments on or objections to the issuance of the proposed registration. * * * * * 3. Section 1301.44 is proposed to be amended by redesignating paragraph (b) as paragraph (c) and adding a new paragraph (b) to read as follows: sec 1301.44 Certificate of registration; denial of registration. * * * * * (b) If a hearing is requested by an applicant for registration or reregistration to manufacture in bulk a basic class of controlled substance listed in Schedule I or II, any person entitled to file comments or objections to the issuance of the proposed registration pursuant to sec 1301.43(a) may participate in the hearing by filing a notice of appearance in accordance with sec 1301.54. Notice of the hearing shall be published in the Federal Register and shall be mailed simultaneously to the applicant and to all persons to whom notice of the application was mailed. Notice of the hearing shall contain a summary of all comments and objections filed regarding the application and shall state the time and place for the hearing, which shall not be less than 30 days after the date of publication of such notice in the Federal Register. * * * * * 4. Section 1301.54 is proposed to be amended by revising paragraphs (a), (b), (c) and (d) to read as follows: sec 1301.54 Request for hearing or appearance; waiver. (a) Any person entitled to a hearing pursuant to secsec 1301.42, 1301.44, or 1301.45 and desiring a hearing shall, within 30 days after the date of receipt of the order to show cause, file with the Administrator a written request for a hearing in the form prescribed in sec 1316.47 of this chapter. (b) Any person entitled to participate in a hearing pursuant to sec 1301.44(b) and desiring to do so shall, within 30 days of the date of publication of notice of the hearing in the Federal Register, file with the Administrator a written notice of his intention to participate in such hearing in the form prescribed in sec 1316.48 of this chapter. Any person filing a request for a hearing need not also file a notice of appearance. (c) Any person entitled to a hearing or to participate in a hearing pursuant to secsec 1301.42, 1301.44, or 1301.45 may, within the period permitted for filing a request for a hearing or a notice of appearance, file with the Administrator a waiver of an opportunity for a hearing or to participate in a hearing, together with a written statement regarding his position on the matters of fact and law involved in such hearing. Such statement, if admissible, shall be made a part of the record and shall be considered in light of the lack of opportunity for cross- examination in determining the weight to be attached to matters of fact asserted therein. (d) If any person entitled to a hearing or to participate in a hearing pursuant to secsec 1301.42, 1301.44, or 1301.45 fails to file a request for a hearing or a notice of appearance, or if he so files and fails to appear at the hearing, he shall be deemed to have waived his opportunity for the hearing or to participate in the hearing, unless he shows good cause for such failure. * * * * * 5. Section 1301.55 is proposed to be amended by revising paragraph (a) to read as follows: sec 1301.55 Burden of proof. (a) At any hearing on an application to manufacture any controlled substance listed in Schedule I or II, the applicant shall have the burden of proving that the requirements for such registration pursuant to section 303(a) of the Act (21 U.S.C. 823(a)) are satisfied. Any other person participating in the hearing pursuant to sec 1301.44(b) shall have the burden of proving any propositions of fact or law asserted by him in the hearing. * * * * * Dated: May 26, 1994. Gene R. Haislip, Deputy Assistant Administrator, Office of Diversion Control. [FR Doc. 94-14333 Filed 6-13-94; 8:45 am] BILLING CODE 4410-09-M ------------------------------------------------------ The Contents entry for this article reads as follows: Manufacturers, distributors, and dispensers of controlled substances; registration, etc.: Administrative hearing requirement, 30555