JCROWS.COM

[Federal Register: July 2, 2007 (Volume 72, Number 126)]
[Rules and Regulations]
[Page 35920-35931]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jy07-6]

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1309 and 1310

[Docket No. DEA-257F]
RIN 1117-AA93
 

Changes in the Regulation of Iodine Crystals and Chemical
Mixtures Containing Over 2.2 Percent Iodine

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.

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SUMMARY: This rulemaking changes the regulation of the listed chemical
iodine under the chemical regulatory provisions of the Controlled
Substances Act (CSA). The Drug Enforcement Administration (DEA)
believes that this action is necessary to remove deficiencies in the
existing regulatory controls, which have been exploited by drug
traffickers who divert iodine (in the form of iodine crystals and
iodine tincture) for the illicit production of methamphetamine in
clandestine drug laboratories. This rulemaking moves iodine from List
II to List I; reduces the iodine threshold from 0.4 kilograms to zero
kilograms; adds import and export regulatory controls; and controls

[[Page 35921]]

chemical mixtures containing greater than 2.2 percent iodine.
    This rulemaking establishes regulatory controls that will apply to
iodine crystals and iodine chemical mixtures that contain greater than
2.2 percent iodine. This regulation therefore controls iodine crystals
and strong iodine tinctures/solutions (e.g., 7 percent iodine) that do
not have common household uses and instead have limited application in
livestock, horses, and for disinfection of equipment. Household
products such as 2 percent iodine tincture/solution and household
disinfectants containing iodine complexes will not be adversely
impacted by this regulation. Additionally, the final rule exempts
transactions of up to one-fluid-ounce (30 ml) of Lugol's Solution.
    Persons handling regulated iodine materials are required to
register with DEA, are subject to the import/export notification
requirements of the CSA, and are required to maintain records of all
regulated transactions involving iodine regardless of size.

DATES: This rulemaking becomes effective on August 1, 2007. Persons
seeking registration must apply on or before August 31, 2007 in order
to continue their business pending final action by DEA on their
application.

FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, Ph.D., Chief,
Drug and Chemical Evaluation Section, Office of Diversion Control, Drug
Enforcement Administration, Washington, DC 20537 at (202) 307-7183.

SUPPLEMENTARY INFORMATION:

I. Background Information on Iodine

    This rulemaking finalizes an August 11, 2006, Notice of Proposed
Rulemaking (NPRM) [71 FR 46144] in which DEA proposed (1) the movement
of iodine from List II to List I; (2) a reduction in the iodine
threshold from 0.4 kilograms to zero kilograms; (3) the addition of
import and export regulatory controls; and (4) the control of chemical
mixtures containing greater than 2.2 percent iodine. This action is
being taken because of the continued use of iodine for the illicit
production of the schedule II controlled substances amphetamine and
methamphetamine. Methamphetamine is the leading controlled substance
clandestinely manufactured in the United States.
    Faced with the growing threat of methamphetamine abuse in the
United States and the ease with which methamphetamine is clandestinely
produced using iodine, the DEA is increasing the regulatory controls on
iodine in an effort to prevent the diversion of iodine to clandestine
drug laboratories.

Need for Increased Regulation

    This rulemaking changes the regulatory control of iodine in an
effort to prevent the diversion of iodine for the illicit production of
methamphetamine and amphetamine. The August 11, 2006, NPRM went into
great detail regarding the scope of the domestic and international
clandestine laboratory problem, use of iodine in the production of
methamphetamine/amphetamine, and the need to increase regulatory
controls on iodine.
    As stated in the NPRM, due to the regulatory controls placed on the
listed chemical hydriodic acid, drug traffickers began using iodine as
a substitute chemical in the illicit production of methamphetamine and
amphetamine, both schedule II controlled substances. Hydriodic acid
became a regulated chemical upon enactment of the Chemical Diversion
and Trafficking Act of 1988 (Pub. L. 100-690). Hydriodic acid, like
iodine, was initially regulated as a List II chemical. Hydriodic acid
was reclassified as a List I chemical by enactment of the Crime Control
Act of 1990 (Pub. L. 101-647).
    The Domestic Chemical Diversion Control Act of 1993 (DCDCA) (Pub.
L. 103-200) required that handlers of List I chemicals be registered.
This increased regulatory control and made it more difficult for
traffickers to acquire hydriodic acid. Faced with this difficulty,
traffickers began to substitute iodine for hydriodic acid for the
illicit production of methamphetamine and amphetamine.
    Iodine is commonly used with the List I chemicals phosphorus or
hypophosphorous acid and ephedrine or pseudoephedrine to manufacture
methamphetamine, which is now the most prevalent method used by
traffickers. The List I chemicals phenylpropanolamine or
norpseudoephedrine can be made into amphetamine by the same method.
    In response to the increased use of iodine in clandestine drug
laboratories, Congress controlled iodine as a List II chemical by
amending Section 102(35) of the CSA (21 U.S.C. 802(35)) by passage of
Pub. L. 104-237, the Comprehensive Methamphetamine Control Act of 1996
(MCA) on October 3, 1996.
    Although iodine became subject to CSA chemical regulatory controls,
traffickers have exploited certain deficiencies in these controls to
divert iodine. Only certain domestic distributions are regulated
transactions, and distributions below the 0.4 kilogram cumulative
threshold (about one pound), within a calendar month, are not regarded
as regulated transactions. Import and export transactions of iodine are
not regulated, regardless of the quantity distributed. Additionally,
because iodine is a List II chemical, handlers of iodine are not
required to register with DEA. These loopholes have been exploited by
drug traffickers and the businesses that supply them.
    While the regulatory controls placed on iodine apply to iodine
crystals, they have not pertained to iodine tinctures (solutions of
iodine and iodide in alcohol), which are considered chemical mixtures.
Drug traffickers are currently circumventing CSA regulatory controls
via the diversion of iodine tinctures. Traffickers have learned that
the tinctures can serve as a ready source of iodine crystals when the
tincture is subjected to the appropriate chemical reaction.
    Existing regulations pertaining to iodine have proved to be
inadequate to prevent diversion. Traffickers have been able to make
undocumented purchases of iodine crystals (up to the existing threshold
of 0.4 kilograms), make unlimited purchases of iodine tincture, and
make undocumented import and export shipments of iodine. Additionally,
because iodine is a List II chemical and distributors are not
registered, it is difficult for DEA to identify all handlers of
regulated material.

International Scope of Problem

    The illicit production of methamphetamine is also an international
problem. Mexican drug trafficking organizations operating out of Mexico
and California began to dominate the illicit production and
distribution of methamphetamine in the United States around 1994. This
followed years of control by independent, regional outlaw motorcycle
gangs, supplemented by numerous independent, smaller-scale producers.
Mexican organizations now produce and supply the majority of the
methamphetamine illicitly available in the United States, using large-
scale laboratories based in Mexico and the Southwestern United States.
These large-scale laboratories often rely upon a ready source of
iodine. Outlaw motorcycle gangs and small independent producers remain
active in domestic methamphetamine production, but not on the same
scale as the Mexican traffickers. The Mexican organizations' ready
access to essential chemicals on the international market

[[Page 35922]]

has greatly facilitated their ability to produce large amounts of
methamphetamine. DEA, therefore, believes that enhanced controls on
iodine are necessary to prevent the diversion of iodine (in the form of
iodine crystals and iodine tincture) for the illicit production of
methamphetamine/amphetamine in clandestine drug laboratories.

Comments

    In response to the August 11, 2006, NPRM, DEA received comments
from thirteen interested parties. While commenters were generally
supportive of DEA's need to prevent the diversion of iodine for the
illicit production of methamphetamine, the comments raised concerns
regarding the potential adverse impact upon the availability of
specific iodine products intended for legitimate use.

Comments Regarding Iodine Products Used for Nutritional Supplementation

    Twelve comments expressed concerns that the proposed regulations
would adversely impact the availability of products for use as a
dietary source of iodine. These comments detailed the use of iodine
products as part of a nutritional program to supplement iodine levels
for various health purposes (e.g., the normalization of thyroid
function, prevention of breast cancer recurrence, or supplementation
during pregnancy as a program to prevent autism in offsprings.)
    Eleven of these comments expressed concern that the regulation
would adversely impact the availability of a specific formulation known
as Lugol's Solution. Lugol's Solution is a 5 percent aqueous solution
of iodine in combination with 10 percent potassium iodide.
    Most of these comments detailed the importance of Lugol's Solution
as a source of milligram doses of iodine as part of a daily health
program of disease prevention. Commenters noted how several drops of
Lugol's Solution per day served as an inexpensive source of dietary
iodine. Commenters detailed multiple uses for Lugol's Solution and
expressed concerns that such material should remain available to end
users in small quantities.
    In response to comments, DEA conducted further review of the
legitimate uses for Lugol's Solution. These uses include (1) the
staining of slides in microbiology, (2) the staining of cervical and
esophageal tissue in diagnosis of disease, (3) use in aquariums, (4)
use in pre-treating the thyroid gland prior to ingestion of
radiolabeled I\131\ so that the thyroid gland will not take up large
quantities of radioactive material, (5) use as a dietary source of
iodine, and (6) use in educational science test kits for identification
of starches. For each of these uses, the quantities of Lugol's Solution
needed are small. In most cases, the Lugol's Solution is used in small
8 milliliter (ml) bottles or in one-fluid-ounce (30 ml) bottles.
Because of the numerous legitimate uses and small quantities involved,
DEA is adding a provision to this final rule that will exempt Lugol's
Solution when packaged in bottles/containers of one-fluid-ounce (30 ml)
or smaller, and involve distribution of only a single package per
transaction. While this final rule provides an exemption for Lugol's
Solution when packaged in small bottles, larger packages are subject to
regulatory controls. DEA is aware of the availability of 16 fluid ounce
bulk packages of Lugol's Solution. These larger bulk packages are
subject to regulatory control provisions including registration,
import/export notification, and recordkeeping.
    DEA review indicates that only 2-6 drops a day of Lugol's Solution
are used for nutritional purposes. Additionally, the quantities used in
the healthcare field, microbiology, and in the testing of starches,
require only very small amounts of Lugol's Solution and the sale of 8
ml and one-fluid-ounce (30 ml) bottles is common. When used in an
aquarium, the labeled directions indicate that only 1 drop of Lugol's
Solution per 25 gallons should be used weekly. Therefore, one-fluid-
ounce package of Lugol's Solution should be adequate for most
legitimate purposes. A one-fluid-ounce (30 ml) package size contains
1.5 grams of iodine and has potential utility for use in the illicit
manufacture of methamphetamine. Therefore, DEA is adding the provision
to exempt individual transactions involving one one-fluid-ounce (30 ml)
package/bottle. Individuals that distribute more than one package/
bottle of Lugol's Solution (of any size) per transaction, are subject
to CSA recordkeeping and import/export requirements.
    This final rulemaking includes a waiver of the registration
requirement under 21 CFR 1309.24 for ``Lugol's Solution (consisting of
5 percent iodine and 10 percent potassium iodide in an aqueous
solution) in original manufacturer's packaging of one-fluid-ounce (30
ml) or less per package.'' Additionally, this rulemaking includes an
exclusion from the definition of regulated transaction under 21 CFR
1310.08 for ``Domestic and international transactions of Lugol's
Solution (consisting of 5 percent iodine and 10 percent potassium
iodide in an aqueous solution) in original manufacturer's packaging of
one-fluid-ounce (30 ml) or less, and no greater than one package/bottle
per transaction.''
    DEA currently has no evidence that Lugol's Solution is diverted as
a source of iodine for illicit purposes. However, should clandestine
laboratory operators begin to exploit the exemption for small packages
of Lugol's Solution as a source of iodine for the manufacture of
methamphetamine, DEA may remove these exemption provisions.
    One comment received from a physician expressed concerns regarding
the possible control of an iodine product (Iodoral) that contains 5
milligrams iodine and 7.5 milligrams potassium iodide per tablet. The
physician stated that this product is used in patients with thyroid
disease and therefore requested that this product remain exempt from
CSA regulatory provisions. In response to this comment, DEA obtained
samples of Iodoral and determined that the concentration of iodine in
the product is below the 2.2 percent concentration level for chemical
mixtures as specified in 21 CFR 1310.12. Therefore, Iodoral 5 mg
tablets are not subject to CSA regulatory control provisions following
implementation of this final rule.

Comment Relating to Commercial Use of Iodine

    One comment was received from a manufacturer of injectable products
and medical delivery systems. The commenter expressed support for the
proposed exemption of iodophor products (iodine complexes), but
requested clarification that the exemption includes organically bound
iodine products which are non-ionic complexes. The commenter provided
specific examples of organically bound products (e.g., iopamidol,
iohexol and amiodarone.)
    The proposed exemption for iodophors was intended to include
organically bound iodine compounds. DEA has evaluated these products
and determined that these organically bound compounds cannot serve as a
source of iodine for methamphetamine laboratories and therefore are not
at risk of diversion. As clarification, DEA has added a new paragraph
under 21 CFR 1310.12(d)(5) which specifies that ``Iodine products that
consist of organically bound iodine (a non-ionic complex) (e.g.,
iopamidol, iohexol, and amiodarone)'' are chemical mixtures that are
automatically exempt from CSA regulatory provisions.

[[Page 35923]]

    This commenter also requested that certain laboratory reagents
(e.g., Karl Fischer Reagent and Aquastar Composite 5), be considered
for exemption from regulation. The commenter stated it was not the
manufacturer or distributor of such products, but used these reagents
frequently for laboratory testing. The commenter expressed concern that
the new regulation would potentially subject such reagents to CSA
regulatory control. DEA conducted a review of such laboratory reagents,
but the iodine concentration in these chemical mixtures appears to be
proprietary and was not disclosed on product labeling.
    DEA wishes to clarify that end users of such material are not
subject to CSA regulatory requirements, except the requirement to
provide identification for purchase of List I chemicals (21 CFR
1310.06), as long as they do not distribute regulated material. Such
laboratory reagents would only be considered regulated material if they
are chemical mixtures containing greater than 2.2 percent iodine, and
not considered either an iodophor or organically bound iodine.
    DEA recognizes that the 2.2 percent iodine concentration criteria
cannot identify all mixtures that should receive exemption status. DEA
notes that an application process already exists to exempt additional
mixtures (21 CFR 1310.13). This application process was finalized in a
previous final rule regarding chemical mixtures (68 FR 23195, May 1,
2003). Under the application process, manufacturers may submit an
application for exemption for those mixtures that do not qualify for
automatic exemption. Exemption status can be granted if DEA determines
that the mixture is formulated in such a way that it cannot be easily
used in the illicit production of a controlled substance and the listed
chemical cannot be readily recovered (i.e., it meets the conditions in
21 U.S.C. 802(39)(A)(vi)). Under these provisions, the manufacturer of
these reagents may apply for exemption if their products are above the
2.2 percent iodine level.
    Additionally, the commenter expressed concern regarding the ability
to obtain iodine crystals for laboratory analytical use following
implementation of this final rule. However, transactions involving
iodine crystals have been regulated as List II chemicals since
implementation of the Comprehensive Methamphetamine Control Act (MCA)
in 1996. This final rule only requires that handlers of such material
register with DEA and maintain records of transactions. Most of the
chemical houses that supply high-grade material to analytical
laboratories are already registered with DEA to handle List I
chemicals. The regulatory requirement only pertains to distribution of
regulated material. DEA does not believe that these regulations will
adversely impact the availability of such material.

Iodine Products Subject to This Final Rule

    Iodine is important to the chemical and allied industries primarily
as a chemical intermediate used to make new chemical products for
industry and research. These products have application in sanitation
(as disinfectants), animal feed, pharmaceuticals, as catalysts, heat
stabilizers, and in various other industrial applications. Most iodine
is consumed by industry. Those who purchase iodine for end use, whether
they are individuals or businesses, will be subject to CSA chemical
regulatory controls to the extent that they must present identification
and provide other information that helps assure the seller that the end
user's proposed use of the chemical is legitimate. See 21 U.S.C. 830
and 21 CFR 1310.07.
    Iodine has powerful bactericidal action and is used for
disinfecting unbroken skin before surgery. Iodine may also be employed
as a weak solution for the first-aid treatment of small wounds and
abrasions.
    The standard definition for iodine topical solutions, and other
iodine containing products, is specified in the United States
Pharmacopeia (U.S.P.). The U.S.P. lists two strengths of iodine
solution and two strengths of iodine tincture. The U.S.P. specifies
formulations for iodine topical solution, strong iodine solution,
iodine tincture, and strong iodine tincture in the official monographs.
Commercially available iodine solutions and tinctures are summarized in
the following table:

                                 Concentration of Iodine in Products per 100 ml
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                                                                                   Sodium iodide     Potassium
                                                                   Iodine (gm.)        (gm.)       iodide (gm.)
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Iodine Topical (w/water)........................................         1.8-2.2         2.1-2.6  ..............
Strong Iodine (w/water).........................................         4.5-5.5  ..............        9.5-10.5
Iodine Tincture (w/alcohol @ 44-50%)............................         1.8-2.2         2.1-2.6  ..............
Strong Iodine Tincture (w/alcohol @ 82.5-88.5%).................         6.8-7.5  ..............        4.7-5.5
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Source: U.S. Pharmacopoeia (U.S.P.)

    As shown in the table, the solutions are formulated in two
concentrations of iodine. They are specifically named as iodine topical
solution and strong iodine solution. Iodine topical solution two
percent U.S.P. is defined as having in each 100 ml, not less than 1.8
grams and not more than 2.2 grams of iodine, and not less than 2.1
grams and not more than 2.6 grams of sodium iodide in water. Strong
iodine solution U.S.P. contains in each 100 ml, not less than 4.5 grams
and not more than 5.5 grams of iodine and not less than 9.5 grams and
not more than 10.5 grams of potassium iodine.
    The U.S.P. defines iodine tincture as containing, in each 100 ml,
not less than 1.8 grams and not more than 2.2 grams of iodine, and not
less than 2.1 grams and not more than 2.6 grams of sodium iodide. The
same weight amounts of iodine and sodium iodide are used as in the
iodine topical solution except that alcohol is used in 44 to 50 percent
concentration. The target concentration of iodine is 2 percent. Strong
iodine tincture is defined by the U.S.P. as containing, in each 100 ml,
not less than 6.8 grams and not more than 7.5 grams of iodine and not
less than 4.7 grams and not more than 5.5 grams of potassium iodide.
The alcohol content is between 82.5 and 88.5 percent. The target iodine
concentration is 7 percent.
    Iodine two percent tincture and solution U.S.P. are sold at a wide
variety of retail outlets and have household application as antiseptic
and antimicrobial products. These products are not subject to this
regulation. In contrast, iodine crystals and iodine chemical mixtures
containing over 2.2 percent iodine have no household use

[[Page 35924]]

and are available only from specialty retailers. Iodine solutions (in
excess of 2.2 percent iodine) are used as an antiseptic in the care of
livestock and horses and as disinfectants for equipment and areas where
livestock are kept. Some iodine solutions (e.g., Lugol's Solution) are
used in saltwater aquariums, used as a dietary source of iodine, used
to test for the presence of starch, and as stains in some laboratory
tests. This rulemaking exempts small transactions of these chemical
mixtures, as discussed elsewhere in this rule.
    Iodine crystals have also been historically used by campers to
purify water. Today, however, most of the water treatment products
available to campers use iodide salts and are not the subject of this
regulation. DEA, however, has identified two marketed products that
contain iodine for water purification. Under this rulemaking, these
products will be subject to control.

Iodine Products Not Regulated Under This Rulemaking

    There are other iodine-containing products that have household use
and are widely sold in retail settings. Iodine products classified as
iodophors consist of iodine complexed with surfactant compounds (e.g.,
poloxamer-iodine complex) or with nonsurfactant compounds (e.g.,
polyvinyl pyrrolidone-iodine complex (povidone-iodine)). These
complexes allow the iodine to be delivered continuously. Such complex
solutions in water or alcohol are better tolerated than iodine tincture
and solutions with comparable efficacy. Considering the necessary time
of application and the correct dilution, these complexes are used for
general disinfection, hand disinfection, as well as for skin
disinfection prior to surgery or venipuncture. Some of these iodine
complexes are also used for the treatment of burns and of different
skin lesions. Since these complex products do not have applicability as
a source of iodine at clandestine drug laboratories, DEA is exempting
these products in 21 CFR 1310.12(d)(4). This provision will
automatically exempt from CSA controls ``Iodine products classified as
iodophors, which exist as an iodine complex to include poloxamer-iodine
complex, polyvinyl pyrrolidone-iodine complex (i.e. povidone-iodine),
undecoylium chloride iodine, nonylphenoxypoly (ethyleneoxy) ethanol-
iodine complex, iodine complex with phosphate ester of alkylaryloxy
polyethylene glycol, and iodine complex with ammonium ether sulfate/
polyoxyethylene sorbitan monolaurate.''
    Additionally, DEA wishes to clarify that organically bound iodine
products that are non-ionic complexes (e.g., iopamidol, iohexol and
amiodarone) are not subject to CSA regulatory controls. These
organically bound compounds cannot serve as a source of iodine for
methamphetamine laboratories and therefore are not at risk of
diversion. As clarification, DEA has added a new paragraph under 21 CFR
1310.12(d)(5), which specifies that ``Iodine products that consist of
organically bound iodine (a non-ionic complex) (e.g., iopamidol,
iohexol, and amiodarone)'' are chemical mixtures that are automatically
exempt from CSA regulatory provisions.
    DEA is aware that the element iodine is a constituent in certain
pharmaceutical products (e.g., potassium iodide and others) sold over-
the-counter or under a prescription. Potassium iodide is available for
use in the event of a nuclear incident to protect the thyroid gland of
exposed individuals. The element iodine is also a constituent in
products sold as radioisotopes (e.g., radioactive iodine), which find
widest use in the treatment of hyperthyroidism and in the diagnosis of
certain disorders (e.g., thyroid dysfunction), and in general
scientific research. The greatest use has been made of sodium iodide
I\131\. DEA is also aware of other radiolabeled material, such as
sodium iodide I\123\, which is available for scanning/imaging purposes
in disease diagnosis. Note that these iodide compounds are not the
subject of this rulemaking. As such, the regulatory controls of the CSA
do not apply to any of these iodide salts or radiolabeled iodine/iodide
salts. Additionally, these regulatory controls do not apply to any
iodide material commonly dispensed under a prescription. Instead, this
regulation is limited only to iodine crystals and chemical mixtures
that contain iodine in the form of the iodine tinctures and iodine
solutions described above.
    This rulemaking implements regulatory controls that apply to iodine
crystals and iodine chemical mixtures that contain greater than 2.2
percent iodine. The vast majority of products having household
application are not adversely impacted by this regulation.

II. Changes to the Regulation of Iodine as a Result of This Rulemaking

Moving Iodine Into 21 CFR 1310.02(a) (List I)

    The Controlled Substances Act (CSA) and its implementing
regulations, specifically 21 U.S.C. 802(34) and (35) and 21 CFR
1310.02, provide the Attorney General with the authority to specify, by
regulation, the addition or deletion of any chemicals as listed
chemicals. Listed chemicals that are classified as List I chemicals are
important to the manufacture of controlled substances. Those classified
as List II chemicals may be used to manufacture controlled substances
in violation of the Act. This authority has been delegated to the
Administrator of DEA by 28 CFR 0.100 and redelegated to the Deputy
Administrator by 28 CFR 0.104, Appendix to Subpart R, Sec.  12.
    The definition in 21 CFR 1300.02(b)(19), defines ``List II
chemical'' as a chemical, other than a List I chemical, specifically
designated by the Administrator in 21 CFR 1310.02(b), that ``is used in
manufacturing a controlled substance in violation of the Act.'' 21 CFR
1300.02(b)(18) defines the term ``List I chemical'' to mean ``a
chemical specifically designated by the Administrator in 21 CFR
1310.02(a) * * * that * * * is used in manufacturing a controlled
substance in violation of the Act and is important to the manufacture
of a controlled substance.''
    In this final rule, the DEA is removing iodine from 21 CFR
1310.02(b) (List II) and placing it in 1310.02(a) (List I) because,
based on the information provided above, and discussed in greater
detail in the Notice of Proposed Rulemaking for this rule, iodine is a
chemical that is important to the manufacture of the controlled
substances methamphetamine and amphetamine in violation of the Act.
Placement in List I, 21 U.S.C. 822(a)(1) requires that persons who
distribute iodine must be registered with DEA. Based on its experience
with hydriodic acid and other List I chemicals, DEA believes that List
I regulatory controls for iodine will help curtail its widespread use
in the clandestine manufacture of methamphetamine and amphetamine. List
I regulatory controls dictate that handlers of iodine, including
persons who manufacture, import, export, or distribute iodine, must
register with DEA. Retail and wholesale outlets that sell iodine
crystals and covered tinctures/solutions are also required to register.
    Prior to receiving a DEA chemical registration, applicants are
subject to a pre-registration investigation by DEA to determine whether
their registration is consistent with the public interest pursuant to
the criteria set forth in 21 U.S.C. 823(h). Registration also provides
the DEA with the identity of all businesses that handle List I
chemicals. A business that sells a List I chemical in violation of the
law or regulations can have its registration revoked and be

[[Page 35925]]

prevented from handling List I chemicals.

Regulation of Import and Export Transactions

    When iodine was controlled as a List II chemical by the
Comprehensive Methamphetamine Control Act of 1996 (MCA), the law
specifically exempted it from import and export controls. The MCA,
however, also explicitly provided that Congress was not limiting the
authorization of the Attorney General to impose the import and export
provisions of the CSA on iodine. See Pub. L. 104-237, Sec.  204.
Because of the international commerce in iodine, and iodine's
documented use in the clandestine production of methamphetamine, DEA
has determined that the addition of import and export controls on
iodine is necessary. Therefore, 21 CFR 1310.08 is amended to remove
imports and exports of iodine as excluded transactions. Thus, iodine
will become subject to the import and export notification provisions of
the CSA.

Elimination of the Iodine Threshold

    Transactions involving listed chemicals (including cumulative
transactions in a single calendar month) below a quantity threshold,
specified pursuant to 21 U.S.C. 802(39)(A), are excluded from the
definition of ``regulated transaction.'' Historically, the threshold
for iodine has been 400 grams (0.4 kilograms). Thresholds denote a
quantity below which regulation is not necessary for law enforcement
purposes. However, DEA has determined that the regulation of all
transactions of regulated iodine products is necessary to prevent
diversion. Thus, DEA is removing the threshold for iodine under this
final rule. Therefore, all transactions of regulated iodine products
are considered regulated transactions regardless of size, unless
specifically exempted.

Iodine Chemical Mixtures

    The CSA (21 U.S.C. 802(40)) defines the term ``chemical mixture''
as ``a combination of two or more chemical substances, at least one of
which is not a List I chemical or a List II chemical, except that such
term does not include any combination of a List I chemical or a List II
chemical with another chemical that is present solely as an impurity.''
Therefore, a chemical mixture contains any one or more listed chemicals
along with any number of non-listed chemicals.
    DEA does not consider a chemical mixture to mean the combination of
a listed chemical with an inert carrier. An inert carrier can be any
chemical that does not interfere with the listed chemical's function,
but is present to aid in the delivery of the listed chemical so it can
be used in some chemical process. Examples include, but are not limited
to, solutions of listed chemicals such as methylamine in water or
hydrogen chloride dissolved in water or alcohol.
    Iodine tinctures and solutions are considered chemical mixtures
because they require the addition of iodine and an iodide salt into a
water or water/alcohol solution. It is not simply iodine dissolved in
an inert carrier. These iodine tinctures and solutions are therefore
chemical mixtures.

Regulation of Chemical Mixtures

    The Domestic Chemical Diversion Control Act of 1993 (DCDCA),
enacted in April 1994, amended 21 U.S.C. 802(39)(A)(v) [current 21
U.S.C. 802(39)(A)(vi)] to provide the Attorney General with the
authority to establish regulations exempting chemical mixtures from the
definition of a ``regulated transaction.'' However, exclusion from this
definition can be made ``based on a finding that the mixture is
formulated in such a way that it cannot be easily used in the illicit
production of a controlled substance and that the listed chemical or
chemicals contained in the mixture cannot be readily recovered.'' As
noted previously, DEA has established the following three-tiered
approach to identify which chemical mixtures qualify for automatic
exemption: (1) The mixture contains a listed chemical at or below an
established concentration limit; or (2) the mixture falls within a
specifically defined category; or (3) the manufacturer of the mixture
applies for and is granted a specific exemption for the product (68 FR
23195, May 1, 2003).
    This final rule implements regulations that identify which iodine
chemical mixtures qualify for automatic exemption because they meet the
requirements of 21 U.S.C. 802(39)(A)(vi). Those iodine chemical
mixtures that do not qualify for automatic exemption are regulated
chemicals, unless the manufacturer applies for, and is granted,
specific exemption for their product(s) by DEA via an application
process (21 CFR 1310.13).
    Since seven percent iodine tincture and solutions are the
predominant iodine-containing chemical mixtures diverted by
traffickers, DEA has determined that these chemical mixtures should be
subject to CSA chemical regulatory controls. Two percent iodine
tincture and solutions are also diverted, but DEA has not documented
the frequent diversion of these materials at clandestine laboratories.
Therefore, DEA is not regulating the two percent iodine tincture or
solution at this time.
    As discussed previously, DEA is also aware of other materials that
contain iodine. Examples include iodophor complexes such as poloxamer-
iodine and povidone-iodine and organically bound iodine complexes such
as iopamidol, iohexol, and amiodarone. These materials are not of
concern to DEA as a source of iodine for clandestine laboratories. This
final rule specifies that these materials be specifically exempted from
CSA chemical regulatory controls under 21 CFR 1310.12 by adding new
paragraphs (d)(4) and (d)(5).

Exemption by Application Process

    DEA recognizes that the 2.2 percent iodine concentration limit and
category exemption criteria cannot identify all mixtures that should
receive exemption status. DEA has implemented an application process to
exempt additional mixtures (21 CFR 1310.13). This application process
was finalized in a final rule (68 FR 23195) published May 1, 2003.
Under the application process, manufacturers may submit an application
for exemption for those mixtures that do not qualify for automatic
exemption. Exemption status can be granted if DEA determines that the
mixture is formulated in such a way that it cannot be easily used in
the illicit production of a controlled substance and the listed
chemical cannot be readily recovered (i.e., it meets the conditions in
21 U.S.C. 802(39)(A)(vi)). An application may be for a single or a
multiple number of formulations. All chemical mixtures that are granted
exemption via the application process will be listed in 21 CFR
1310.13(i).

III. Requirements That Apply to Regulated List I Chemicals and Their
Regulated Chemical Mixtures as a Result of This Rulemaking

    Any chemical mixture that is regulated because it contains greater
than 2.2 percent iodine is treated as a List I chemical. Therefore, the
same requirements for registration, records and reports, imports/
exports, and administrative inspection, as outlined below, apply to
handlers of regulated chemical mixtures.
    In light of the placement of iodine in 21 CFR 1310.02(a) (List I)
and to control chemical mixtures containing greater than 2.2 percent
iodine, the following requirements for List I chemicals are

[[Page 35926]]

outlined. Chemical mixtures that are not exempt or excluded under any
provision of these regulations, either by concentration limit, general
category, or as a result of DEA action on a specific application for
exemption, are considered regulated chemical mixtures. Persons
interested in handling List I chemicals, including regulated chemical
mixtures containing List I chemicals, must comply with the following:
    1. Registration. Any person who manufactures or distributes a List
I chemical, or proposes to engage in the manufacture or distribution of
a List I chemical, must obtain a registration pursuant to the CSA (21
U.S.C. 822). Regulations describing registration for List I chemical
handlers are set forth in 21 CFR part 1309.
    Separate registration is required for manufacturing, distribution,
importing, and exporting. Different locations operated by a single
entity require separate registration if any location is involved with
the manufacture, distribution, import, or export of a List I chemical.
Any person manufacturing, distributing, importing, or exporting a
regulated List I chemical mixture is subject to the registration
requirement under the CSA. DEA recognizes, however, that it is not
possible for persons who manufacture, distribute, import, or export
iodine, upon its placement in List I, to immediately complete and
submit an application for registration and for DEA to issue
registrations immediately for those activities. Therefore, to allow
continued legitimate commerce in iodine, DEA is establishing in 21 CFR
1310.09 a temporary exemption from the registration requirement for
persons desiring to manufacture, distribute, import, or export iodine,
provided that DEA receives a properly completed application for
registration on or before August 31, 2007. The temporary exemption for
such persons will remain in effect until DEA takes final action on
their application for registration.
    The temporary exemption applies solely to the registration
requirement; all other chemical control requirements, including
recordkeeping and reporting, will remain in effect. Additionally, the
temporary exemption does not suspend applicable federal criminal laws
relating to iodine, nor does it supersede state or local laws or
regulations. All handlers of iodine must comply with their state and
local requirements in addition to the CSA and other federal regulatory
controls.
    2. Records and Reports. The CSA (21 U.S.C. 830) requires that
certain records be kept and reports be made that involve listed
chemicals. Regulations describing recordkeeping and reporting
requirements are set forth in 21 CFR part 1310. A record must be made
and maintained for two years after the date of a transaction involving
a listed chemical, provided the transaction is a regulated transaction.
    Each regulated bulk manufacturer of a regulated mixture shall
submit manufacturing, inventory and use data on an annual basis (21 CFR
1310.05(d)). Bulk manufacturers producing the mixture solely for
internal consumption, e.g., formulating a non-regulated mixture, are
not required to submit this information. Existing standard industry
reports containing the required information are acceptable, provided
the information is readily retrievable from the report.
    Section 1310.05 requires that each regulated person shall report to
DEA any regulated transaction involving an extraordinary quantity of a
listed chemical, an uncommon method of payment or delivery, or any
other circumstance that the regulated person believes may indicate that
the listed chemical will be used in violation of the CSA.
    3. Import/Export. All imports/exports of a listed chemical shall
comply with the CSA (21 U.S.C. 957 and 971). Regulations for
importation and exportation of List I chemicals are described in 21 CFR
part 1313. Separate registration is necessary for each activity (21 CFR
1309.22).
    4. Security. All applicants and registrants shall provide effective
controls against theft and diversion of chemicals as described in 21
CFR 1309.71.
    5. Administrative Inspection. Places, including factories,
warehouses, or other establishments and conveyances, where regulated
persons may lawfully hold, manufacture, or distribute, dispense,
administer, or otherwise dispose of a regulated chemical/chemical
mixture, or where records relating to those activities are maintained,
are controlled premises as defined in 21 CFR 1316.02(c) where original
or other records or documents required under the Act, are kept or
required to be kept. The CSA (21 U.S.C. 880) allows for administrative
inspections of these controlled premises as provided in 21 CFR part
1316 subpart A.
    The goal of this rulemaking is to deny traffickers access to iodine
while minimizing the burden on legitimate industry. Persons who obtain
a regulated chemical, but do not distribute the chemical, are end
users. End users are not subject to CSA chemical regulatory control
provisions such as registration or recordkeeping requirements. Some
examples of end users are those who chemically react iodine and change
it into a non-listed chemical, formulate iodine into an exempt chemical
mixture or consume it in some industrial process, or use it for water
treatment or sanitation.

Regulatory Certifications

Regulatory Flexibility and Small Business Concerns

    The Regulatory Flexibility Act (5 U.S.C. 600-612) requires agencies
to determine whether a rule will have a significant economic impact on
a substantial number of small entities. If an agency finds that there
is a significant economic impact on a substantial number of small
entities, the agency must consider whether alternative approaches could
mitigate the impact on small entities. The size criteria for small
entities are defined by the Small Business Administration (SBA) in 13
CFR 121.201. As discussed below, DEA has researched the production and
marketing of iodine to determine whether this rulemaking could have a
significant economic impact on a substantial number of small entities.
    The majority of firms potentially subject to this rulemaking are
considered small entities under the Small Business Administration
definitions for the affected sectors.\1\ The only firms for which the
rulemaking would have a significant economic impact are those with
revenues or sales of less than about $125,000 a year; the initial
registration time and fee would represent one percent of their
revenues. Economic Census data indicate that even the smallest firms in
the affected sectors have sales well above the $125,000 a year
level.\2\ Consequently, DEA concludes that this rulemaking will not
have a significant economic impact on a substantial number of small
entities. DEA recognizes, however, that there may be a very small
number of firms marketing specialty products that may be adversely
affected because they offer no other alternative products. DEA sought
comments on whether there could be a significant economic impact on a
substantial number of small entities in the NPRM. DEA did not receive
any comments on this issue from any distributors of such products.
---------------------------------------------------------------------------

    \1\ See Table 3 for the SBA size standards for affected
entities.
    \2\ See Table 3 for the average revenue for the smallest firms.

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

[[Page 35927]]

Regulatory Flexibility Analysis

Potential Universe of All Affected Entities
    In broad terms, three companies produce iodine in bulk and
distribute it to other companies that either use it in chemical
manufacturing, purify it and repackage it, or simply repackage it for
further sale. There may be a third step at the manufacturing level
where iodine crystals or solutions are purchased in bulk from companies
that purified it and are then repackaged for retail sales. Although
some iodine products are likely to follow the normal distribution chain
of manufacturer to wholesaler to retailer, others do not. Most chemical
manufacturers are likely to purchase iodine directly from other
manufacturers. Some of the ``manufacturers'' of iodine products appear
to sell both to retail outlets and directly to consumers. Many of the
manufacturers offer catalogue and Internet sales.
    In addition to the three manufacturers that produce iodine as a
bulk chemical, DEA identified 43 firms that have developed material
safety data sheets (MSDSs) for iodine products that will be covered by
this rule; five of these are already registered as chemical
manufacturers. It is not possible to determine whether the DEA
registrants produce iodine at registered locations or whether any of
the 43 firms produce iodine products at multiple locations.\3\ Eight
other chemical manufacturers list iodine as a product; one of these is
registered as a chemical importer and exporter. There may be other
firms producing iodine for industrial uses for which MSDSs are not
publicly available.\4\ DEA sought comments on whether such information
exists that could help in further identifying the entities this final
rule will potentially impact. The only comments received were from end-
users.
---------------------------------------------------------------------------

    \3\ The CSA requires that each location where a controlled
substance or List I chemical is handled have a separate
registration.
    \4\ OSHA requires the manufacturer of a chemical to develop an
MSDS. Other firms that package or distribute the chemical must
provide the MSDS, but generally use the MSDS acquired from the
original manufacturer. MSDSs must be made available to employees and
to firms that purchase the chemical, but publishing them for the
general public is not required.
---------------------------------------------------------------------------

    DEA identified 15 other manufacturers of iodine products. It is
likely that these firms purchase iodine crystals and repackage them or
purchase crystals or concentrated solutions and dilute them prior to
repackaging. Because some of these firms may operate at multiple
locations and because it is likely that not all manufacturers have been
identified, the analysis estimates that there are between 75 and 90
manufacturers of iodine products.
    Iodine products may be handled by a variety of wholesalers. The
livestock and science kit products could be handled by drug, chemical,
or agricultural wholesalers. Distributors of science kits will still
need to keep records if quantities exceed a single one-fluid-ounce
package of Lugol's Solution per transaction.
    Current Duns data indicate that 267 wholesalers distribute animal
medicines; these are the wholesalers most likely to be distributing
iodine products for horses. Some of these distributors may already be
registered to handle controlled substances. The 2002 Economic Census
for the wholesale industry indicated that about 1,115 agricultural
wholesalers/retailers may carry tack shop materials. It is possible
that other chemical wholesalers may be providing iodine to
manufacturers of iodine products, but DEA considers it more likely that
these manufacturers purchase iodine in bulk directly from chemical
manufacturers. DEA has not identified any data that indicate the number
of wholesalers who distribute aquarium chemicals, but as there appears
to be only one such covered product marketed specifically for aquariums
(Kent Marine Lugol's Solution), it may not be handled by a large number
of wholesalers. DEA has exempted distributors of Lugol's Solution in
the manufacturers' packages containing 1 fluid ounce (30 ml) or less
from registration, so these distributors will simply have to retain
normal sales records.
    Census classifications do not cover camping goods at the wholesale
level. The web site for Polar Pure, a water purification system
involving iodine regulated by this rule, lists only two wholesale
distributors. Overall, DEA estimates that the number of wholesalers may
range from 300 to 1,400.
    At the retail level, tinctures are sold by tack shops; 2005 Duns
data list about 4,080 such retailers. Agricultural retailers may also
sell these products for livestock, but these are included in the
wholesale estimate because the Census combines agricultural wholesalers
and retailers in a single classification. Veterinarians may also sell
the products, but would not be subject to registration because they are
already registered to handle controlled substances.
    The 2002 Census indicated that there were 5,039 pet stores that
sold aquarium supplies. A check of two large chains, which have more
than 1,400 stores between them, indicates that although both stock some
iodine supplements, neither stock Lugol's solution. DEA estimates that
between one percent and five percent of pet stores would carry iodine
either as crystals or strong tinctures. Although nursery/garden
retailers and building supplies/garden retailers sell pet supplies, it
is unlikely that any of them carry covered iodine products. Since DEA
has provided for the unregulated sale of single small packages of
Lugol's Solution, the potential impact upon pet stores should be
greatly reduced or eliminated.
    The Census listed about 1,524 sporting good specialty stores that
carry camping supplies. DEA has included 5 percent to 10 percent of
them in its estimates regarding the impact of this rule. Mail order and
Internet outlets sell all of the iodine products. DEA has no basis for
estimating how many of these outlets sell iodine products without being
associated with either wholesale or retail outlets that would be
included in other counts. DEA has included 50 to 100 of these, but
recognizes that these numbers could be either too low or too high.
Table 1 presents the estimated low to high range of potentially
regulated entities.

                Table 1.--Potentially Regulated Universe
------------------------------------------------------------------------
                                                          Low      High
------------------------------------------------------------------------
New Manufacturers.....................................       75       90
Wholesalers...........................................      300    1,400
Tack Shops............................................    2,040    4,080
Pet Supplies..........................................       50      250
Camping Supplies......................................       75      150
Other.................................................       50      100
                                                       -----------------
    Total.............................................    2,590    6,070
------------------------------------------------------------------------

    The estimates in Table 1 represent the number of outlets that may
currently handle products that are subject to this rule. The regulated
universe will likely be smaller (especially for pet supplies, given
that DEA has provided the exemption for single small packages of
Lugol's Solution in this final rule).
    In estimating the number of new registrants, however, DEA has to
consider whether these outlets will elect to register and continue
selling the products. For almost all of the entities listed in Table 1,
iodine products are a minor item. The manufacturers, wholesalers, and
mail order/Internet suppliers routinely collect the information DEA
would require under this rule; this information is necessary for them
to ship the product. Other than the registration fees, the rulemaking
would not impose a burden on them

[[Page 35928]]

although it is possible that some of these outlets may elect to drop
iodine products rather than be subject to DEA regulations.
    Store retailers face a different situation. Not only are their
revenues usually lower than those of manufacturers and wholesalers, but
they are also unlikely to collect all of the information DEA requires
for these transactions routinely. Because the cost of the iodine
products is low ($5 to $20), many of the transactions may be in cash.
To teach their clerks what is required, explain to customers why the
information is needed, transcribe the data, and maintain the record may
be too great a burden for a specialty product that is unlikely to be in
high demand and for which reasonable substitutes exist. DEA expects,
therefore, that most store retailers will stop carrying these products
and direct their customers to substitutes or to mail order or Internet
sources. This shift would, in turn, likely reduce the number of
wholesale distributors handling the products. Table 2 provides a more
likely estimate of the potential number of new registrants, but even
these estimates are likely to be high because most wholesale and retail
outlets may elect to avoid DEA regulation.

                Table 2.--Potential Number of Registrants
------------------------------------------------------------------------
                                                          Low      High
------------------------------------------------------------------------
New manufacturers.....................................       75       90
Chemical wholesalers..................................      150      700
Other.................................................       50      100
                                                       -----------------
    Total.............................................      275      890
------------------------------------------------------------------------

Small Entities Likely To Be Affected by This Rule
    The SBA standards for the potentially affected sectors are shown in
Table 3 as are the average sales or value of shipments (for
manufacturers) for the smallest firms reported in the 2002 Economic
Census:

             Table 3.--Small Business Standards for Sectors
------------------------------------------------------------------------
                                                     Av. sales/smallest
                                  Size standard          firms\**\
------------------------------------------------------------------------
Inorganic chemical              1,000 FTE*.......  $4.25 million.
 manufacturers.
Pharmaceutical manufacturers..  750 FTE..........  $824,000.
Miscellaneous manufacturers...  500 FTE..........
Chemicals wholesalers.........  100 FTE..........  $1 million.
Sporting goods and pet stores.  $6.5 million.....  $345,000 (sporting),
                                                    $274,000 (pet).
Electronic/mail order shopping  $23 million......  $528,000
                                                    (electronic),
                                                    $497,000 (mail).
------------------------------------------------------------------------
* FTE is an abbreviation for Full Time Equivalent (Employees).
** 1 to 4 FTE except for inorganic chemical, where data available only
  for 5-9 FTE.

Because of the size standards, it is highly likely that a substantial
number of the firms that will be regulated will be considered small
businesses. DEA has no information on the number of potentially
regulated entities that will be classified as small and did not receive
any comments on this issue. The three main manufacturers of iodine are
large firms; two of the three are also foreign-owned and the third is a
joint venture with foreign firms.
Specific Requirements Imposed That Will Impact Small Entities
    Firms that handle iodine will be required to register with DEA. At
present, the registration fee for manufacturers is $2,293 and for
distributors is $1,147. Each of the firms will also be required to
become familiar with DEA's regulations, to maintain records of each
sale, and to report to DEA on unusual sales and thefts/losses. Bulk
manufacturers must file annual reports, but these reports already apply
to iodine as a List II chemical, so impose no new burden. DEA specifies
that normal business records may be used to meet the requirements of
records of sales. Importers and exporters will be required to file an
advance notification for each importation or exportation.
    DEA estimates that it takes a firm a half hour to complete and
submit a registration application, which can be done online, and a half
hour to become familiar with the rule. DEA assumes that rule
familiarization and registration will be done by managerial staff. The
cost for initial compliance for firms in manufacturing, wholesale, and
retail sectors is shown in Table 4. Wage rates are based on May 2005
BLS industry data and loaded with fringe and overhead. Fringe rates are
based on BLS ``Employer Costs for Employee Compensation--December
2005'' for management for goods producing and service industries, as
applicable. Overhead is loaded at 56 percent of compensation, based on
the most recent Grant Thornton survey.

                                   Table 4.--Initial Compliance Cost per Firm
----------------------------------------------------------------------------------------------------------------
                                                                                                    Total cost
                             Sector                                  Wage rate      Total labor      with fee
----------------------------------------------------------------------------------------------------------------
Manufacturing...................................................            $126            $126          $2,419
Wholesale.......................................................              98              98           1,245
Retail..........................................................              62              62           1,209
Mail order/Electronic...........................................              93              93           1,240
----------------------------------------------------------------------------------------------------------------

A comparison of the initial compliance costs in Table 4 with the annual
revenues or sales of the smallest firms shown in Table 3 indicates that
the costs do not approach one percent of sales or revenues of the
smallest firms in each sector and, therefore, do not impose a
significant economic burden on firms. The recurring costs for renewal
are slightly lower (a half hour of labor plus the registration fee).
DEA estimates that completing the advance notification (Form 486) for
imports and exports requires less than 15 minutes.

[[Page 35929]]

Reporting and Recordkeeping Requirements
    Firms subject to this rulemaking will be required to maintain
records of sales. The records required include the date of the sale;
the name, quantity, and form of packaging of the chemical; the method
of transfer; and the type of identification used by the purchaser and
any unique number on that identification. Routine sales records for
credit card or mail order sales will include the required information.
Manufacturers and wholesalers, which normally sell products through
purchase orders, will not have to create any additional records.
Retailers that have cash sales will have to create new records if they
continue to sell the products. Because these products represent such a
small percentage of any store's sales and there are products that can
be substituted for them, DEA considers that it is unlikely that
retailers will register and continue to sell iodine products other than
exempted quantities of Lugol's Solution.
    Importers and exporters will have to file a Form 486 15 days in
advance of any importation or exportation. If the importer meets the
requirements to be a regular importer, the person must file the form on
or before the date of importation, but does not require DEA approval.
Similarly, exporters that have an established business relationship
with a foreign customer need to file the form by the date of
exportation.
Alternatives
    Pursuant to the requirements of the Regulatory Flexibility Account,
DEA evaluated alternatives to this rulemaking and determined that no
reasonable alternatives exist. This rulemaking establishes changes to
the regulatory control of iodine in an effort to prevent the diversion
of iodine for the illicit production of methamphetamine and
amphetamine. Providing small businesses with alternatives and/or
exemptions from this rulemaking would eliminate the regulatory
objective behind the rule. DEA has explored ways to lessen the
regulations' economic impact on all entities covered by the rule. This
rulemaking establishes regulatory controls that apply to iodine
crystals and iodine chemical mixtures that contain greater than 2.2
percent iodine, thereby eliminating the majority of products that use
iodine from the requirements of this regulation.\5\ DEA, after
reviewing comments, has also provided an exemption for individual
transactions involving small packages of Lugol's Solution.
Additionally, this rulemaking allows manufacturers to seek exemption
for additional mixtures of iodine that do not qualify for automatic
exemption under 21 CFR 1310.13. DEA sought comments on reasonable
alternatives to this rulemaking that would serve to lessen its impact
on small businesses while maintaining the regulatory objective of
regulating iodine crystals and strong tinctures and chemical mixtures
containing over 2.2 percent iodine. DEA has incorporated new the
exemption for individual transactions involving one-fluid-ounce (30 ml)
packages of Lugol's Solution in response to these comments.
---------------------------------------------------------------------------

    \5\ See the section in this regulation on the legitimate uses of
iodine.
---------------------------------------------------------------------------

Additional Impact Issues Raised
    DEA expects that most store retailers will elect not to sell iodine
crystals or strong tinctures rather than registering and maintaining
sales records. Most iodine products with household applications will
not be subject to the rule. DEA considered whether the loss of product
sales would have a significant economic impact on retailers. These
products make up a very small part of the sales of any sporting goods
store. Eliminating the product line is unlikely to have a noticeable
effect on sales even if customers continue to seek the products from
online or mail order sources. In most cases, customers will be able to
purchase substitutes that are no more expensive, and in some cases, are
less expensive. DEA, therefore, expects that the impact on sales at the
retail level will be minimal. Where cost effective substitutes were not
available DEA has provided an exemption (i.e., individual transactions
involving one-fluid-ounce (30 ml) packages of Lugol's Solution, where
certain alternative products cost more than ten times that of Lugol's
Solution).
    The impact on manufacturers, with one possible exception, is also
likely to be minimal. DEA's research indicates that the manufacturers
who produce iodine tinctures and crystals for use with livestock and
fish also produce and market the substitutes. If sales of these iodine
products decline, it is likely that the sales of substitutes will
increase. Many of these companies also sell directly to customers
through catalogues and online. Because the sales records required under
the rules are the same records the companies create for mail order or
online sales, there is no burden beyond registration for these firms to
meet these requirements. The one exception is a small company that
apparently markets a single product using iodine crystals. To the
extent that in-store sales of its product decline and are not replaced
with online sales, the rulemaking could have a significant impact on
the firm.

Executive Order 12866

    The Deputy Administrator hereby certifies that this rulemaking has
been drafted in accordance with Executive Order 12866, Section 1(b). It
has been determined that this rulemaking is a ``significant regulatory
action''. Therefore, this action has been reviewed by the Office of
Management and Budget.
    This final rule imposes new regulatory requirements on businesses
choosing to handle iodine tinctures, iodine crystals and chemical
mixtures containing iodine including registration with DEA,
recordkeeping, the submission of certain reports regarding import and
export transactions to DEA, and security requirements. DEA believes
that the requirement of recordkeeping for regulated transactions
involving iodine tinctures, crystals and chemical mixtures containing
iodine are already accomplished through the maintenance of business
records as a usual and customary business practice. Likewise, security
occurs as a normal part of good business practice. DEA believes these
new regulatory requirements are necessary to prevent the diversion of
iodine to the illicit production of methamphetamine and amphetamine.
    Based on the costs and number of regulated entities discussed in
the previous section, DEA estimates that the total cost of initial
compliance with the final rule ranges from $430,000 to $1.21 million;
annual costs thereafter range from $416,000 to $1.16 million.
Costs of Methamphetamine Abuse/Benefits of Rulemaking
    Methamphetamine is the most prevalent controlled substance
illicitly synthesized in the United States. The clandestine
manufacture, distribution and abuse of methamphetamine are serious
public health problems. Despite considerable efforts by federal, state,
and local law enforcement, the illicit trafficking and abuse of
methamphetamine continue.
    According to the 2005 National Survey on Drug Use and Health,
approximately 10.36 million Americans ages 12 and older reported trying
methamphetamine at least once during their lifetimes, representing 4.3%
of the population ages 12 and older. Approximately 1.3 million (0.5%)
reported past year methamphetamine use and 512,000 (0.2%) reported past
month methamphetamine use. In 2005, the Monitoring the Future Study
which assesses the extent of drug use among

[[Page 35930]]

adolescents indicated that 3.1 percent of 8th graders, 4.1 percent of
10th graders and 4.5 percent of 12th graders reported some prior
lifetime use of methamphetamine. The Drug Abuse Warning Network (DAWN)
data indicate that the estimated number of emergency department (ED)
visits for methamphetamine was 108,905 in 2005.
    The El Paso Intelligence Center (EPIC) reports that there were
12,484 methamphetamine laboratories seized (including laboratories,
dump sites and equipment seizures) in the U.S. in CY2005 (as reported
through November 2006). Another rising cost of the methamphetamine
problem is the cost of cleaning up the toxic side effects of
methamphetamine production. Clandestine laboratory sites must be
cleaned up and chemicals seized at clandestine laboratories must be
removed, and that removal is very expensive. During FY 2005, DEA
administered 8,639 state and local clandestine laboratory cleanups at a
cost of $17 million.
    The total social and monetary costs from trafficking and abuse of
methamphetamine are abundant. Costs include those incurred to treat
medical consequences of abuse, loss of life and injury to users and by
users to bystanders, abandonment of the children of methamphetamine
abusers (and corresponding cost of social services), theft and property
damage resulting from abuse, loss of employment and productivity,
increased costs to law enforcement, cost of prosecution and
incarceration for crimes associated with drug use, and increased costs
due to cleanups of lab sites. Benefits obtained from implementation of
iodine controls, to counter illicit methamphetamine production, greatly
exceed costs necessary to implement such controls.

Executive Order 12988

    This regulation meets the applicable standards set forth in
Sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice
Reform.

Executive Order 13132

    This rulemaking does not preempt or modify any provision of state
law; nor does it impose enforcement responsibilities on any state; nor
does it diminish the power of any state to enforce its own laws.
Accordingly, this rulemaking does not have federalism implications
warranting the application of Executive Order 13132.

Paperwork Reduction Act

    This rulemaking implements changes in the regulation of iodine and
implements regulations to identify iodine chemical mixtures that are
exempt from CSA regulatory controls pertaining to chemicals. Under this
rulemaking, persons who handle chemical mixtures with concentration
levels of iodine 2.2 percent and less will not be subject to CSA
regulatory controls, including the requirement to register with DEA.
    This rulemaking will require persons handling iodine crystals,
strong iodine tinctures and chemical mixtures containing iodine to
register with DEA and to report import and export transactions
involving regulated transactions in these chemicals to DEA.
    For purposes of this rulemaking, DEA has estimated the population
of persons potentially required to register with DEA to handle iodine
and its chemical mixtures to be between 275 and 890. However, some of
these persons may already be registered with DEA and others may decide
to no longer handle such products rather than registering. DEA notes
that it solicited, but did not receive, comment regarding the number of
persons who would be required to register with DEA as a result of this
rule. Accordingly, by separate notice, DEA is amending its information
collection regarding chemical registration [OMB information collection
1117-0031 ``Application for Registration under Domestic Chemical
Diversion Control Act of 1993 and Renewal Application for Registration
under Domestic Chemical Diversion Control Act of 1993''] to increase
the burden associated with this collection by 275 respondents annually.
    Further, this rulemaking will require persons importing and
exporting products containing iodine crystals, tinctures, and chemical
mixtures controlled by this rulemaking to report such imports and
exports to DEA. DEA sought comment from the regulated industry
regarding the impact of this regulation; however, no comments addressed
this issue. Therefore by separate notice DEA is amending its
information collection regarding the reporting of import and export
transactions [OMB information collection 1117-0023 ``Import/Export
Declaration: List I and List II Chemicals''] to estimate that DEA will
receive new DEA Forms 486 annually. DEA notes that DEA already receives
DEA Forms 486 for the importation and exportation of iodine; the only
new reporting results from chemical mixtures containing over 2.2
percent iodine.
    DEA also solicited comments on the impact of recordkeeping
requirements upon handlers of regulated iodine products and any
potential impact upon public health given any reduction in availability
of regulated products, especially where it can be quantified. The
majority of comments addressed these issues. In response, DEA is
providing an exemption for individual transactions involving Lugol's
Solution in small packages so that such product will remain available
to end-users.

Unfunded Mandates Reform Act of 1995

    This rulemaking will not result in the expenditure by state, local,
and tribal governments, in the aggregate, or by the private sector, of
$118,000,000 or more in any one year, and will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.

Congressional Review Act

    This rulemaking is not a major rule as defined by Section 804 of
the Small Business Regulatory Enforcement Fairness Act of 1996
(Congressional Review Act). This rulemaking will not result in an
annual effect on the economy of $100,000,000 or more; a major increase
in cost or prices; or significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
United States-based companies to compete with foreign-based companies
in domestic and export markets.

List of Subjects

21 CFR Part 1309

    Administrative practice and procedure, Drug Traffic Control, List I
and List II chemicals, Reporting and recordkeeping requirements.

21 CFR Part 1310

    Drug traffic control, List I and List II chemicals, Reporting
requirements.

0
For the reasons set out above, 21 CFR parts 1309 and 1310 are amended
as follows:

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

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

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

0
2. Sec.  1309.24 is amended by redesignating paragraphs (h) through (k)
as paragraphs (i) through (l) and by adding a new paragraph (h) to read
as follows:

[[Page 35931]]

Sec.  1309.24  Waiver of registration requirement for certain
activities.

* * * * *
    (h) The requirement of registration is waived for any person whose
activities with respect to List I chemicals are limited solely to the
distribution of Lugol's Solution (consisting of 5 percent iodine and 10
percent potassium iodide in an aqueous solution) in original
manufacturer's packaging of one fluid ounce (30 ml) or less.
* * * * *

PART 1310--RECORDS AND REPORTS OF LISTED CHEMICALS AND CERTAIN
MACHINES [AMENDED]

0
3. The authority citation for part 1310 continues to read as follows:

    Authority: 21 U.S.C. 802, 827(h), 830, 871(b), 890.
 

0
4. Sec.  1310.02 is amended by adding a new paragraph (a)(28), removing
paragraph (b)(11), and redesignating paragraph (b)(12) as paragraph
(b)(11) to read as follows:
 

Sec.  1310.02  Substances covered.

* * * * *
    (a) * * *

(28) Iodine.....................................................    6699
 

* * * * *

0
5. Sec.  1310.04 is amended by removing paragraph (f)(2)(ii)(H);
redesignating (f)(2)(ii)(I) as (f)(2)(ii)(H); and adding a new
paragraph (g)(1)(vi) to read as follows:
 

Sec.  1310.04  Maintenance of records.

* * * * *
    (g) * * *
    (1) * * *
    (vi) Iodine
* * * * *

0
6. Sec.  1310.08 is amended by revising paragraph (f) to read as
follows:
 

Sec.  1310.08  Excluded transactions.

* * * * *
    (f) Domestic and international transactions of Lugol's Solution
(consisting of 5 percent iodine and 10 percent potassium iodide in an
aqueous solution) in original manufacturer's packaging of one-fluid-
ounce (30 milliliters) or less, and no greater than one package per
transaction.
* * * * *

0
7. Sec.  1310.09 is amended by adding new paragraph (h) to read as
follows:
 

Sec.  1310.09  Temporary exemption from registration.

* * * * *
    (h) Each person required by section 302 of the Act (21 U.S.C. 822)
to obtain a registration to manufacture, distribute, import, or export
regulated iodine, including regulated iodine chemical mixtures pursuant
to Sec. Sec.  1310.12 and 1310.13, is temporarily exempted from the
registration requirement, provided that the Administration receives a
proper application for registration or application for exemption for a
chemical mixture containing iodine on or before August 31, 2007. The
exemption will remain in effect for each person who has made such
application until the Administration has approved or denied that
application. This exemption applies only to registration; all other
chemical control requirements set forth in the Act and parts 1309,
1310, and 1313 of this chapter remain in full force and effect. Any
person who distributes, imports, or exports a chemical mixture
containing iodine whose application for exemption is subsequently
denied by the Administration must obtain a registration with the
Administration. A temporary exemption from the registration requirement
will also be provided for these persons, provided that the
Administration receives a properly completed application for
registration on or before 30 days following the date of official
Administration notification that the application for exemption has not
been approved. The temporary exemption for such persons will remain in
effect until the Administration takes final action on their
registration application.
 

0
8. Sec.  1310.12 is amended by adding an entry for ``iodine'' in
alphabetical order in the table of paragraph (c), and adding new
paragraphs (d)(4) and (d)(5) to read as follows:
 

Sec.  1310.12  Exempt chemical mixtures.

* * * * *
    (c) * * *

                                          Table of Concentration Limits
----------------------------------------------------------------------------------------------------------------
                                DEA chemical      Concentration
      List I chemicals            code No.          (percent)                   Special conditions
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Iodine......................              6699               2.2  Calculated as weight/volume (w/v).

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

    (d) * * *
    (4) Iodine products classified as iodophors that exist as an iodine
complex to include poloxamer-iodine complex, polyvinyl pyrrolidone-
iodine complex (i.e., povidone-iodine), undecoylium chloride iodine,
nonylphenoxypoly (ethyleneoxy) ethanol-iodine complex, iodine complex
with phosphate ester of alkylaryloxy polyethylene glycol, and iodine
complex with ammonium ether sulfate/polyoxyethylene sorbitan
monolaurate.
    (5) Iodine products that consist of organically bound iodine (a
non-ionic complex) (e.g., iopamidol, iohexol, and amiodarone.)
* * * * *

    Dated: June 19, 2007.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E7-12736 Filed 6-29-07; 8:45 am]
BILLING CODE 4410-09-P
 
 
 
 

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