Louisville, Kentucky
October 31- November 1, 2006

The Drug Enforcement Administration’s (DEA) Office of Diversion Control sponsored the Ninth Chemical Industry Conference October 31 – November 1, 2006. The conference was well attended by handlers of bulk List I and II chemicals, scheduled listed chemical products, and their respective associations. The focus of this conference was to strengthen the cooperative efforts between DEA and the regulated chemical industry and provide a forum to discuss practices, procedures, and updated regulation in order to prevent chemical diversion while minimizing the impact on legitimate commerce.

PRESENTATIONS:

Detroit Field Division, Assistant Special Agent-in-Charge (ASAC) Richard Badaracco opened the proceedings by greeting and welcoming participants to the conference.

ASAC Badaracco introduced Denise Curry, Deputy Director of the Office of Diversion Control. Ms. Curry greeted the conference participants as representative of the DEA’s Office of Diversion Control and Deputy Assistant Administrator Joseph T. Rannazzisi. Ms.Curry provided introductory remarks and gave a brief overview of recent organizational changes inside DEA and a synopsis detailing the function and mission of DEA’s Office of Diversion Control.

Ms. Curry introduced Christine Sannerud, Ph.D., Chief, Drug and Chemical Evaluation Section (ODE). Ms. Sannerud gave a presentation detailing current activities within ODE. She discussed the production of methamphetamine and the scheduled listed chemical products used in this process. Ms. Sannerud described the function of ODE in respect to the determination of chemicals used in the manufacturing of controlled substances and the existing regulatory mechanisms to control compounds used in manufacturing illicit controlled substances. She discussed investigations, import and export processing permits, the DEA Form 486, and the reporting of chemical statistics to the UN. Clandestine laboratories were also a topic of discussion. Details of Ms. Sannerud’s talk and MS PowerPoint presentation can be found in the attached, (see file entitled "DEA Regulated Chemical Initiatives")

Next, Mark Caverly, Chief, Liaison and Policy Section (ODL), who acted as Master of Ceremonies for the conference and provided two presentations, introduced the Louisville District Office Resident Special Agent-in-Charge (RAC) Tony King. RAC King spoke regarding the real life dangers of methamphetamine use and how methamphetamine has adversely affected society. He focused on the methamphetamine epidemic in the country and in Kentucky. This presentation was informative and well received by the conference attendees. Due to the confidential nature of these slides, they are not attached.

Ms. Catherine Gentry, Program Analyst, Dangerous Drugs & Chemicals Section (ODE), gave a presentation detailing both the domestic and international chemical operations in which DEA is currently participating. Ms. Gentry discussed the need and function of the following activities:

Ms. Gentry discussed the operation and results of each special activity. She also discussed the International Methamphetamine Precursor Control Efforts meeting held in February 2006 in Hong Kong. Details can be found in Ms. Gentry’s MS PowerPoint presentation (attached, see file entitled "Overview of Current Regulated Chemicals").

The next series of speakers discussed chemical control and the recently enacted Combat Methamphetamine Epidemic Act (CMEA) and a new category of chemicals arising from this law called Scheduled Listed Chemical Products. Legal issues, quotas and terrorism as it relates to the chemical industry were also discussed.

The day ended with a presentation by Mark Caverly, detailing the recently enacted CMEA. Mr. Caverly began with a brief summary of the new law and the purpose for implementation. He discussed the new category of chemicals called scheduled listed chemical products which consist of pseudoephedrine, ephedrine and phenylpropanolamine. Mr. Caverly explained the requirements for regulated sellers and described the online system available to self-certify. He talked about the DEA developed database containing self-certification records available to state and local law enforcement agencies as well as information regarding the required logbook and privacy requirements. Details about Mr. Caverly’s talk can be found in his MS PowerPoint presentation (attached, see file entitled "Combat Methamphetamine Epidemic Act of 2005").

The second day of the conference began with a presentation by David L. Barber, Chief, Diversion and Regulatory Litigation Division, Office of Chief Counsel. Mr. Barber discussed the legal implications of the CMEA for chemical distributors, manufacturers and importers, gave examples and explained "orders to show cause" against regulated sellers and mail order distributors of Scheduled Listed Chemical Products. He also addressed new importation criteria for ephedrine, pseudoephedrine and phenylpropanolamine, along with details of how the CMEA logbook should be maintained. Mr. Barber spent much of his presentation answering many questions from the conference attendees. Details of Mr. Barber’s talk can be found in his MS PowerPoint presentation (attached, see file entitled "DEA Legal Issues").

Regulations and quotas were the next topics of discussion. The first speaker was Mark Caverly. He gave an update on DEA chemical regulations and noted again the implementation of the new CMEA and other pertinent regulatory actions. He addressed retail rules, spot market, quotas, and briefly noted regulatory issues that had previously been covered in Ms. Gentry’s presentation. He reported to the audience that as of October 24, 2006, there were 49,102 self-certifications for regulated sellers. Details regarding Mr. Caverly’s talk can be found on his MS PowerPoint presentation (attached, see file entitled "DEA Chemical Regulations Update").

Quotas were addressed by Matthew Strait, Chief, Quota and Reporting Unit, Drug and Chemical Evaluation Section. Mr. Strait focused his presentation on quotas for List I Chemicals with the two registrant populations of importers and manufacturers the primary topic. He provided the quota requirements under the CMEA and discussed clandestine manufacturing of methamphetamine and the chemicals associated with the illicit production of this dangerous drug. For manufacturers, Mr. Strait discussed two important DEA forms, the Form 189 and Form 250. Quotas for the three new scheduled listed chemical products were noted for importers. Medical needs of the US and how these needs are impacted by the scheduling of the three listed chemical products was described in a study done with IMS Health. Details of Mr. Strait’s talk can be found in his MS PowerPoint presentation (attached, see file entitled "Chemical quotas and IMS Issues").

The final speaker was Marybeth Kelliher, Chief, External Affairs Unit, Department of Homeland Security Risk Management Division (DHS-RMD). Ms. Kelliher gave an overview of DHS and the mission with regard to terrorism prevention and the chemical industry. She discussed critical infrastructure and the need for DHS and the chemical industry to work together and provide risk assessments and protective programs in order to deter terrorism. Ms. Kelliher went into detail about the National Infrastructure Protection Plan and what that means for the country as well as private industry. Attack, theft, or sabotage at a chemical facility is of concern given the potential for significant health, economic, and/or national security consequences arising from such an event. Details regarding Ms. Kelliher’s talk can be found on her MS PowerPoint presentation (attached, see file entitled "Security, Terrorism and the Chemical Industry").

After the last session of the day, Mr. Caverly hosted an open discussion where the industry and association members were free to voice their opinions and concerns. There was much discussion regarding the CMEA, quotas and regulations. Mr. Caverly stated that this conference was not typical of our past chemical conferences due to the new CMEA law and the involvement of many retailers with concerns ranging from self certification to maintaining the mandatory logbook. He assured all those present that their opinions and concerns would be considered and encouraged the continuation of open communication in order to maintain the working relationship DEA enjoys with the chemical industry.