2002 DEA - Chemical Industry Conference Report
September 9-12, 2002
Charleston, South Carolina
INTRODUCTION/CONFERENCE OBJECTIVES
The Drug Enforcement Administration (DEA) sponsored the 2002 DEA-Chemical
Industry Conference in Charleston, South Carolina, on September 9-12,
2002. The focus of this conference was to strengthen cooperative efforts
between the DEA and the chemical industry as well as provide a forum to
discuss practices and procedures that prevent chemical diversion while
minimizing the impact upon legitimate industry. Representatives from the
DEA, U.S. Customs Service (USCS), twenty chemical firms, and four chemical
associations attended the conference.
Laura M. Nagel, Deputy Assistant Administrator of the DEA’s Office of
Diversion Control (OD), welcomed participants. She stated the purpose of
the conference was to foster cooperation between the chemical industry and
the DEA. Ms. Nagel stressed that in order to have an impact on preventing
the movement of legal chemicals into the illicit market we must have
cooperation between DEA and the chemical industry. She explained that in
CY 2001, 7250 clandestine laboratories were seized by various law
enforcement agencies. She discussed Operation Mountain Express and
explained that it had driven the larger traffickers out of the country and
that profits from the illicit drug trade were possibly going to support
unidentified terrorist groups in the Middle East. Many traffickers are now
obtaining their chemicals from Canada because the Canadian Government
presently does not have any chemical regulations in place. However, the
Canadian authorities are currently working towards establishing the
necessary regulations.
Ms. Nagel explained that OD would be more cautious when registering
chemical handlers. She acknowledged that at times the regulations appear
burdensome and anti-business; however, the DEA welcomes suggestions on how
we can partner with the chemical industry to prevent the diversion of
chemicals into the illicit market. She also asked the industry
representatives to be vigilant and identify those persons and companies
who are violating the regulations.
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OPENING REMARKS/CONFERENCE HIGHLIGHTS
Ms. Patricia M. Good, Section Chief, Liaison and Policy Section,
thanked the attendees for coming and noted that there were bulk
manufacturers’ representatives as well as drug product industry
representatives in attendance. Ms. Good explained that the conference
would be broken into three segments: first, chemicals needed to produce
cocaine, such as potassium permanganate, and the associated international
initiative targeting these chemicals, Operation Purple; second,
chemicals needed to produce heroin such as acetic anhydride (AA), and the
initiative Operation Topaz; third, drug products including
pseudoephedrine and ephedrine. Ms. Good stressed that the DEA wanted this
conference to be one of open communication and an exchange of information.
Mr. Terry Woodworth, Deputy Director, Office of Diversion Control, also
welcomed the conference attendees and stressed the DEA’s desire that the
conference provide an opportunity for open and frank exchange of
information.
CHEMICAL CONTROL SECTION OVERVIEW
Mr. Scott Collier, Chief, Chemical Control Section, discussed the
various amendments to the chemical control law and regulations. He
explained that Congress does not always consult with the DEA prior to
passing a law and as with all regulations, the DEA has to determine how to
balance the intent of the law with the concerns of industry. Mr. Collier
advised that new legal decisions have helped the DEA to better define the
chemical law and its requirements. The goal is to eradicate illicit drug
production without placing unnecessary restrictions on business.
Mr. Collier discussed the importance of industry’s contributions and
cooperation in the success of Operation Mountain Express. He stated
that the problem was not with the majority of bulk handlers or importers
but a few rogue companies. These individuals, realizing the profits that
could be made, decided to sell the chemicals, specifically pseudoephedrine.
As a result of all three phases of Mountain Express, the DEA
arrested over 300 people and seized $17 million in assets.
Mr. Collier next discussed the responsibilities of the Chemical Control
Section (ODI). He stated that ODI was responsible for: the enforcement of
U.S. chemical laws, international chemical control initiatives, the U.S.
chemical import and export control program, and coordination and support
of chemical investigations. In regulatory enforcement there are four U.S.
chemical laws that ODI works with: the Chemical Diversion and Trafficking
Act of 1988, the Domestic Chemical Diversion Control Act of 1993, the
Comprehensive Methamphetamine Control Act (CMCA) of 1996, and the
Methamphetamine Anti-Proliferation Act (MAPA) of 2000. Activities under
the international initiatives include: conducting liaison with
international chemical control organizations; liaison with foreign
counterpart chemical control authorities and providing chemical control
training for foreign counterparts; and, conducting chemical control
operations such as, Operation Purple and Operation Topaz.
For the import and export control program, ODI monitors regular customer
investigations and chemical registrations, authorizes and suspends import
and export shipments, and maintains the chemical control databases. They
also support and coordinate chemical investigations, issue warning letters
to companies whose products are diverted, and assist in the identification
of chemical sources of supply.
Mr. Collier described methamphetamine as the primary problem in the
U.S. when it comes to chemical control. The primary chemicals used to
produce methamphetamine are ephedrine, pseudoephedrine,
phenyl-2-propanone, iodine, and red phosphorus. However, when
phenyl-2-propanone was controlled as a Schedule II controlled substance,
its use diminished. In CY 2001, over 7,000 methamphetamine laboratories
were seized in the U.S. by both the DEA and state and local law
enforcement agencies.
Mr. Collier reported that there are 38 chemicals that are regulated by
the Controlled Substances Act. In addition, there are 65 chemicals on the
special surveillance list. The fact that different countries have
different laws regarding chemicals creates a challenge for the DEA. What
the DEA considers illegal may not be illegal in another country and vice
versa. An example of this would be Canada. When the U.S. clamped down on
pseudoephedrine, traffickers went to Canada to obtain the pseudoephedrine.
Most of the pseudoephedrine that was smuggled from Canada was used to fuel
"super laboratories" that can produce 10 pounds of
methamphetamine in a twenty-four hour period. Chemicals obtained in the
U.S. are usually used in smaller laboratories. This is why we are working
with Canada to strengthen its regulations.
Mr. Collier stated that there are several ways to manufacture illicit
drugs, each with numerous chemical variations. The spread of "drug
recipes" via the Internet has been a serious problem for the DEA.
"Cookbooks" are available on various web sites.
Mr. Collier discussed the extensive problems associated with the clean
up of methamphetamine laboratories, which are considered hazardous waste
sites. The DEA spent approximately $24 million in FY-2001, cleaning up
laboratory sites. Most methamphetamine laboratories are found by local law
enforcement, which do not have the resources to perform the clean up.
However, Congress has given the DEA money to clean up these sites. The DEA
provides training in clandestine laboratory safety and investigative
techniques to DEA personnel, as well as local and international law
enforcement personnel.
Mr. Collier discussed some of the ways the DEA and industry can help
each other. The suggestions included providing timely written updates of
federal chemical laws and regulations, conducting training and convening
working groups and conferences. The industry’s first point of contact
for assistance should be the local DEA field office. The DEA headquarters
should only be consulted after efforts are exhausted with the local field
office. Industry can help by supporting initiatives such as Mountain
Express, which was discussed previously. This operation was such a
success because of the industry’s cooperation. Industry can help by
complying with regulatory requirements and ensuring that its business
partners are also complying with the regulatory requirements. The industry
should report suspicious orders both to the DEA and other chemical
suppliers. A question was raised concerning "Warning Letters"
which are issued to firms whose product is found at illicit laboratory
sites. Mr. Collier explained that the letter is being standardized and the
title has been changed to "Notice of Diversion."
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INTERNATIONAL TRENDS AND TRAFFICKING –
COCAINE CHEMICALS
Mr. John Farmer, Program Analyst from the International Chemical
Control Unit (ODII), discussed international trends and trafficking in
cocaine, heroin, and amphetamine-type stimulants.
Methamphetamine and ecstasy were also discussed during his
presentation. He emphasized that cocaine production at one point had gone
down but recent data indicated production levels have increased. The
production of cocaine was steady from 1995 to 1998. In 1999, there was a
decline in production but as of 2001 it was back to previous levels. North
America leads in the global consumption of cocaine with 300 metric tons
while Europe is next with a consumption of 150-200 metric tons. In the
United Kingdom, crack has become a major issue with all the associated
problems for example, drive-by shootings.
Countries involved in the production of cocaine are primarily
located in the Andean Region, and include Columbia, Peru and Bolivia, with
Columbia being the center point. The chemicals necessary for the
production of cocaine are potassium permanganate, acetone, ethyl ether,
methyl ethyl ketone (MEK), methyl isobutyl ketone (MIBK), and toluene.
While there are six producers of potassium permanganate, a cocaine
precursor, the other chemicals are solvents produced all over the world.
From November 1997- February 1998, USCS made six seizures of potassium
permanganate totaling 80 metric tons. The chemical was produced in China
and shipped via Hong Kong chemical brokers to Columbia. During 1996 and
1997, two Colombian companies alone were responsible for importing
approximately 83 percent of the potassium permanganate entering the
country.
In June 1998, the United Nations (UN) General Assembly met to the deal
with the emerging problem of chemical diversion. It devised a plan which,
in part, called for all signatories to the ‘88 Convention to strengthen
the monitoring of chemical shipments. Operation Purple was one of
the measures initiated to target potassium permanganate diversion. There
were several reasons that potassium permanganate was targeted: 1) it is an
internationally controlled chemical; 2) it is used by legitimate industry,
thus providing a paper trail for investigators to follow; and, 3) it is
produced in a limited number of countries simplifying its control and
monitoring.
Operation Purple included 18 countries who were either producers of
potassium permanganate, transient points, or producers of cocaine. The
goals and objectives of Operation Purple were: 1) to
intercept diversion and identify suspicious companies/individuals; 2) to
gather intelligence on traffickers’ methods, routes, and patterns; and,
3) to take appropriate action - administratively, civilly, or criminally.
The guidelines established to accomplish these goals were: 1) every
potassium permanganate transaction greater than 100 kilograms was to be
identified and monitored; 2) each monitored shipment was to be tracked
from the producing country through all transit countries, to the importing
country, to the end-user; 3) designation of Competent National Authorities
(CNA); and, 4) creation of a unique reference number for each shipment
that would include the abbreviation of the name of the exporting country.
The Multi-lateral Chemical Reporting Form was chosen as the primary
source for tracking potassium permanganate during Operation Purple.
The form required a few minor modifications. The form was already
being used by signatories of the convention and could be modified by
adding a reference number to the top of the form so that each shipment
would be unique. This number has three parts: 1) the country of export; 2)
the month of export; and, 3) the year of export. The completed
notification form is faxed from the exporting country to the CNA of the
importing country, the U.N. International Narcotics Control Board (INCB),
and all transit countries. When the importing government is convinced of
the bona fides of the shipment, they respond back to the exporter, the
transit countries and the INCB. The shipment is then either allowed to
proceed or is stopped. This advance notification of a pending shipment
affords the importing government time to verify the legitimacy of the
importer.
In February 1999, an international conference was held in Madrid,
Spain, to discuss Operation Purple and any other efforts targeting
potassium permanganate. A more comprehensive plan was developed at the
meeting where countries were tasked with determining what their needs and
uses were for potassium permanganate. They also were tasked with
determining how the chemical was traded internationally.
In October of 1999, another international Potassium Permanganate
Meeting was held in Hong Kong. The purpose of this meeting was to evaluate
the notification system. At this time, more countries were joining the
notification system. Now there are approximately 30 countries involved in Operation
Purple. The results of this operation from April 1999 to June 2002
include 1,658 shipments monitored totaling 44,934,395 kilograms tracked. Operation
Purple stopped or seized 66 shipments involving 4,326,471 kilograms of
potassium permanganate and provided for the arrest of 57 individuals for
attempted diversion.
Mr. Farmer discussed some of the other efforts of the potassium
permanganate initiative. Other countries realized their lack of controls.
Prior to Operation Purple numerous companies were importing
potassium permanganate into Guatemala. As a result of efforts inspired by Operation
Purple, the government of Guatemala limited the import of potassium
permanganate to two companies and established a quota based on industry’s
legitimate need. Other countries also started to investigate the need for
the chemical and set standards for their industries. This effort resulted
in many law enforcement operations to be initiated especially in
the Andean Region. One of these initiatives in particular was Operation
Mosque. Operation Mosque was a joint effort of Spain, Colombia,
and the DEA. This operation resulted in the seizure of 12,000 kilograms of
potassium permanganate and the arrest of 13 individuals, nine in Spain and
four in Colombia. Operation Mosque also caused major shifts in the
normal international trafficking patterns for potassium permanganate.
Data indicates that countries with limited controls over the chemical
industry showed an increase in chemical exports. For example, in
comparison between CY 2000 versus CY 2001, our studies showed that
China’s exports increased 300 percent and India’s exports increased
200 percent. In addition, the average size of the shipments increased by
200 percent from 5,886 to 12,624 kilograms. One of the most significant
patterns detected was that there are 63 countries that prior to 1999-2000
had never purchased potassium permanganate are now purchasing the
chemical. These countries do not participate in Operation Purple.
The volume of exports to Asia has increased from 38 percent to 54 percent
where chemical controls are weak. Clearly, traffickers have moved to
countries that have little or no control over the chemical.
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Mr. John Farmer discussed the global movement of AA, Operation
Topaz, illicit trade routes and trafficking patterns. Heroin
production was fairly consistent during 1997 through 2000, hovering around
400,000 kilograms. There was a severe drop in production in 2001, which
was attributable to severe drought conditions that affected poppy
cultivation in Southwest Asia, and the Taliban ban on poppy cultivation in
Afghanistan. In 2000, Afghanistan produced 3,656,000 kilograms or 72
percent of the world’s opium supply while in 2001, Southeast Asia
produced 90.5 metric tons of heroin.
Mr. Farmer then identified the chemicals required for heroin
production, which include solvents such as acetone, ethyl ether,
hydrochloric acid, MEK, MIBK and the precursor, AA. He showed slides
demonstrating the production of heroin, the function of each chemical and
pointed out that each is regulated by the 1988 convention against illicit
trafficking in narcotics and psychotropic substances.
Mr. Farmer stated that the total worldwide production of AA is
2,500,000,000 kilograms with 1,306,800 kilograms being needed for heroin
production - this is less than one half of one percent of the total
production. Unlike cocaine produced in only one region, heroin is produced
in four distinct areas: Mexico, Colombia, Southwest Asia and Southeast
Asia. The AA is produced all around the regions where heroin production
takes place. There are many routes used to smuggle AA to heroin producing
countries. The success of Operation Purple to control the chemicals
used in the production of cocaine inspired the international community to
initiate Operation Topaz, designed to monitor the movement of AA
from its source countries, through all the transit countries to the
ultimate consignee.
Recognizing the important role played by AA in the production of
heroin, the INCB convened a meeting, which was hosted by the Government of
Turkey, October 16-19, 2000. All major manufacturing and exporting
countries as well as transit points and importing countries were invited
to attend. Operation Topaz commenced on March 1, 2001, and now has
40 participants. The goals established for Operation Topaz were to:
1) intercept diversion attempts, identify suspicious companies or
individuals; 2) gather intelligence on traffickers’ diversion methods,
identify new trafficking routes and patterns; and, 3) prosecute
administratively, civilly, and criminally. The meeting also produced the
following guidelines to be used by Operation Topaz: 1) every AA
transaction greater than 100 liters is to be identified and monitored; 2)
each shipment will be tracked from the producing country through each and
every transit or relay country, to the importing consignee, and finally to
the end user; and, 3) identify a CNA. As in Operation Purple, each
participating country designated one office, the CNA, as the central point
for the operation.
The notification form used for Operation Topaz is basically the
same as the one used for Operation Purple, a unique reference
number and the heading has been changed to reflect Operation Topaz.
This completed notification form is faxed from the exporting country to
the CNA of the importing country, the INCB, and all transit countries. The
advance notice of a pending shipment affords the government time to verify
the legitimacy of the importer. When the importing government is convinced
of the bona fides of the shipment, it responds back to the exporter, the
transit countries and the INCB. After they receive the response, they
either stop the shipment or release it. Since its inception, there have
been 2,115 shipments monitored for a total of 205,000,000 kilograms. There
have been 8 arrests as a result of Operation Topaz. There have also
been 28 shipments, for a total of 290,721 kilograms stopped and seized
under Operation Topaz. There are shipments of AA going to
non-participating countries. We know of 213 consignments totaling 15,340
tons since Operation Topaz began. It is estimated that five percent
of shipments, which account for 10 percent of the AA produced, is destined
for non-participating countries.
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Industry’s Role in Supporting
International Efforts-Heroin
Ms. Trish Jones, Global Trade Analyst, Cendian Corporation / Eastman
Chemical Company, discussed two hi-jacking incidents that happened to
Eastman Chemical Company. One incident was the hi-jacking of two
containers of AA in Colombia. The other was the hi-jacking of one
isotainer, in Colombia. These containers were en route to a legitimate
customer. She also explained that Eastman Chemical Company is a
manufacturer of industrial chemicals and polymers with headquarters in
Kingsport, Tennessee. From its 41 manufacturing sites in 17 countries,
Eastman Chemicals ships products all over the world. Of these, there are
only a couple of the chemicals that Eastman handles that the DEA is
interested in, specifically AA.
After the hi-jackings, Eastman had to reevaluate its screening process.
Now, if a customer calls Eastman and has an interest in purchasing AA, a
sales representative visits that potential customer. They visit the
customer’s facilities, meet with the people that work there, and inspect
the site to see what is being done there. If they agree to sell to a
customer, the customer must sign a letter acknowledging that they are
aware that the chemical they are buying is one that is regulated by the
DEA. They must also submit a company profile that tells Eastman who works
for the company and who the management is, not just a buyer’s name.
These documents are only valid for one year. Further, they must have a
consistent ordering pattern, that is, if a customer orders once during the
year and then at the eleventh month wants to order again, they start over
with a new visit and letter. Eastman does this because they don’t know
what may have changed with the customer since their last order. They must
order within a six-month period to avoid being revisited.
Eastman uses alternative shipping methods for shipping AA, depending on
whether the shipment is being forwarded within or outside of the U.S.
Shipments are made in drums within the U.S. Shipments outside of the U.S
are made in isotainers, a bulk liquid tank. This is done because it is
much easier to steal a drum than a tank truck. In the case of the first
hi-jacked shipment, the customer’s location was 600 miles from the Port
of Cartagena where two isotainers were hi-jacked, en route to the
customer. Eastman suspects that the hi-jackers emptied the AA from the
isotainers into drums. The trucks were found but the isotainers never
were. While this incident was being investigated, there was another
hi-jacking of AA in Colombia. This took place about 4-6 weeks after the
first hi-jacking. At this point, Eastman made the decision not to ship any
more AA to Colombia. The DEA reinforced this decision, by suspending all
AA shipments to Colombia. Ms. Jones stated that Eastman Chemical couldn’t
emphasize enough how helpful the DEA was in helping investigate these
incidents. The DEA, Eastman Chemical and the customer proceeded to
investigate the hi-jackings. The customer was a key player in this
investigation, although this was U.S. law and regulations, the customer
bent over backwards to help the investigation. Eastman, the customer, DEA
and the foreign port worked closely with the anti-narcotics police to
redesign the process. Once the DEA determined that these measures were
sufficient, they lifted the suspension of shipments of AA. Since these
incidents, Eastman has not had any more occurrences and feels confident
regarding the process. Ms. Jones noted that as a result of these
incidents, Eastman has a better awareness of these chemicals, and better
communication within the company about what has to happen. Ms. Jones
stated that Eastman is now following similar procedures in Europe to
prevent shipments from ending up in the illicit market.
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International Trends and Trafficking -
Amphetamine Type Stimulants Chemicals (ATS)
Mr. John Farmer, discussed the abuse of ecstasy. Ecstasy is known as
"E" and the "Hug Drug," but is
chemically known as MDMA or methylenedioxymethamphetamine. Some of the
paraphernalia associated with ecstasy use include light sticks and
pacifiers. In 1914, MDMA was first patented as an appetite suppressant and
was intended as an intermediate for the development of other more powerful
products. In the 1970’s, MDMA was used for psychotherapy to eliminate
inhibitions and bring feelings to the surface. However, in the 1980’s
the federal government did tests and trials of MDMA and declared that it
did not have any medical benefit. Subsequently, in 1986, MDMA was
classified as a Schedule I illicit drug with no medical benefits.
Ecstasy tablets are stamped with various logos which serve two
purposes: to appeal to a certain audience, such as teens, and to create
brand loyalty. It is interesting to note that while MDMA is primarily a
club drug, it is now finding its way into schools and the workplace. It is
primarily marketed by Israeli and Russian organized crime groups. The
profit from MDMA is huge. An ecstasy tablet costs .25¢-.50¢ to
manufacture and wholesales for .50¢ to $2.00 in Europe. In the U.S. it
sells for up to $8.00 finally reaching the club scene where it sells for
$20.00-$30.00 a piece. In 2000, the USCS seized 9.3 million dosage units
compared to 400,000 seized in 1997. The DEA estimates that, in 2001,
approximately 2 million dosage units entered the U.S. Approximately 90
percent of the MDMA consumed in the U.S. comes from the BENELUX region of
Europe while Poland is starting to emerge as a major player. The
manufacturing of MDMA has been split into two processes. Due to the
volatility of the precursor chemicals the chemical process is done at one
site and tablets are pressed at another location.
The majority of ecstasy is used at rave parties where you have bass
driven music and flashing lights, both of which enhance the affects of the
drug. The MDMA’s stimulant properties are similar to adrenaline or
amphetamines. The physiological effects of MDMA include: increased heart
rate, increased blood pressure, stimulation of the brain (increased motor
activity, heightened alertness), tight jaw muscles, grinding of the teeth,
overheating/sweating/dehydration, mild hallucinogenic properties, enhanced
tactile sensations and perceptual changes. Pacifiers are sold at rave
parties to protect users from the tightening of the jaw muscles and teeth
grinding. Some people at the rave parties will put Vicks Vapor Rub in a
mask and put the mask on and inhale the vapors. This will give them an
incredible high because the senses are enhanced. Ecstasy causes a massive
release of serotonin in a person’s brain. The "Ravers" will
then dance for hours on end. It so enhances the tactile senses that they
have a need to be touched. Brain scans taken of people who have taken
ecstasy show the brain to look like that of an elderly person with
Parkinson’s disease. Experts have said that only one dose of ecstasy may
start a process in the brain that is irreversible. People build a
tolerance to ecstasy and it becomes necessary for them to start stacking.
Stacking means that instead of one tablet they need two to get the same
high; then they keep increasing the amount to maintain the high they got
with one.
The U.S. Customs Service (USCS) is the first line of defense in
stopping ecstasy from entering the country. Ecstasy enters the country in
luggage, airlines, seagoing cargo, parcels and couriers. Approximately 57
percent of the ecstasy enters the country by airplane. In 2001, the DEA
seized 4,493,189 tablets and the USCS seized 7,200,000. In the
Netherlands, there were 5,017,064 tablets seized in 1999 and 8,890,008 in
2000. Although many tablets are being seized, large quantities continue to
enter into the U.S. Quantities of ecstasy being manufactured in the U.S.
remain relatively low. In 1999, there were 16 clandestine laboratories
found in the U.S., 8 in 2000, and 17 in 2001. There were 28 clandestine
laboratories seized in the Netherlands in 1999 and 37 in 2000. This is
because ecstasy is difficult to manufacture and most of the precursors
needed are difficult to obtain. The precursors needed to manufacture
ecstasy are 3,4 Methylenedioxyphenyl-2-propanone, Methylamine, Isosafrole,
Safrole, and Piperonal. All these are List I chemicals under U.S. law and
are regulated by the U.N. The main sources of these chemicals are Europe
and Asia.
In an attempt to control the abuse of ecstasy in the U.S., new federal
guidelines for sentencing have been established. Under the old guidelines,
possession of 800 tablets (200 grams) of ecstasy carried a 15-month
sentence. Under the new guidelines for the same amount of tablets, a
person can receive a 60-month (5-year) sentence.
The DEA’s most serious problem is with methamphetamine.
Methamphetamine is an amphetamine-type stimulant. There are two primary
processes to make methamphetamine: one, is the ephedrine / pseudoephedrine
process and the other is the phenyl-2-propanone method. The most prevalent
process in the U.S. is the ephedrine/pseudoephedrine method because
phenyl-2-propanone is a controlled substance. All of the precursors
(ephedrine, pseudoephedrine, phenyl-2-propanone, iodine and red
phosphorous) for manufacturing methamphetamine are either listed chemicals
or a controlled substance. In 2001, with only 46 states reporting to the
National Clandestine Laboratory Database, there were 12,720
methamphetamine incidents. A methamphetamine incident includes
laboratories, chemical/glassware/equipment seizures and dumpsites.
Ninety-five percent of the DEA clandestine laboratory seizures were
"Mom and Pop" type operations usually producing one-ounce or
smaller quantities. These laboratories use readily available chemicals:
pseudoephedrine from cold and sinus medicine, red phosphorous from flares
and match heads, Coleman fuel and other readily available materials and
are usually very toxic situations. These operations pose a significant
danger from fire and explosion. They are often booby-trapped and pose a
danger both to law enforcement and the public. Some of the biggest
problems are the chemical waste at these sites and the danger to children
in the area.
The source countries for methamphetamine are the U.S., Mexico and
Southeast Asia. The methamphetamine that comes from Southeast Asia is
called "Crystal Meth" and comes in tablet form. One of the
problems with this is that some young people think the tablet is ecstasy
and when they take it are expecting one experience but receive another.
The sources for pseudoephedrine are Germany, China, India and Pakistan.
The sources for ephedrine are India, China and the Czech Republic. The
U.S. has a serious problem with pseudoephedrine smuggled from Canada. As
Canada does not have chemical laws, it has become a haven for traffickers
to provide the U.S. market with pseudoephedrine.
In June 2002, the International Narcotics Control Board (INCB), in
conjunction with the European Union and the DEA, met in Washington, D.C.
Forty-two countries attended the meeting intended to counter
amphetamine-type stimulant abuse on an international basis. These
countries represented all manufacturing, importing, exporting and transit
countries for the chemical precursors. The participants agreed to launch
an international project entitled Project Prism. They also formed a
task force to oversee individual operations and two working groups. One
working group was to target amphetamine-type stimulant chemicals. The
other was to target materials and equipment used in illicit
amphetamine-type stimulant production and the use of the Internet in
preventing diversion.
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U.S. Customs Service Import/Export
Procedures
Ms. Janice Catrell, USCS, explained that the USCS International
Training Division is paid by the U.S. Department of State to train its
foreign counterparts in customs procedures and methods. Ms. Catrell
informed the attendees that Afghanistan is now an emerging heroin
producing country. The U.S. thought that they were just exporting opium
paste but in fact they are processing the paste and exporting heroin. She
explained the mission of the USCS and how it enforces over 400 laws for 40
agencies. It has personnel at 301 ports of entry and exit. Since 9/11,
anti-terrorism has become a new priority for the USCS. When you talk about
anti-terrorism at the border you are talking about nuclear, biological,
and chemical weapons being smuggled into the U.S. The USCS is unique in
that they are the only agency with Warrantless Search Authority.
Ms. Catrell explained the USCS export control program, particularly Operation
Exodus. In the late 1980s, the USCS was given the authority to examine
out-bound shipments. Prior to this, it was unclear that the USCS could
examine shipments leaving the U.S. Operation Exodus focuses on
Weapons of Mass Destruction (WMD) such as missile delivery systems. They
also have Operation Blue Lightning, which focuses on the searching
of cargo ships. She went on to explain the Treasury Enforcement
Communication System (TECS), the computer system that the USCS currently
has in place, which is mainly a data base of passengers arriving in the
U.S. She spoke of the computer system that the USCS uses to keep track of
cargoes and manifests, which are required to be filed with the USCS prior
to an export or import.
Ms. Catrell explained there are two current programs that the
USCS has initiated: 1) The Customs-Trade Partnership Against Terrorism (C-TPAT);
and, 2) the ISCS Container Security Initiative (CSI). The C-TPAT is a
joint government and business initiative to build cooperative
relationships that strengthen overall supply chain and border security.
The CSI will put USCS inspectors at overseas ports where they will inspect
cargo containers prior to their being loaded for shipping to the U.S.
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Overview Import Export Procedures
Mr. Frank Moreno, Chief of the Data Processing and Analysis Unit, stated
that there are currently 38 chemicals that are regulated by the DEA. He
showed a slide listing the 38 and explained that some, such as white
phosphorus, were recently regulated. Registration is required for any
company or person who handles any List I chemicals. If a company or person
imports or exports any of the 38 chemicals, they must notify the DEA via a
DEA Form 486. Thresholds for required reporting are different for each
chemical. Thresholds are listed for each chemical in 21 CFR 1310. Records
are only required for those chemical transactions which meet or exceed the
reporting threshold. Some chemicals, such as ephedrine, have a zero
threshold requiring every import/export transaction to be recorded and
reported. Others, such as MEK, have a 1,500 kilogram threshold. The
threshold is also determined on a monthly cumulative basis. A company or
person may meet or exceed the threshold by shipping many smaller amounts
of a chemical over a month’s time. This also must be reported to the DEA.
All records must be kept for two years.
The DEA considers chemical mixtures to be a combination of two or more
chemicals where at least one chemical is regulated. These mixtures are
currently not regulated. If a listed chemical contains only impurities
that are a part of the manufacturing process, then it is still regulated.
It should be noted that it is illegal for someone to formulate a mixture
solely to evade the record keeping and reporting requirements.
The Chemical Registration Program began in 1993 with the passing of the
Domestic Chemical Diversion Control Act (DCDCA). This act mandated that
chemical handlers who import, export, or distribute List l chemicals be
registered with the DEA. At the present time, there are approximately
3,500 registered chemical handlers. The DEA Form 510, application for
chemical handler registration, may be obtained from the DEA website (www.deadiversion.usdoj.gov)
or by contacting DEA Headquarters or a local field office. The application
and payment is then mailed to the DEA and the field will conduct a
pre-registration investigation. Upon approval of the application a
certificate, which is valid for one year, is mailed to the registrant.
Renewal applications are automatically mailed to the registrant. The
attendees were informed that if they had any modifications to their
current registration they were to report them to the DEA. Attendees were
further informed that the Chemical Handler’s Manual is available on
line.
Importers and exporters of listed chemicals are required to notify the
DEA 15 days prior to that shipment leaving or entering the country. If an
exporter is shipping to a new customer, the shipper is required to give
the DEA 15 days advance notice. The reason for this is to give the DEA an
opportunity to investigate the recipient in the foreign country. In
situations where an exporter ships to the same customer at least twice a
year, the 15-day advance warning can be waived. If shipment by an exporter
to a given customer stops and later resumes, the 15-day advance notice
must again be provided to DEA. The same applies to importing from a
foreign supplier except there are no waivers of the 15-day notice. In case
of a genuine emergency, the DEA has the authority to waive the 15-day
requirement. The 15-day notice requirement begins when the form is
received by the DEA, not when the form is placed in the mail for delivery
to the DEA. The DEA will conduct an investigation of the designated
customer. Importers or exporters may proceed to ship the product if the
DEA does not contact them and prohibit the shipment. If the customer is
not approved, the DEA will ask the importer to stop the shipment or issue
a suspension order.
There are four types of transactions that are reportable to the DEA.
These are exports, imports, international shipments, and transshipments.
Exports, imports and transshipments are self-explanatory. An international
shipment is when a U.S. company or a U.S. broker handles a shipment that
occurs totally outside of U.S. territory. For example, a broker in Texas
arranges a shipment that goes from Germany to Venezuela, even though it
never touches U.S. territory, it still has to be reported to the DEA 15
days ahead of that shipment. With the exception of a transshipment, the
DEA must be notified via the DEA Form 486. For a transshipment, the
shipper providing notice on company letterhead can notify the DEA. The DEA
Form 486 must be filled out completely, signed, and faxed to the DEA. When
filing a DEA Form 486 for drug products, additional information is
required (i.e., the dosage form, dosage strength, number of containers and
the number of tablets).
The USCS has access to the DEA Form 486 and chemical data through their
database. This allows the USCS to determine if the DEA Form 486 has been
submitted to the DEA. On a daily basis the DEA downloads this information
directly to the USCS data bank. If listed chemicals are found by USCS
without a corresponding DEA Form 486 being on file, they will seize the
shipment. Furthermore, there is a statutory requirement that listed
chemical exporters comply with the import laws of the foreign government.
The DEA sends pre-export notifications to foreign governments. If the
foreign government finds that the importing company does not have all the
required paperwork or has exceeded their quota, they will ask the DEA to
stop the shipment.
Some of the issues related to importing and exporting are: 1) ensuring
that the shipper’s address on the DEA Form 486 is the registered
location; 2) ensuring that registrations apply to specific chemicals; 3)
remembering that the 15-day notification cannot be waived unless there is
regular customer status; and 4) providing 15 days notice for importing
shipments of ephedrine, pseudoephedrine, and phenylpropanolamine. Shipping
ephedrine, pseudoephedrine and phenylpropanolamine to Canada, Mexico and
Central America also require the 15 day advance notice. The U.S. company
is responsible for filing the DEA Form 486, not the foreign subsidiaries.
Free trade agreements do not affect reporting requirements. Foreign trade
zones in the U.S. where listed chemicals are manufactured must report the
importation of the chemical from the trade zone into the U.S. Importers of
MEK, acetone, or toluene into the U.S., need only file a quarterly report
with the DEA. The reason the DEA removed the shipment-by-shipment
requirement was because these chemicals are used in the manufacture of
cocaine, which is not manufactured in the U.S.
Chemical Legal Update
Mr. Charles E. Trant, Attorney, Section Chief, Diversion Litigation
Section, the DEA Office of Chief Counsel, discussed three cases involving
wholesale distributors of regulated chemicals. The cases included one
administrative case, one criminal case, and one civil case.
The first case he discussed involved a company called Mediplas,
a wholesale distributor of pseudoephedrine. Mediplas was named in a
show cause action after an investigation showed that Mediplas sold
16 million dosage units of pseudoephedrine to one customer. This
pseudoephedrine was eventually used in the illicit market. Their defense
was that they were not responsible for the ultimate distribution because
their product was sold only to DEA registrants. The defendant did not
request a hearing but one was held anyway. The Administrative Law Judge
upheld the suspension deciding that it was not a question of the
culpability of the importer but it was whether the shipment ended up in
the illicit chain, a negligence standard.
The second case presentation involved Grab Bag Distributor, a
convenience store. This case resulted in a summary judgment. Grab Bag
was selling huge quantities of pseudoephedrine to several customers. Grab
Bag did not properly identify the customers, the customers were not
registered with the DEA and they paid cash for the product.
Three-hundred-sixty-six civil charges were brought against Grab Bag.
The owner attempted to defend himself by stating he had acquired some
identification and had not deemed any of the sales to be suspicious.
Evidence presented by the DEA included an analysis of the marketing of
pseudoephedrine in the convenience store business. Testimony by a Senior
Diversion Investigator and a senior manager from the industry both labeled
this volume of sales as suspicious for a company the size of Grab Bag.
This case was won by Summary Judgment.
The third case Mr. Trant discussed was handled as an administrative,
civil and criminal case (the Neil Laboratories case) and was a part
of Mountain Express III. Mr. Trant gave a brief history of the Mountain
Express operations. Neil Laboratories was a small family
business owned by Middle Easterners, the Patel brothers. Several
undercover buys were made to prove that they knew that the pseudoephedrine
was destined to methamphetamine traffickers at Mexican super labs. On
January 16, 2002, an immediate Suspension Order was issued and on January
17, 2002, the arrests were made. On March 6, 2002, Neil Laboratories
filed a restraining order requesting the lifting of the suspension order.
The judge in District Court refused to lift the order stating that unless
there is a finding of capricious or unreasonable behavior on the part of
the Administrative Law Judge the administrative decision will not be
disturbed. The District Judge granted the government’s request for
summary suspension.
Mr. Trant discussed a new source of information being used in
chemical investigations. This technique involves the services of Mr.
Jonathan Robbin, an expert market analysis statistician. Mr. Robbin has
used official government and commercially available sales data to
determine the legitimate market for over the counter products containing
the List 1 chemical pseudoephedrine, and limited analyses on over the
counter products containing the List 1 chemical ephedrine. Mr. Robbin
found that very little of these cough and cold preparations are sold by
convenience stores. Pharmacies and stores, such as Costco and Wal-Mart,
sell 93 percent of these products. There is no legitimate expectation that
this type of store is selling these products in large enough numbers to
support the amount of pseudoephedrine products being purchased by
convenience stores. Evidence in one case indicated that customers were
paying two-to-three times the norm for pseudoephedrine products and
$500.00 for overnight delivery. Mr. Trant reiterated DEA’s desire to
cooperate with industry.
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Overview of Domestic Chemical Issues
Mr. John Uncapher, Chief, DEA Domestic Chemical Diversion Unit,
discussed the domestic regulation of chemicals. He began by stressing the
importance of chemical companies knowing their customers. Prior to 1989,
the problem was that there were no regulations regarding the distribution
of precursor and essential chemicals. This resulted in the diversion of
chemicals into the illicit market to manufacture illicit drugs such as
methamphetamine. The first law passed was the Chemical Diversion and
Trafficking Act of 1988 (CDTA), which placed controls on 20 chemicals. It
also established record keeping requirements, reporting requirements, and
the concept of thresholds. Further, this law controlled bulk products.
When the traffickers switched to tablets it was necessary to have the
Domestic Chemical Diversion Control Act of 1993 (DCDCA) passed. This law
established the registration requirements for importer, exporters, and
distributors of List I chemicals. It also placed controls on single entity
ephedrine products and on U.S. based companies involved in international
transactions. This law also changed the terminology used for the chemicals
from essential and precursor to List I and List II chemicals. Traffickers
started to use combination ephedrine tablets and pseudoephedrine
over-the-counter products. The Comprehensive Methamphetamine Control Act
of 1996 (CMCA) was passed to establish controls on combination ephedrine
as well as pseudoephedrine and PPA products. The latest legislation to be
passed was the Methamphetamine Anti Proliferation Act of 2000 (MAPA). The
MAPA reduced the threshold for two types of distributors, the convenience
stores (retail distributor) and mail order distributors. In addition, the
DEA started to take criminal, civil and administrative action against
companies for illegal chemical sales. The DEA and the chemical legislation
in effect encourage voluntary initiatives by the industry. An excellent
example of voluntary initiatives was Wal-Mart’s effort to limit the
amount of these products that any one person can purchase at a time.
Another way the DEA responds to this problem is by sending Notices
formerly known as Warning Letters to chemical suppliers whose
chemicals are found at clandestine labs.
The U.S. has a serious methamphetamine problem, which cannot be
addressed by the DEA alone. The problem must be addressed on several
levels and industry’s help is crucial. Industry needs to voluntarily
restrict sales at the retail level as well as be aware of, and report,
suspicious orders. Chemical handlers should comply with DEA Form 486
regulations. In addition, they should be familiar with their customers by
determining if they are required to be registered and if they are
registered; know their customers’ needs, especially new customers; know
who their customers are selling to; look for any changes in ordering
patterns by existing customers; and, watch for orders of iodine, it is a
key ingredient in making methamphetamine.
There are record keeping requirements for regulated transactions.
Registrants are required to keep these records for two years. It is best
to keep them separate but at the very least they must be readily
retrievable. All regulated transactions must be recorded and the records
must be maintained at the registered location. However, companies with
multiple locations may request permission from the DEA to maintain records
at a central location. Suspicious orders must be reported and not shipped.
If there is any doubt about an order, it should be reported as suspicious
to avoid liability. Suspicious orders should be reported by a
telephone call to the local DEA office and followed up by a written
report. Proof of identity must be obtained from customers. The regulations
list several examples of ways that can be used to comply with this
requirement. The first basic check is to insure the customer has a DEA
registration.
Importers of ephedrine or pseudoephedrine and occasionally other
chemicals should be aware that the foreign country from which these
products are to be exported will not allow the export until they receive a
Letter of No Objection (LONO) from the DEA. Mr. Uncapher stated the LONO
advises a foreign country in writing that the U.S. has no objection to the
product being imported. The LONO and DEA Form 486 must be filed with the
DEA.
In order to import, export, or distribute List I chemicals, DEA
registration is required. Retail distributors are exempted from the
registration requirement. Retail sales should be for the personal use of
the customer. However, if a retailer is selling single-entity ephedrine
products, registration is required. When someone wants to be registered,
they apply via DEA Form 510, submitting it to DEA Headquarters. The
application is then sent to the DEA field office that has jurisdiction
over the applicant and a pre-registration investigation is conducted. This
is a very important step in approving the application because the DEA has
to determine if approving this application is in the public interest.
There are several factors that are considered in approving an application.
These factors are as follows: 1) does the applicant list as their
suppliers companies who are subjects of Orders to Show Cause or have
received Warning Letters; 2) how many other suppliers does the applicant’s
customers have for List I chemical products; 3) what do their
customers do with the products; 4) what is the applicant’s experience in
handling chemicals or drug products containing List I chemicals; 5) how
much List I chemical product does the customer plan to buy per month from
the applicant; 6) is the applicant a distributor proposing to supply other
distributors rather than supplying directly to retailers; and 7) where
is the applicant who wants to be registered located? If the applicant is a
dosage form manufacturer, and is being approved, the DEA will obtain
authentic samples for the DEA Special Testing Laboratory.
The Suspicious Orders Task Force (SOTF) was mandated by the CMCA of
1996 and was composed of representatives of the DEA, state law
enforcement, and private industry. The SOTF made several recommendations
addressing how to curtail suspicious orders. One recommendation was
that manufacturers of retail over-the-counter (OTC) products containing
List I chemicals use only packaging which conforms to the packaging of
"ordinary over-the-counter" products (blister packs). Also, they
recommended that the sales of elemental iodine and red phosphorous
at retail be considered suspicious and be reportable to the DEA. In
addition, they recommended that all distributors who sell at the
retail level have signs advising that all such sales will be reported to
the DEA.
The title of the Warning Letter has been changed to Notice of
Diversion. In 1996, at a DEA/Chemical Industry Conference some industry
complained that they did not know when their products were being found in
clandestine laboratories. As a result, Warning letters were developed to
notify the people involved where their products were being found. Other
agencies, such as the California Bureau of Narcotics Enforcement, also
issue Warning Letters.
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Introduction to Clandestine
Laboratories
Mr. Sheldon Burkett, Special Agent (S/A) Staff Coordinator, DEA Office
of Domestic Operations, spoke about the various gangs involved in the
manufacturing of methamphetamine and the methods used to manufacture. S/A
Burkett explained that a super laboratory produces 10 pounds of
methamphetamine in a 24-hour period. A small laboratory produces
approximately 2 ounces per batch. In 2001, approximately 301 super
laboratories were discovered by law enforcement.
Drug Abuse Warning Network (DAWN) statistics show that the core age of
a methamphetamine user is 20-39 years of age. Females are approximately 42
percent of the user group. The addiction period for methamphetamine is
very short, approximately six months. In 2001, the DEA alone paid $24
million to clean up clandestine laboratory sites. Methamphetamine is easy
to make, the chemicals are easy to obtain, and there is a high profit
margin. S/A Burkett discussed the diseases a user can catch and the
physical and emotional effects this drug has on the user. He explained
that the rehabilitation of a methamphetamine user normally takes two
years. S/A Burkett showed slides of methamphetamine lab sites and
explained the dangers of seizing them.
Chemical Regulatory Issues/Pending
Actions
Ms. Michelle Ferritto, Program Analyst, Liaison and Policy Section,
presented a regulatory update on some of the DEA’s pending and proposed
chemical actions. Chemical security has been a problem. From 1995 to 2000
almost all reported chemical thefts have involved pseudoephedrine or
ephedrine, either in bulk or in drug products. The amount of the product
stolen could theoretically produce approximately 1.3 tons of
methamphetamine.
While the legitimate wholesale price for a case of 144 bottles of
pseudoephedrine products is $150 to $170, the black market price is $1100
to $3,000 or more depending on the location. The DEA has proposed
additional security be required for List I chemicals and chemical
products. The DEA is proposing the same level of security that is required
for Schedules III-V controlled substances. These products are required to
be secured in a cage that is protected by an alarm system. This would only
affect pseudoephedrine, ephedrine, and PPA. Industry’s input will be
sought regarding alternative means to effectively prevent theft and loss.
The MAPA of 2000 requires reporting of export transactions other than
those listed on the DEA Form 486. It established exemptions of certain
types of transactions from the mail order reporting requirement including:
samples, long term care residents, and dispensing per prescriptions.
The blister pack exemption has caused some people to believe that the
blister pack safe-harbor is an unqualified exemption. The exemption
applies only to retail distribution and persons conducting retail
distribution activities. It is an exemption for ordinary over-the-counter
pseudoephedrine or PPA products that are sold in package sizes of not more
than 3.0 grams of pseudoephedrine base or PPA base. It must be packaged in
blister packs, each blister containing not more than two dosage units.
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Closing Remarks
Closing remarks were provided by Mr. Woodworth for the conference. He
noted that although the DEA and the chemical industry may have different
perspectives on how to regulate the chemical industry, the DEA and the
chemical industry share similar goals. He pointed out the functional
differences between the DEA and the chemical industry. For example, it is
doubtful that anyone in the chemical industry has participated in an
arrest or kicked in a door or participated in the investigation of a rogue
chemical handler. On the other hand, it is extremely doubtful that anybody
in the DEA has participated in the drafting of a marketing strategy or,
for that matter, sold a dime’s worth of a chemical product. However,
preventing diversion and helping to protect the health and safety of the
American public are both primary concerns of the DEA and the chemical
industry. Industry’s perspective is different from law enforcement’s
in that industry needs to conduct business and make a profit. The DEA and
the chemical industry have done a great job cooperating with each other.
The Government will continue to work closely with the chemical industry in
order to achieve their desired goals. Mr. Woodworth noted the substantial
steps taken over the years to interact with industry and to enhance a
highly regarded relationship.
There are still some major concerns requiring the attention of the DEA
and the chemical industry. For example: how to address the problem created
by driving traffickers down to the retail level; how to accommodate the
people who have legitimate needs for pseudoephedrine; and, how to address
the notice and the warning for products. Mr. Woodworth stated that the
only way to address these issues is for the DEA to sit down with the
individual companies, including the retail level. The DEA and industry
must develop a strategic plan to address these issues. The DEA has taken
substantial steps over the years to interact with industry and enhance the
working relationship. The DEA has hosted national conferences, conducted
quarterly working groups, established liaison programs, and its field
offices conduct training on a variety of subjects. In addition, the DEA
publishes numerous documents, manuals and newsletters, which are displayed
on our website in order to educate and communicate to its registrant
public.
Mr. Woodworth noted the conference a success and thanked everyone for
taking time out of their busy schedule to participate.
