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ing a hearing shall, within 30 days after the date of receipt of the order to show cause (or the date of publication of notice of the application for registration in the FEDERAL REGISTER in the case of § 301.43), file with the Director a written request for a hearing in the form prescribed in § 316.47 of this chapter.

(b) Any person entitled to participate in a hearing pursuant to § 301.43 and desiring to do so shall, within 30 days of the date of publication of notice of the hearing in the FEDERAL REGISTER, file with the Director a written notice of his intention to participate in such hearing in the form prescribed in § 316.48 of this chapter. Any person filing a request for a hearing need not also file a notice of appearance.

(c) Any person entitled to a hearing or to participate in a hearing pursuant to §§ 301.42-301.45 may, within the period permitted for filing a request for a hearing or a notice of appearance, file with the Director a waiver of an opportunity for a hearing or to participate in a hearing, together with a written statement regarding his position on the matters of fact and law involved in such hearing. Such statement, if admissible, shall be made a part of the record and shall be considered in light of the lack of opportunity for cross-examination in determining the weight to be attached to matters of fact asserted therein.

(d) If any person entitled to a hearing or to participate in a hearing pursuant to §§ 301.42-301.45 fails to file a request for a hearing or a notice of appearance, or if he so files and fails to appear at the hearing, he shall be deemed to have waived his opportunity for the hearing or to participate in the hearing, unless he shows good cause for such failure.

(e) If all persons entitled to a hearing or to participate in a hearing waive or are deemed to waive their opportunity for the hearing or to participate in the hearing, the Director may cancel the hearing, if scheduled, and issue his final order pursuant to § 301.57 without a hearing.

[36 F.R. 7778, Apr. 24, 1971, as amended at 36 F.R. 13386, July 21, 1971]

§ 301.55 Burden of proof.

(a) At any hearing on an application to manufacture any controlled substance listed in schedule I or II, the applicant shall have the burden of proving that the requirements for such registration pur

suant to section 303(a) of the Act (21 U.S.C. 823(a)) are satisfied. Any other person participating in the hearing pursuant to § 301.43 shall have the burden of proving any propositions of fact or law asserted by him in the hearing.

(b) At any other hearing for the denial of a registration, the Bureau shall have the burden of proving that the requirements for such registration pursuant to section 303 of the Act (21 U.S.C. 823) are not satisfied.

(c) At any hearing for the revocation or suspension of a registration, the Bureau shall have the burden of proving that the requirements for such revocation or suspension to section 304 (a) of the Act (21 U.S.C. 824(a)) are satisfied. § 301.56 Time and place of hearing.

The hearing will commence at the place and time designated in the order to show cause or notice of hearing published in the FEDERAL REGISTER (unless expedited pursuant to § 301.46 (c)) but thereafter it may be moved to a different place and may be continued from day to day or recessed to a later day without notice other than announcement thereof by the presiding officer at the hearing. § 301.57 Final order.

As soon as practicable after the presiding officer has certified the record to the Director, the Director shall issue his order on the granting, denial, revocation, or suspension of registration. In the event that an application for registration to manufacture in bulk a basic class of any controlled substance listed in schedule I or II is granted, or any application for registration is denied, or any registration is revoked or suspended, the order shall include the findings of fact and conclusions of law upon which the order is based. The order shall specify the date on which it shall take effect. The Director shall serve one copy of his order upon each party in the hearing. MODIFICATION, TRANSFER AND TERMINATION OF REGISTRATION

§ 301.61 Modification in registration.

Any registrant may apply to modify his registration to authorize the handling of additional controlled substances by submitting a letter of request to the Registration Branch, Bureau of Narcotics and Dangerous Drugs, Department of Justice, Post Office Box 28083, Central Station, Washington, D.C. 20005. The let

ter shall contain the registrant's name, address, registration number, and the substances and/or schedules to be added to his registration, and shall be signed in accordance with § 301.22(f). If the registrant is seeking to handle additional controlled substances listed in schedule I for the purpose of research or instructional activities, he shall attach three copies of a research protocol describing each research project involving the additional substances, or two copies of a statement describing the nature, extent, and duration of such instructional activities, as appropriate. No fee shall be required to be paid for the modification. The request for modification shall be handled in the same manner as an application for registration. [36 F.R. 18729, Sept. 21, 1971]

§ 301.62

Termination of registration.

The registration of any person shall terminate if and when such person dies, ceases legal existence, discontinues business or professional practice, or changes his name or address as shown on the certificate of registration. Any registrant who ceases legal existence, discontinues business or professional practice, or changes his name or address as shown on the Certificate of Registration shall notify the Director promptly of such fact. In the event of a change in name or address, the person may apply for a new Certificate of Registration in advance of the effective date of such change by filing an application and paying the appropriate fee in the same manner as an application for new registration. The application shall be handled in the same manner as an application for registration.

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(a) All applicants and registrants shall provide effective controls and procedures to guard against theft and diversion of controlled substances. In order to determine whether a registrant has provided effective controls against diversion, the Director shall use the security requirements set forth in §§ 301.72-301.76 as standards for the physical security controls and operating procedures necessary to prevent diversion. Materials and construction which will provide a structural equivalent to the physical security controls set forth in §§ 301.72, 301.73 and 301.75 may be used in lieu of the materials and construction described in those sections.

(b) Substantial compliance with the standards set forth in §§ 301.72-301.76 may be deemed sufficient by the Director after evaluation of the overall security system and needs of the applicant or registrant. In evaluating the overall security system of a registrant or applicant, the Director may consider any of the following factors as he may deem relevant to the need for strict compliance with security requirements:

(1) The type of activity conducted (e.g., processing of bulk chemicals, preparing dosage forms, packaging, labeling, cooperative buying, etc.);

(2) The type and form of controllea substances handled (e.g., bulk liquids or dosage units, usable powders or nonusuable powders);

(3) The quantity of controlled substance handled;

(4) The location of the premises and the relationship such location bears on security needs;

(5) The type of building construction comprising the facility and the general characteristics of the building or build

ings;

(6) The type of vault, safe, and secure enclosures or other storage system (e.g., automatic storage and retrieval system) used;

(7) The type of closures on vaults, safes, and secure enclosures;

(8) The adequacy of key control systems and/or combination lock control systems;

(9) The adequacy of electric detection and alarm systems, if any including use of supervised transmittal lines and standby power sources;

(10) The extent of unsupervised public access to the facility, including the presence and characteristics of perimeter fencing, if any;

(11) The adequacy of supervision over employees having access to manufacturing and storage areas;

(12) The procedures for handling business guests, visitors, maintenance personnel, and nonemployee service personnel;

(13) The availability of local police protection or of the registrant's or applicant's security personnel, and;

(14) The adequacy of the registrant's or applicant's system for monitoring the receipt, manufacture, distribution, and disposition of controlled substances in its operations.

(c) When physical security controls become inadequate as a result of a controlled substance being transferred to a different schedule, or as a result of a noncontrolled substance being listed on any schedule, or as a result of a significant increase in the quantity of controlled substances in the possession of the registrant during normal business operations, the physical security controls shall be expanded and extended accordingly. A registrant may adjust physical security controls within the requirements set forth in §§ 301.72-301.76 when the need for such controls decreases as a result of a controlled substance being transferred to a different schedule, or a result of a controlled substance being removed from control, or as a result of a significant decrease in the quantity of controlled substances in the possession of the registrant during normal business operations.

(d) Any registrant or applicant desiring to determine whether a proposed security system susbtantially complies with, or is the structural equivalent of, the requirements set forth in §§ 301.72301.76 may submit any plans, blueprints, sketches or other materials regarding the proposed security system either to the Regional Director in the region in which the system will be used, or to the Compliance Investigations Division, Bureau of Narcotics and Dangerous Drugs, Department of Justice, Washington, D.C. 20537.

(e) Physical security controls of locations registered under the Harrison Narcotic Act or the Narcotics Manufacturing Act of 1960 on April 30, 1971, shall be deemed to comply substantially with the standards set forth in §§ 301.72, 301.73 and 301.75. Any new facilities or

work or storage areas constructed or utilized for controlled substances, which facilities or work or storage areas have not been previously approved by the Bureau, shall not necessarily be deemed to comply substantially with the standards set forth in §§ 301.72, 301.73 and 301.75, notwithstanding that such facilities or work or storage areas have physical security controls similar to those previously approved by the Bureau.

[36 F.R. 18729, Sept. 21, 1971]

§ 301.72 Physical security controls for nonpractitioners: storage areas.

(a) Schedules I and II. Raw materials, bulk materials awaiting further processing, and finished products which are controlled substances listed in schedule I or II shall be stored in one of the following secure storage areas:

(1) Where small quantities permit, a safe:

(i) Which safe has an Underwriters' Laboratories Burglary Rating of T-20, E or better, or the equivalent of such a safe;

(ii) Which safe, if it weighs less than 750 pounds, is bolted or cemented to the floor or wall in such a way that it cannot be readily removed; and

(iii) Which safe, if necessary, depending upon the quantities and type of controlled substances stored, is equipped with an alarm system which, upon unauthorized entry, shall transmit a signal directly to a central protection company or a local or State police agency which has a legal duty to respond, or a 24-hour control station operated by the regis– trant, or such other protection as the Director may approve.

(2) A vault constructed before, or under construction on, September 1, 1971, which is of substantial construction with a steel door, combination or key lock, and an alarm system; or

(3) A vault constructed September 1, 1971:

after

(i) The walls, floors, and ceilings of which vault are constructed of at least 8 inches of reinforced concrete or other substantial masonry, reinforced vertically and horizontally with 2-inch steel rods tied 6 inches on center, or the structural equivalent to such reinforced walls, floors, and ceilings;

(ii) The door of which vault contains a multiple-position combination lock or the equivalent, a relocking device or the equivalent, and steel plate with a thick

ness of at least 1/2 inch or with a 2-hour fire rating or the equivalent;

(iii) Which vault, if operations require it to remain open for frequent access, is equipped with a "day-gate" which is self-closing and self-locking, or the equivalent, for use during the hours of operation in which the vault door is open;

(iv) The walls or perimeter of which vault are equipped with an alarm, which upon unauthorized entry shall transmit a signal directly to a central station protection company, or a local or State police agency which has a legal duty to respond, or a 24-hour control station operated by the registrant, or such other protection as the Bureau may approve, and, if necessary, holdup buttons at strategic points of entry to the perimeter area of the vault;

(v) The door of which vault is equipped with contact switches; and

(vi) Which vault has one of the following: complete electrical lacing of the walls, floor and ceilings; sensitive ultrasonic equipment within the vault; a sensitive sound accumulator system; or such other device designed to detect illegal entry as may be approved by the Bureau.

(b) Schedules III, IV, and V. Raw materials, bulk materials awaiting further processing, and finished products which are controlled substances listed in schedules III, IV, and V shall be stored in one of the following secure storage areas:

(1) Where small quantities permit, a safe which complies with the requirements set forth in paragraph (a)(1) of this section;

(2) A vault which complies with the requirements set forth in either paragraph (a) (2) or (3) of this section; or

(3) A building or area located within a building, which building or area:

(i) Has walls or perimeter fences of sufficient height and construction to provide security from burglary;

(ii) Has substantial doors which may be securely locked during nonworking hours by a multiple-position combination or key lock;

(iii) Is equipped with an alarm which, upon unauthorized entry, shall transmit a signal directly to a central station protection company, or local or State police agency which has a legal duty to respond, or a 24-hour control station operated by the registrant, or such other protection as the Bureau may approve; and

sub

(iv) In which all controlled stances are segregated from all other merchandise and kept under constant surveillance during normal business hours.

(c) Multiple storage areas. Where several types or classes of controlled substances are handled separately by the registrant or applicant for different purposes (e.g., returned goods, or goods in process), the controlled substances may be stored separately, provided that each storage area complies with the requirements set forth in this section.

(d) Accessibility to storage areas. The controlled substances storage areas shall be accessible only to an absolute minimum number of specifically authorized employees. When it is necessary for employee maintenance personnel, nonemployee maintenance personnel, business guests, or visitors to be present in or pass through controlled substances storage areas, the registrant shall provide for adequate observation of the area by an employee specifically authorized in writing.

[36 F.R. 18730, Sept. 21, 1971] EFFECTIVE DATE: March 1, 1972.

§ 301.73 Physical security controls for nonpractitioners: Manufacturing

areas.

All manufacturing activities (including processing, packaging, and labeling) involving controlled substances listed in any schedule shall be conducted in accordance with the following:

or

(a) All in-process substances shall be returned to the controlled substances storage area at the termination of the process. If the process is not terminated at the end of a workday (except where a continuous process or other normal manufacturing operation should not be interrupted), the processing area tanks, vessels, bins or bulk containers containing such substances shall be securely locked, with adequate security for the area or building. If such security requires an alarm, such alarm, upon unauthorized entry, shall transmit a signal directly to a central station protection company, or local or state police agency which has a legal duty to respond, or a 24-hour control station operated by the registrant.

(b) Manufacturing activities with controlled substances shall be conducted in an area or areas of clearly defined limited access which is under surveillance by an employee or employees designated in

writing as responsible for the area. "Limited access" may be provided, in the absence of physical dividers such as walls or partitions, by traffic control lines or restricted space designation. The employee designated as responsible for the area may be engaged in the particular manufacturing operation being conducted: Provided, That he is able to provide continuous surveillance of the area in order that unauthorized persons may not enter or leave the area without his knowledge.

(c) During the production of controlled substances, the manufacturing areas shall be accessible to only those employees required for efficient operation. When it is necessary for employee maintenance personnel, nonemployee maintenance personnel, business guests, or visitors to be present in or pass through manufacturing areas during production of controlled substances, the registrant shall provide for adequate observation of the area by an employee specifically authorized in writing.

[36 F.R. 18731, Sept. 21, 1971] EFFECTIVE DATE: March 1, 1972. § 301.74

Other security controls for nonpractitioners.

(a) Before distributing a controlled substance to any person who the registrant does not know to be registered to possess the controlled substance, the registrant shall make a good faith inquiry either with the Bureau or with the appropriate State controlled substances registration agency, if any, to determine that the person is registered to possess the controlled substance.

(b) The registrant shall design and operate a system to disclose to the registrant suspicious orders of controlled substances. The registrant shall inform the Regional Office of the Bureau in his region of suspicious orders when discovered by the registrant. Suspicious orders include orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.

(c) The registrant shall notify the Regional Office of the Bureau in his region of any theft or significant loss of any controlled substances upon discovery of such theft or loss. The registrant shall also complete BND Form 106 regarding such theft or loss. Thefts must be reported whether or not the controlled substances are subsequently recovered and/ or the responsible parties are identified and action taken against them.

(d) The registrant shall not distribute any controlled substance listed in schedules II through V as a complimentary sample to any potential or current customer (1) without the prior written request of the customer, (2) to be used only for satisfying the legitimate medical needs of patients of the customer, and (3) only in reasonable quantities. Such request must contain the name, address, and registration number of the customer and the name and quantity of the specific controlled substance desired. The request shall be preserved by the registrant with other records of distribution of controlled substances. In addition, the requirements of Part 305 of the chapter shall be complied with for any distribution of a controlled substance listed in Schedule II. For purposes of this paragraph, the term 'customer' includes a person to whom a complimentary sample of a substance is given in order to encourage the prescribing or recommending of the substance by the person.

(e) When shipping controlled substances, a registrant is responsible for selecting common or contract carriers which provide adequate security to guard against in-transit losses. When storing controlled substances in a public warehouse, a registrant is responsible for selecting a warehouseman which will provide adequate security to guard against storage losses; wherever possible, the registrant shall store controlled substances in a public warehouse which complies with the requirements set forth in § 301.72. In addition, the registrant shall employ precautions (e.g., assuring that shipping containers do not indicate that contents are controlled substances) to guard against storage or in-transit losses.

(f) When distributing controlled substances through agents (e.g., detailmen), a registrant is responsible for providing and requiring adequate security to guard against theft and diversion while the substances are being stored or handled by the agent or agents.

[36 F.R. 7778, Apr. 24, 1971; 36 F.R. 13386, July 21, 1971, as amended at 36 F.R. 18731, Sept. 21, 1971]

§ 301.75 Physical security controls for practitioners.

(a) Controlled substances listed in schedules I and II shall be stored in a securely locked, substantially constructed cabinet.

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