Default Provisions for Hearing Proceedings Relating to the Revocation, Suspension, or Denial of a DEA Registration, 61662-61671 [2020-19309]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 85, Number 190 (Wednesday, September 30, 2020)]
[Proposed Rules]
[Pages 61662-61671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19309]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1301, 1309, and 1316

[Docket No. DEA-438]
RIN 1117-AB36


Default Provisions for Hearing Proceedings Relating to the 
Revocation, Suspension, or Denial of a DEA Registration

AGENCY: Drug Enforcement Administration, Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This proposed rulemaking would add provisions requiring a 
person served with an order to show cause issued pursuant to the 
Controlled Substances Act to file a request for a hearing no later than 
15 days after the date of receipt of the order. The proposed rulemaking 
would also add provisions requiring that a person who requests a 
hearing file an answer to the order to show cause no later than 30 days 
after the date of receipt of the order; it also sets forth criteria for 
what the answer must contain. The proposed rule would add provisions 
allowing the entry of a default where a party served with an order to 
show cause fails to request a hearing, fails to file an answer to the 
order to show cause, or otherwise fails to defend against the order to 
show cause. The proposed rule provides that where a party defaults, the 
factual allegations of the order to show cause would be deemed 
admitted. The proposed rule would also provide for the dismissal of an 
order to show cause where the Administration fails to prosecute the 
proceeding. This proposed rule would also provide that a default may 
only be excused upon a party establishing good cause to excuse its 
default and sets forth the procedures a party must follow to seek such 
relief. Further, the proposed rule would remove the current provisions 
allowing a recipient of an order to show cause to file a written 
statement while waiving his/her/its right to an administrative hearing.

DATES: Electronic comments must be submitted, and written comments must

[[Page 61663]]

be postmarked, on or before November 30, 2020. Commenters should be 
aware that the electronic Federal Docket Management System will not 
accept comments after 11:59 p.m. Eastern Time on the last day of the 
comment period.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-438'' on all correspondence, including any 
attachments.
    Electronic Comments: The Drug Enforcement Administration encourages 
that all comments be submitted through the Federal eRulemaking Portal, 
which provides the ability to type short comments directly into the 
comment field on the web page or to attach a file for lengthier 
comments. Please go to https://www.regulations.gov and follow the online 
instructions at that site for submitting comments. Upon completion of 
your submission you will receive a Comment Tracking Number for your 
comment. Please be aware that submitted comments are not 
instantaneously available for public view on Regulations.gov. If you 
have received a Comment Tracking Number, your comment has been 
successfully submitted and there is no need to resubmit the same 
comment.
    Paper Comments: Paper comments that duplicate an electronic 
submission are not necessary and are discouraged. Should you wish to 
mail a paper comment in lieu of an electronic comment, it should be 
sent via regular or express mail to: Drug Enforcement Administration, 
Attention: DEA Federal Register Representative/DPW, 8701 Morrissette 
Drive, Springfield, Virginia 22152.

FOR FURTHER INFORMATION CONTACT: Scott A. Brinks, Diversion Control 
Division, Drug Enforcement Administration; Mailing Address: 8701 
Morrissette Drive, Springfield, Virginia 22152; Telephone: (571) 362-
3261.

SUPPLEMENTARY INFORMATION:

Posting of Public Comments

    Please note that all comments received, including attachments and 
other supporting materials, are considered part of the public record. 
They will be made available by the Drug Enforcement Administration 
(DEA) for public inspection online at https://www.regulations.gov/. The 
Freedom of Information Act applies to all comments received. 
Confidential information or personal identifying information, such as 
account numbers or Social Security numbers, or names of other 
individuals, should not be included. Submissions will not be edited to 
remove any identifying or contact information.
    Comments with confidential information, which should not be made 
available for public inspection, should be submitted as written/paper 
submissions. Two written/paper copies should be submitted. One copy 
will include the confidential information with a heading or cover sheet 
that states ``CONTAINS CONFIDENTIAL INFORMATION.'' DEA will review this 
copy, including the claimed confidential information, in its 
consideration of comments. The second copy should have the claimed 
confidential information redacted/blacked out. DEA will make this copy 
available for public inspection online at https://www.regulations.gov/. 
Other information, such as name and contact information, that should 
not be made available, may be included on the cover sheet but not in 
the body of the comment, and must be clearly identified as 
``confidential.'' Any information clearly identified as 
``confidential'' will not be disclosed.
    An electronic copy of this document is available at https://www.regulations.gov/.

Statutory and Regulatory Background of Administrative Hearing 
Regulations

    DEA implements and enforces Titles II and III of the Comprehensive 
Drug Abuse Prevention and Control Act of 1970 and the Controlled 
Substances Import and Export Act (21 U.S.C. 801-971), as amended, and 
referred to as the Controlled Substances Act (CSA or the Act).\1\ The 
CSA is designed to prevent, detect, and eliminate the diversion of 
controlled substances and listed chemicals into the illicit market 
while providing for a sufficient supply of controlled substances and 
listed chemicals for legitimate medical, scientific, research, and 
industrial purposes. Controlled substances have the potential for abuse 
and dependence and are controlled to protect the public health and 
safety. To this end, controlled substances are classified into one of 
five schedules based upon: The potential for abuse, currently accepted 
medical use, and the degree of dependence if abused. 21 U.S.C. 812. 
Listed chemicals are separately classified based on their use in and 
importance to the manufacture of controlled substances (List I or List 
II chemicals). 21 U.S.C. 802(33)-(35).
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    \1\ The Attorney General's delegation of authority to DEA may be 
found at 28 CFR 0.100.
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    The CSA establishes a closed system of distribution that requires 
DEA to monitor and control the manufacture, distribution, dispensing, 
import, and export of controlled substances until they reach their 
final lawful destination. In order to maintain this closed system of 
distribution, persons that manufacture, distribute, dispense, import, 
export, or conduct research or chemical analysis with controlled 
substances are required to register with DEA at each principal place of 
business or professional practice. Persons registered with DEA are 
permitted to possess controlled substances as authorized by their 
registration and must comply with the applicable requirements 
associated with their registration. 21 U.S.C. 822. The CSA also 
establishes a system to monitor and control the manufacture, 
distribution, import, and export of listed chemicals and requires that 
persons who seek to engage in these activities obtain a registration 
authorizing them to do so from DEA.
    In carrying out its functions under the Act, DEA ``may hold 
hearings, sign and issue subpoenas, administer oaths, examine 
witnesses, and receive evidence at any place in the United States.'' 21 
U.S.C. 875(a). See also 21 U.S.C. 965. The Act requires that, except as 
otherwise provided, hearings involving the proposed denial of an 
application for a registration or the proposed suspension or revocation 
of a registration \2\ are to be conducted ``in accordance with 
subchapter II of chapter 5 of Title 5,'' which sets forth the 
procedures for adversary adjudications under the Administrative 
Procedure Act (APA).\3\ 21 U.S.C. 824(c)(4).
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    \2\ Before taking any action to deny, revoke, or suspend a 
registration to manufacture, distribute, dispense, import, or export 
a controlled substance or a registration to manufacture, distribute, 
import or export a list I chemical, DEA must serve upon the 
applicant or registrant an order to show (OSC) cause why the 
registration should not be denied, revoked, or suspended. See 21 
U.S.C. 824(c) and 958(d)(4). The OSC cause must ``contain a 
statement of the basis thereof and shall call upon the applicant or 
registrant to appear before [DEA] at a time and place stated in the 
order, but in no event less than thirty days after the date of 
receipt of the order.'' Id. Proceedings for the denial, revocation, 
or suspension of a registration are to be conducted in accordance 
with the Administrative Procedure Act. See id.
    \3\ See 5 U.S.C. 556 and 557.
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    In accordance with the Attorney General's authority to ``promulgate 
and enforce any rules, regulations, and procedures which he may deem 
necessary and appropriate for the efficient execution of his 
functions'' under the Act, 21 U.S.C. 871(b), DEA's predecessor agency, 
the Department of Justice's Bureau of Narcotics and Dangerous Drugs, 
first issued regulations in 1971 to implement the Comprehensive Drug 
Abuse Prevention and Control Act of 1970. See 36 FR 7776

[[Page 61664]]

(Apr. 24, 1971). With a few exceptions, the administrative hearing 
provisions of those 1971 regulations are virtually identical to the 
ones in place today.
    The general administrative hearing provisions which apply to all 
hearings brought pursuant to 21 U.S.C. 823, 824 and 958 are found at 21 
CFR part 1316, subpart D. Specific administrative hearing provisions 
relating to the registration of manufacturers, distributors, 
dispensers, importers, and exporters of controlled substances are in 21 
CFR 1301.32, 34 through 37, and 41 through 46, as well as 21 CFR 
1316.41 through 68. Administrative hearing provisions relating to the 
registration of manufacturers, distributors, importers, and exporters 
of list I chemicals are in 21 CFR 1309.42, 43, 46, 51 through 55, and 
21 CFR 1316.41 through 68.
    The changes proposed in this action would apply only to hearings 
relating to the denial, revocation, or suspension of a DEA registration 
pursuant to 21 U.S.C. 823, 824, and 958. This proposed rulemaking does 
not contemplate changes for any other types of hearings that DEA may 
conduct, including hearings relating to quota issuance, revision, or 
denial, or those relating to the scheduling of controlled substances.

Need for Change and Overview of the Proposed Amendments

    Current DEA hearing regulations in 21 CFR parts 1301 and 1309 
relating to actions to deny, suspend, or revoke a DEA registration 
contain neither a rule requiring a responsive pleading to an OSC nor a 
default provision, in contrast to the hearing regulations of many other 
Federal agencies. Provisions requiring a responsive pleading to a 
complaint and authorizing the entry of a default are an accepted part 
of civil and administrative practice. See, e.g., 16 CFR 3.12 (Federal 
Trade Commission rule regarding answer and default); 40 CFR 22.15, 
22.17 (Environmental Protection Agency rules regarding answer and 
default); 12 CFR 1081.201 (Consumer Financial Protection Bureau rule 
regarding answer and default); Fed. R. Civ. P. 8(b) and 55. Because of 
the absence of such provisions, DEA must expend significant resources 
to adjudicate registration matters even where the applicant or 
registrant has effectively opted not to litigate. This scenario occurs 
in a significant number of DEA administrative actions, and the addition 
of these provisions would conserve scarce agency resources \4\ and 
greatly increase the efficiency of the adjudicatory process. Requiring 
the applicant/registrant to file an answer would improve efficiency 
even in cases where an applicant/registrant requests a hearing, by 
narrowing the scope of the hearing to those issues about which there is 
a legitimate disagreement between the parties.
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    \4\ It is important to note that the administrative hearings 
that are the subject of this proposed rulemaking involve fee-paying 
DEA applicants and registrants. DEA believes that this proposed 
rulemaking will speed the disposition of cases, and enhance the 
protection of the public interest.
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    DEA proposes to add provisions to Sec. Sec.  1301.37 and 1309.46 
requiring applicants/registrants served with an OSC that request a 
hearing to file an answer responding to each of the allegations 
contained in the OSC, and to amend Sec.  1316.47 accordingly. DEA also 
proposes to amend Sec. Sec.  1301.43(c) and (d), and 1309.53(b) and (c) 
by adding provisions allowing for entry of a default in various 
circumstances.
    The addition of Sec. Sec.  1301.37(d) and 1309.46(d) and the 
proposed changes to Sec.  1316.47 would require an applicant/registrant 
who requests a hearing to file an answer within 30 days of the date of 
receipt of the OSC. The deadline to file a request for a hearing would 
be shortened to 15 days to expedite the hearing process, but the 
request form would be amended to only require the hearing request 
itself, and not a substantive response to the OSC. The substantive 
response material would still be included in the answer, but would 
retain the same 30-day deadline provided by the current regulations 
governing time allowed for filing a response to an OSC under Sec. Sec.  
1301.43(a), 1309.53(a), and 1316.47. These staggered deadlines help 
keep the administrative process on track by compelling the recipient of 
an OSC to signal their intention to engage the DEA administrative 
process within 15 days of being served. Without this sort of a 
staggered deadline, requests to extend the 30-day deadline to file an 
answer are likely to arrive on, or after the deadline, and if the 
request for extension is granted, the administrative litigation process 
will be delayed for an additional 30 to 60 days. The staggered 
deadlines are not expected to preclude the filing of all extension 
requests; however, staggering deadlines will help decrease the number 
of such filings and ensure they are filed earlier in the process. This 
proposed rule would signal to DEA whether an applicant/registrant 
intends to contest an OSC, without reducing the amount of time the 
applicant/registrant has to prepare a substantive response to the OSC. 
This earlier knowledge (at the 15-day mark) would allow DEA to 
prioritize its resources on those matters that will proceed to an 
administrative hearing, and to prepare for the hearings that are most 
likely to occur.
    Staggered deadlines would place only a marginal burden on 
recipients of OSC. As noted, a recipient need only send an email to the 
address provided in the OSC stating ``I request a hearing'' within 15 
days of being served with an OSC. DEA believes that these staggered 
deadlines are appropriate given the relative lack of effort and 
complexity of a hearing request affirming that the applicant/registrant 
intends to engage the administrative process in response to the OSC. 
Filing an answer would likely require more time and effort. 
Accordingly, DEA believes that requiring the filing of an answer in 30 
days--which is more generous than deadlines set by the Federal Rules of 
Civil Procedure for analogous parties--is appropriate. See Fed. R. Civ. 
P. 12(a)(A)(i) (21 day deadline for filing answer).
    For each factual allegation in the OSC, the answer must 
specifically admit, deny, or state that the party does not have, and is 
unable to obtain, sufficient information to admit or deny the 
allegation. The proposed rule provides that a party may amend its 
answer one time prior to the presiding officer's issuance of the 
prehearing ruling, after which a party may amend its answer only with 
leave of the presiding officers. These rules would also require an 
applicant/registrant to serve a copy of its request for a hearing and 
its answer on the Administration at the address listed in the OSC, in 
addition to filing these documents with the Office of the 
Administrative Law Judges (ALJ).
    Under the proposed new language in Sec. Sec.  1301.43(c)(1) and 
1309.53(b)(1), a person who fails to timely request a hearing after 
properly being served with an OSC pursuant to Sec.  1301.37 or 1309.46 
would be deemed to have waived his/her/its right to a hearing and to be 
in default. The proposed new language of Sec. Sec.  1301.43(c)(1) and 
1309.53(b)(1) provides that a person who fails to timely request a 
hearing may seek to be excused from the default by filing a motion with 
the Office of ALJ establishing good cause to excuse the default no 
later than 45 days after the date on which the person received the OSC. 
Thereafter, any person who has failed to timely request a hearing and 
seeks to be excused from a default must file a motion with the Office 
of the Administrator, which shall have exclusive jurisdiction to rule 
on the motion.
    Similarly, the proposed new language in Sec. Sec.  1301.43(c)(2) 
and 1309.53(b)(2) provides that any person who has

[[Page 61665]]

requested a hearing but fails to timely file an answer, or fails to 
demonstrate good cause (via a motion for relief) for failing to timely 
file an answer, will be deemed to have waived his/her/its right to a 
hearing and to be in default. The proposed new language also provides 
that, upon motion of the Administration in such circumstances, the 
presiding officer shall then enter an order terminating the proceeding. 
However, under Sec.  1316.47(b), the presiding officer, upon request 
and a showing of good cause (e.g., an unexpected medical emergency, 
death in the family, excusable neglect), may grant a reasonable 
extension of the time allowed for filing the answer. See e.g., Rene 
Casanova, M.D., 77 FR 58,150, 58, 150 n.2 (2012) (collecting cases 
applying ``good cause'' standard in context of request for extensions). 
As with any motion for relief from a deadline, a respondent could seek 
an extension of time prior to the deadline in question, and the non-
moving party would have the opportunity to respond.
    The proposed language in Sec. Sec.  1301.43(c)(3) and 1309.53(b)(3) 
provides that if the Administration fails to prosecute, or a person who 
has requested a hearing fails to plead or otherwise defend, that party 
shall be deemed in default, and the opposing party may move to 
terminate the proceeding. The proposed rule further provides that upon 
such motion, the presiding officer shall then enter an order 
terminating the proceeding absent a showing of good cause by the party 
deemed to be in default. Upon termination of the proceeding by the 
presiding officer, a party may seek relief only by filing a motion 
establishing good cause to excuse its default with the Office of the 
Administrator. This rule is being proposed because on occasion, 
applicants/registrants have filed a timely hearing request but, for 
whatever reason, subsequently failed to participate further in the 
proceeding, repeatedly failed to adhere to the orders of the presiding 
officer, or otherwise defend the allegations in the OSC. This means 
that even if a party who timely filed an answer could subsequently be 
held in default if it essentially stopped participating in the 
litigation process, or if its conduct was sufficiently contumacious of 
the tribunal such that default was an appropriate sanction. This rule, 
which mirrors the authority trial judges have under the Federal Rules 
of Civil Procedure to dismiss cases for significant failures to defend 
or the failure of a party to prosecute a case, see Fed. R. Civ. P. 
41(b), 55, would authorize the presiding officer to issue an order 
terminating the proceeding in such cases.
    The proposed new language for Sec. Sec.  1301.43(e) and 1309.53(d) 
provides that a default shall be deemed to constitute a waiver of the 
applicant's/registrant's right to a hearing and an admission of the 
factual allegations of the OSC.
    The proposed new language in Sec. Sec.  1301.43(f)(1) and 
1309.53(e)(1) sets forth the procedures to be followed where a party is 
deemed to be in default. With respect to an applicant/registrant who is 
deemed to be in default based on the failure to file a timely hearing 
request, or where the applicant/registrant is deemed to be in default 
for failure to file an answer or otherwise defend and the presiding 
officer has issued an order terminating the proceeding, the proposed 
rule provides that the Administration may then file a request for final 
agency action along with a record to support its request with the 
Administrator who may enter a default pursuant to Sec.  1316.67. This 
record should include, for instance, documents demonstrating adequate 
service of process and, where a party held to be in default asserted 
that the default should be excused, any pleadings filed by both the 
parties addressing this issue.
    In contrast, under the current rules, in cases where the applicant/
registrant waives his/her/its right to a hearing, DEA counsel must 
provide the Administrator with a much more voluminous record, including 
evidence to support each factual allegation which the Administration 
seeks to establish. This may include recordings and transcripts of 
undercover visits, medical records, invoices and dispensing records, 
and expert reports. Because DEA's current rules do not provide that an 
applicant's/registrant's waiver of his/her/its right to a hearing 
constitutes an admission of the factual allegations of the OSC, both 
the preparation of the record by DEA counsel for submission to the 
Administrator and the process of reviewing the record and drafting the 
Administrator's final order require a significant investment of agency 
resources. The changes proposed here would thus save these resources, 
which can then be devoted to other pending matters and reduce the time 
it takes for the Administrator's final order to issue in those cases 
where applicants/registrants choose not to challenge the proceeding or 
fail to properly participate in the proceeding.
    The proposed rule provides that in the event the Administration is 
deemed to be in default pursuant to Sec.  1301.43(f)(2) or 
1309.53(e)(2), the presiding officer shall transmit the record to the 
Administrator for his consideration no later than five (5) business 
days after the date of issuance of the order. The proposed rule also 
provides that upon termination of the proceeding by the presiding 
officer, the Administration may seek relief only by filing a motion 
establishing good cause to excuse its default with the Office of the 
Administrator.
    The proposed new language in Sec. Sec.  1301.43(f)(3) and 
1309.53(e)(3) provides that a party held to be in default may move to 
set aside an entry of default final order issued by the Administrator 
by filing a motion no later than 30 days from the date of issuance by 
the Administrator of an entry of default. However, any such motion 
shall be granted only upon a showing of good cause to excuse the 
default.
    Under the proposed amendments to Sec. Sec.  1301.43(e)(1) and 
1309.53(d)(1), the Administrator would be authorized to issue a final 
order on the basis of a default, but would have the discretion not to 
take such action. For example, the Administrator might conclude that 
the factual allegations of the OSC, even deeming them admitted, do not 
establish violations of the CSA or other conduct which is inconsistent 
with the public interest. The Administrator may also conclude that any 
violations or misconduct proved by the admissions nonetheless do not 
warrant the sanction proposed by the Administration. In such instance, 
the Administrator would retain the discretion to dismiss the OSC, or 
issue an appropriate order imposing whatever sanction is warranted by 
the admitted allegations.
    DEA also proposes to remove the provisions in Sec. Sec.  1301.43(c) 
and 1309.53(b) that allow for the submission of a written statement in 
lieu of a hearing. For adjudications relating to registrations and 
applications, these provisions have proven to be unworkable in practice 
because these proceedings typically involve the need to resolve 
disputed historical facts and to make credibility determinations. 
Either party would, however, retain the ability (as exists currently) 
to seek summary disposition on any allegation for which no material 
facts were in dispute. The current provisions of Sec. Sec.  1301.43(c) 
and 1309.53(b) are ambiguous and do not necessarily even allow for, or 
require the submission of, additional evidence supporting a position 
statement. Given that the Administration provides an opportunity for a 
full and fair hearing to any person issued an OSC in accordance with 
the Due Process Clause and the

[[Page 61666]]

Administrative Procedure Act, the current provision allowing the 
submission of unsworn written statements does not enhance the 
reliability of the Administration's adjudications. Accordingly, DEA is 
proposing to remove this procedural option, which historically has been 
invoked by respondents only sparingly.
    DEA is also proposing to remove the opportunity of third parties 
who are entitled to participate in a hearing under Sec.  1301.43(c) to 
submit a written position statement in lieu of participating in the 
hearing. In DEA's experience, no party has ever requested this 
opportunity, and any such party retains the opportunity to participate 
in the hearing if the applicant/registrant avails itself of its right 
to a hearing.

Regulatory Analyses

Executive Orders 12866, 13563, and 13771, Regulatory Planning and 
Review, Improving Regulation and Regulatory Review, and Reducing 
Regulation and Controlling Regulatory Costs

    This proposed rule was developed in accordance with the principles 
of Executive Orders 12866, 13563, and 13771. Executive Order 12866 
directs agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health, and safety effects; 
distributive impacts; and equity). Executive Order 13563 is 
supplemental to and reaffirms the principles, structures, and 
definitions governing regulatory review as established in Executive 
Order 12866. Executive Order 12866 classifies a ``significant 
regulatory action,'' requiring review by the Office of Management and 
Budget (OMB), as any regulatory action that is likely to result in a 
rule that may: (1) Have an annual effect on the economy of $100 million 
or more or adversely affect in a material way the economy, a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order. DEA has determined that this proposed rule is not a 
``significant regulatory action'' under Executive Order 12866, section 
3(f).
    DEA estimates that there are both costs and cost savings associated 
with the proposed rule. The provisions of this proposed rule apply only 
to the small minority of applicants and registrants who are issued an 
OSC. Therefore, a very small minority of registrants would potentially 
be economically impacted if this rule were promulgated. From 2016 to 
2018, there were on average 81 OSCs issued annually. These 81 OSCs fall 
into one of three categories: (1) An average of 29 cases in which the 
registrant/applicant surrendered and/or withdrew his/her/its 
application, thus mooting the case, (2) an average of 11 cases in which 
the registrant/applicant properly requested a hearing, and (3) the 
remaining 41 registrants per year who failed to timely file a request 
for a hearing and were deemed to have waived their right to a hearing 
and who would be in default under the proposed rule. The 11 registrants 
per year who properly requested a hearing are estimated to incur costs 
while the registrants in the remaining two categories do not.
    The proposed rule requires that an applicant/registrant must file 
an answer responding to every allegation in the OSC. The average of 29 
cases in which the registrant/applicant surrenders or withdraws his/
her/its application, thus mooting the case, would not result in the 
registrant/applicant filing an answer to the OSC. Therefore, these 
registrants/applicants would not incur any costs. The average of 11 
cases per year where an applicant requests a hearing may incur a cost 
associated with answering the factual allegation(s) of the OSC. To 
estimate the cost of this proposed change, DEA estimates that, on 
average, it will take five hours for a registrant's attorney to review 
the OSC and prepare an answer to all allegations. The total estimated 
cost of this proposed change is $36,190 per year.\5\
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    \5\ Hourly rate using Laffey Matrix for lawyers with 8-10 years 
of experience from 6/1/18 to 5/31/19 is $658 per hour. Total Cost = 
($658 x 5 x 11). While it is possible the fees incurred for legal 
review and to answer the allegations would be offset by a reduction 
in fees later in the process. This is a new requirement and DEA 
conservatively estimates this requirement as a new cost.
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    The remaining 41 cases, where there was neither a registration 
surrendered nor a hearing conducted, would be differently impacted by 
this proposed rule. The proposed rule provides that where a party 
defaults, the factual allegations of the OSC are deemed admitted. For 
these 41 cases, where there was registrant inaction, the registrant's 
cost of inaction is the same under current or proposed rules. There is 
no additional cost to registrants. This proposed rule would also 
provide that a default may only be set aside upon a party establishing 
good cause to excuse its default. DEA has no basis to estimate the 
number of affected parties who will seek to establish good cause to set 
aside a default and any costs associated with such activities.
    However, under Kamir Garces Mejias, 72 FR 54931 (2007), a party 
seeking to be excused from an ALJ order terminating a proceeding for 
failing to comply with the ALJ's orders is required to show good cause 
to excuse its default. Thus, because this proposed requirement of the 
rule simply codifies case law, it imposes no additional cost to 
registrants.
    Finally, this proposed rule would also result in cost savings for 
DEA by streamlining the Administrator's review process using the 
default determination. The proposed rule provides that when an 
applicant/registrant is deemed to be in default, the Administration may 
then file a request for final agency action along with a record to 
support its request with the Administrator who may enter a default. 
This record should include, for instance, documents demonstrating 
adequate service of process and, where a party held to be in default 
asserted that the default should be excused, any pleadings filed by 
both the parties addressing this issue. In contrast, under the current 
rules, in cases where the applicant/registrant waives his/her/its right 
to a hearing, DEA counsel must provide the Administrator with a much 
more voluminous record, including evidence to support each factual 
allegation which the Administration seeks to establish. Because DEA's 
current rules do not provide that an applicant's/registrant's waiver of 
his/her/its right to a hearing constitutes an admission of the factual 
allegations of the OSC, both the preparation of the record by DEA 
counsel for submission to the Administrator and the process of 
reviewing the record and drafting the Administrator's final order 
require a significant investment of agency resources. The changes 
proposed here would thus save these resources, which can then be 
devoted to other pending matters and reduce the time it takes for the 
Administrator's final order to issue in those cases where applicants/
registrants choose not to challenge the proceeding or fail to properly 
participate in the proceeding.
    To estimate the cost savings of this rule, DEA first estimates the 
amount of time and resources that would be saved for cases that would 
be resolved via

[[Page 61667]]

entry of a default. The complexity of a given case would impact both 
how much time it would take to prepare the request for final agency 
action (FAA) and for the Administrator's Office to draft the final 
order based on that FAA request, which cumulatively would represent the 
amount of resources saved in a given case. For a case based solely on 
allegations related to a lack of state authority, or an exclusion from 
federal health care programs, the gathering of the evidence, including 
declarations, and preparation of the FAA motion take, on average, 
approximately 10-15 hours. For cases with allegations (most commonly, 
improper prescribing or filling of prescriptions), the preparation of 
the FAA materials is considerably longer--approximately 30-40 hours per 
case. It is estimated that of the cases in which there was neither a 
hearing request nor a registration surrender, roughly 30-40% are No 
State License (NSL) cases and 60-70% of cases would be considered other 
non-NSL cases. For the purpose of this analysis, DEA estimates that of 
the 41 cases this rule would impact on average each year, 65% would be 
considered non-NSL cases and take 35 hours to prepare a FAA for, while 
35% would be considered NSL cases and take 13 hours to prepare a FAA 
for. Applying the loaded wage \6\ for GS-15 Step 5 employees,\7\ DEA 
estimates the cost savings of this rule for the time it would take to 
prepare the FAA request is around $134,065 per year.\8\
---------------------------------------------------------------------------

    \6\ The loaded wage includes the average benefits for employees 
in the government. Therefore, the loaded wage is the estimated cost 
of employment to the employer rather than the compensation to the 
employee.
    \7\ Hourly rate for GS-15 Step 5 employees in the Washington, DC 
region is $74.86. 2019 General Schedule Locality Pay Tables for the 
Washington-Baltimore-Arlington area, Office of Personnel Management, 
https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2019/DCB_h.pdf. Average benefits for state 
government employees is 37.5% of total compensation. Employer Costs 
for Employee Compensation--December 2018, Bureau of Labor 
Statistics, https://www.bls.gov/news.release/archives/ecec_03192019.pdf. The 37.5% of total compensation equates to 60% 
(37.5%/62.5%) load on wages and salaries. The loaded hourly rate is 
$119.78 ($74.86 x 1.6). The ECEC does not provide figures for 
Federal Government employees; therefore, figures for state employees 
are used as estimate.
    \8\ ($119.78 x 41 x 65% x 35) + ($119.78 x 41 x 35% x 13).
---------------------------------------------------------------------------

    Additionally, there are cost savings from the time it would take 
the Administrator's Office to draft the final order based on that FAA 
request. The cost savings for the Administrator's review process would 
be the most significant for all substantive cases that would be subject 
to the rule. The Administrator's review process consists of the time to 
review the FAA request, evaluate the evidence submitted by DEA counsel, 
draft a decision, and the time the Administrator must spend reviewing 
the proposed decision. On average, there are four substantive cases per 
year that would be subject to the rule. Currently, the estimated time 
it takes for the substantive cases is 30 days or 240 hours. With the 
rule promulgated, the estimated time it will take for these substantive 
cases will be between one day and two weeks depending on the complexity 
of the case. For the purpose of this analysis, DEA estimates it will 
take seven days or 56 hours with the rule promulgated. Using the loaded 
hourly wage of a GS-15 Step 5 employee, the estimated cost savings for 
substantive cases is $88,155 per year.\9\ There is also cost savings 
for non-substantive cases, but DEA believes this cost savings to be 
minimal for the Administrator's review process. Also, while there is a 
difference in the legal definition of ``deemed to have waived'' versus 
``deemed to be in default,'' there is no enhancement of potential 
sanctions. The Administrator will continue to issue the final order 
based on the same set of circumstances regarding the OSC and the 
default determination, versus the current ``deemed to have waived'' 
determination with the additional voluminous record provided. 
Therefore, the cost savings due to the Administrator's review process 
is estimated to be around $88,155 per year.
---------------------------------------------------------------------------

    \9\ (4 x 240 x $119.78) - (4 x 56 x $119.78) = $88,155.
---------------------------------------------------------------------------

    In summary, there are both costs and cost savings associated with 
this proposed rule. DEA has no basis to estimate the additional 
litigation costs for registrants who are ``deemed to be in default'' as 
a result of the proposed rule as compared to registrants who are 
``deemed to have waived'' under the existing regulations, but believes 
this additional litigation cost to be minimal due to the small number 
of these cases occurring each year. The total cost to registrants due 
to the requirement that an applicant/registrant must file an answer to 
an OSC is $36,190 per year. This proposed rule has an estimated cost 
savings of $222,220 ($134,065 + $88,155) per year for DEA by 
streamlining the Administrator's review process using the default 
determination. The estimated net cost savings of this rule is $186,030 
($222,220 - $36,190) per year.
    Therefore, DEA does not anticipate that this rulemaking will have 
an annual effect on the economy of $100 million or more or adversely 
affect, in a material way, the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities.
    This proposed rule has been characterized as ``Other'' for purposes 
of E.O. 13771 because costs of this proposed rule have not finally been 
determined.

Executive Order 12988, Civil Justice Reform

    The proposed regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice 
Reform to eliminate ambiguity, minimize litigation, establish clear 
legal standards, and reduce burden.

Executive Order 13132, Federalism

    This rulemaking does not have federalism implications warranting 
the application of Executive Order 13132. The rule does not have 
substantial direct effects on the States, on the relationship between 
the national government and the states, or the distribution of power 
and responsibilities among the various levels of government.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This proposed rule does not have substantial direct effects on the 
states, on the relationship between the national government and the 
states, or the distribution of power and responsibilities between the 
Federal Government and Indian tribes.

Regulatory Flexibility Act

    The Administrator, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 601-12) (RFA), has reviewed this rule and by approving it 
certifies that the rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities.
    In accordance with the RFA, DEA evaluated the impact of this rule 
on small entities. The proposed rule would add provisions allowing the 
entry of a default where a party served with an OSC fails to request a 
hearing, fails to file an answer to the OSC, or otherwise fails to 
defend against the OSC. Cf. Fed. R. Civ. P. 55(a). The proposed rule 
provides that where a party defaults, the factual allegations of the 
OSC are deemed admitted. Further, the proposed rule would remove the 
current provisions allowing a recipient of an OSC to file a written 
statement while waiving his/her/its right to an

[[Page 61668]]

administrative hearing. As all DEA registrants would be subject to the 
amended administrative enforcement procedures described in the notice 
of proposed rulemaking, the proposed rule could potentially affect any 
person holding or planning to hold a DEA registration to handle 
controlled substances and those manufactures, distributors, importers, 
and exporters of list I chemicals. As of March 2019, there were 
approximately 1.8 million DEA registrations for controlled substances 
and list I chemicals. Registrants include individual practitioners 
(such as physicians, dentists, mid-level practitioners, etc.), business 
entities (such as offices of physicians, pharmacies, hospitals, 
pharmaceutical manufacturers, distributors, importers, exporters, 
etc.), and governmental or tribal agencies that handle controlled 
substances or list I chemicals.
    In practice, a very small minority of DEA registrants are served 
with OSCs in connection with the denial or cancellation of 
registration, and thus a very small minority of DEA registrants would 
be impacted by the proposed rule. Over the three-year period 2016-2018, 
there was an average of 81 OSCs served per year. These 81 OSCs fall 
into one of three categories: (1) An average of 29 cases in which the 
registrant/applicant surrendered the registration and/or withdrew his/
her/its application, thus mooting the case, (2) an average of 11 cases 
in which the registrant/applicant properly requested a hearing, and (3) 
the remaining 41 registrants per year who failed to timely file a 
request for a hearing and were deemed to have waived their right to a 
hearing (and would be in default under the proposed rule). The 11 
registrants per year who properly requested a hearing are estimated to 
incur costs while the registrants in the remaining two categories do 
not.
    The proposed rule requires that an applicant/registrant must file 
an answer responding to every allegation in the OSC. The average of 29 
cases in which the registrant/applicant surrenders or withdraws his/
her/its application, thus mooting the case, would not result in the 
registrant/applicant filing an answer to the allegations in the OSC. 
Therefore, these registrants/applicants would not incur any costs. The 
average of 11 cases per year where a registrant/applicant requests a 
hearing may incur a cost associated with answering the allegation(s) of 
the OSC. To estimate the cost of this proposed change, DEA estimates 
that, on average, it will take five hours for a registrant/applicant's 
attorney to review the OSC and prepare an answer to all allegations, or 
an average of $3,290 per registrant.\10\
---------------------------------------------------------------------------

    \10\ Hourly rate using Laffey Matrix for lawyers with 8-10 years 
of experience from 6/1/18 to 5/31/19 is $658 per hour. $658 x 5 = 
$3,290.
---------------------------------------------------------------------------

    The remaining 41 cases, where there was neither a registration 
surrendered nor a hearing conducted, would be differently impacted by 
this proposed rule. The proposed rule provides that where a party 
defaults, the factual allegations of the OSC are deemed admitted. This 
proposed rule would also provide that a default may only be set aside 
upon a party establishing good cause to excuse its default. DEA has no 
basis to estimate the number of affected parties who will seek to 
establish good cause to set aside a default and any costs associated 
with such activities. However, under Kamir Garces Mejias, 72 FR 54931 
(2007), a party seeking to be excused from an ALJ order terminating a 
proceeding for failing to comply with the ALJ's orders is required to 
show good cause to excuse its default. Thus, because this proposed 
requirement of the rule simply codifies case law, it imposes no 
additional cost to registrants.
    In summary, it is estimated that there will be an average of 11 
cases per year, in which the registrant/applicant properly requests a 
hearing and will incur an economic impact of $3,290 if this proposed 
rule is promulgated. Because the subject of the 11 cases can be an 
individual or entity (i.e., offices of physicians, pharmacies, 
hospitals, pharmaceutical manufacturers, distributors, importers, 
exporters, governmental or tribal agencies, etc.), DEA compared the 
estimated cost of $3,290 to the average revenue of the smallest 
entities for some representative North American Industry Classification 
System (NAICS) codes for DEA registrants using data from U.S. Census 
Bureau, Statistics of U.S. Businesses (SUSB).
    For example, there are a total of 174,901 entities in NAICS code, 
621111--Office of Physicians (Except Mental Health Specialists). Of the 
174,901 total entities, DEA estimates that 97.6% are small entities. 
DEA compared the estimated cost of $3,290 to the revenue of the 
smallest of small entities, those with 0-4 employees. There are 95,494 
entities in the 0-4 employee category with a combined total annual 
revenue of $42,823,012,000, or an average of $448,000 per entity 
(rounded to nearest thousand).\11\ The estimated cost of $3,290 is 
0.73% the average annual revenue of $448,000. The same analysis was 
conducted for each representative NAICS code. The cost as percent of 
average revenue for the smallest of small entities ranges from 0.24% to 
1.30%. The table below summarizes the analysis and results.
---------------------------------------------------------------------------

    \11\ Data for NAICS codes are based on the 2012 SUSB Annual 
Datasets by Establishment Industry, June 2015. SUSB annual or static 
data include number of firms, number of establishments, employment, 
and annual payroll for most U.S. business establishments. The data 
are tabulated by geographic area, industry, and employment size of 
the enterprise. The industry classification is based on 2012 North 
American Industry Classification System (NAICS) codes.

[[Page 61669]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Smallest Employment Size Category Analysis
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Estimated    Employment                              Average
                                                                  Total      number of       size      Number of    Estimated     revenue     Cost as %
         NAICS code               NAICS code-description        number of      small      (number of     firms       receipts     per firm    of revenue
                                                                 entities     entities    employees)                  ($000)       ($000)
--------------------------------------------------------------------------------------------------------------------------------------------------------
325412.....................  Pharmaceutical Preparation                930          863          0-4          297          N/A          N/A          N/A
                              Manufacturing.
424210.....................  Drugs and Druggists' Sundries           6,618        6,348          0-4        3,628    4,962,687        1,368        0.24%
                              Merchant Wholesalers.
446110.....................  Pharmacies and Drug Stores......       18,852       18,481          0-4        6,351    6,803,003        1,071        0.31%
541940.....................  Veterinary Services.............       27,708       27,032          0-4        8,878    2,594,724          292        1.13%
621111.....................  Offices of Physicians (except         174,901      170,634          0-4       95,494   42,823,012          448        0.73%
                              Mental Health Specialists).
621112.....................  Offices of Physicians, Mental          10,876       10,611          0-4        8,977    2,279,458          254        1.30%
                              Health Specialists.
621210.....................  Offices of Dentists.............      125,151      122,097          0-4       50,711   16,801,830          331        0.99%
621320.....................  Offices of Optometrists.........       19,731       19,250          0-4       10,913    2,946,400          270        1.22%
621391.....................  Offices of Podiatrists..........        8,122        7,924          0-4        5,284    1,529,293          289        1.14%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In conclusion, this proposed rule will have an estimated cost of 
$3,290 on an average of 11 small entities per year. The $3,290 is 
estimated to represent 0.24%-1.30% of annual revenue for the smallest 
of small entities, entities with 0-4 employees. Therefore, DEA 
estimates the proposed rule will not, if promulgated, have a 
significant economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    The estimated annual impact of this rule is minimal. DEA has 
determined, in accordance with the Unfunded Mandates Reform Act of 1995 
(UMRA), 2 U.S.C. 1501 et seq., that this action would not result in any 
federal mandate that may result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more (adjusted for inflation) in any one year. 
Therefore, neither a Small Government Agency Plan nor any other action 
is required under provisions of UMRA.

Paperwork Reduction Act of 1995

    This proposed rule would not create or modify a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 
et seq.). An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid OMB control number.

List of Subjects

21 CFR Part 1301

    Administrative practice and procedure, Drug traffic control, 
Exports, Imports, Security measures.

21 CFR Part 1309

    Administrative practice and procedure, Drug traffic control, 
Exports, Imports.

21 CFR Part 1316

    Administrative practice and procedure, Authority delegations 
(Government agencies), Drug traffic control, Research, Seizures and 
forfeitures.

    For the reasons stated in the preamble, DEA proposes to amend 21 
CFR parts 1301, 1309, and 1316 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, 831, 871(b), 875, 877, 
886a, 951, 952, 956, 957, 958, 965 unless otherwise noted.

0
2. In Sec.  1301.37, revise paragraph (d) to read as follows:


Sec.  1301.37   Order to show cause.

* * * * *
    (d)(1) When to File: Hearing Request. A party that wishes to 
request a hearing in response to an order to show cause must file with 
the Office of the Administrative Law Judges and serve on the 
Administration a hearing request no later than fifteen (15) days after 
the date of receipt of the order to show cause. Service of the request 
on the Administration shall be accomplished by sending it to the 
address provided in the order to show cause.
    (2) When to File: Answer. A party requesting a hearing shall also 
file with the Office of the Administrative Law Judges and serve on the 
Administration an answer to the order to show cause no later than 
thirty (30) days following the date of receipt of the order to show 
cause. A party shall serve its answer on the Administration at the 
address provided in the order to show cause. The presiding officer may, 
upon a showing of good cause by the party, consider an answer that has 
been filed out of time.
    (3) Contents of Answer; Effect of Failure to Deny. For each factual 
allegation in the order to show cause, the answer shall specifically 
admit, deny, or state that the party does not have and is unable to 
obtain sufficient information to admit or deny the allegation. When a 
party intends in good faith to deny only a part of an allegation, the 
party shall specify so much of it as is true and shall deny only the 
remainder. A statement of a lack of information shall have the effect 
of a denial. Any allegation not denied shall be deemed admitted.
    (4) Amendments. Prior to the issuance of the prehearing ruling, a 
party may as a matter of right amend its answer one time. Subsequent to 
the issuance of the prehearing ruling, a party may amend its answer 
only with leave of the presiding officer. Leave shall be freely granted 
when justice so requires.
* * * * *
0
3. In Sec.  1301.43:
0
a. Revise the section heading and paragraph (a);
0
b. Add a heading to paragraph (b);
0
c. Revise paragraphs (c) through (e); and
0
d. Add paragraph (f).
    The revisions and additions read as follows:


Sec.  1301.43   Request for hearing or appearance; waiver; default.

    (a) Written request for a hearing. Any person entitled to a hearing 
pursuant to Sec.  1301.32 or Sec. Sec.  1301.34 through 1301.36 and 
desiring a hearing shall, within 15 days after the date of receipt of 
the order to show cause (or the date of publication of notice of the 
application for registration in the Federal Register in the case of 
Sec.  1301.34), file with the

[[Page 61670]]

Administrator a written request for hearing in the form prescribed in 
Sec.  1316.47 of this chapter.
    (b) Written notice of intent.
* * * * *
    (c) Default; criteria. (1) Any person entitled to a hearing 
pursuant to Sec.  1301.32 or Sec. Sec.  1301.34 through 36 who fails to 
file a timely request for a hearing, shall be deemed to have waived 
his/her/its right to a hearing and to be in default. Any person who has 
failed to timely request a hearing under paragraph (a) of this section 
may seek to be excused from the default by filing a motion with the 
Office of Administrative Law Judges establishing good cause to excuse 
the default no later than 45 days after the date of receipt of the 
order to show cause. Thereafter, any person who has failed to timely 
request a hearing under paragraph (a) of this section and seeks to be 
excused from the default shall file such motion with the Office of the 
Administrator, which shall have exclusive jurisdiction to rule on the 
motion.
    (2) Any person who has requested a hearing pursuant to this section 
but who fails to timely file an answer and who fails to demonstrate 
good cause for failing to timely file an answer, shall be deemed to 
have waived his/her/its right to a hearing and to be in default. Upon 
motion of the Administration, the presiding officer shall then enter an 
order terminating the proceeding.
    (3) In the event the Administration fails to prosecute or a person 
who has requested a hearing fails to plead (including by failing to 
file an answer) or otherwise defend, said party shall be deemed to be 
in default and the opposing party may move to terminate the proceeding. 
Upon such motion, the presiding officer shall then enter an order 
terminating the proceeding, absent a showing of good cause by the party 
deemed to be in default. Upon termination of the proceeding by the 
presiding officer, a party may seek relief only by filing a motion 
establishing good cause to excuse its default with the Office of the 
Administrator.
    (d) Failure to file; appear. If any person entitled to participate 
in a hearing pursuant to Sec.  1301.34 or 1301.35(b) fails to file a 
notice of appearance, or if such person so files and fails to appear at 
the hearing, such person shall be deemed to have waived his/her/its 
opportunity to participate in the hearing, unless such person shows 
good cause for such failure.
    (e) Default. A default shall be deemed to constitute a waiver of 
the applicant's/registrant's right to a hearing and an admission of the 
factual allegations of the order to show cause.
    (f) Procedure. (1) In the event that an applicant/registrant is 
deemed to be in default pursuant to paragraph (c)(1) of this section, 
or the presiding officer has issued an order terminating the proceeding 
pursuant to paragraphs (c)(2) or (3) of this section, the 
Administration may then file a request for final agency action with the 
Administrator, along with a record to support its request. In such 
circumstances, the Administrator may enter a default pursuant to Sec.  
1316.67.
    (2) In the event the Administration is deemed to be in default and 
the presiding officer has issued an order terminating the proceeding 
pursuant to paragraph (c)(3) of this section, the presiding officer 
shall transmit the record to the Administrator for his consideration no 
later than five (5) business days after the date of issuance of the 
order. Upon termination of the proceeding by the presiding officer, the 
Administration may seek relief only by filing a motion establishing 
good cause to excuse its default with the Office of the Administrator.
    (3) A party held to be in default may move to set aside a default 
issued by the Administrator by filing a motion no later than 30 days 
from the date of issuance by the Administrator of a default. Any such 
motion shall be granted only upon a showing of good cause to excuse the 
default.

PART 1309--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, IMPORTERS 
AND EXPORTERS OF LIST I CHEMICALS

0
4. The authority citation for part 1309 continues to read as follows:

    Authority:  21 U.S.C. 802, 821, 822, 823, 824, 830, 871(b), 875, 
877, 886a, 952, 953, 957, 958.

0
5. In Sec.  1309.46, revise paragraph (d) to read as follows:


Sec.  1309.46   Order to show cause.

* * * * *
    (d)(1) When to File: Hearing Request. A party that wishes to 
request a hearing in response to an order to show cause must file with 
the Office of the Administrative Law Judges and serve on the 
Administration such request no later than fifteen (15) days following 
the date of receipt of the order to show cause. Service of the request 
on the Administration shall be accomplished by sending it to the 
address provided in the order to show cause.
    (2) When to File: Answer. A party requesting a hearing shall also 
file with the Office of the Administrative Law Judges and serve on the 
Administration an answer to the order to show cause no later than 
thirty (30) days following the date of receipt of the order to show 
cause. A party shall also serve its answer on the Administration at the 
address provided in the order to show cause. The presiding officer may, 
upon a showing of good cause by the party, consider an answer that has 
been filed out of time.
    (3) Contents of Answer; Effect of Failure to Deny. For each 
allegation in the order to show cause, the answer shall specifically 
admit, deny, or state that the party does not have, and is unable to 
obtain, sufficient information to admit or deny the allegation. When a 
party intends in good faith to deny only a part of an allegation, the 
party shall specify so much of it as is true and shall deny only the 
remainder. A statement of a lack of information shall have the effect 
of a denial. Any allegation not denied shall be deemed admitted.
    (4) Amendments. Prior to the issuance of the prehearing ruling, a 
party may as a matter of right amend its answer one time. Subsequent to 
the issuance of the prehearing ruling, a party may amend its answer 
only with leave of the presiding officer. Leave shall be freely granted 
when justice so requires.
* * * * *
0
6. In Sec.  1309.53, revise the section heading and paragraphs (b) and 
(d), and add paragraph (e) to read as follows:


Sec.  1309.53   Request for hearing or appearance; waiver; default.

* * * * *
    (b) Default; criteria. (1) Any person entitled to a hearing 
pursuant to Sec.  1309.42 or 1309.43 who fails to file a timely request 
for a hearing, shall be deemed to have waived his/her/its right to a 
hearing and to be in default. Any person who has failed to timely 
request a hearing under paragraph (a) of this section may seek to be 
excused from the default by filing a motion with the Office of 
Administrative Law Judges establishing good cause to excuse the default 
no later than 45 days after the date of receipt of the order to show 
cause. Thereafter, any person who has failed to timely request a 
hearing under paragraph (a) of this section and seeks to be excused 
from the default, shall file such motion with the Office of the 
Administrator, which shall have exclusive jurisdiction to rule on the 
motion.
    (2) Any person who has requested a hearing pursuant to this section 
but who fails to timely file an answer and who fails to demonstrate 
good cause for failing to timely file an answer, shall be deemed to 
have waived his/her/its right to a hearing and to be in default. Upon

[[Page 61671]]

motion of the Administration, the presiding officer shall then enter an 
order terminating the proceeding.
    (3) In the event the Administration fails to prosecute or a person 
who has requested a hearing fails to plead (including by failing to 
file an answer) or otherwise defend, said party shall be deemed to be 
in default and the opposing party may move to terminate the proceeding. 
Upon such motion, the presiding officer shall then enter an order 
terminating the proceeding, absent a showing of good cause by the party 
deemed to be in default. Upon termination of the proceeding by the 
presiding officer, a party may seek relief only by filing a motion 
establishing good cause to excuse its default with the Office of the 
Administrator.
* * * * *
    (d) Default. A default shall be deemed to constitute a waiver of 
the applicant's/registrant's right to a hearing and an admission of the 
factual allegations of the order to show cause.
    (e) Procedure. (1) In the event that an applicant/registrant is 
deemed to be in default pursuant to paragraph (b)(1) of this section, 
or the presiding officer has issued an order termination the proceeding 
pursuant to paragraphs (b)(2) or (3) of this section, the 
Administration may then file a request for final agency action with the 
Administrator, along with a record to support its request. In such 
circumstances, the Administrator may enter a default pursuant to Sec.  
1316.67 of this chapter.
    (2) In the event that the Administration is deemed to be in default 
and the presiding officer has issued an order terminating the 
proceeding pursuant to paragraph (b)(3) of this section, the presiding 
officer shall transmit the record to the Administrator for his 
consideration no later than five (5) business days after the date of 
issuance of the order. Upon termination of the proceeding by the 
presiding officer, the Administration may seek relief only by filing a 
motion establishing good cause to excuse its default with the Office of 
the Administrator.
    (3) A party held to be in default may move to set aside a default 
issued by the Administrator by filing a motion no later than 30 days 
from the date of issuance by the Administrator of a default. Any such 
motion shall be granted only upon a showing of good cause to excuse the 
default.

PART 1316--ADMINISTRATIVE FUNCTIONS, PRACTICES, AND PROCEDURES

0
7. The authority citation for part 1316, subpart D, continues to read 
as follows:

    Authority:  21 U.S.C. 811, 812, 871(b), 875, 958(d), 965.

0
8. Amend Sec.  1316.47 by revising the section heading and paragraphs 
(a) and (b) to read as follows:


Sec.  1316.47   Request for hearing; answer.

    (a) Hearing request format. Any person entitled to a hearing and 
desiring a hearing shall, within the period permitted for filing, file 
a request for a hearing that complies with the following format (see 
the Table of DEA Mailing Addresses in Sec.  1321.01 of this chapter for 
the current mailing address):
    (Date)
    Drug Enforcement Administration, Attn: Hearing Clerk/OALJ
    (Mailing Address)
    Subject: Request for Hearing
    Dear Sir:
    The undersigned __ (Name of the Person) hereby requests a hearing 
in the matter of: __
    (Identification of the proceeding).
    (State with particularity the interest of the person in the 
proceeding.)
    All notices to be sent pursuant to the proceeding should be 
addressed to:
    (Name)
    (Street Address)
    (City and State)
    Respectfully yours,
    (Signature of Person)
    (b) Filing of an answer. A party shall file an answer as required 
under Sec.  1301.37(d) or 1309.46(d) of this chapter, as applicable. 
The presiding officer, upon request and a showing of good cause, may 
grant a reasonable extension of the time allowed for filing the answer.
0
9. Revise the first sentence of Sec.  1316.49 to read as follows:


Sec.  1316.49   Waiver of hearing.

    In proceedings other than those conducted under part 1301 or part 
1309 of this chapter, any person entitled to a hearing may, within the 
period permitted for filing a request for hearing or notice of 
appearance, file with the Administrator a waiver of an opportunity for 
a hearing, together with a written statement regarding his position on 
the matters of fact and law involved in such hearing. * * *

Timothy J. Shea,
Acting Administrator.
[FR Doc. 2020-19309 Filed 9-29-20; 8:45 am]
BILLING CODE 4410-09-P