Controlled Substances and List I Chemical Registration and Reregistration Fees, 39318-39341 [2011-16847]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 76, Number 129 (Wednesday, July 6, 2011)]
[Proposed Rules]
[Pages 39318-39341]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16847]



[[Page 39318]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1301 and 1309

[Docket No. DEA-346P]
RIN 1117-AB32


Controlled Substances and List I Chemical Registration and 
Reregistration Fees

AGENCY: Drug Enforcement Administration (DEA), Department of Justice.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: DEA proposes adjusting the fee schedule for DEA registration 
and reregistration fees necessary to recover the costs of its Diversion 
Control Program relating to the registration and control of the 
manufacture, distribution, dispensing, importation and exportation of 
controlled substances and List I chemicals as mandated by the 
Controlled Substances Act.

DATES: Electronic comments must be submitted and written comments must 
be postmarked on or before September 6, 2011. Commenters should be 
aware that the electronic Federal Docket Management System will not 
accept comments after midnight Eastern Time on the last day of the 
comment period.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-346'' on all electronic and written correspondence. 
DEA encourages all comments be submitted electronically through https://www.regulations.gov using the electronic comment form provided on that 
site. An electronic copy of this document and supplemental information 
to this proposed rule are also available at the https://www.regulations.gov Web site for easy reference. Paper comments that 
duplicate the electronic submission are not necessary as all comments 
submitted to https://www.regulations.gov will be posted for public 
review and are part of the official docket record. Should you, however, 
wish to submit written comments via regular or express mail, they 
should be sent to the Drug Enforcement Administration, Attention: DEA 
Federal Register Representative/ODL, 8701 Morrissette Drive, 
Springfield, VA 22152.

FOR FURTHER INFORMATION CONTACT: Imelda L. Paredes, Office of Diversion 
Control, Drug Enforcement Administration, 8701 Morrissette Drive, 
Springfield, Virginia 22152; Telephone (202) 307-7165.

SUPPLEMENTARY INFORMATION:
    Posting of Public Comments: Please note that all comments received 
are considered part of the public record and made available for public 
inspection online at https://www.regulations.gov and in the DEA's public 
docket. Such information includes personal identifying information 
(such as your name, address, etc.) voluntarily submitted by the 
commenter.
    If you want to submit personal identifying information (such as 
your name, address, etc.) as part of your comment, but do not want it 
to be posted online or made available in the public docket, you must 
include the phrase ``PERSONAL IDENTIFYING INFORMATION'' in the first 
paragraph of your comment. You must also place all the personal 
identifying information you do not want posted online or made available 
in the public docket in the first paragraph of your comment and 
identify what information you want redacted.
    If you want to submit confidential business information as part of 
your comment, but do not want it to be posted online or made available 
in the public docket, you must include the phrase ``CONFIDENTIAL 
BUSINESS INFORMATION'' in the first paragraph of your comment. You must 
also prominently identify confidential business information to be 
redacted within the comment. If a comment has so much confidential 
business information that it cannot be effectively redacted, all or 
part of that comment may not be posted online or made available in the 
public docket.
    Personal identifying information and confidential business 
information identified and located as set forth above will be redacted, 
and the comment, in redacted form, will be posted online and placed in 
the DEA's public docket file. Please note that the Freedom of 
Information Act applies to all comments received. If you wish to 
inspect the agency's public docket file in person by appointment, 
please see the ``For Further Information'' paragraph.

Background

Legal Authority

    The Drug Enforcement Administration (DEA) is a component of the 
Department of Justice and is the primary agency responsible for 
coordinating the drug law enforcement activities of the United States. 
DEA also assists in the implementation of the President's National Drug 
Control Strategy. DEA's mission is to enforce U.S. controlled 
substances laws and regulations and bring to the criminal and civil 
justice system those organizations and individuals involved in the 
growing, manufacturing or distribution of controlled substances and 
listed chemicals appearing in or destined for illicit traffic in the 
U.S., including organizations that use drug trafficking proceeds to 
finance terrorism. The diversion control program (DCP) is a strategic 
component of the DEA's law enforcement mission. The DCP carries out the 
mandates of the Controlled Substances and Chemical Diversion and 
Trafficking Acts. It is primarily the DCP within DEA that implements 
and enforces Titles II and III of the Comprehensive Drug Abuse 
Prevention and Control Act of 1970, often referred to as the Controlled 
Substances Act (CSA) and the Controlled Substances Import and Export 
Act (CSIEA) (21 U.S.C. 801-971), as amended (hereinafter, ``CSA'').\1\ 
DEA drafts and publishes the implementing regulations for these 
statutes in Title 21 of the Code of Federal Regulations (CFR), Parts 
1300 to 1321. The CSA together with these regulations are designed to 
prevent, detect, and eliminate the diversion of controlled substances 
and listed chemicals into the illicit market while ensuring a 
sufficient supply of controlled substances and listed chemicals for 
legitimate medical, scientific, research, and industrial purposes.
---------------------------------------------------------------------------

    \1\ The Attorney General's delegation of authority to DEA may be 
found at 28 CFR 0.100.
---------------------------------------------------------------------------

    Pursuant to the CSA, controlled substances are classified in one of 
five schedules based upon their potential for abuse, their currently 
accepted medical use, and the degree of dependence the substance may 
cause. 21 U.S.C. 812. Likewise, under the CSA, listed chemicals are 
separately classified based on their importance to the manufacture of 
controlled substances (List I chemicals) or their use in manufacturing 
controlled substances (List II chemicals). 21 U.S.C. 802(33)-(35). The 
CSA mandates that DEA register persons or entities who manufacture, 
distribute, dispense, import, export, or conduct research or chemical 
analysis with controlled substances and listed chemicals. These 
registrants are permitted to handle controlled substances and listed 
chemicals as authorized by their registration and are required to 
comply with the applicable requirements associated with their 
registration. 21 U.S.C. 822. The identification and registration of all 
individuals and entities authorized to handle controlled substances and 
listed chemicals establishes a closed system over which DEA is charged 
to inspect, investigate, and enforce applicable federal law.

[[Page 39319]]

    Under the CSA, DEA is authorized to charge reasonable fees relating 
to the registration and control of the manufacture, distribution, 
dispensing, import, and export of controlled substances and listed 
chemicals. 21 U.S.C. 821 and 958(f). DEA must set fees at a level that 
ensures the recovery of the full costs of operating the various aspects 
of its DCP. 21 U.S.C. 886a. Each year, DEA is required by statute to 
transfer the first $15 million of fee revenues into the general fund of 
the Treasury and the remainder of the fee revenues is deposited into a 
separate fund of the Treasury called the Diversion Control Fee Account 
(DCFA). 21 U.S.C. 886a(1). On at least a quarterly basis, the Secretary 
of the Treasury is required to reimburse DEA an amount from the DCFA 
``in accordance with estimates made in the budget request of the 
Attorney General for those fiscal years'' for the operation of the 
DCP.\2\ 21 U.S.C. 886a(1)(B) and (D). The first $15 million of fee 
revenues that are transferred to the Treasury do not support any DCP 
activities.
---------------------------------------------------------------------------

    \2\ The diversion control program (DCP) consists of the 
controlled substance and chemical diversion control activities of 
DEA. These activities are related to the registration and control of 
the manufacture, distribution, dispensing, importation, and 
exportation of controlled substances and listed chemicals (21 U.S.C. 
886a(2)).
---------------------------------------------------------------------------

History of Fees

    In 1970, Congress consolidated more than 50 laws related to the 
control of legitimate channels of narcotics and dangerous drugs into 
one statute--the CSA. The statute was ``designed to improve the 
administration and regulation of the manufacturing, distribution, and 
dispensing of controlled substances by providing for a `closed' system 
of drug distribution for legitimate handlers of such drugs'' with 
criminal penalties for transactions outside the legitimate chain.\3\ 
With enactment of the CSA, the Bureau of Narcotics and Dangerous Drugs 
(BNDD) was also granted authority to charge reasonable fees relating to 
the registration and control of the manufacture, distribution, 
dispensing, export, and import of controlled substances.\4\ To this 
end, BNDD established a three-tiered fee structure for companies and 
individuals wishing to participate in the U.S. controlled substance 
industry.\5\ Before the enactment of the CSA, the U.S. House of 
Representatives held hearings to discuss the proposed Controlled 
Substances Act. In these hearings, there was a discussion about whether 
the Attorney General should be allowed to charge reasonable fees 
relating to both registration and control (including enforcement costs) 
or just registration.\6\ In the end, Congress enacted the CSA and 
allowed the Attorney General to charge reasonable fees relating to both 
registration and control.\7\
---------------------------------------------------------------------------

    \3\ H.R. Rep. No. 91-1444 (1970), reprinted in 1970 U.S.C.C.A.N. 
4566, 4571-4572.
    \4\ DEA's authority to charge reasonable fees was later expanded 
to include manufacturers, distributors, importers and exporters of 
List I chemicals. The Domestic Chemical Diversion Control Act of 
1993, Pub. L. 103-200, 107 Stat. 2333.
    \5\ 36 FR 4928, March 13, 1971, 36 FR 7776, April 24, 1971.
    \6\ Drug Abuse Control Amendments of 1970: Hearing on H.R. 1170 
and H.R. 13743 Before Subcomm. on Public Health and Welfare of the 
H. Comm. on Interstate and Foreign Commerce, 91st Cong. 145-148, 
359-365, and 412-414 (Feb. 3 & 20, 1970) and Controlled Dangerous 
Substances, Narcotics and Drug Control Laws: Hearings Before H. 
Comm. on Ways and Means, 91st Cong. 211-214 and 468-474 (July 20 & 
21, 1970).
    \7\ The term ``control'' as defined in 21 U.S.C. 802(5) 
specifically applies to Part B of Title II of the CSA only (21 
U.S.C. 811-814). In general, ``diversion control'' is a broad term 
encompassing activities related to preventing and detecting the 
diversion of controlled substances and listed chemicals from 
legitimate commerce into the illicit market. In 1992, Congress 
established the Diversion Control Fee Account (DCFA) and required 
that the fees charged by DEA under its diversion control program be 
set at a level that ensures the recovery of the full costs of 
operating the various aspects of that program (Pub. L. 102-395, 106 
Stat. 1843). In 2004, Congress amended the CSA and defined 
``diversion control program'' and ``controlled substance and 
chemical diversion control activities'' (Pub. L. 108-447, 118 Stat. 
2921, codified in 21 U.S.C. 886a). The ``diversion control program'' 
means the controlled substance and chemical diversion control 
activities of the Drug Enforcement Administration. 21 U.S.C. 
886a(2)(A).
---------------------------------------------------------------------------

    In 1973, the BNDD was abolished and all BNDD functions were 
transferred to DEA, including the authority to charge registrants 
reasonable fees.\8\ In 1982, a General Accounting Office (GAO) report 
\9\ advised that the 1971 fee schedule did not adequately recover the 
costs for the DCP administered by DEA. An increase in fees was proposed 
and finalized in the Federal Register in 1983.\10\ All fees collected 
from 1971 through 1992 were deposited into the general fund of the 
United States Treasury.
---------------------------------------------------------------------------

    \8\ Reorganization Plan No. 2 of 1973, 38 FR 18380 (July 2, 
1973).
    \9\ GAO/GGD-83-2, October 29, 1982.
    \10\ 48 FR 14640, April 5, 1983; 48 FR 56043, December 19, 1983.
---------------------------------------------------------------------------

    In the 1993 appropriations for DEA, Congress determined that the 
DCP would be fully funded by fees and no longer by appropriations.\11\ 
Congress established the DCFA as a separate account of the Treasury to 
``ensure the recovery of the full costs of operating the various 
aspects of [the Diversion Control Program]'' by those participating in 
the closed system established by the CSA. 21 U.S.C. 886a(1)(C). 
Congress specified the general operation of the DCFA. Each fiscal year, 
the first $15 million of deposited fees are retained in the general 
fund of the Treasury and are not available for use by the DCP. The 
amounts in excess of $15 million are deposited into the DCFA for the 
operation of DEA's diversion control program. The funds in the DCFA 
remain available until expended and are paid by the Secretary of the 
Treasury to reimburse DEA for expenses incurred in the operation of the 
DCP in accordance with estimates made in the budget request of the 
Attorney General. 21 U.S.C. 886a(1). Thus, specific statutory 
authorizations set the parameters of the DCFA, but not the details of 
the application of those standards to the activities of DEA.
---------------------------------------------------------------------------

    \11\ Departments of Commerce, Justice, and State, the Judiciary 
and Related Agencies Appropriations Act of 1993, Public Law 102-395, 
codified in relevant part at 21 U.S.C. 886a.
---------------------------------------------------------------------------

    Shortly after the 1993 Appropriations Act, DEA published a proposed 
rule proposing to increase the existing fee schedule to comply with 
Congress' direction to set fees at a level that ensures the recovery of 
the full costs of operating the DCP.\12\ After a comment period, a 
final rule was published on March 22, 1993, implementing changes to the 
fee structure and excluding chemical control costs from the calculation 
of fees.\13\ Several members of the registrant population impacted by 
the fee increase challenged the new fee, first in federal district 
court, where it was upheld, and subsequently on appeal to the U.S. 
Court of Appeals where it was remanded without being vacated for 
inadequate information supporting the selected fees.\14\
---------------------------------------------------------------------------

    \12\ 57 FR 60148-01, December 18, 1992.
    \13\ 58 FR 15272-01, March 22, 1993.
    \14\ American Medical Association v. Reno, 857 F.Supp. 80 
(D.D.C. 1994); American Medical Association v. Reno, 57 F.3d 1129 
(D.C. Cir. 1995).
---------------------------------------------------------------------------

    In December of 1993, the Domestic Chemical Diversion Control Act of 
1993 was passed by Congress to amend the CSA to require that 
manufacturers, distributors, importers, and exporters of List I 
chemicals obtain a registration from DEA. Coincident with the new 
registration requirements, DEA was also authorized to charge 
``reasonable fees relating * * * to the registration and control of 
regulated persons and regulated transactions.'' \15\ (Congress modified 
this language in 2004, as it currently reads at 21 U.S.C. 821, to make 
it uniform with other provisions

[[Page 39320]]

of the CSA.\16\) This amendment to the CSA was made after publication 
of DEA's March 22, 1993 final rule and the commencement of the legal 
challenges. List I chemical registration and reregistration fees were 
not addressed in the DCFA until the fee calculation initiated with a 
proposed rule published November 2005.\17\
---------------------------------------------------------------------------

    \15\ The Domestic Chemical Diversion Control Act of 1993, Public 
Law 103-200, 107 Stat. 2333.
    \16\ It authorizes ``reasonable fees relating to the 
registration and control of the manufacture, distribution, and 
dispensing of controlled substances and to listed chemicals.'' 21 
U.S.C. 821.
    \17\ 70 FR 69474, November 16, 2005. See also 108 H. Rpt. 576, 
July 1, 2004.
---------------------------------------------------------------------------

    The fee was finalized in 1996 with a request for further 
comment.\18\ DEA instituted studies and internal reorganizations to 
enable DEA to better identify DCP activities and costs. Additional 
information on the components and activities of the fee-funded DCP and 
what was deemed to be part of that program as well as DEA's response to 
comments received was published in 2002 for additional public 
comment.\19\ After that publication, a review of DEA's DCP by the 
Office of the Inspector General, Department of Justice (OIG) concluded 
DEA was not adequately supporting the DCP program.\20\
---------------------------------------------------------------------------

    \18\ 61 FR 68624, December 30, 1996.
    \19\ 67 FR 51988, August 9, 2002.
    \20\ ``Review of the Drug Enforcement Administration's Control 
of the Diversion of Controlled Pharmaceuticals,'' I-2002-010, 
October 2002, https://www.usdoj.gov/oig/reports/DEA/e0210/index.htm.
---------------------------------------------------------------------------

    In February 2003, DEA published a proposed rule to raise 
registration and reregistration fees in an effort to comply with the 
statutory requirement to charge fees at a level that ensures the 
recovery of the full costs of operating the various aspects of the 
DCP.\21\ Shortly thereafter, DEA created an organization within 
headquarters known as the Validation Unit. This Unit reviews and 
ensures that every DCFA expenditure over $500 is in support of 
diversion control-related activities. The Validation Unit is 
independent of the Office of Diversion Control and reports directly to 
the DEA Deputy Administrator. If an expense only partially supports the 
DCP, such as a field office's rent or utility cost, the Validation Unit 
determines the portion of the expense that should be funded by the 
DCFA. A new fee was finalized by publication of a final rule on October 
10, 2003.\22\
---------------------------------------------------------------------------

    \21\ 68 FR 7728, February 18, 2003.
    \22\ 68 FR 58587, October 10, 2003. DEA published a correction 
to this final rule where the internal DEA computer system, Firebird, 
was identified as being solely funded through appropriations. The 
Firebird system costs are properly apportioned as a DCP cost as well 
as a non-DCP appropriations expense. 69 FR 34568, June 22, 2004.
---------------------------------------------------------------------------

    In 2004, Congress provided additional guidance in the relevant 2005 
Appropriations Act.\23\ Specifically, the CSA was amended to define the 
DCP as ``the controlled substance and chemical diversion control 
activities of the Drug Enforcement Administration.'' 21 U.S.C. 
886a(2)(A). Furthermore, ``controlled substance and chemical diversion 
control activities'' means ``those activities related to the 
registration and control of the manufacture, distribution, dispensing, 
importation, and exportation of controlled substances and listed 
chemicals.'' 21 U.S.C. 886a(2)(B). Congress further provided that 
reimbursements from the DCFA ``shall be made without distinguishing 
between expenses related to controlled substance activities and 
expenses related to chemical activities'' (21 U.S.C. 886a(1)(B)) and 
amended the language of 21 U.S.C. 821 and 958(f) to be consistent with 
the definition of the DCP articulated in 21 U.S.C. 886a(2). As a 
result, all registration and reregistration fees for controlled 
substances and chemicals are deposited into the DCFA and reimbursements 
by the Secretary of the Treasury are made without distinction.
---------------------------------------------------------------------------

    \23\ Public Law 108-447, Departments of Commerce, Justice and 
State, the Judiciary and Related Agencies Appropriations Act of 
2005, signed into law on December 8, 2004.
---------------------------------------------------------------------------

    In 2005, based upon the internal organizational changes and the 
2005 Appropriations Act, DEA proposed an adjusted fee schedule to 
appropriately reflect all costs associated with the DCP.\24\ In July 
2006, the OIG reported on its Follow-up Review of DEA's Efforts to 
Control the Diversion of Controlled Pharmaceuticals and recommended 
that DEA apply more resources to diversion control.\25\ The OIG also 
recommended that DEA provide more Special Agent support to the DCP and 
increase training for those individuals who support the program. The 
OIG also noted that the diversion of controlled substance 
pharmaceuticals had dramatically increased over recent years and that 
the increase coincided with the use of emerging technologies such as 
the Internet. Twelve comments were received and analyzed in response to 
DEA's proposed fee rule and DEA published the final rule on August 29, 
2006.\26\
---------------------------------------------------------------------------

    \24\ 70 FR 69474, November 16, 2005.
    \25\ ``Follow-Up Review of the Drug Enforcement Administration's 
Efforts to Control the Diversion of Controlled Pharmaceuticals,'' I-
2006-004, July 2006, https://www.usdoj.gov/oig/reports/DEA/e0604/final.pdf.
    \26\ 71 FR 51105, August 29, 2006.
---------------------------------------------------------------------------

    The OIG completed a Review of DEA's Use of the Diversion Control 
Fee Account in 2008 and did not find any misused DCFA funds for non-
diversion control activities between FY 2004 and FY 2007. To the 
contrary, the OIG found that DEA did not fully fund all diversion 
control costs with the DCFA as required by law.\27\ It has been 
approximately five years since the last fee adjustment. It should be 
noted, however, that collections associated with the last fee 
adjustment did not begin until FY 2007.
---------------------------------------------------------------------------

    \27\ ``Review of the Drug Enforcement Administration's Use of 
the Diversion Control Fee Account,'' I-2008-002, February 2008, 
https://www.usdoj.gov/oig/reports/DEA/e0802/final.pdf.
---------------------------------------------------------------------------

Diversion Control Program (DCP)--Scope

    The scope of the DCP has evolved since its inception. In late 1971, 
the BNDD's Compliance Program was created to provide a specialized work 
force that could focus exclusively on controlled substance diversion 
and take full advantage of the controls and penalties established by 
the CSA. The program was placed under the BNDD's Office of Enforcement 
and staffed by compliance investigators, later called diversion 
investigators. In 1973, the BNDD was abolished and all BNDD functions 
were transferred to DEA.\28\
---------------------------------------------------------------------------

    \28\ Reorganization Plan No. 2 of 1973, 38 FR 18380 (July 2, 
1973).
---------------------------------------------------------------------------

    From 1971 to 1983, DEA's legal authority with regard to diversion 
and abuse of drugs remained relatively unchanged. The CSA originally 
provided DEA with substantially more authority to regulate controlled 
substance manufacturers and distributors than retail dispensers such as 
medical professionals and retail pharmacies. Congress, acknowledging 
that registration is the cornerstone of the closed system of 
distribution, required DEA to find that manufacturer and distributor 
registrations are consistent with a specifically defined public 
interest and with U.S. international obligations as a prerequisite to 
granting such registrations.\29\ In contrast, practitioners were 
entitled to a registration if they were authorized to handle controlled 
substances by the state in which they practiced. Furthermore, a 
practitioner's registration could be revoked only on the following 
three bases: conviction of a drug-related felony; revocation of a state 
license; or submission of a materially falsified application. There was 
also great disparity in the recordkeeping and security requirements 
applicable to the two groups, with manufacturers and distributors 
subject to the tighter

[[Page 39321]]

controls. This disparity in regulatory authority generated more 
regulatory oversight and, hence, compliance, at the manufacturer and 
distributor level than at the retail level. The limitations on DEA's 
statutory authority severely restricted its ability to regulate 
practitioners.
---------------------------------------------------------------------------

    \29\ 21 U.S.C. 823(a)-(e).
---------------------------------------------------------------------------

    By 1977, all 197 DEA compliance investigators (now diversion 
investigators) were fully occupied monitoring approximately 3,300 
controlled substance manufacturers, distributors, importers, exporters, 
and narcotic treatment programs, where large stocks of controlled 
substances and the potential for large-scale diversion were 
present.\30\ At that time, 98 percent of DEA registrants were in the 
dispensing category, i.e., physicians, dentists, veterinarians, retail 
pharmacies, hospitals, and teaching institutions.\31\ In 1978, the 
Comptroller General issued a report to Congress that examined DEA's 
efforts to prevent diversion of controlled substances at the retail 
level, i.e., by doctors and pharmacists.\32\ The report explored the 
barriers to DEA's efforts to control retail diversion: inadequate 
statutory authority, weak regulatory requirements, and inadequate 
resources. One of the Comptroller General's recommendations to Congress 
was that Congress change DEA's role by authorizing DEA to exercise 
direct regulatory authority over retail level practitioners. This would 
have been a deviation from DEA's traditional enforcement role and would 
require significant legislative changes and manpower increases.
---------------------------------------------------------------------------

    \30\ GAO/GGD-78-22, March 10, 1978 at 3, 18.
    \31\ GAO/GGD-78-22 at 3.
    \32\ GAO/GGD-78-22.
---------------------------------------------------------------------------

    Shortly thereafter, many amendments to the CSA between 1984 and 
1990 strengthened and expanded DEA's statutory authority. The Dangerous 
Drug Diversion Control Act of 1984 \33\ provided DEA with new authority 
to deny or revoke a practitioner's DEA registration on the basis of 
specifically defined public interest grounds \34\ and also provided DEA 
with emergency scheduling authority.\35\ The Anti-Drug Abuse Act of 
1986 established penalties for the manufacture and distribution of 
``designer drugs.'' \36\ The Anti-Drug Abuse Act of 1988 for the first 
time required recordkeeping and reporting by chemical distributors, 
importers, and exporters, and established penalties for illegal 
activities related to precursor and essential chemicals.\37\ The 
Anabolic Steroids Control Act of 1990 brought steroids under the 
regulatory oversight and control of the DEA by placing certain anabolic 
steroids in schedule III of the CSA.\38\ This Act required certain 
steroid manufacturers and distributors to register with DEA and brought 
anabolic steroids under the recordkeeping, reporting, security, 
prescribing, import, and export controls of the CSA.
---------------------------------------------------------------------------

    \33\ Part B--Diversion Control Amendments, Public Law 98-473, 98 
Stat. 2070 (Oct. 12,1984).
    \34\ 21 U.S.C. 823(f), 824(a)(4).
    \35\ 21 U.S.C. 811(h) (The amendment provided for one-year 
emergency scheduling of a drug, the abuse of which constituted an 
``imminent hazard to the public safety.'' The drug would remain in 
schedule I for up to one year, during which the normal scheduling 
procedures would proceed).
    \36\ Subtitle E--Controlled Substances Analogue Enforcement Act, 
Public Law 99-570, 100 Stat. 3207 (Oct. 27, 1986).
    \37\ Title VI, Subtitle A--Chemical Diversion and Chemical 
Trafficking Act of 1988, Public Law 100-690, 102 Stat. 4181 (Nov. 
18, 1988).
    \38\ Public Law 101-647, 104 Stat. 4851 (Nov. 29, 1990).
---------------------------------------------------------------------------

    As discussed above, the Domestic Chemical Diversion Control Act of 
1993 amended the CSA to require manufacturers, distributors, importers, 
and exporters of List I chemicals obtain a registration from the DEA, 
thus greatly expanding the authority and activities of the DCP.
    On October 17, 2000, Congress passed the Drug Addiction Treatment 
Act, permitting qualified physicians to treat narcotic dependence with 
certain schedule III through V narcotic controlled substances.\39\ The 
Act waived the requirement for certain qualified physicians to obtain a 
separate DEA registration as a Narcotic Treatment Program. However, 
upon application, the DCP must issue such qualifying physicians an 
identification number for inclusion with the physician's DEA 
Certificate of Registration.\40\ As a result, when a qualifying 
physician submits notice of his waiver pursuant to the Act, the DCP 
issues the physician a new DEA Certificate of Registration with the 
appropriate identification number.
---------------------------------------------------------------------------

    \39\ Public Law 106-310, 114 Stat. 1222 (Oct. 17, 2000).
    \40\ 21 U.S.C. 823(g)(2)(D)(ii).
---------------------------------------------------------------------------

    Renamed from the Office of Compliance and Regulatory Affairs and 
then the Diversion Control Program, today, the DEA Office of Diversion 
Control administers the DCP.\41\ As such, it is responsible for 
ensuring the availability of controlled substances and listed chemicals 
for legitimate uses in the United States while exercising controls to 
prevent the diversion of these substances and chemicals for illegal 
uses. The Office of Diversion Control maintains an overall geographic 
picture of the drug and chemical diversion and abuse problems to 
identify new trends or patterns in diversion and abuse. This enables 
the Office of Diversion Control to appropriately direct resources.
---------------------------------------------------------------------------

    \41\ 28 CFR Part 0, Appendix to Subpart R.
---------------------------------------------------------------------------

    The DCP is executed by maintaining the closed system of 
distribution, regulating and controlling nearly 1.4 million DEA 
registrants,\42\ and investigating activity related to the diversion of 
controlled substances and listed chemicals. The DCP's regulatory 
function is accomplished through routine regulatory inspections, by 
providing information and assistance to registrants, and by controlling 
and monitoring the manufacture, distribution, dispensing, import, and 
export of controlled substances and listed chemicals. The DCP's 
enforcement function is accomplished by identifying and investigating 
those persons or entities responsible for diverting controlled 
substances and listed chemicals from legitimate commerce. Violators are 
subject to administrative sanction, and civil and criminal prosecution.
---------------------------------------------------------------------------

    \42\ This represents the total registrant population. 
Approximately seven percent of the total registrant population 
consists of fee exempt registrants who are not included in the fee 
calculations presented herein. The registrant population grew at a 
rate of approximately 2.6 percent per year from 2007 to 2010.
---------------------------------------------------------------------------

    To ensure accountability within the closed system of distribution, 
the DCP administers, maintains, controls, and oversees the DEA 
registration system.\43\ This entails processing, reviewing, and, if 
necessary, investigating all applications for registration and 
reregistration, collecting fees, and, when appropriate, proposing to 
take administrative action on registrations or applications for 
registration, such as restriction, revocation, suspension, or denial of 
an application. Maintaining the DEA registration system requires 
coordination with state regulatory agencies and other federal agencies 
such as the Center for Substance Abuse Treatment.\44\
---------------------------------------------------------------------------

    \43\ See 21 U.S.C. 822-25, 827-29, 831, 952-54, 956-58, 971.
    \44\ See 21 U.S.C. 823(g).
---------------------------------------------------------------------------

    In addition, the DCP exercises statutory authority to determine the 
appropriate procedures necessary to the ordering and distribution of 
schedule I and II controlled substances.\45\ This enables the DCP to 
monitor the flow of certain controlled substances from their point of 
manufacture through commercial distribution. It also monitors 
registrant compliance with

[[Page 39322]]

electronic reporting systems such as the Automation of Reports and 
Consolidated Orders System (ARCOS), and manages the cataloging of 
controlled substances based on the National Drug Code (NDC) system, the 
Drug/Ingredient file, Trade Name file, DEA Generic Name file and U.N. 
Code/Name file. Other oversight activities include maintaining the 
Controlled Substance Ordering System (CSOS), monitoring CSOS activities 
through the initial certification process, and periodic auditing of 
registrant systems. CSOS provides registrants with an electronic 
platform that reduces costs to registrants while ensuring a more 
efficient and effective ordering process.
---------------------------------------------------------------------------

    \45\ 21 U.S.C. 828.
---------------------------------------------------------------------------

    One of the primary functions of the DCP is to ensure that 
registrants are in compliance with the safeguards inherent in the CSA. 
This proactive approach is designed to identify and prevent the large 
scale diversion of controlled substances and listed chemicals into the 
illicit market.
    Registrant compliance is determined primarily through the conduct 
of pre-registration, scheduled, and complaint investigations. DCP 
regulatory activities have an inherent deterrent function, and they are 
designed to ensure that those businesses and individuals registered 
with DEA to handle controlled substances or listed chemicals have 
sufficient measures in place to prevent the diversion of these 
substances. These investigations also help registrants understand and 
comply with the CSA \46\ and identify those registrants who violate the 
CSA and implementing regulations. Preregistration investigations reduce 
the possibility of registering unauthorized subjects, ensure that the 
means to prevent diversion are in place, and determine whether 
registration is consistent with the public interest.
---------------------------------------------------------------------------

    \46\ See 21 U.S.C. 827 (records and reports of registrants).
---------------------------------------------------------------------------

    Manufacturers, distributors, reverse distributors, importers, 
exporters, and narcotic treatment programs pose the greatest potential 
for large-scale diversion. Accordingly, scheduled investigations of 
these non-practitioner registrants are a major priority of the DCP. 
These investigations serve as a deterrent to diversion through the 
continuous evaluation of registrants' recordkeeping procedures, 
security, and overall adherence to the CSA. Emphasis during these 
investigations is given to verifying inventory, records and 
recordkeeping procedures, a review of customers and their ordering 
patterns, and security protocols.
    The DCP is constantly evaluating diversion trends, patterns, 
routes, and techniques in order to appropriately focus its regulatory, 
civil and criminal enforcement activities. This is accomplished in many 
ways, including collecting and analyzing targeting and analysis data, 
conducting diversion threat assessments, working with state and local 
medical and pharmacy boards and state and local law enforcement 
agencies, and developing intelligence.
    The DCP conducts criminal enforcement activities primarily through 
Tactical Diversion Squads (TDSs). TDSs are comprised of many DEA 
specialties, including DEA Special Agents and Diversion Investigators, 
and state and local counterparts such as state law enforcement and 
regulatory personnel. These groups combine varied resources and 
expertise in order to investigate, disrupt, and dismantle those 
individuals or organizations involved in diversion schemes (e.g., 
doctor shoppers, prescription forgers, and prevalent retail-level 
violators).
    In fulfillment of its function to control the import and export of 
controlled substances and listed chemicals, the DCP issues import and 
export registrations and permits, and monitors declared imports, 
exports, and transshipments of these substances. The DCP must ensure 
that all imports and exports of controlled substances and listed 
chemicals meet the requirements of the CSA. As such, the DCP maintains 
and monitors many electronic reporting systems, such as the Chemical 
Handlers Enforcement Management System (CHEMS), which provides 
information on entities manufacturing, distributing, and exporting and 
importing regulated chemicals, and encapsulating and tableting 
machines.\47\
---------------------------------------------------------------------------

    \47\ See 21 U.S.C. 830, 957-58.
---------------------------------------------------------------------------

    The DCP's authority over controlled substances and listed chemicals 
requires its support of domestic and foreign investigations of these 
substances. As such, the DCP serves as the Competent National Authority 
(CNA) for the United States vis-[agrave]-vis precursor chemicals and 
international treaties. The DCP works with the international community 
to identify and seize international shipments of precursor and 
essential chemicals destined for clandestine laboratories for use in 
manufacturing controlled substances. The DCP also works on a bilateral 
basis to urge international partners to take effective action, in 
cooperation with chemical companies, to prevent the diversion of 
precursor chemicals from legitimate trade. In addition to its other 
oversight and regulatory responsibilities in this area,\48\ the DCP 
reviews and approves importation requests for List I chemicals and 
reviews chemical registrant submissions.
---------------------------------------------------------------------------

    \48\ 21 U.S.C. 830; 21 CFR Parts 1310, 1313, 1314.
---------------------------------------------------------------------------

    Not only does the DCP exercise authority and control over the 
registrant population, the DCP exercises authority over the 
classification of substances.\49\ This is accomplished by evaluating 
drugs and chemicals to determine whether these substances are being 
abused or potentially involved in illicit traffic, and to evaluate 
whether any substances should be scheduled as a controlled substance. 
This requires the collection and analysis of data from various sources 
across the United States. These evaluations are used by DEA as a basis 
for developing appropriate drug control policies, determining the 
status of controlled, excluded, or exempted drugs and drug products, 
and supporting United States initiatives in international forums.
---------------------------------------------------------------------------

    \49\ 21 U.S.C. 811-814.
---------------------------------------------------------------------------

    Another crucial function of the DCP is the annual establishment of 
quotas for all schedule I and II controlled substances and the List I 
chemicals pseudoephedrine, ephedrine, and phenylpropanolimine.\50\ 
Along with this responsibility, the DCP also provides scientific 
support for policy guidance and training, expert witness testimony and 
conference presentations. The DCP fulfills U.S. treaty obligations 
pertaining to the CSA, including the preparation of periodic reports 
for submission to the United Nations as mandated by U.S. international 
drug control treaty obligations on the manufacture and distribution of 
narcotic and psychotropic substances as well as determining the 
anticipated future needs for narcotic and psychotropic substances.
---------------------------------------------------------------------------

    \50\ 21 U.S.C. 826.
---------------------------------------------------------------------------

    In the execution of its regulatory functions, the DCP reviews 
proposed legislation pertinent to the availability of controlled 
substances and listed chemicals for legitimate uses in the United 
States and controls to prevent the diversion of these substances and 
chemicals. The DCP constantly reviews its own regulations and develops 
and implements regulations designed to enhance DEA's diversion control 
efforts and to implement newly enacted legislation.
    All DCP regulatory activities require education and outreach to 
ensure appreciation of and compliance with the CSA and applicable 
policies and regulations. Providing such guidance is also necessary to 
reduce the likelihood of diversion from legitimate commerce

[[Page 39323]]

to illegitimate purposes. One aspect of the DCP's outreach efforts is 
establishing and maintaining liaison and working relationships with 
other federal agencies, as well as foreign, state and local 
governments, and the regulated community. Other efforts include 
developing and maintaining manuals and other publications; organizing 
and conducting national conferences on current issues, policies, and 
initiatives; and providing guidance to the general public.

Changes in the Controlled Substances Act Since the Last Fee Rule in 
2006

    Since implementation of the last fee rule in 2006, Congress has 
made several changes to the CSA that impact how the DCP operates to 
control controlled substances and listed chemicals and register those 
individuals who wish to handle these substances. Additionally, the 
nature of the diversion control problem has increased in size and 
complexity. These statutory changes, in addition to the changing scope 
of diversion, required the DCP to implement program and organizational 
changes. These changes impact DEA beyond its DCP and thus are not 
necessarily funded through the DCFA.
Methamphetamine Abuse
    Congress has enacted a series of legislative initiatives to combat 
the rise in methamphetamine abuse. Methamphetamine is a highly 
addictive drug with potent central nervous system stimulant properties. 
Control as a schedule II substance and the removal of methamphetamine 
injectable formulations from the United States market, combined with a 
better appreciation for its high abuse potential, led to a drastic 
reduction in the abuse of this drug in 1971. However, a resurgence of 
methamphetamine abuse occurred in the 1980s and it is currently 
considered a major drug of abuse. The widespread availability of 
methamphetamine today is largely fueled by illicit production in large 
and small clandestine laboratories throughout the United States and 
illegal production and importation from Mexico.
    Methamphetamine is abused for its stimulant and euphoric effects. 
High-dose chronic abuse has been associated with irritability, tremors, 
convulsions, anxiety, paranoia, and neurotoxic effects that cause 
damage to neurons and blood vessels. Aggressive and violent behavior by 
users, often directed at spouses and children, pose a significant risk 
to those individuals in contact with methamphetamine addicts. Death has 
resulted from extreme anorexia, hyperthermia, convulsions, and 
cardiovascular collapse (including stroke and heart attacks).
    The methods used to manufacture methamphetamine are directly 
impacted by the availability of precursor chemicals and ease of 
synthesis. Currently, methamphetamine is primarily produced 
domestically by utilizing diverted pseudoephedrine combination products 
that are sold at retail and, to a lesser extent, ephedrine products. 
The manufacture of this drug poses a significant threat to the public 
health and safety due to the toxic waste and the risk of fire and 
explosion associated with the clandestine laboratories that manufacture 
the drug, and the fact that many individuals, including children, are 
at risk of exposure to toxic chemicals and waste generated during the 
manufacturing process.
    A Rand Corporation study reported that the 2005 cost to the U.S. 
for overall methamphetamine-related activities including crime and 
criminal justice costs, health care costs, endangered children put in 
foster care, the loss of productivity, drug treatment, and injuries and 
death at methamphetamine laboratories was estimated at $23.4 
billion.\51\ Similarly, the Vanderbilt University Medical Center in 
Tennessee reported spending $325 million between July 2009 and June 
2010 for uncompensated medical care at its Burn Center.\52\ One-third 
of its patients were burned from exploding methamphetamine 
laboratories.\53\
---------------------------------------------------------------------------

    \51\ Nancy Nicosia et al., ``The Economic Cost of 
Methamphetamine Use in the United States, 2005,'' RAND Corporation, 
2009.
    \52\ John Brannon, ``Meth-related Burns a Growing Part of 
Uncompensated Care at Vanderbilt,'' Messenger, August 12, 2010, 
https://www.nwtntoday.com/news.php?viewstory=44736.
    \53\ Id.
---------------------------------------------------------------------------

    In 2010, there were in excess of 10,000 clandestine laboratory 
incidents in the United States related to the manufacture of 
methamphetamine.\54\ Coinciding with the upward trend in 
methamphetamine laboratory seizures is an alarming upward trend in 
methamphetamine abusers. According to the 2009 National Survey on Drug 
Use and Health, between 2008 and 2009 there was a 60 percent increase 
in the number of past month users of methamphetamine.\55\ This comes 
after a significant reduction of past month users between 2006 and 
2008, a period when the U.S. was experiencing decreases in the number 
of methamphetamine laboratory seizures.
---------------------------------------------------------------------------

    \54\ The El Paso Intelligence Center (EPIC) has not validated 
this data as of the date of this Notice of Proposed Rulemaking, 
however, all indications are that there were approximately 12,000 
such clandestine laboratory incidents in 2010.
    \55\ Substance Abuse and Mental Health Services Administration 
(SAMHSA), ``Results from the 2009 National Survey on Drug Use and 
Health: Volume I, Summary of National Findings,'' Office of Applied 
Studies, 2010 (NSDUH Series H-38A, HHS Publication No. SMA 10-4856), 
https://www.oas.samhsa.gov/nsduh/2k9NSDUH/2k9Results.pdf.
---------------------------------------------------------------------------

    The Combat Methamphetamine Epidemic Act of 2005 (CMEA) was enacted 
on March 9, 2006. 21 U.S.C. 971. It requires retailers of non-
prescription products containing pseudoephedrine, ephedrine and 
phenylpropanolamine to place these products behind the counter or in a 
locked cabinet. Consumers must show identification and sign a logbook 
for each purchase. An interim final rule was published to implement 
section 716 of the Act and require additional reporting for import, 
export, and international transactions involving all List I and List II 
chemicals.\56\ On October 14, 2008, Congress enacted the 
Methamphetamine Production Prevention Act of 2008, which amended the 
CSA to require the sellers of methamphetamine precursor chemicals to 
record information about sales and purchasers in electronic logbooks or 
bound paper books. 21 U.S.C. 830(e)(1)(A)(iv)-(vi). Further, on October 
12, 2010, the Combat Methamphetamine Enhancement Act of 2010 (MEA) was 
enacted, establishing new requirements for mail-order distributors of 
scheduled listed chemical products (Pub. L. 111-268).
---------------------------------------------------------------------------

    \56\ 72 FR 17401, April 9, 2007. Implementation was delayed an 
additional 30 days until June 8, 2007, to allow industry more time 
to fully comply with the new provisions. 72 FR 28601, May 22, 2007.
---------------------------------------------------------------------------

Internet Diversion
    On October 15, 2008, Congress amended the CSA with enactment of the 
Ryan Haight Online Pharmacy Consumer Protection Act of 2008. DEA 
amended its regulations accordingly by interim final rule to prevent 
the illegal distribution and dispensing of controlled substances by 
means of the Internet.\57\
---------------------------------------------------------------------------

    \57\ 74 FR 15596, April 6, 2009.
---------------------------------------------------------------------------

Disposal of Controlled Substances
    Lastly, on October 12, 2010, Congress amended the CSA with the 
enactment of the Secure and Responsible Drug Disposal Act of 2010 (Pub. 
L. 111-273). Pursuant to this amendment, DEA must promulgate new 
regulations that allow ultimate users and long-term care facilities to 
dispose of controlled substances through a variety of methods of 
collection and disposal. DEA is in the process of drafting these 
regulations.

[[Page 39324]]

Increased Need for Diversion Control

    Coincident with the above statutory changes, the increased misuse 
of controlled substances and listed chemicals highlights the urgency of 
and need for diversion control. The National Survey on Drug Use and 
Health (NSDUH) (formerly the National Household Survey on Drug Abuse) 
is an annual survey of the civilian, non-institutionalized, population 
of the United States aged 12 or older. The survey is conducted by the 
Department of Health and Human Services Office of Applied Studies, 
Substance Abuse and Mental Health Services Administration. Findings 
from the 2009 NSDUH \58\ estimate that 7.0 million persons used 
prescription-type psychotherapeutic drugs--pain relievers, anti-anxiety 
medications, stimulants, and sedatives--non-medically in the previous 
month. This represents 2.8 percent of the population aged 12 or older. 
These estimates were 13 percent higher than those from the 2008 Survey. 
From 2002 to 2009, there was an increase in the rate of current non-
medical use of prescription-type drugs (from 5.5 to 6.3 percent) among 
young adults aged 18 to 25, driven primarily by an increase in pain 
reliever misuse. In 2009, an estimated 3.1 million persons aged 12 or 
older used an illicit drug for the first time within the past twelve 
months. Of those, an estimated 28.7 percent initiated with 
psychotherapeutics, including 17.1 percent with pain relievers, 8.6 
percent with tranquilizers, 2.0 percent with stimulants, and 1.0 
percent with sedatives.
---------------------------------------------------------------------------

    \58\ SAMHSA, ``Results from the 2009 National Survey on Drug Use 
and Health: Volume I, Summary of National Findings,'' Office of 
Applied Studies, 2010 (NSDUH Series H-38A, HHS Publication No. SMA 
10-4856), https://www.oas.samhsa.gov/nsduh/2k9NSDUH/2k9Results.pdf.
---------------------------------------------------------------------------

    Abuse of prescription controlled substances among teenagers is 
second only to abuse of illegal marijuana. The 2010 ``Monitoring the 
Future'' survey of teenagers found that 8 percent of high school 
seniors reported non-medical use of Vicodin, and 5.1 percent reported 
non-medical use of OxyContin, both scheduled controlled substances 
(painkillers).\59\ This reported abuse is consistent with reports by 
high-school students of increased non-medical use of painkillers in the 
past five years.\60\ As reported by The Partnership at Drugfree.org 
(formerly the Partnership for a Drug-Free America) from its 2009 
survey, more than 50 percent of teenagers (grades 9-12) believe that 
prescription drugs are easier to obtain than illegal drugs. There is a 
concern that young people may perceive prescription and/or over-the-
counter drugs as ``safer'' than illegal drugs because of their 
intended, legitimate medical use.\61\
---------------------------------------------------------------------------

    \59\ Lloyd D. Johnson, PhD, et al, ``Monitoring the Future 
National Results on Adolescent Drug Use: Overview of Key Findings, 
2010,'' Institute for Social Research, The University of Michigan, 
2011.
    \60\ Lloyd D. Johnston, PhD, et al, ``Monitoring the Future 
National Results on Adolescent Drug Use: Overview of Key Findings, 
2009,'' National Institute of Drug Abuse, 2010 (NIH Publication No. 
10-7583).
    \61\ Partnership for a Drug-Free America and MetLife Foundation, 
``2009 Parents and Teens Attitude Tracking Report,'' March 2, 2010.
---------------------------------------------------------------------------

    The consequences of prescription drug abuse are seen in the data 
collected by the Substance Abuse and Mental Health Services 
Administration (SAMHSA) on emergency room visits. According to their 
latest data, ``Drug Abuse Warning Network (DAWN), 2009: National 
Estimates of Drug-Related Emergency Department Visits,'' SAMHSA 
estimates that of the 4.6 million emergency department visits in 2009 
associated with drug use, about 1.2 million visits involved the non-
medical use of pharmaceuticals.\62\ Emergency department visits 
involving non-medical use of pharmaceuticals (misuse or abuse) almost 
doubled between 2004 and 2009 from 627,291 in 2004 to 1,244,679 visits 
in 2009 (98.4 percent increase).\63\ About half of the 2009 emergency 
department visits related to abuse or misuse of pharmaceuticals 
involved painkillers and more than one-third involved drugs to treat 
insomnia and anxiety.\64\
---------------------------------------------------------------------------

    \62\ SAMHSA, Highlights of the 2009 Drug Abuse Warning Network 
(DAWN) Findings on Drug-Related Emergency Department Visits, Center 
for Behavioral Health Statistics and Quality, The DAWN Report, 
December 28, 2010.
    \63\ Id. at 4.
    \64\ Id. at 3.
---------------------------------------------------------------------------

    According to the Centers for Disease Control, overdose deaths 
caused by prescription drugs is the second leading cause of accidental 
death in the United States among young people.\65\ The Florida Medical 
Examiner's Commission reported that between 2005 and 2009 the number of 
deaths in Florida associated with oxycodone rose 248.5 percent.\66\
---------------------------------------------------------------------------

    \65\ U.S. Department of Health and Human Services, Centers for 
Disease Control and Prevention, National Center for Injury 
Prevention and Control, Web-based Injury Statistics Query and 
Reporting System (WISQARS), ``20 Leading Causes of Death, United 
States, 2007, All Races, Both Sexes.''
    \66\ Florida Dep't of Law Enforcement, Medical Examiners 
Commission, ``Drugs Identified in Deceased Persons by Florida 
Medical Examiners 2005 Report,'' at 15 (May 2006) and Florida Dep't 
of Law Enforcement, Medical Examiners Commission, ``Drugs Identified 
in Deceased Persons by Florida Medical Examiners 2009 Report,'' at 
17 (June 2010).
---------------------------------------------------------------------------

Operational Changes of the DCP Since 2006

    As discussed above, the OIG reviewed DEA's efforts to control the 
diversion of controlled pharmaceuticals and in 2006 recommended that 
DEA incorporate law enforcement support and law enforcement authority 
to assist the DCP in performing criminal investigations that inherently 
require law enforcement authority, e.g., the authority to arrest, 
execute search warrants, and conduct surveillance and undercover 
activities. As discussed above, DEA expanded the use of Tactical 
Diversion Squads comprised of many DEA specialized resources such as 
Special Agents, Diversion Investigators and state and local law 
enforcement and regulatory personnel to more effectively investigate, 
disrupt, and dismantle those individuals or organizations involved in 
diversion schemes. Since the last fee calculation, DEA added 161 
Special Agent positions to the DCP. The majority of these positions 
were allocated to the DCP Tactical Diversion Squads. By 2009, there 
were 37 operational Tactical Diversion Squads across the United States 
and DEA is committed to increasing this number within this fee cycle. 
These squads are designed to address controlled substance diversion in 
consonance with the traditional Diversion Investigator regulatory 
efforts.
    DEA made other organizational changes to incorporate in the DCP 
those units responsible for diversion control operations. To ensure the 
proper utilization of DCFA resources, DEA created a Diversion Value and 
Analysis Unit in the Diversion Planning and Resources Section to 
identify and prevent duplication of effort, conduct cost benefit 
analyses, and develop, oversee, and review acquisitions.
    In 2009, the DCP intensified its regulatory activities to help the 
registrant population better comply with the CSA and to identify those 
registrants who violated the CSA and implementing regulations. The 
modifications included increasing investigation cycles as well as depth 
of review. Scheduled investigations were increased from every five 
years to every three years for controlled substance manufacturers, bulk 
manufacturers, distributors, reverse distributors, importers, 
exporters, bulk importers, and Narcotic Treatment Programs; scheduled 
investigations for chemical manufacturers, bulk manufacturers, 
distributors, importers, exporters, and bulk importers were increased 
from two

[[Page 39325]]

per Diversion Investigator per year to all such registrants every three 
years. Investigations of Office Based Opioid Treatment/Buprenorphine 
Physicians, currently referred to as DATA-Waived Practitioners, were 
increased from one such registrant per Diversion Group per year to all 
such registrants per Diversion Group every five years. Researchers were 
increased from only being investigated on a complaint basis to two 
schedule I researchers plus two schedule II-V researchers per Diversion 
Group per year. Finally, analytical laboratories, previously not 
subject to scheduled investigations, were increased to include 
analytical laboratories affiliated with manufacturers being 
investigated every three years in tandem with the affiliated 
manufacturer's scheduled investigation.
    In an effort to enhance the DCP's enforcement capabilities, to 
reduce costs, to streamline the regulatory compliance process for 
registrants, and to keep the public informed, the DCP made several 
improvements to its information technology capabilities. 
Underperforming contracts were terminated and a new unit was created 
within the DCP to manage all information technology projects 
exclusively for the DCP. This resulted in significant cost reductions 
and improved program efficiency and responsiveness to both registrants 
and the public.
    The new unit successfully made cost-saving improvements to the 
technology infrastructure of the Controlled Substances Ordering System 
(CSOS) and streamlined the application process for registrants by 
implementing an online system for new applications and renewal 
applications for registrations. The DCP is also enhancing the 
communications system to allow interconnectivity between many different 
systems. The DCP is continually working to improve the quality and 
accessibility of its reporting systems, such as the Automated Reports 
and Consolidated Orders System (ARCOS) and Drug Theft/Loss (DTL). These 
two programs generate timely, accurate, and actionable data that 
improve the DCP's enforcement and control efforts as well as providing 
for a more efficient means by which registrants may submit such 
reports.
    DEA's Interim Final Rule on Electronic Prescriptions for Controlled 
Substances (EPCS), effective June 1, 2010, will enhance diversion 
control as a means to protect against fraudulent prescriptions and will 
streamline the recordkeeping process for pharmacies (75 FR 16236, March 
31, 2010). This rule provides practitioners with the option to 
electronically sign and transmit prescriptions for controlled 
substances. Likewise, with this new rule, pharmacies are permitted to 
receive and archive electronic prescriptions. The DCP is working to 
develop and implement EPCS.
    As part of the requirements of the Combat Methamphetamine Epidemic 
Act of 2005 (CMEA), regulated sellers of scheduled listed chemical 
products are required to self-certify annually. Regulated sellers can 
self-certify and find training manuals on the Diversion Control Program 
Web site.

Need for a New Fee Calculation

    DEA last adjusted the fee schedule in August 2006, however, 
collections did not begin until FY 2007.\67\ This fee schedule was 
intended to be sufficient to cover the ``full costs'' of the DCP for FY 
2006 through FY 2008 or October 1, 2005 through September 30, 2008. The 
DCP program has continued to operate under this fee schedule due to 
cost savings through reorganization and modernization efforts and by 
inadvertently excluding certain costs to the DCP. As indicated by the 
above-referenced 2008 OIG report, additional salary and other costs 
attributable to diversion control activities need to be incorporated 
into the DCP. In addition, the mission of the DCP has been expanded by 
Congress and by the need to address an explosion in the abuse of 
prescription drugs that seriously impact public health and safety. The 
National Drug Control Strategy is focused on all aspects of the 
problem--supply, demand, and treatment.
---------------------------------------------------------------------------

    \67\ 71 FR 50115, August 29, 2006.
---------------------------------------------------------------------------

    The Office of Diversion Control at DEA is focused on the supply 
side of this serious threat to the public health and safety. At the end 
of FY 2008, a reorganization within DEA expanded the use of Tactical 
Diversion Squads across the country to allow Diversion Investigators to 
focus their expertise on regulatory oversight and the deterrent effect 
of increased regulatory investigations. Tactical Diversion Squads 
incorporate the criminal investigative skills and statutory authority 
of Special Agents and state and local Task Force Officers to bring to 
the criminal justice system those organizations and individuals who 
violate the CSA by diverting controlled substances and listed chemicals 
into the illicit market. Diversion Investigators are a key asset to 
Tactical Diversion Squads because they lend their keen