Georgia Convenience Wholesale, Inc.; Denial of Application, 9969-9971 [E7-3839]
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Federal Register / Vol. 72, No. 43 / Tuesday, March 6, 2007 / Notices
another product (Lipodrene), which also
contained ephedrine alkaloids. On
January 12, 2006, the U.S. Attorney’s
Office filed an additional complaint
which sought the forfeiture of these
products. U.S. Marshalls seized these
products, which were valued at
approximately $ 16,000.
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Discussion
Under 21 U.S.C. 823(h), an applicant
to distribute List I chemicals is entitled
to be registered unless the registration
would be ‘‘inconsistent with the public
interest.’’ In making this determination,
Congress directed that I consider the
following factors:
(1) Maintenance by the applicant of
effective controls against diversion of
listed chemicals into other than
legitimate channels;
(2) Compliance by the applicant with
applicable Federal, State, and local law;
(3) Any prior conviction record of the
applicant 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.
‘‘These factors are considered in the
disjunctive.’’ Joy’s Ideas, 70 FR 33195,
33197 (2005). I may rely on any one or
a combination of factors, and may give
each factor the weight I deem
appropriate in determining whether an
application for registration should be
denied. See, e.g., David M. Starr, 71 FR
39367 (2006); Energy Outlet, 64 FR
14269 (1999). Moreover, I am ‘‘not
required to make findings as to all of the
factors.’’ Hoxie v. DEA, 419 F.3d 477,
482 (6th Cir. 2005); Morall v. DEA, 412
F.3d 165, 173–74 (D.C. Cir. 2005).
Here, I conclude that an analysis of
each factor is unnecessary and that
Respondent’s application should be
denied based on Factor Two, its record
of non-compliance with applicable
laws.
As recognized in numerous final
orders, the illicit manufacture and abuse
of methamphetamine have had
pernicious effects on families and
communities throughout the nation.
Preventing the diversion of list I
chemicals into the illicit manufacture of
methamphetamine is of critical
importance in protecting the public
from the devastation wreaked by this
drug.
While the investigative file in this
case contains no evidence establishing
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the risk of diversion by establishments
such as those which Respondent
proposed to distribute its products to,
the firm’s record of non-compliance
with other federal laws does not inspire
confidence in its willingness to
faithfully obey DEA regulations. Here,
the investigative file establishes two
separate instances in which Respondent
violated the FDA Act. Moreover, FDA
found these violations well after the rule
banning ephedrine alkaloids went into
effect.
In section 303(h) of the CSA, Congress
broadly directed that the Attorney
General consider ‘‘compliance by the
applicant with applicable Federal, State,
and local law,’’ 21 U.S.C. 823(h)(2), in
determining whether to grant a list I
distributor’s registration. In contrast to
the provision applicable to a
practitioner’s registration, Congress did
not limit the subject matter of the laws
that are properly considered in
determining whether an applicant’s
compliance record supports granting it
a registration. Cf. id. § 823(f)(4)
(directing consideration of a
practitioner’s ‘‘[c]ompliance with
applicable State, Federal, or local laws
relating to controlled substances’’).
Moreover, Respondent’s apparent
willingness to sell products which have
been banned (as evidenced by the fact
that banned products were found not
once, but twice at its facility) and/or its
inability to properly document its
compliance with the FDA act (with
respect to its assertion that it intended
to export the products found in the first
incident), are sufficiently probative of
the manner in which it would likely
fulfill its obligations as a registrant
under the Controlled Substances Act.1 I
thus conclude that granting it a
registration would ‘‘be inconsistent with
the public interest.’’ Id. § 823(h).
Order
Pursuant to the authority vested in me
by 21 U.S.C. 823(h), and 28 CFR
0.100(b) & 0.104, I order that the
application of Respondent ATF Fitness
Products, Inc., for a DEA Certificate of
Registration as a distributor of list I
chemicals be, and it hereby is, denied.
This order is effective April 5, 2007.
Dated: February 23, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7–3856 Filed 3–5–07; 8:45 am]
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1 The CSA imposes extensive recordkeeping
requirements on List I chemical distributors. See 21
CFR Pt. 1310.
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9969
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Georgia Convenience Wholesale, Inc.;
Denial of Application
On February 6, 2006, the Deputy
Assistant Administrator, Office of
Diversion Control, Drug Enforcement
Administration, issued an Order to
Show Cause to Georgia Convenience
Wholesale, Inc., (Respondent) of
Doraville, Georgia. The Show Cause
Order proposed to deny Respondent’s
pending application for a Certificate of
Registration to distribute list I chemicals
on the ground that its registration
‘‘would be inconsistent with the public
interest.’’ Show Cause Order at 1 (citing
21 U.S.C. 823(h)).
The Show Cause Order specifically
alleged that on April 19, 2005,
Respondent applied for a registration to
distribute list I chemicals including
pseudoephedrine, ephedrine and
phenylpropanolamine (PPA), and that
these products ‘‘are commonly used to
illegally manufacture
methamphetamine, a Schedule II
controlled substance.’’ Show Cause
Order at 1–2. The Show Cause Order
alleged that Respondent was proposing
to distribute these products to
convenience stores, and that ‘‘law
enforcement officials have observed that
an overwhelming proportion of
precursors found at illicit
methamphetamine sites have involved
non-traditional pseudoephedrine and
ephedrine brands sold through
convenience stores.’’ Id. at 2. The Show
Cause Order also alleged that as nontraditional products ‘‘become more
tightly regulated, even traditional
products are subject to diversion.’’ Id.
The Show Cause Order further alleged
that during a pre-registration
investigation, Respondent’s owner/
operator was not aware that PPA had
been withdrawn from the over-thecounter market. Id. Relatedly, the Show
Cause Order alleged that Respondent
had also sought registration for other list
I chemicals even though these
chemicals ‘‘were not ingredients in any
over-the-counter drug product.’’ Id.
Finally, the Show Cause Order alleged
that Respondent ‘‘does not have
adequate experience or familiarity with
products and the sales potentials in the
industry to carry out the responsibilities
of a registrant and prevent the diversion
of listed chemical precursors into illicit
activities.’’ Id. at 3.
On or about February 24, 2006, the
Show Cause Order, which also notified
Respondent of its right to request a
hearing, was served by certified mail,
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return receipt requested, as evidenced
by the signed return receipt card. Since
that time, neither Respondent, nor
anyone purporting to represent it, has
responded. Because (1) more than thirty
days have passed since service 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 contained in the
investigative file and make the
following findings.
Findings
Respondent is a Georgia corporation
which is located at 4030 Pleasantdale
Road, Doraville, Georgia. Respondent is
a wholesale distributor of general
merchandise to convenience stores, gas
stations, candy stores, dollar stores,
party stores, and liquor stores in the
Atlanta, Georgia metropolitan area.
Respondent has been in business since
May 2005.
On April 19, 2005, Respondent’s
president, Mr. Mohammad S. Yaqoob,
applied for a DEA Certificate of
Registration to distribute list I
chemicals. Specifically, Respondent
applied to distribute ephedrine,
methylephedrine, nmethlypseudoephedrine,
norpseudoephedrine,
phenylpropanolamine (PPA), and
pseudoephedrine.
As explained in numerous DEA final
orders, both pseudoephedrine and
ephedrine currently have therapeutic
uses. See, e.g., Tri-County Bait
Distributors, 71 FR 52160, 52161
(2006).1 Both chemicals are, however,
regulated under the Controlled
Substances Act because they are
precursor chemicals which are easily
extracted from non-prescription
products and used in the illicit
manufacture of methamphetamine, a
Schedule II controlled substance. See 21
U.S.C. § 802(34); 21 CFR 1308.12(d).
Methamphetamine is a powerful and
highly addictive central nervous system
stimulant. See, e.g., Tri-County Bait
Distributors, 71 FR at 52161. The illegal
manufacture and abuse of
methamphetamine pose a grave threat to
this country. Methamphetamine abuse
has destroyed numerous lives and
families and ravaged communities.
Moreover, because of the toxic nature of
the chemicals which are used to make
the drug, the illegal manufacture of
1 The FDA is, however, currently proposing to
remove combination ephedrine-guaifenesin
products from its over-the-counter (OTC) drug
monograph and to declare them not safe and
effective for OTC use. See 70 FR 40232 (2005).
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15:35 Mar 05, 2007
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methamphetamine causes serious
environmental harms. Id.
On June 9, 2005, two DEA Diversion
Investigators (DIs) went to Respondent’s
proposed registered location to conduct
a pre-registration investigation. The DIs
met with Mr. Yaqoob, who informed the
investigators that he had purchased the
business on May 1, 2005. The DIs also
met with Mr. Omar, Respondent’s VicePresident.
Both Mr. Yaqoob and Mr. Omar told
the DIs that each had previously owned
a gas station and had sold list I chemical
products. Mr. Yaqoob informed the DIs
that Respondent’s list I customers
would be convenience stores and gas
stations. Numerous DEA orders have
found that these establishments are nontraditional (or gray market) retailers of
list I chemical products. See, e.g., T.
Young Associates, Inc., 71 FR 60567,
60568 (2006).
Mr. Yaqoob also provided the DIs
with a list of the list I chemical products
Respondent intended to distribute. The
list was comprised entirely of
traditional cold and sinus medicines
that contain pseudoephedrine. When
one of the DIs asked Mr. Yaqoob why he
had originally requested authorization
to handle other list I chemicals, Mr.
Yaqoob stated that he had not known
exactly which drug codes were needed
to handle pseudoephedrine so he asked
for the additional codes. Mr. Yaqoob,
however, had submitted a letter, which
is dated prior to the onsite inspection,
withdrawing Respondent’s request to
handle PPA, methylephedrine, nmethlypseudoephedrine, and
norpseudoephedrine.
The investigation determined that
Respondent’s business is located in a
large brick building which has an alarm
system with motion detectors, glass
break strips, and metal contact strips,
and is monitored by a security
company. Moreover, the doors were
equipped with metal cross bars and
dead bolt locks. Finally, the list I
products were to be stored in a separate
room (which was to remain locked at all
times) and not in the warehouse.
Furthermore, Respondent appeared to
have adequate procedures for handling
the list I products, as well as for
identifying and verifying new
customers.
Discussion
Under 21 U.S.C. 823(h), an applicant
to distribute list I chemicals is entitled
to be registered unless the registration
would be ‘‘inconsistent with the public
interest.’’ In making this determination,
Congress directed that I consider the
following factors:
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Sfmt 4703
(1) Maintenance by the applicant of
effective controls against diversion of listed
chemicals into other than legitimate
channels;
(2) Compliance by the applicant with
applicable Federal, State, and local law;
(3) Any prior conviction record of the
applicant 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.
‘‘These factors are considered in the
disjunctive.’’ Joy’s Ideas, 70 FR 33195,
33197 (2005). I may rely on any one or
a combination of factors, and may give
each factor the weight I deem
appropriate in determining whether an
application for registration should be
denied. See, e.g., David M. Starr, 71 FR
39367 (2006); Energy Outlet, 64 FR
14269 (1999). Moreover, I am ‘‘not
required to make findings as to all of the
factors.’’ Hoxie v. DEA, 419 F.3d 477,
482 (6th Cir. 2005); Morall v. DEA, 412
F.3d 165, 173–74 (D.C. Cir. 2005).
In this case, I acknowledge that
factors one, two, and three would not
bar Respondent’s registration. I find
dispositive, however, that Respondent
lacks relevant experience in the
wholesale distribution of list I
chemicals (factor four) and that it
intends to distribute list I chemicals to
the gray market (factor five), a market in
which the risk of diversion is
substantial. Consistent with DEA
precedents, I hold that Respondent’s
registration would be inconsistent with
the public interest.
Factor One—The Maintenance of
Effective Controls Against Diversion
This investigative file does not
establish that Respondent would fail to
maintain adequate procedures to protect
against diversion. Moreover, the file
establishes that Respondent would
provide adequate security of list I
chemical products to protect them from
theft. Thus, this factor does not support
a finding that Respondent’s registration
would be inconsistent with the public
interest.
Factors Two and Three—Compliance
With Applicable Laws and the
Applicant’s Prior Record of Relevant
Criminal Convictions
There is no evidence that Respondent
is not in compliance with applicable
Federal, State, or local laws. Relatedly,
there is no evidence that Respondent, or
any person affiliated with it, has ever
been convicted of a crime under either
Federal or State laws relating to
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controlled substances or listed
chemicals. I thus conclude that neither
factor supports a finding that
Respondent’s registration would be
inconsistent with the public interest.
Factor Four—The Applicant’s Past
Experience in the Distribution of Listed
Chemicals
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DEA precedent establishes that ‘‘an
applicant’s lack of experience in
distributing list I chemicals creates a
greater risk of diversion and thus weighs
heavily against the granting of an
application.’’ Tri-County Bait
Distributors, 71 FR at 52163. According
to the investigative file, Respondent’s
president and vice-president previously
owned gas stations at which they sold
list I chemical products. But as I
explained in Tri-County Bait
Distributors, merely engaging in the
retail sale of these products is not
sufficient to establish that an applicant
has experience which is relevant to
fulfilling the regulatory obligations of a
wholesaler of these products. Id.
Distributors of list I chemicals are
subject to a comprehensive and complex
regulatory scheme.See 21 CFR parts
1309 and 1310. Moreover, prior to the
enactment of the Combat
Methamphetamine Epidemic Act of
2005, retail distributors of ephedrine
and pseudoephedrine were generally
exempt from recordkeeping and
reporting requirements.2
Accordingly, for an applicant’s (or its
key employee’s) experience to be
relevant, the key employee must have
been actively involved in the fulfillment
of a registrant’s regulatory obligations as
a wholesale distributor and demonstrate
adequate knowledge of the applicant’s
proposed products.3 Because neither of
Respondent’s key employees has such
experience, I conclude that this factor
supports a finding that granting it a
registration would be inconsistent with
the public interest.
2 Effective September 30, 2006, retail distributors
are now required to maintain a logbook which
records the name and address of each purchaser of
ephedrine or a pseudoephedrine product containing
more than 60 mg. of the chemical, the date and time
of the sale, the product name and the quantity sold.
3 Respondent initially sought registration for
additional chemicals beyond pseudoephedrine and
ephedrine even though it intended only to carry
products containing pseudoephedrine. According to
the documentary evidence, Respondent withdrew
its request to be registered for these chemicals
before the inspection. Accordingly, I conclude that
Respondent’s initial request to be registered for the
additional chemicals does not support a finding
that it lacks adequate product knowledge.
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Factor Five—Other Factors That Are
Relevant to and Consistent With Public
Health and Safety
Numerous DEA orders recognize that
convenience stores and gas-stations
constitute the non-traditional retail
market for legitimate consumers of
products containing pseudoephedrine
and ephedrine. See, e.g., Tri-County Bait
Distributors, 71 FR at 52161; D & S
Sales, 71 FR 37607, 37609 (2006);
Branex, Inc., 69 FR 8682, 8690–92
(2004). DEA orders also establish that
the sale of list I chemical products by
non-traditional retailers is an area of
particular concern in preventing
diversion of these products into the
illicit manufacture of
methamphetamine. See, e.g., Joey
Enterprises, 70 FR 76866, 76867 (2005).
As Joey Enterprises explains, ‘‘[w]hile
there are no specific prohibitions under
the Controlled Substances Act regarding
the sale of listed chemical products to
[gas stations and convenience stores],
DEA has nevertheless found that [these
entities] constitute sources for the
diversion of listed chemical products.’’
Id. See also TNT Distributors, 70 FR
12729, 12730 (2005) (special agent
testified that ‘‘80 to 90 percent of
ephedrine and pseudoephedrine being
used [in Tennessee] to manufacture
methamphetamine was being obtained
from convenience stores’’); OTC
Distribution Co., 68 FR 70538, 70541
(2003) (noting ‘‘over 20 different seizure
of [gray market distributor’s]
pseudoephedrine product at clandestine
sites,’’ and that in eight-month period,
distributor’s product ‘‘was seized at
clandestine laboratories in eight states,
with over 2 million dosage units seized
in Oklahoma alone.’’); MDI
Pharmaceuticals, 68 FR 4233, 4236
(2003) (finding that ‘‘pseudoephedrine
products distributed by [gray market
distributor] have been uncovered at
numerous clandestine
methamphetamine settings throughout
the United States and/or discovered in
the possession of individuals apparently
involved in the illicit manufacture of
methamphetamine’’).
Significantly, all of Respondent’s
proposed customers participate in the
non-traditional market for ephedrine
and pseudoephedrine products. DEA
orders recognize that there is a
substantial risk of diversion of list I
chemicals into the illicit manufacture of
methamphetamine when these products
are sold by non-traditional retailers. See,
e.g. Joy’s Ideas, 70 FR at 33199 (finding
that the risk of diversion was ‘‘real’’ and
‘‘substantial’’); Jay Enterprises, Inc., 70
FR 24620, 24621 (2005) (noting
‘‘heightened risk of diversion’’ should
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Fmt 4703
Sfmt 4703
9971
application be granted). Under DEA
precedents, an applicant’s proposal to
sell into the non-traditional market
weighs heavily against the granting of a
registration under factor five. So too
here.
Because of the methamphetamine
epidemic’s devastating impact on
communities and families throughout
the country, DEA has repeatedly denied
an application when an applicant
proposed to sell into the non-traditional
market and analysis of one of the other
statutory factors supports the
conclusion that granting the application
would create an unacceptable risk of
diversion. Thus, in Xtreme Enterprises,
67 FR 76195, 76197 (2002), my
predecessor denied an application
observing that the respondent’s ‘‘lack of
a criminal record, compliance with the
law and willingness to upgrade her
security system are far outweighed by
her lack of experience with selling list
I chemicals and the fact that she intends
to sell ephedrine almost exclusively in
the gray market.’’ I have repeatedly
adhered to this reasoning in denying
applications to distribute list I
chemicals to the non-traditional market.
See, e.g., Jay Enterprises, 70 FR at
24621; Prachi Enterprises, 69 FR 69407,
69409 (2004).
Here, Respondent’s key persons have
no experience in the wholesale
distribution of list I chemical products
and yet the firm intends to distribute
these products to non-traditional
retailers, a market in which the risk of
diversion is substantial. See Taby
Enterprises of Osceola, Inc., 71 FR
71557, 71559 (2006). Given these
findings, I hold that granting
Respondent’s application would be
‘‘inconsistent with the public interest.’’
21 U.S.C. 823(h).
Order
Pursuant to the authority vested in me
by 21 U.S.C. 823(h), and 28 CFR
0.100(b) and 0.104, I order that the
application of Georgia Convenience
Wholesale, Inc., for a DEA Certificate of
Registration as a distributor of list I
chemicals be, and it hereby is, denied.
This order is effective April 5, 2007.
Dated: February 23, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7–3839 Filed 3–5–07; 8:45 am]
BILLING CODE 4410–09–P
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]]>Agencies
[Federal Register Volume 72, Number 43 (Tuesday, March 6, 2007)]
[Notices]
[Pages 9969-9971]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3839]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Georgia Convenience Wholesale, Inc.; Denial of Application
On February 6, 2006, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration, issued an Order to
Show Cause to Georgia Convenience Wholesale, Inc., (Respondent) of
Doraville, Georgia. The Show Cause Order proposed to deny Respondent's
pending application for a Certificate of Registration to distribute
list I chemicals on the ground that its registration ``would be
inconsistent with the public interest.'' Show Cause Order at 1 (citing
21 U.S.C. 823(h)).
The Show Cause Order specifically alleged that on April 19, 2005,
Respondent applied for a registration to distribute list I chemicals
including pseudoephedrine, ephedrine and phenylpropanolamine (PPA), and
that these products ``are commonly used to illegally manufacture
methamphetamine, a Schedule II controlled substance.'' Show Cause Order
at 1-2. The Show Cause Order alleged that Respondent was proposing to
distribute these products to convenience stores, and that ``law
enforcement officials have observed that an overwhelming proportion of
precursors found at illicit methamphetamine sites have involved non-
traditional pseudoephedrine and ephedrine brands sold through
convenience stores.'' Id. at 2. The Show Cause Order also alleged that
as non-traditional products ``become more tightly regulated, even
traditional products are subject to diversion.'' Id.
The Show Cause Order further alleged that during a pre-registration
investigation, Respondent's owner/operator was not aware that PPA had
been withdrawn from the over-the-counter market. Id. Relatedly, the
Show Cause Order alleged that Respondent had also sought registration
for other list I chemicals even though these chemicals ``were not
ingredients in any over-the-counter drug product.'' Id. Finally, the
Show Cause Order alleged that Respondent ``does not have adequate
experience or familiarity with products and the sales potentials in the
industry to carry out the responsibilities of a registrant and prevent
the diversion of listed chemical precursors into illicit activities.''
Id. at 3.
On or about February 24, 2006, the Show Cause Order, which also
notified Respondent of its right to request a hearing, was served by
certified mail,
[[Page 9970]]
return receipt requested, as evidenced by the signed return receipt
card. Since that time, neither Respondent, nor anyone purporting to
represent it, has responded. Because (1) more than thirty days have
passed since service 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 contained in the
investigative file and make the following findings.
Findings
Respondent is a Georgia corporation which is located at 4030
Pleasantdale Road, Doraville, Georgia. Respondent is a wholesale
distributor of general merchandise to convenience stores, gas stations,
candy stores, dollar stores, party stores, and liquor stores in the
Atlanta, Georgia metropolitan area. Respondent has been in business
since May 2005.
On April 19, 2005, Respondent's president, Mr. Mohammad S. Yaqoob,
applied for a DEA Certificate of Registration to distribute list I
chemicals. Specifically, Respondent applied to distribute ephedrine,
methylephedrine, n-methlypseudoephedrine, norpseudoephedrine,
phenylpropanolamine (PPA), and pseudoephedrine.
As explained in numerous DEA final orders, both pseudoephedrine and
ephedrine currently have therapeutic uses. See, e.g., Tri-County Bait
Distributors, 71 FR 52160, 52161 (2006).\1\ Both chemicals are,
however, regulated under the Controlled Substances Act because they are
precursor chemicals which are easily extracted from non-prescription
products and used in the illicit manufacture of methamphetamine, a
Schedule II controlled substance. See 21 U.S.C. Sec. 802(34); 21 CFR
1308.12(d).
---------------------------------------------------------------------------
\1\ The FDA is, however, currently proposing to remove
combination ephedrine-guaifenesin products from its over-the-counter
(OTC) drug monograph and to declare them not safe and effective for
OTC use. See 70 FR 40232 (2005).
---------------------------------------------------------------------------
Methamphetamine is a powerful and highly addictive central nervous
system stimulant. See, e.g., Tri-County Bait Distributors, 71 FR at
52161. The illegal manufacture and abuse of methamphetamine pose a
grave threat to this country. Methamphetamine abuse has destroyed
numerous lives and families and ravaged communities. Moreover, because
of the toxic nature of the chemicals which are used to make the drug,
the illegal manufacture of methamphetamine causes serious environmental
harms. Id.
On June 9, 2005, two DEA Diversion Investigators (DIs) went to
Respondent's proposed registered location to conduct a pre-registration
investigation. The DIs met with Mr. Yaqoob, who informed the
investigators that he had purchased the business on May 1, 2005. The
DIs also met with Mr. Omar, Respondent's Vice-President.
Both Mr. Yaqoob and Mr. Omar told the DIs that each had previously
owned a gas station and had sold list I chemical products. Mr. Yaqoob
informed the DIs that Respondent's list I customers would be
convenience stores and gas stations. Numerous DEA orders have found
that these establishments are non-traditional (or gray market)
retailers of list I chemical products. See, e.g., T. Young Associates,
Inc., 71 FR 60567, 60568 (2006).
Mr. Yaqoob also provided the DIs with a list of the list I chemical
products Respondent intended to distribute. The list was comprised
entirely of traditional cold and sinus medicines that contain
pseudoephedrine. When one of the DIs asked Mr. Yaqoob why he had
originally requested authorization to handle other list I chemicals,
Mr. Yaqoob stated that he had not known exactly which drug codes were
needed to handle pseudoephedrine so he asked for the additional codes.
Mr. Yaqoob, however, had submitted a letter, which is dated prior to
the onsite inspection, withdrawing Respondent's request to handle PPA,
methylephedrine, n-methlypseudoephedrine, and norpseudoephedrine.
The investigation determined that Respondent's business is located
in a large brick building which has an alarm system with motion
detectors, glass break strips, and metal contact strips, and is
monitored by a security company. Moreover, the doors were equipped with
metal cross bars and dead bolt locks. Finally, the list I products were
to be stored in a separate room (which was to remain locked at all
times) and not in the warehouse. Furthermore, Respondent appeared to
have adequate procedures for handling the list I products, as well as
for identifying and verifying new customers.
Discussion
Under 21 U.S.C. 823(h), an applicant to distribute list I chemicals
is entitled to be registered unless the registration would be
``inconsistent with the public interest.'' In making this
determination, Congress directed that I consider the following factors:
(1) Maintenance by the applicant of effective controls against
diversion of listed chemicals into other than legitimate channels;
(2) Compliance by the applicant with applicable Federal, State,
and local law;
(3) Any prior conviction record of the applicant 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.
``These factors are considered in the disjunctive.'' Joy's Ideas,
70 FR 33195, 33197 (2005). I may rely on any one or a combination of
factors, and may give each factor the weight I deem appropriate in
determining whether an application for registration should be denied.
See, e.g., David M. Starr, 71 FR 39367 (2006); Energy Outlet, 64 FR
14269 (1999). Moreover, I am ``not required to make findings as to all
of the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005);
Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
In this case, I acknowledge that factors one, two, and three would
not bar Respondent's registration. I find dispositive, however, that
Respondent lacks relevant experience in the wholesale distribution of
list I chemicals (factor four) and that it intends to distribute list I
chemicals to the gray market (factor five), a market in which the risk
of diversion is substantial. Consistent with DEA precedents, I hold
that Respondent's registration would be inconsistent with the public
interest.
Factor One--The Maintenance of Effective Controls Against Diversion
This investigative file does not establish that Respondent would
fail to maintain adequate procedures to protect against diversion.
Moreover, the file establishes that Respondent would provide adequate
security of list I chemical products to protect them from theft. Thus,
this factor does not support a finding that Respondent's registration
would be inconsistent with the public interest.
Factors Two and Three--Compliance With Applicable Laws and the
Applicant's Prior Record of Relevant Criminal Convictions
There is no evidence that Respondent is not in compliance with
applicable Federal, State, or local laws. Relatedly, there is no
evidence that Respondent, or any person affiliated with it, has ever
been convicted of a crime under either Federal or State laws relating
to
[[Page 9971]]
controlled substances or listed chemicals. I thus conclude that neither
factor supports a finding that Respondent's registration would be
inconsistent with the public interest.
Factor Four--The Applicant's Past Experience in the Distribution of
Listed Chemicals
DEA precedent establishes that ``an applicant's lack of experience
in distributing list I chemicals creates a greater risk of diversion
and thus weighs heavily against the granting of an application.'' Tri-
County Bait Distributors, 71 FR at 52163. According to the
investigative file, Respondent's president and vice-president
previously owned gas stations at which they sold list I chemical
products. But as I explained in Tri-County Bait Distributors, merely
engaging in the retail sale of these products is not sufficient to
establish that an applicant has experience which is relevant to
fulfilling the regulatory obligations of a wholesaler of these
products. Id.
Distributors of list I chemicals are subject to a comprehensive and
complex regulatory scheme.See 21 CFR parts 1309 and 1310. Moreover,
prior to the enactment of the Combat Methamphetamine Epidemic Act of
2005, retail distributors of ephedrine and pseudoephedrine were
generally exempt from recordkeeping and reporting requirements.\2\
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\2\ Effective September 30, 2006, retail distributors are now
required to maintain a logbook which records the name and address of
each purchaser of ephedrine or a pseudoephedrine product containing
more than 60 mg. of the chemical, the date and time of the sale, the
product name and the quantity sold.
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Accordingly, for an applicant's (or its key employee's) experience
to be relevant, the key employee must have been actively involved in
the fulfillment of a registrant's regulatory obligations as a wholesale
distributor and demonstrate adequate knowledge of the applicant's
proposed products.\3\ Because neither of Respondent's key employees has
such experience, I conclude that this factor supports a finding that
granting it a registration would be inconsistent with the public
interest.
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\3\ Respondent initially sought registration for additional
chemicals beyond pseudoephedrine and ephedrine even though it
intended only to carry products containing pseudoephedrine.
According to the documentary evidence, Respondent withdrew its
request to be registered for these chemicals before the inspection.
Accordingly, I conclude that Respondent's initial request to be
registered for the additional chemicals does not support a finding
that it lacks adequate product knowledge.
---------------------------------------------------------------------------
Factor Five--Other Factors That Are Relevant to and Consistent With
Public Health and Safety
Numerous DEA orders recognize that convenience stores and gas-
stations constitute the non-traditional retail market for legitimate
consumers of products containing pseudoephedrine and ephedrine. See,
e.g., Tri-County Bait Distributors, 71 FR at 52161; D & S Sales, 71 FR
37607, 37609 (2006); Branex, Inc., 69 FR 8682, 8690-92 (2004). DEA
orders also establish that the sale of list I chemical products by non-
traditional retailers is an area of particular concern in preventing
diversion of these products into the illicit manufacture of
methamphetamine. See, e.g., Joey Enterprises, 70 FR 76866, 76867
(2005). As Joey Enterprises explains, ``[w]hile there are no specific
prohibitions under the Controlled Substances Act regarding the sale of
listed chemical products to [gas stations and convenience stores], DEA
has nevertheless found that [these entities] constitute sources for the
diversion of listed chemical products.'' Id. See also TNT Distributors,
70 FR 12729, 12730 (2005) (special agent testified that ``80 to 90
percent of ephedrine and pseudoephedrine being used [in Tennessee] to
manufacture methamphetamine was being obtained from convenience
stores''); OTC Distribution Co., 68 FR 70538, 70541 (2003) (noting
``over 20 different seizure of [gray market distributor's]
pseudoephedrine product at clandestine sites,'' and that in eight-month
period, distributor's product ``was seized at clandestine laboratories
in eight states, with over 2 million dosage units seized in Oklahoma
alone.''); MDI Pharmaceuticals, 68 FR 4233, 4236 (2003) (finding that
``pseudoephedrine products distributed by [gray market distributor]
have been uncovered at numerous clandestine methamphetamine settings
throughout the United States and/or discovered in the possession of
individuals apparently involved in the illicit manufacture of
methamphetamine'').
Significantly, all of Respondent's proposed customers participate
in the non-traditional market for ephedrine and pseudoephedrine
products. DEA orders recognize that there is a substantial risk of
diversion of list I chemicals into the illicit manufacture of
methamphetamine when these products are sold by non-traditional
retailers. See, e.g. Joy's Ideas, 70 FR at 33199 (finding that the risk
of diversion was ``real'' and ``substantial''); Jay Enterprises, Inc.,
70 FR 24620, 24621 (2005) (noting ``heightened risk of diversion''
should application be granted). Under DEA precedents, an applicant's
proposal to sell into the non-traditional market weighs heavily against
the granting of a registration under factor five. So too here.
Because of the methamphetamine epidemic's devastating impact on
communities and families throughout the country, DEA has repeatedly
denied an application when an applicant proposed to sell into the non-
traditional market and analysis of one of the other statutory factors
supports the conclusion that granting the application would create an
unacceptable risk of diversion. Thus, in Xtreme Enterprises, 67 FR
76195, 76197 (2002), my predecessor denied an application observing
that the respondent's ``lack of a criminal record, compliance with the
law and willingness to upgrade her security system are far outweighed
by her lack of experience with selling list I chemicals and the fact
that she intends to sell ephedrine almost exclusively in the gray
market.'' I have repeatedly adhered to this reasoning in denying
applications to distribute list I chemicals to the non-traditional
market. See, e.g., Jay Enterprises, 70 FR at 24621; Prachi Enterprises,
69 FR 69407, 69409 (2004).
Here, Respondent's key persons have no experience in the wholesale
distribution of list I chemical products and yet the firm intends to
distribute these products to non-traditional retailers, a market in
which the risk of diversion is substantial. See Taby Enterprises of
Osceola, Inc., 71 FR 71557, 71559 (2006). Given these findings, I hold
that granting Respondent's application would be ``inconsistent with the
public interest.'' 21 U.S.C. 823(h).
Order
Pursuant to the authority vested in me by 21 U.S.C. 823(h), and 28
CFR 0.100(b) and 0.104, I order that the application of Georgia
Convenience Wholesale, Inc., for a DEA Certificate of Registration as a
distributor of list I chemicals be, and it hereby is, denied. This
order is effective April 5, 2007.
Dated: February 23, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7-3839 Filed 3-5-07; 8:45 am]
BILLING CODE 4410-09-P
