Regulation of Industrial Chemicals by DEA and the States as Precursor Chemicals
In an effort to stem the illegal manufacture of controlled substances, state legislatures have been regulating industrial use chemicals independent, and in addition to, existing federal regulation. A number of states have their own regulatory scheme involving both chemicals regulated by DEA and others that are not so regulated. Thus, there is a patchwork of federal and state regulation that chemical manufacturers and distributors must understand and navigate in order to legally conduct business.
"Precursor chemicals" are chemicals that can be used to illicitly manufacture controlled substances. Such chemicals also have significant legitimate uses in various industries. For example, malonic acid can be used to make phenyl-2-propanone ("P2P") and barbiturates. But malonic acid and its esters also are important intermediates in syntheses of vitamins B1 and B6, barbiturates, non-steroidal anti-inflammatory agents, other numerous pharmaceuticals, agrochemicals, and flavors and fragrances compounds.
When DEA regulates precursor chemicals, it either schedules them as a controlled substance or identifies them as a Listed Chemical. A precursor chemical, referred to as an "immediate precursor," under federal law, is a substance (1) which the Attorney General has found to be and by regulation designated as being the principal compound used, or produced primarily for use, in the manufacture of a controlled substance; (2) which is an immediate chemical intermediary used or likely to be used in the manufacture of such controlled substances; and, (3) the control of which is necessary to prevent, curtail, or limit the manufacture of such controlled substance. 21 U.S.C. § 802 (23). An "immediate precursor" can be scheduled as a controlled substance on the same schedule as the controlled substance in the manufacture of which it is used or a higher schedule. 21 U.S.C. § 811(e). When an immediate precursor chemical has been designated as a controlled substance, any company manufacturing, distributing or possessing it must hold the proper DEA registrations and comply with all relevant DEA regulations.
DEA has two categories of listed chemicals: List I and List II. Both lists are composed of chemicals used in the illicit manufacture of controlled substances. List I chemicals are "important" to such manufacture, while List II are not. See 21 U.S.C. § 802(34). Listed chemicals are identified in the Controlled Substances Act or by DEA regulation. See 21 U.S.C. § 802(34) & 21 C.F.R. § 1310.02 (a) & (b). There are currently thirty chemicals on List I and eleven chemicals on List II. Id. The current List I and List II chemicals are set out in Appendix A. Companies manufacturing, distributing, importing or exporting List I chemicals generally need to be registered with DEA. Further, any company involved with List I and/or List II chemicals must comply with DEA's regulations. See 21 U.S.C. § 822(a)(1).
DEA also regulates some chemicals useful in the illegal manufacture of controlled substances by placing them on a special surveillance list. The special surveillance list constitutes notice that certain chemicals are "laboratory supplies." The distribution of a laboratory supply to a person who uses, or attempts to use, them to manufacture a controlled substance or a listed chemical may result in a civil fine of $25,000 if that distribution was made with "reckless disregard'' for the illegal uses to which such chemical would be put. See 21 U.S.C. 842(a)(11), 842(c)(2)(C). The chemicals on the special surveillance list are included in Appendix A.
In 1992, the American Prosecutors Research Institute issued the Model State Chemical Control Act. The Model Act was designed to create a state-based monitoring system to track thirty-five chemicals. The chemicals listed in the Model Act included ten chemicals not currently included on DEA's List I or List II. Those chemicals are D-lysergic acid, which is regulated by DEA as a controlled substance; diethylamine and its salts; malonic acid and its esters; 2,3-methylenedioxyphenyl-2-propanone; morpholine and its salts; n-ethylephedrine, its salts, optical isomers; and salts of optical isomers; 1-phenyl-1-chloro-2-methylaminopropane; phenyl-2-propanone; pyrrolidine and its salts; and, thionyl chloride. The chemicals included in the Model Act are listed in Appendix B.
When the Model Act was proposed, eighteen states already had their own provisions regulating certain chemicals. At that time, the list of state regulated chemicals ranged from nine to thirty-five. The states had established varying requirements, such as mandatory registration, record keeping, notice to the state prior to delivery, reporting of out-of-state purchases, and reporting of theft or loss among others.
Since the issuance of the Model Act, additional states have established their own regulations for certain chemicals. The result is a patchwork of regulation. For instance, one state now regulates thirty-seven different chemicals under its law, including diethyl malonate and 1,4 butanediol, neither of which are regulated by DEA or included in the Model Act, and mixtures of iodine at levels below that regulated by DEA. These chemicals also have legitimate business uses. Furthermore, the states that have established their own regulation provide for the regulation of additional chemicals generally as the result of an administrative agency decision. Certain states require registration before manufacturing or selling certain chemicals in the state or even shipping the chemical into the state. Some states further regulate certain chemicals as controlled substances under their state Controlled Substances Act. Some states exempt certain chemicals when used for industrial purposes only and not meant for human consumption. Overall, selling of chemicals considered precursors of controlled substances requires a careful examination of the law of each state in which a company plans to manufacture, sell, or deliver their product.
For more information about state or federal regulation of precursor chemicals, please contact Douglas Behr (+1-202-434-4213, behr@khlaw.com) or Jacquelyn Thompson (+1-202-434-4209, thompsonj@khlaw.com).