Reports by Registrants of Theft or Significant Loss of Controlled Substances, 47094-47097 [05-15969]
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Federal Register / Vol. 70, No. 155 / Friday, August 12, 2005 / Rules and Regulations
Rule. They request a 60-day extension of
the effective date of the Final Rule to
October 14, 2005.
2. For good cause shown, the
Commission will extend the effective
date of the Final Rule 60 days from the
current effective date (August 15, 2005)
to October 14, 2005. Additionally, we
will extend to November 15, 2005, the
date by which all public utilities that
own, control, or operate transmission
facilities in interstate commerce are to
adopt the Final Rule Appendix G as
amendments to the Large Generator
Interconnection Procedures and Large
Generator Interconnection Agreements
(LGIAs) in their Open Access
Transmission Tariffs.2 The transition
period adopted in the Final Rule (which
states that the low voltage ride-through,
reactive power and supervisory control
and data acquisition (SCADA)
provisions apply only to LGIAs signed,
filed with the Commission in executed
form, or filed as non-conforming
agreements, on or after January 1, 2006,
or the date six months after publication
of the Final Rule in the Federal
Register) remains unchanged.
3. NERC and AWEA state that they
will file a report with the Commission
on or before September 14, 2005,
describing the final results of their
discussions and any recommended
revisions to the low voltage ride-through
provisions in the Final Rule. The
Commission accepts this commitment,
and will take any such recommended
revisions submitted on or before
September 14, 2005 into consideration
as it considers the requests for rehearing
filed in this proceeding. Additionally,
the Commission will consider any
supplemental comments related to the
low voltage ride-through provisions of
the Final Rule that are filed on or before
September 14, 2005. However, the
Commission will not consider
comments that simply rehash prior
arguments.
The Commission orders:
(A) The effective date of the Final
Rule on Interconnection for Wind
Energy is hereby extended to October
14, 2005, as discussed in the body of
this order.
(B) The date by which all public
utilities that own, control, or operate
transmission facilities in interstate
commerce are to adopt the Final Rule
Appendix G as amendments to the Large
Generator Interconnection Procedures
and Large Generator Interconnection
Agreements in their Open Access
2 This extension also satisfies the request for
extension submitted by Midwest Independent
Transmission System Operator, Inc. on August 4,
2005.
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Transmission Tariffs is hereby extended
to November 14, 2005, as discussed in
the body of this order.
(C) The Secretary shall promptly
publish a copy of this order in the
Federal Register.
manufacturing, distribution, and
dispensing of controlled substances. As
part of these regulations, DEA requires
that registrants have systems to
maintain security for controlled
substances and to report thefts or losses.
By the Commission.
Linda Mitry,
Deputy Secretary.
[FR Doc. 05–15980 Filed 8–11–05; 8:45 am]
Theft and Loss Reporting Requirements
Section 1301.74(c), ‘‘Other security
controls for non-practitioners; narcotic
treatment programs and compounders
for narcotic treatment programs.’’ states
that ‘‘[t]he registrant shall notify the
Field Division Office of the
Administration in his area of any theft
or significant loss of any controlled
substances upon discovery of such theft
or loss. The supplier shall be
responsible for reporting in-transit
losses of controlled substances by the
common or contract carrier selected
pursuant to § 1301.74(e), upon
discovery of such theft or loss. The
registrant shall also complete DEA Form
106 regarding such theft or loss. Thefts
must be reported whether or not the
controlled substances are subsequently
recovered and/or the responsible parties
are identified and action taken against
them.’’
Section 1301.76(b), ‘‘Other security
controls for practitioners.’’ requires that
‘‘[t]he registrant shall notify the Field
Division Office of the Administration in
his area of the theft or significant loss
of any controlled substances upon
discovery of such loss or theft. The
registrant shall also complete DEA (or
BND) Form 106 regarding such loss or
theft.’’
BILLING CODE 6717–01–U
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Part 1301
[Docket No. DEA–196F]
RIN 1117–AA73
Reports by Registrants of Theft or
Significant Loss of Controlled
Substances
Drug Enforcement
Administration (DEA), Justice.
ACTION: Final Rule.
AGENCY:
SUMMARY: DEA is amending its
regulations regarding reports by
registrants of theft or significant loss of
controlled substances. There had been
some confusion as to what constitutes a
significant loss and when and how
initial notice of a theft or loss should be
provided to DEA. In this final rule, DEA
clarifies the regulations and provides
guidance to registrants regarding the
theft, significant loss, and unexplained
loss of controlled substances.
DATES: This final rule is effective
September 12, 2005.
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. Background
DEA’s Legal Authority
DEA implements the Controlled
Substances Act (21 U.S.C. 801–971)
(CSA), as amended. DEA publishes the
implementing regulations for this
statute in Title 21 of the Code of Federal
Regulations (CFR), Part 1300 to 1399.
These regulations are designed to ensure
that there is a sufficient supply of these
substances for legitimate medical
purposes and deter the diversion of
controlled substances to illegal
purposes. The CSA mandates that DEA
establish a closed system of control for
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DEA’s Proposed Rule
On July 8, 2003, DEA published a
notice of proposed rulemaking (NPRM)
(68 FR 40576) to address confusion that
exists within the regulated industry as
to the exact meaning of the phrases
‘‘upon discovery’’ and ‘‘significant
loss.’’
DEA has always viewed ‘‘upon
discovery’’ to mean that notification
should occur immediately and without
delay. The purpose of immediate
notification is to provide an opportunity
for DEA, state, or local participation in
the investigative process when
warranted and to create a record that the
theft or significant loss was properly
reported. It also alerts law enforcement
personnel to more broadly based
circumstances or patterns of which the
individual registrant may be unaware.
This notification is considered part of a
good-faith effort on the part of the
regulated industries to maintain
effective controls against the diversion
of controlled substances, as required by
§ 1301.71(a). Lack of prompt notification
could prevent effective investigation
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Federal Register / Vol. 70, No. 155 / Friday, August 12, 2005 / Rules and Regulations
and prosecution of individuals involved
in the diversion of controlled
substances. DEA proposed to insert the
word ‘‘immediately’’ before the phrase
‘‘upon discovery’’ to clarify this point.
Regarding ‘‘significant loss,’’ there is
no single objective standard that can be
established and applied to all registrants
to determine whether a loss is
‘‘significant.’’ Any unexplained loss or
discrepancy should be reviewed within
the context of a registrant’s business
activity and environment. What
constitutes a significant loss for one
registrant may be construed as
comparatively insignificant for another.
A manufacturer may experience
continuous losses in the manufacturing
process due to, for example,
atmospheric changes or mixing
procedures. Such losses may not be
deemed by the registrant to be
significant and may be recorded in
batch records. Conversely, for
registrants other than manufacturers, the
repeated loss of small quantities of
controlled substances over a period of
time may indicate a significant aggregate
problem that must be reported to DEA,
even though the individual quantity of
each occurrence is not significant.
Individual registrants should examine
both their business activities and the
external environment in which those
business activities are conducted to
determine whether unexplained losses
of controlled substances are significant.
When in doubt, registrants should err on
the side of caution in alerting the
appropriate law enforcement
authorities, including DEA, of thefts and
losses of controlled substances. DEA
proposed to amend the regulations by
inserting a list of factors that registrants
should consider when determining
whether a loss of controlled substances
is significant.
II. Comments Received in Response to
the NPRM Published July 8, 2003
DEA received eight comments in
response to the NPRM. In general, the
comments were supportive of DEA
efforts to clarify current regulations and
provide guidance regarding reporting of
theft or significant loss of controlled
substances. At the same time,
commenters offered a number of
suggestions that, in their view, would
provide even greater clarity and
certainty to the regulations. These
comments are addressed below.
Timing of Reports
Regarding the timing of initial theft or
loss reports, DEA proposed to insert the
word ‘‘immediately’’ before the phrase
‘‘upon discovery.’’ DEA also suggested
in the proposed rule preamble that
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submission of the DEA Form 106 itself
is not immediately necessary if the
registrant needs time to investigate the
facts surrounding the theft or significant
loss, but that updates should be
provided to DEA if the investigation
takes more than two months. One
commenter recommended that the
regulations provide an objective
standard regarding the time frame when
reports must be made (while retaining
the subjective standard for registrants to
decide when a report is necessary).
Specifically, the commenter suggested
that initial reports be required within
one business day and that DEA Form
106 must be filed within 30 days.
DEA agrees with the commenter that
an objective standard for initial
notification would be useful and
believes the one-business-day
suggestion is consistent with its
proposed addition of the word
‘‘immediately.’’ Regarding the 30-day
requirement for submission of the Form
106, however, DEA believes that may be
difficult to comply with in some cases,
so prefers to retain the registrant
flexibility provided by the approach
outlined in the proposed rule preamble,
i.e., DEA Form 106 should be submitted
once the circumstances surrounding the
theft or significant loss are clear, but
updates should be provided to DEA if
the investigation takes more than two
months.
Clarification on ‘‘Discovery’’
Related to this change, several
commenters requested clarification or
proposed changes to what constitutes
‘‘discovery.’’ They suggested this was
more a source of confusion to the
regulated community than was the
timing issue. According to these
commenters, DEA should explicitly
recognize that ‘‘discovery’’ may well
occur in increments, therefore, knowing
when to make a report becomes
complex. One commenter suggested that
the addition of objective standards for
submitting reports would resolve much
of the confusion, while another
suggested adding ‘‘and verification’’
after the phrase ‘‘upon discovery.’’
DEA does not disagree with these
commenters and recognized the
incremental nature of discovery in the
preamble to the proposed rule when it
suggested that an update be provided to
DEA within 60 days of initial
notification, if the investigation into the
theft or significant loss is still ongoing,
and that the Form 106 need not be filed
at all if the registrant ultimately
determines that no theft or significant
loss occurred. DEA’s overriding interest
here is in obtaining immediate
notification of suspected or actual theft
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47095
or significant loss and accepts the onebusiness-day suggestion as a clear
standard for making that required initial
notification.
Method of Initial Notification
One commenter questioned the nature
of the initial notification itself, seeking
clarification on whether a telephone call
would suffice. In the preamble to the
proposed rule, DEA recommended that
the initial notification be a short
statement provided by fax, which would
avoid delays that might be associated
with using regular U.S. mail. Faxing is
not the only option a registrant may use,
but DEA does believe that the
notification should be in writing. Not
only does this eliminate any
misunderstanding that could arise in an
oral communication, but it also provides
the registrant with a record of what was
provided, when it was provided, and to
whom it was provided.
DEA Form 106
A final area of comments on the
notification process raised issues about
the purpose of Form 106 and offered
suggestions that the commenters
believed would make it a more useful
report. While DEA appreciates these
comments and suggestions, DEA
considers them beyond the scope of this
rulemaking. DEA Form 106 is scheduled
to be revised within the next year, and
DEA will consider these comments
during that process.
In reviewing the existing regulation
and DEA Form 106, DEA noted that
while the form itself specified that the
form should be completed and
submitted to DEA, the regulations
merely required that the form be
completed and did not contain a
requirement that the form be submitted.
Therefore, DEA is amending the
regulations to explicitly acknowledge
the requirement, currently contained
only in the DEA Form 106 instructions,
that the completed DEA Form 106 be
submitted to DEA.
Factors To Be Considered in
Determining Whether a Loss Is
Significant
In the proposed rulemaking, DEA
included a change that would add a list
of factors to be considered in
determining whether a loss is
‘‘significant.’’ DEA recognizes there is
no single objective standard that can be
applied to all registrants—what
constitutes a significant loss for one
registrant may be construed as
comparatively insignificant for another.
Any unexplained loss or discrepancy
must be reviewed within the context of
a registrant’s business activity and
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environment. Several commenters
thought the list of factors is a helpful
addition. One commenter disagreed,
stating that ‘‘none of these factors or
questions is particularly useful in
determining whether initial notification
should be provided to DEA to satisfy the
requirement of reporting’’ and suggested
that confusion over what constitutes a
significant loss exists not only among
DEA registrants, but also among DEA
field offices, which results in
differences in interpretation and
enforcement.
DEA recognizes that there has been
confusion within the regulated
community regarding the application of
this standard and for that very reason
proposed the list of factors to clarify for
all parties what registrants should be
considering—at a minimum—when
determining whether a loss is
significant. As DEA noted in the
proposed rule preamble, ‘‘individual
registrants should examine both their
business activities and the external
environment in which those business
activities are conducted to determine
whether unexplained losses of
controlled substances are significant.
When in doubt, registrants should err on
the side of caution in alerting the
appropriate law enforcement
authorities, including DEA, of thefts and
losses of controlled substances.’’ DEA
encourages registrants to use additional
factors beyond what DEA suggests in the
evaluation of whether a loss is
significant. DEA believes, however, that
it has provided as much direction on
this matter as it reasonably can, given
the case-by-case nature of this
determination.
In-Transit Loss
One commenter also suggested the
insertion of the word ‘‘significant’’
before the phrase ‘‘in-transit losses of
controlled substances’’ in § 1301.74(c),
unless DEA intends for all in-transit
losses to be reported. DEA does, in fact,
intend for all in-transit losses to be
reported, not just significant losses.
Therefore, to clarify this point, and
based on the comment received, DEA is
amending the regulatory text to reflect
that ‘‘all’’ in-transit losses must be
reported to DEA.
DEA Form 41
Several commenters requested
additional clarification and guidance on
reporting and recordkeeping,
particularly with regard to breakage and
spillage and the submission of Form 41.
In the preamble to the proposed
rulemaking, DEA did provide guidance
on this topic, both to distinguish it from
reporting of thefts or significant losses
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of controlled substances (and the use of
DEA Form 106) and to restate the
disposal and documentation obligations
when breakage, spillage, or other
damage to controlled substances occurs.
DEA believes this guidance is adequate
and sufficiently clear and does not wish
to expand on the topic as a part of this
rulemaking on theft and significant loss.
Registrants should continue to employ
common sense, good faith approaches to
their reporting and recordkeeping
obligations in the case of breakage and
spillage.
Reporting of Thefts and Losses to
ARCOS
Finally, DEA received a request for
clarification of the reporting of thefts
and losses to DEA’s Automation of
Reports and Consolidated Orders
System (ARCOS). DEA wishes to
reiterate that thefts and losses are
reported to ARCOS. Thefts are reported
using transaction codes based on the
type of theft, e.g., theft from premises,
in-transit loss, etc. Losses are reported
to ARCOS simply as losses. DEA did not
propose any regulatory change regarding
this reporting, nor is it making a
regulatory change at this time.
Regulatory Certifications
Regulatory Flexibility Act
The Deputy Assistant Administrator
hereby certifies that this rulemaking has
been drafted in accordance with the
Regulatory Flexibility Act (5 U.S.C.
605(b)), has reviewed this regulation,
and by approving it certifies that this
regulation will not have a significant
economic impact on a substantial
number of small entities. This
regulation seeks to clarify existing DEA
regulations regarding the reporting of
thefts and significant losses of
controlled substances. No new
recordkeeping or reporting requirements
are imposed by this rulemaking.
Executive Order 12866
The Deputy Assistant Administrator
further certifies that this rulemaking has
been drafted in accordance with the
principles in Executive Order 12866
Section 1(b). DEA has determined that
this is not a significant rulemaking
action. Therefore, this action has not
been reviewed by the Office of
Management and Budget. This
rulemaking merely seeks to clarify
existing DEA regulations, policies and
procedures.
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.
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Executive Order 13132
This rulemaking does not preempt or
modify any provision of state law; nor
does it impose enforcement
responsibilities on any state; nor does it
diminish the power of any state to
enforce its own laws. Accordingly, this
rulemaking does not have federalism
implications warranting the application
of Executive Order 13132.
Unfunded Mandates Reform Act of 1995
This rule will not result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $115 million or more
in any one year, and will not
significantly or uniquely affect small
governments. Therefore, no actions were
deemed necessary under the provisions
of the Unfunded Mandates Reform Act
of 1995.
Small Business Regulatory Enforcement
Fairness Act of 1996
This rule is not a major rule as
defined by section 804 of the Small
Business Regulatory Enforcement
Fairness Act of 1996. This rule will not
result in an annual effect on the
economy of $100,000,000 or more; a
major increase in costs or prices; or
significant adverse effects on
competition, employment, investment,
productivity, innovation, or on the
ability of United States-based
companies to compete with foreignbased companies in domestic and
export markets.
List of Subjects in 21 CFR Part 1301
Administrative practice and
procedure, Drug traffic control, Security
measures.
For the reasons set out above, 21 CFR
part 1301 is amended as follows:
I
PART 1301—REGISTRATION OF
MANUFACTURERS, DISTRIBUTORS,
AND DISPENSERS OF CONTROLLED
SUBSTANCES
1. The authority citation for part 1301
continues to read as follows:
I
Authority: 21 U.S.C. 821, 822, 823, 824,
871(b), 875, 877, 951, 952, 953, 956, 957.
2. Section 1301.74 is amended by
revising paragraph (c) to read as follows:
I
§ 1301.74 Other security controls for nonpractitioners; narcotic treatment programs
and compounders for narcotic treatment
programs.
*
*
*
*
*
(c) The registrant shall notify the
Field Division Office of the
Administration in his area, in writing, of
any theft or significant loss of any
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Federal Register / Vol. 70, No. 155 / Friday, August 12, 2005 / Rules and Regulations
controlled substances within one
business day of discovery of the theft or
loss. The supplier is responsible for
reporting all in-transit losses of
controlled substances by the common or
contract carrier selected pursuant to
paragraph (e) of this section, within one
business day of discovery of such theft
or loss. The registrant shall also
complete, and submit to the Field
Division Office in his area, DEA Form
106 regarding the theft or loss. Thefts
and significant losses must be reported
whether or not the controlled
substances are subsequently recovered
or the responsible parties are identified
and action taken against them. When
determining whether a loss is
significant, a registrant should consider,
among others, the following factors:
(1) The actual quantity of controlled
substances lost in relation to the type of
business;
(2) The specific controlled substances
lost;
(3) Whether the loss of the controlled
substances can be associated with
access to those controlled substances by
specific individuals, or whether the loss
can be attributed to unique activities
that may take place involving the
controlled substances;
(4) A pattern of losses over a specific
time period, whether the losses appear
to be random, and the results of efforts
taken to resolve the losses; and, if
known,
(5) Whether the specific controlled
substances are likely candidates for
diversion;
(6) Local trends and other indicators
of the diversion potential of the missing
controlled substance.
*
*
*
*
*
I 3. Section 1301.76 is amended by
revising paragraph (b) to read as follows:
§ 1301.76 Other security controls for
practitioners.
*
*
*
*
*
(b) The registrant shall notify the
Field Division Office of the
Administration in his area, in writing, of
the theft or significant loss of any
controlled substances within one
business day of discovery of such loss
or theft. The registrant shall also
complete, and submit to the Field
Division Office in his area, DEA Form
106 regarding the loss or theft. When
determining whether a loss is
significant, a registrant should consider,
among others, the following factors:
(1) The actual quantity of controlled
substances lost in relation to the type of
business;
(2) The specific controlled substances
lost;
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(3) Whether the loss of the controlled
substances can be associated with
access to those controlled substances by
specific individuals, or whether the loss
can be attributed to unique activities
that may take place involving the
controlled substances;
(4) A pattern of losses over a specific
time period, whether the losses appear
to be random, and the results of efforts
taken to resolve the losses; and, if
known,
(5) Whether the specific controlled
substances are likely candidates for
diversion;
(6) Local trends and other indicators
of the diversion potential of the missing
controlled substance.
*
*
*
*
*
William J. Walker,
Deputy Assistant Administrator, Office of
Diversion Control.
[FR Doc. 05–15969 Filed 8–11–05; 8:45 am]
BILLING CODE 4410–09–P
NATIONAL INDIAN GAMING
COMMISSION
25 CFR Part 542
RIN 3141–AA27
Minimum Internal Control Standards
National Indian Gaming
Commission.
ACTION: Final rule.
AGENCY:
SUMMARY: In response to the inherent
risks of gaming enterprises and the
resulting need for effective internal
controls in Tribal gaming operations,
the National Indian Gaming
Commission (Commission or NIGC) first
developed Minimum Internal Control
Standards (MICS) for Indian gaming in
1999, and then later revised them in
2002. The Commission recognized from
the outset that periodic technical
adjustments and revisions would be
necessary in order to keep the MICS
effective in protecting Tribal gaming
assets and the interests of Tribal
stakeholders and the gaming public. To
that end, the following final rule
revisions contain certain corrections
and revisions to the Commission’s
existing MICS, which are necessary to
clarify, improve, and update other
existing MICS provisions. The purpose
of these MICS revisions is to address
apparent shortcomings in the MICS and
various changes in Tribal gaming
technology and methods. Public
comment on these final MICS revisions
was received by the Commission for a
period of 48 days after the date of their
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47097
publication in the Federal Register as a
proposed rule on March 10, 2005.
After consideration of all received
comments, the Commission has made
whatever changes to the proposed
revisions that it deemed appropriate and
is now promulgating and publishing the
final revisions to the Commission’s
MICS Rule, 25 CFR part 542.
DATES: Effective Date: August 12, 2005.
Compliance Date: Except for the final
revisions to subsection 542.3(f), on or
before October 11, 2005, the Tribal
gaming regulatory authority shall: (1) In
accordance with the Tribal gaming
ordinance, establish and implement
Tribal internal control standards that
shall provide a level of control that
equals or exceeds the revised standards
set forth herein; and (2) establish a
deadline no later than December 12,
2005, by which a gaming operation must
come into compliance with the Tribal
internal control standards. However, the
Tribal gaming regulatory authority may
extend the deadline by an additional 60
days if written notice is provided to the
Commission no later than December 12,
2005. Such notification must cite the
specific revisions to which the
extension pertains.
With regard to the final revisions to
subsection 542.3(f), on or before October
11, 2005, the Tribal gaming regulatory
authority shall: (1) In accordance with
the Tribal gaming ordinance, establish
and implement Tribal internal control
standards that shall provide a level of
control that equals or exceeds the
revised standards set forth in subsection
542.3(f); and (2) establish a deadline no
later than August 14, 2006, by which a
gaming operation must come into
compliance with the Tribal internal
control standards. To further clarify the
referenced deadline, the final revisions
to subsection 542.3(f) are applicable to
fiscal years of the gaming operation
ending after August 14, 2006. No
extension of the compliance period is
allowed for the final revisions to
subsection 542.3(f).
FOR FURTHER INFORMATION CONTACT:
Vice-Chairman Nelson Westrin, (202)
632–7003 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On January 5, 1999, the Commission
first published its Minimum Internal
Control Standards (MICS) as a Final
Rule. As gaming Tribes and the
Commission gained practical experience
applying the MICS, it became apparent
that some of the standards required
clarification or modification to operate
as the Commission had intended and to
accommodate changes and advances
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]]>Agencies
[Federal Register Volume 70, Number 155 (Friday, August 12, 2005)]
[Rules and Regulations]
[Pages 47094-47097]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-15969]
=======================================================================
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Part 1301
[Docket No. DEA-196F]
RIN 1117-AA73
Reports by Registrants of Theft or Significant Loss of Controlled
Substances
AGENCY: Drug Enforcement Administration (DEA), Justice.
ACTION: Final Rule.
-----------------------------------------------------------------------
SUMMARY: DEA is amending its regulations regarding reports by
registrants of theft or significant loss of controlled substances.
There had been some confusion as to what constitutes a significant loss
and when and how initial notice of a theft or loss should be provided
to DEA. In this final rule, DEA clarifies the regulations and provides
guidance to registrants regarding the theft, significant loss, and
unexplained loss of controlled substances.
DATES: This final rule is effective September 12, 2005.
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. Background
DEA's Legal Authority
DEA implements the Controlled Substances Act (21 U.S.C. 801-971)
(CSA), as amended. DEA publishes the implementing regulations for this
statute in Title 21 of the Code of Federal Regulations (CFR), Part 1300
to 1399. These regulations are designed to ensure that there is a
sufficient supply of these substances for legitimate medical purposes
and deter the diversion of controlled substances to illegal purposes.
The CSA mandates that DEA establish a closed system of control for
manufacturing, distribution, and dispensing of controlled substances.
As part of these regulations, DEA requires that registrants have
systems to maintain security for controlled substances and to report
thefts or losses.
Theft and Loss Reporting Requirements
Section 1301.74(c), ``Other security controls for non-
practitioners; narcotic treatment programs and compounders for narcotic
treatment programs.'' states that ``[t]he registrant shall notify the
Field Division Office of the Administration in his area of any theft or
significant loss of any controlled substances upon discovery of such
theft or loss. The supplier shall be responsible for reporting in-
transit losses of controlled substances by the common or contract
carrier selected pursuant to Sec. 1301.74(e), upon discovery of such
theft or loss. The registrant shall also complete DEA Form 106
regarding such theft or loss. Thefts must be reported whether or not
the controlled substances are subsequently recovered and/or the
responsible parties are identified and action taken against them.''
Section 1301.76(b), ``Other security controls for practitioners.''
requires that ``[t]he registrant shall notify the Field Division Office
of the Administration in his area of the theft or significant loss of
any controlled substances upon discovery of such loss or theft. The
registrant shall also complete DEA (or BND) Form 106 regarding such
loss or theft.''
DEA's Proposed Rule
On July 8, 2003, DEA published a notice of proposed rulemaking
(NPRM) (68 FR 40576) to address confusion that exists within the
regulated industry as to the exact meaning of the phrases ``upon
discovery'' and ``significant loss.''
DEA has always viewed ``upon discovery'' to mean that notification
should occur immediately and without delay. The purpose of immediate
notification is to provide an opportunity for DEA, state, or local
participation in the investigative process when warranted and to create
a record that the theft or significant loss was properly reported. It
also alerts law enforcement personnel to more broadly based
circumstances or patterns of which the individual registrant may be
unaware. This notification is considered part of a good-faith effort on
the part of the regulated industries to maintain effective controls
against the diversion of controlled substances, as required by Sec.
1301.71(a). Lack of prompt notification could prevent effective
investigation
[[Page 47095]]
and prosecution of individuals involved in the diversion of controlled
substances. DEA proposed to insert the word ``immediately'' before the
phrase ``upon discovery'' to clarify this point.
Regarding ``significant loss,'' there is no single objective
standard that can be established and applied to all registrants to
determine whether a loss is ``significant.'' Any unexplained loss or
discrepancy should be reviewed within the context of a registrant's
business activity and environment. What constitutes a significant loss
for one registrant may be construed as comparatively insignificant for
another. A manufacturer may experience continuous losses in the
manufacturing process due to, for example, atmospheric changes or
mixing procedures. Such losses may not be deemed by the registrant to
be significant and may be recorded in batch records. Conversely, for
registrants other than manufacturers, the repeated loss of small
quantities of controlled substances over a period of time may indicate
a significant aggregate problem that must be reported to DEA, even
though the individual quantity of each occurrence is not significant.
Individual registrants should examine both their business
activities and the external environment in which those business
activities are conducted to determine whether unexplained losses of
controlled substances are significant. When in doubt, registrants
should err on the side of caution in alerting the appropriate law
enforcement authorities, including DEA, of thefts and losses of
controlled substances. DEA proposed to amend the regulations by
inserting a list of factors that registrants should consider when
determining whether a loss of controlled substances is significant.
II. Comments Received in Response to the NPRM Published July 8, 2003
DEA received eight comments in response to the NPRM. In general,
the comments were supportive of DEA efforts to clarify current
regulations and provide guidance regarding reporting of theft or
significant loss of controlled substances. At the same time, commenters
offered a number of suggestions that, in their view, would provide even
greater clarity and certainty to the regulations. These comments are
addressed below.
Timing of Reports
Regarding the timing of initial theft or loss reports, DEA proposed
to insert the word ``immediately'' before the phrase ``upon
discovery.'' DEA also suggested in the proposed rule preamble that
submission of the DEA Form 106 itself is not immediately necessary if
the registrant needs time to investigate the facts surrounding the
theft or significant loss, but that updates should be provided to DEA
if the investigation takes more than two months. One commenter
recommended that the regulations provide an objective standard
regarding the time frame when reports must be made (while retaining the
subjective standard for registrants to decide when a report is
necessary). Specifically, the commenter suggested that initial reports
be required within one business day and that DEA Form 106 must be filed
within 30 days.
DEA agrees with the commenter that an objective standard for
initial notification would be useful and believes the one-business-day
suggestion is consistent with its proposed addition of the word
``immediately.'' Regarding the 30-day requirement for submission of the
Form 106, however, DEA believes that may be difficult to comply with in
some cases, so prefers to retain the registrant flexibility provided by
the approach outlined in the proposed rule preamble, i.e., DEA Form 106
should be submitted once the circumstances surrounding the theft or
significant loss are clear, but updates should be provided to DEA if
the investigation takes more than two months.
Clarification on ``Discovery''
Related to this change, several commenters requested clarification
or proposed changes to what constitutes ``discovery.'' They suggested
this was more a source of confusion to the regulated community than was
the timing issue. According to these commenters, DEA should explicitly
recognize that ``discovery'' may well occur in increments, therefore,
knowing when to make a report becomes complex. One commenter suggested
that the addition of objective standards for submitting reports would
resolve much of the confusion, while another suggested adding ``and
verification'' after the phrase ``upon discovery.''
DEA does not disagree with these commenters and recognized the
incremental nature of discovery in the preamble to the proposed rule
when it suggested that an update be provided to DEA within 60 days of
initial notification, if the investigation into the theft or
significant loss is still ongoing, and that the Form 106 need not be
filed at all if the registrant ultimately determines that no theft or
significant loss occurred. DEA's overriding interest here is in
obtaining immediate notification of suspected or actual theft or
significant loss and accepts the one-business-day suggestion as a clear
standard for making that required initial notification.
Method of Initial Notification
One commenter questioned the nature of the initial notification
itself, seeking clarification on whether a telephone call would
suffice. In the preamble to the proposed rule, DEA recommended that the
initial notification be a short statement provided by fax, which would
avoid delays that might be associated with using regular U.S. mail.
Faxing is not the only option a registrant may use, but DEA does
believe that the notification should be in writing. Not only does this
eliminate any misunderstanding that could arise in an oral
communication, but it also provides the registrant with a record of
what was provided, when it was provided, and to whom it was provided.
DEA Form 106
A final area of comments on the notification process raised issues
about the purpose of Form 106 and offered suggestions that the
commenters believed would make it a more useful report. While DEA
appreciates these comments and suggestions, DEA considers them beyond
the scope of this rulemaking. DEA Form 106 is scheduled to be revised
within the next year, and DEA will consider these comments during that
process.
In reviewing the existing regulation and DEA Form 106, DEA noted
that while the form itself specified that the form should be completed
and submitted to DEA, the regulations merely required that the form be
completed and did not contain a requirement that the form be submitted.
Therefore, DEA is amending the regulations to explicitly acknowledge
the requirement, currently contained only in the DEA Form 106
instructions, that the completed DEA Form 106 be submitted to DEA.
Factors To Be Considered in Determining Whether a Loss Is Significant
In the proposed rulemaking, DEA included a change that would add a
list of factors to be considered in determining whether a loss is
``significant.'' DEA recognizes there is no single objective standard
that can be applied to all registrants--what constitutes a significant
loss for one registrant may be construed as comparatively insignificant
for another. Any unexplained loss or discrepancy must be reviewed
within the context of a registrant's business activity and
[[Page 47096]]
environment. Several commenters thought the list of factors is a
helpful addition. One commenter disagreed, stating that ``none of these
factors or questions is particularly useful in determining whether
initial notification should be provided to DEA to satisfy the
requirement of reporting'' and suggested that confusion over what
constitutes a significant loss exists not only among DEA registrants,
but also among DEA field offices, which results in differences in
interpretation and enforcement.
DEA recognizes that there has been confusion within the regulated
community regarding the application of this standard and for that very
reason proposed the list of factors to clarify for all parties what
registrants should be considering--at a minimum--when determining
whether a loss is significant. As DEA noted in the proposed rule
preamble, ``individual registrants should examine both their business
activities and the external environment in which those business
activities are conducted to determine whether unexplained losses of
controlled substances are significant. When in doubt, registrants
should err on the side of caution in alerting the appropriate law
enforcement authorities, including DEA, of thefts and losses of
controlled substances.'' DEA encourages registrants to use additional
factors beyond what DEA suggests in the evaluation of whether a loss is
significant. DEA believes, however, that it has provided as much
direction on this matter as it reasonably can, given the case-by-case
nature of this determination.
In-Transit Loss
One commenter also suggested the insertion of the word
``significant'' before the phrase ``in-transit losses of controlled
substances'' in Sec. 1301.74(c), unless DEA intends for all in-transit
losses to be reported. DEA does, in fact, intend for all in-transit
losses to be reported, not just significant losses. Therefore, to
clarify this point, and based on the comment received, DEA is amending
the regulatory text to reflect that ``all'' in-transit losses must be
reported to DEA.
DEA Form 41
Several commenters requested additional clarification and guidance
on reporting and recordkeeping, particularly with regard to breakage
and spillage and the submission of Form 41.
In the preamble to the proposed rulemaking, DEA did provide
guidance on this topic, both to distinguish it from reporting of thefts
or significant losses of controlled substances (and the use of DEA Form
106) and to restate the disposal and documentation obligations when
breakage, spillage, or other damage to controlled substances occurs.
DEA believes this guidance is adequate and sufficiently clear and does
not wish to expand on the topic as a part of this rulemaking on theft
and significant loss. Registrants should continue to employ common
sense, good faith approaches to their reporting and recordkeeping
obligations in the case of breakage and spillage.
Reporting of Thefts and Losses to ARCOS
Finally, DEA received a request for clarification of the reporting
of thefts and losses to DEA's Automation of Reports and Consolidated
Orders System (ARCOS). DEA wishes to reiterate that thefts and losses
are reported to ARCOS. Thefts are reported using transaction codes
based on the type of theft, e.g., theft from premises, in-transit loss,
etc. Losses are reported to ARCOS simply as losses. DEA did not propose
any regulatory change regarding this reporting, nor is it making a
regulatory change at this time.
Regulatory Certifications
Regulatory Flexibility Act
The Deputy Assistant Administrator hereby certifies that this
rulemaking has been drafted in accordance with the Regulatory
Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation, and by
approving it certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. This
regulation seeks to clarify existing DEA regulations regarding the
reporting of thefts and significant losses of controlled substances. No
new recordkeeping or reporting requirements are imposed by this
rulemaking.
Executive Order 12866
The Deputy Assistant Administrator further certifies that this
rulemaking has been drafted in accordance with the principles in
Executive Order 12866 Section 1(b). DEA has determined that this is not
a significant rulemaking action. Therefore, this action has not been
reviewed by the Office of Management and Budget. This rulemaking merely
seeks to clarify existing DEA regulations, policies and procedures.
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, or by the private sector, of $115
million or more in any one year, and will not significantly or uniquely
affect small governments. Therefore, no actions were deemed necessary
under the provisions of the Unfunded Mandates Reform Act of 1995.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Fairness Act of 1996. This rule
will not result in an annual effect on the economy of $100,000,000 or
more; a major increase in costs or prices; or significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based companies to
compete with foreign-based companies in domestic and export markets.
List of Subjects in 21 CFR Part 1301
Administrative practice and procedure, Drug traffic control,
Security measures.
0
For the reasons set out above, 21 CFR part 1301 is amended as follows:
PART 1301--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, AND
DISPENSERS OF CONTROLLED SUBSTANCES
0
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.
0
2. Section 1301.74 is amended by revising paragraph (c) to read as
follows:
Sec. 1301.74 Other security controls for non-practitioners; narcotic
treatment programs and compounders for narcotic treatment programs.
* * * * *
(c) The registrant shall notify the Field Division Office of the
Administration in his area, in writing, of any theft or significant
loss of any
[[Page 47097]]
controlled substances within one business day of discovery of the theft
or loss. The supplier is responsible for reporting all in-transit
losses of controlled substances by the common or contract carrier
selected pursuant to paragraph (e) of this section, within one business
day of discovery of such theft or loss. The registrant shall also
complete, and submit to the Field Division Office in his area, DEA Form
106 regarding the theft or loss. Thefts and significant losses must be
reported whether or not the controlled substances are subsequently
recovered or the responsible parties are identified and action taken
against them. When determining whether a loss is significant, a
registrant should consider, among others, the following factors:
(1) The actual quantity of controlled substances lost in relation
to the type of business;
(2) The specific controlled substances lost;
(3) Whether the loss of the controlled substances can be associated
with access to those controlled substances by specific individuals, or
whether the loss can be attributed to unique activities that may take
place involving the controlled substances;
(4) A pattern of losses over a specific time period, whether the
losses appear to be random, and the results of efforts taken to resolve
the losses; and, if known,
(5) Whether the specific controlled substances are likely
candidates for diversion;
(6) Local trends and other indicators of the diversion potential of
the missing controlled substance.
* * * * *
0
3. Section 1301.76 is amended by revising paragraph (b) to read as
follows:
Sec. 1301.76 Other security controls for practitioners.
* * * * *
(b) The registrant shall notify the Field Division Office of the
Administration in his area, in writing, of the theft or significant
loss of any controlled substances within one business day of discovery
of such loss or theft. The registrant shall also complete, and submit
to the Field Division Office in his area, DEA Form 106 regarding the
loss or theft. When determining whether a loss is significant, a
registrant should consider, among others, the following factors:
(1) The actual quantity of controlled substances lost in relation
to the type of business;
(2) The specific controlled substances lost;
(3) Whether the loss of the controlled substances can be associated
with access to those controlled substances by specific individuals, or
whether the loss can be attributed to unique activities that may take
place involving the controlled substances;
(4) A pattern of losses over a specific time period, whether the
losses appear to be random, and the results of efforts taken to resolve
the losses; and, if known,
(5) Whether the specific controlled substances are likely
candidates for diversion;
(6) Local trends and other indicators of the diversion potential of
the missing controlled substance.
* * * * *
William J. Walker,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 05-15969 Filed 8-11-05; 8:45 am]
BILLING CODE 4410-09-P
