McBride Marketing; Revocation of Registration, 35710-35711 [E6-9707]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 71, Number 119 (Wednesday, June 21, 2006)]
[Notices]
[Pages 35710-35711]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-9707]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration


McBride Marketing; Revocation of Registration

    On October 13, 2004, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause proposing to revoke McBride Marketing's 
(Respondent) DEA Certificate of Registration, 002748MMY, as a 
distributor of List I chemicals and to deny any pending applications 
for renewal. As grounds for the action, the Show Cause Order alleged 
that Respondent's continued registration would be inconsistent with the 
public interest. See 21 U.S.C. 824(a)(4). Specifically, the Show Cause 
Order alleged, inter alia, that Respondent did not have adequate 
security to protect List I chemical products from diversion, that 
Respondent did not maintain adequate sales records in accordance with 
21 CFR 1310.06, that Respondent had product shortages, and that 
Respondent had been acquiring and distributing pseudoephedrine products 
even though it was not registered to do so.
    The Show Cause Order was sent by certified mail, return receipt 
requested, to Respondent's registered location and receipt was 
acknowledged on October 20, 2004. Neither Respondent, its owner, nor 
anyone else purporting to represent it has responded. Because (1) more 
than thirty days have passed since the receipt of the Show Cause Order, 
and (2) no request for a hearing has been received, I conclude that 
Respondent has waived its right to a hearing. See 21 CFR 1309.53(c). I 
therefore enter this final order without a hearing based on relevant 
material in the investigative file and make the following findings.

Findings

    Ephedrine and pseudoephedrine are List I chemicals that while 
having therapeutic uses, are easily extracted from lawful products and 
used in the illicit manufacture of methamphetamine, a schedule II 
controlled substance. See 21 U.S.C. 802(34). As noted in numerous prior 
DEA orders, ``methamphetamine is an extremely potent central nervous 
system stimulant.'' A-1 Distribution Wholesale, 70 FR 28573 (2005). 
Methamphetamine abuse has destroyed lives and families, ravaged 
communities, and created serious environmental harms.
    Methamphetamine abuse is an especially serious problem in 
Tennessee, the State in which Respondent's business is located. At the 
time of the issuance of the Show Cause Order, Tennessee led the 
Southeast in clandestine lab seizures, accounting for approximately 59% 
of these seizures during the second quarter of 2004. Moreover, in 
enacting the Meth-Free Tennessee Act of 2005, the Tennessee legislature 
found that as a result of these seizures, ``more than 700 children are 
entering state custody each year.'' 2005 Tennessee Laws Pub. Ch. 18 
(Preamble).
    Respondent is an unincorporated firmed owned by Mr. Bobby McBride. 
The firm, which is located at the McBrides' home in Parsons, Tennessee, 
has held a DEA registration to distribute ephedrine products since 
1998. Respondent has approximately 58 convenience store and gas 
stations customers which purchase listed chemical products. Although 
Respondent also sells novelty items and toys, listed chemicals account 
for 30% of its business.
    On February 26, 2004, two DEA Diversion Investigators (DIs) visited 
Respondent to conduct a regulatory investigation. They met with Nancy 
McBride, the owner's wife and Respondent's bookkeeper, presented her 
with their credentials and a notice of inspection, and obtained 
Respondent's consent to the inspection.
    During the inspection, the DIs determined that Respondent stored 
listed chemical products in two mini-vans. While the vans were kept 
locked at all times, the vehicles did not have alarm systems.
    The DIs also conducted an inventory and audit of Respondent's 
ephedrine products. In reviewing the records, the DIs determined that 
while Respondent's sales records included the purchaser's name, product 
description and quantity, the records did not contain the brand name of 
the products, price, or the customer's address. Therefore, in 
conducting the audit, the DIs were required to group products together 
based on package size. Moreover, while Respondent's owner claimed that 
he conducted a physical inventory each January, the record for January 
2003 could not be found. The DIs thus used the record for the January 
2004 inventory as the beginning inventory and conducted an 
accountability audit covering the period of January 1, 2004, through 
February 26, 2004.
    The DI's audit found shortages in both the sixty-count bottles and 
six-count package sizes. Notwithstanding the relatively short period of 
the audit, 70 sixty-count bottles and 380 six-count packages were 
unaccounted for. The DIs also found in Respondent's inventory several 
pseudoephedrine products, including four boxes of Tylenol Allergy Sinus 
(with each box containing 50 sealed packets of one caplet), three boxes 
of Aleve Cold and Sinus (with each box containing 50 sealed packets of 
two gel caps), and one box of Vick's Nyquil Liquicaps (with the box 
containing 25 packets of two caplets).
    Respondent, however, was not registered to distribute 
pseudoephedrine products. The DIs confirmed that Respondent had been 
selling pseudoephedrine products based on their review of sales records 
and interviews they conducted during customer verification visits.

Discussion

    21 U.S.C. 824(a) provides that a registration to distribute List I 
chemical may be suspended or revoked ``upon a finding that the 
registrant * * * has committed such acts as would render [its] 
registration under section 823 of this title inconsistent with the 
public interest as determined under [that] section.'' In making the 
public interest determination, the Controlled Substances Act requires 
the consideration of the following factors:

    (1) Maintenance by the [registrant] of effective controls 
against diversion of listed chemicals into other than legitimate 
channels;
    (2) Compliance by the [registrant] with applicable Federal, 
State, and local law;
    (3) Any prior conviction record of the [registrant] under 
Federal or State laws relating to controlled substances or to 
chemicals controlled under Federal or State law;
    (4) Any past experience of the applicant in the manufacture and 
distribution of chemicals; and
    (5) Such other factors as are relevant to and consistent with 
the public health and safety.

Id. 823(h).

    ``[T]hese factors are considered in the disjunctive.'' Joy's Ideas, 
70 FR 33195, 33197 (2005). I ``may rely on any one or combination of 
factors, and may give each factor the weight [I] deem[] appropriate in 
determining whether a registration should be revoked or an

[[Page 35711]]

application for a registration be denied.'' Id. See also Energy Outlet, 
64 FR 14,269 (1999). In this case, I have concluded that factors one, 
two and five are dispositive and support the revocation of Respondent's 
registration.

Factor One--Maintenance of Effective Controls

    I conclude that Respondent does not maintain effective controls 
against diversion. Respondent's storage of its List I chemical products 
in two mini-vans is clearly inadequate to protect against diversion. 
DEA's regulations clearly contemplate that List 1 chemicals be stored 
in a secure premises and not in motor vehicles unless in transit. See 
21 CFR 1309.71(b) (directing DEA to consider ``[t]he location of the 
premises,'' and ``[t]he type of building construction comprising the 
facility and the general characteristics of the building or 
buildings'').
    While the DIs were correct to note that the vehicles did not have 
alarms, even if Respondent's vehicles had alarms, they would not comply 
with the regulations. A thief can steal a vehicle in far less time than 
it takes to break into a properly secured and alarmed premises. 
Moreover, a thief stealing a van holding listed chemicals does not have 
to load the goods into the getaway vehicle. Storage of listed chemicals 
in a van plainly creates an unacceptable risk of diversion.
    The shortages that were found during the audit further support the 
conclusion that Respondent does not maintain effective controls against 
diversion. The shortages uncovered in the audit were substantial given 
that the audit only covered a period of two months. I need not find 
that diversion was the cause of the shortages to conclude that 
Respondent does not maintain effective controls against diversion.
    Furthermore, Respondent's sales records did not contain the 
addresses of its purchasers. Such information is essential for DEA and 
local authorities to effectively investigate whether purchasers are 
conducting a legitimate business or whether diversion is occurring. I 
thus conclude that factor one weighs heavily against Respondent's 
continued registration.

Factor 2--Compliance With Applicable Law

    As stated above, Respondent's use of mini-vans to store List I 
chemicals does not comply with the physical security regulations. 
Moreover, Respondent failed to properly maintain sales records because 
its invoices did not contain product names and the addresses of the 
purchasers. See 21 CFR 1310.03 and 1310.06. Finally, Respondent engaged 
in the distribution of pseudoephedrine notwithstanding that its 
registration did not give it authority to distribute the chemical. See 
21 CFR 1309.21(a) (requiring registration ``specific to the List I 
chemicals to be handled''). I thus conclude that this factor weighs 
against Respondent's continued registration.

Factor 3--The Registrant's Prior Conviction Record

    There is no evidence in the investigative file establishing that 
Respondent has been convicted of a drug-related criminal offense. I 
thus find that this factor weighs in favor of continued registration. I 
conclude, however, that this factor is entitled to little weight as it 
is reasonable to expect that DEA registrants not have a drug-related 
criminal record.

Factor 4--The Registrant's Past Experience in Distributing List I 
Chemicals

    The record indicates that Respondent has held a registration to 
distribute List I chemicals since 1998. But in light of the findings 
discussed above, it appears that Respondent has been improperly storing 
and distributing List I chemicals in violation of DEA's regulations for 
a substantial period of time. I thus decline to give Respondent's 
experience any weight in this determination.

Factor 5--Such Other Factors As Are Relevant to and Consistent With the 
Public Health and Safety

    According to the investigative file, Respondent distributes List 1 
chemicals solely to convenience stores and gas stations in Western 
Tennessee, a State which at the time these proceedings were initiated 
had a severe problem with methamphetamine abuse. As noted above, 
Tennessee recently enacted the Meth-Free Tennessee Act of 2005. See 
also Joy's Ideas, 70 FR at 33199. One of the Act's provisions requires 
that ``any product that contains any immediate methamphetamine 
precursor may be dispensed only by a licensed pharmacy.'' Tenn. St. 
Sec.  39-17-431(a). While the Act exempts from this requirement those 
products containing methamphetamine precursors ``not in a form that can 
be used in the manufacture of methamphetamine,'' id. Sec.  39-17-
431(b)(1), none of the ephedrine products which Respondent distributed 
under his DEA registration are exempt. See id. Sec.  39-17-431(b)(3) 
(exempting gel capsules and liquid preparations).
    Respondent, however, does not have any licensed pharmacies as 
customers, and therefore, Respondent would violate state law were it to 
distribute ephedrine products to its existing customers. In prior 
orders, I have noted the important role of the States in combating the 
illicit manufacture of methamphetamine. See, e.g., Joy's Ideas, 70 FR 
at 33198 (discussing Oklahoma and Tennessee legislation). Where, as 
here, state efforts are fully consistent with federal policy, it is 
appropriate to give them due weight in determining whether continuing a 
registration would be consistent with public health and safety.\1\ It 
would be manifestly inconsistent with public health and safety to 
continue Respondent's registration in light of the provisions of 
Tennessee law. See id. at 33199. I therefore conclude that factor five 
weighs in favor of revocation. Having considered all of the statutory 
factors, I conclude that the continuance of Respondent's registration 
would be inconsistent with the public interest.
---------------------------------------------------------------------------

    \1\ I do not consider the relationship of Tennessee law under 
factor two because at the time of the investigation, the statute had 
not been enacted. Moreover, there is no evidence in the 
investigative file establishing that Respondent subsequently 
violated state law.
---------------------------------------------------------------------------

Order

    Accordingly, pursuant to the authority vested in me by 21 U.S.C. 
823 and 824, and 28 CFR 0.100(b) and 0.104, I hereby order that DEA 
Certificate of Registration, 002748MMY, issued to McBride Marketing, 
be, and it hereby is, revoked. I further order that any pending 
applications for renewal or modification of such registration be, and 
they hereby are, denied. This order is effective July 21, 2006.

    Dated: June 12, 2006.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E6-9707 Filed 6-20-06; 8:45 am]
BILLING CODE 4410-09-P