October 17, 1997
Deputy Assistant Administrator
Office of Diversion Control
Drug Enforcement Administration
Washington, DC 20537
Attn: DEA Federal Register Representative/CCR
Dear Federal Register Representative:
The Office of Advocacy submitted comments to DEA on the proposed rule for pseudoehpedrine-containing OTC drugs (60 Fed. Reg. 55,346) on March 5, 1996. The comments focused on the deficiencies with respect to the agency's regulatory flexibility analysis and the economic burden that would be placed on the retail industry upon implementation of the rule as proposed. The final rule, although not completely retailer friendly, incorporated many significant changes to lessen the economic burden on small retailers.
The Office of the Chief Counsel for Advocacy of the U.S. Small Business Administration was created in 1976 to represent the views and interests of small business in Federal policy making activities(1)The Chief Counsel participates in rulemakings when he deems it necessary to ensure proper representation of small business interests. In addition to these responsibilities, the Chief Counsel monitors compliance with the Regulatory Flexibility Act (RFA),(2) and works with federal agencies to ensure that their rulemakings demonstrate an analysis of the impact that their decisions will have on small businesses.
The instant proposed rule amends the regulations to make them consistent with the language of the Methamphetamine Control Act of 1996 (MCA) and to establish the specific procedures to be followed to satisfy the new reporting requirements. Although an analysis of alternatives is contained in the instant proposed rule, there remains an overlooked class of affected entities that deserve more careful scrutiny. It seems reasonable to assume that the industry could be separated into retailers and wholesalers/mail order companies. The retailers were provided an exemption from registration and record keeping under the regulations due to the fact that they sell below-threshold quantities of regulated substances. The wholesalers/mail order companies were targeted for regulation because of the large bulk quantities that can be sold to relatively anonymous buyers and the potential for abuse by clandestine methamphetamine manufacturers.
However, lumping all wholesalers/mail order companies into one category hides the potential impact on a class of wholesalers that market their products mainly to small convenience stores. According to the American Wholesale Marketers Association, most of their clients market to small independent retail outlets (e.g., convenience and grocery stores) and do not engage in large bulk sales to large retail markets or to individuals. The agency, moreover, has not provided specific information in the record of the original proposed rule and final rule, nor the instant proposed rule, to indicate that this group of small wholesalers is contributing to the problem of illegal diversion.
Inasmuch as the proposed rule could have a tremendous impact on this sector of the economy,(3) the Office of Advocacy requests that DEA garner additional data and information concerning small wholesalers in order to determine the economic impact on that industry and to develop an alternative course of regulatory action. Our office is not suggesting that DEA forego its policy objective of reducing the flow of precursor drugs to illegal labs, but that DEA should consider the least burdensome alternatives to accomplish their objectives. For instance, the agency might consider less frequent reporting for small wholesalers. Less frequent reporting is an idea supported and promoted by the Clinton Administration to reduce regulatory burdens on small entities(4) Or, as provided in the final rule for retailers, a waiver of the registration requirement may be appropriate for small wholesalers that sell only to certain retailers.
Thank you for your consideration of this matter. Please do not hesitate to contact the Office of Advocacy if you require additional information, 202-205-6532.
Sincerely,
Jere W. Glover
Chief Counsel for Advocacy
Shawne Carter McGibbon
Assistant Chief Counsel
for Advocacy
Endnotes
1. Pub. L. No. 94-305, 90 Stat. 668 (codified as amended at 15 U.S.C. §§ 634a-g, 637).
2. Regulatory Flexibility Act, 5 U.S. C. § 601, as amended by the Small Business Regulatory Enforcement Fairness Act, Pub. L. No. 104-121, 110 Stat. 866 (1996).
3. According to the final rule, "all mail order and wholesale distributors will be subject to the full extent of CSA chemical regulatory controls" (emphasis added).
4. See President's Memorandum to the Heads of Executive Agencies, REGULATORY REFORM-WAIVER OF PENALTIES AND REDUCTION OF REPORTS (April 21, 1995). The memorandum reads, "Each agency shall reduce by one-half the frequency of the regularly scheduled reports that the public is required, by rule or by policy, to provide to the Government."
* Last Modified: 6/14/01