[Federal Register Volume 63, Number 208 (Wednesday, October 28, 1998)]
[Notices]
[Pages 57708-57709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28897]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration
[Docket No. 97-16]


Penick Corporation, Newark, New Jersey; Notice of Administrative 
Hearing, Summary of Comments and Objections; Notice of Hearing

    This Notice of Administrative Hearing, Summary of Comments and 
Objections, regarding the application of Penick Corporation (Penick) 
for registration as an importer of coca leaves, raw opium, opium poppy 
and poppy straw concentrate, all Schedule II controlled substances, is 
published pursuant to 21 CFR 1301.42(a). On May 12, 1997, notice was 
published in the Federal Register \1\ stating that Penick has applied 
to be registered as an importer of coca leaves, raw opium, opium poppy 
and poppy straw concentrate.
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    \1\ 62 FR 25972.
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    On June 12, 1997, Noramco of Delaware, Inc. (Noramco), filed 
comments and objections on the application and requested a hearing in 
the event that the application is not denied. Mallinckrodt Chemical, 
Inc. (Mallinckrodt), also filed comments and objections to the 
application. Notice is hereby given that a hearing with respect to 
Penick's application to be registered as an importer of coca leaves, 
raw opium, opium poppy and poppy straw concentrate will be conducted 
pursuant to the provisions of 5 U.S.C. 952(a) and 958 and 21 CFR 
1311.42.

Hearing Date: The hearing will begin at 9:30 a.m. on November 30, 1998, 
and will be held at the Drug Enforcement Administration Headquarters, 
600 Army Navy Drive, Hearing Room, Room E-2103, Arlington, Virginia.

Notice of Appearance: Any person entitled to participate in this 
hearing pursuant to 21 CFR 1301.42(a), and desiring to do so, may 
participate by filing a notice of intention to participate in 
accordance with 21 CFR 1301.54, in triplicate, with the Hearing Clerk, 
Office of the Administrative Law Judges, Drug Enforcement 
Administration, Washington, D.C. 20537, within 30 days of the date of 
publication of this notice in the Federal Register. Each notice of 
appearance must be in the form prescribed in 21 CFR 1216.48. Penick, 
Noramco, Mallinckrodt, and DEA Office of Chief Counsel need not file a 
notice of intention to participate.

For Further Information Contact: Helen Farmer, Hearing Clerk, Drug 
Enforcement Administration, Washington, D.C. 20537; Telephone (202) 
307-8188.

Summary of Comments and Objections

Mallinckrodt's Comments

    Mallinckrodt states that as a result of Penick's financial 
difficulties, which led to Penick's Chapter 11 bankruptcy petition, 
Penick has not produced significant quantities of controlled substances 
since 1991 and does not have the present ability to do so. Mallinckrodt 
further asserts that Penick's bankruptcy trustee, appointed by the 
bankruptcy court, has no experience in the controlled substance 
business, and that the goal of Penick and its bankruptcy trustee has 
not been to ressurect the business, but rather, to sell the business in 
order to pay off Penick's creditors. Mallinckrodt asserts that Penick 
has previously stated that it views its DEA registrations as its most 
valuable assets. Mallinckrodt argues that because DEA has a policy of 
not granting ``shelf registrations,'' i.e., registrations that the 
applicant intends to use only in the future, Penick should not be 
granting a DEA registration because ``[a]llowing Penick to treat its 
DEA registrations as assets is not the proper use of [a] DEA 
registration or the DEA registration process.''

Noramco's Comments

    Noramco argues that Penick cannot meet the burden of demonstrating 
that its registration is in the public interest due to a combination of 
its financial status and its management by a court-appointed bankruptcy 
trustee. Noramco first argues that Penick has substantial financial 
difficulties, which has resulted in Penick producing only small amounts 
of controlled substances since 1991 and that also caused Penick, in 
June 1994, to file for bankruptcy under Chapter 11 of the Bankruptcy 
Code. Normaco states that the management of Penick is now controlled by 
a bankruptcy trustee who does not have experience in the controlled 
substances industry. Moreover, Noramco asserts that the trustee's 
primary function is to market Penick's assets, with Penick's DEA 
registrations being the corporation's most significant assets. Noramco 
claims that the bankruptcy trustee's desire to make the sale of Penick 
more lucrative is not a lawful purpose for registration under the 
Controlled Substances Act.

[[Page 57709]]

Finally, Noramco has expressed concern that Penick's poor financial 
situation and management may increase the risk of diversion of any 
controlled substances that it imports.

The Government's Comments

    The Government asserts that the above-captioned proceeding is a 
combination of a rulemaking to determine whether the Schedule II raw 
materials coca leaves, raw opium, poppy straw, and poppy straw 
concentrate may be imported lawfully into the United States pursuant to 
21 U.S.C. 952(a)(1) and also an adjudication pursuant to 21 U.S.C. 
958(a) on Penick's pending application for a DEA registration as an 
importer of Schedule II raw materials. The Government argues that 
because DEA does not maintain a ``contingency reserve'' of DEA 
registrants Penick must first demonstrate that raw opium and poppy 
straw concentrate may be imported into the United States pursuant to 21 
U.S.C. 952(a)(1). The Government further asserts that Penick, which is 
involved in Chapter 11 bankruptcy proceedings, must next demonstrate to 
the Deputy Administrator that it is able to satisfy the requirements of 
21 U.S.C. 823(a) and 958(a) and 21 CFR 1301.34(b)-(f) before the Deputy 
Administrator will renew its DEA registration to import the above-
listed Schedule II raw materials into the United States.
    The Government also requests that all interested parties be 
afforded the opportunity to provide comments for such rulemaking. Due 
to the length of time between the notice of Penick's application for 
renewal of its DEA registration, see 62 FR 25972 (1997), and this 
Notice of Hearing, the Government's request is granted. All interested 
parties shall have until November 30, 1998, to file comments regarding 
the above-mentioned rulemaking.

    Dated: October 22, 1998.
Donnie R. Marshall,
Acting Deputy Administrator, Drug Enforcement Administration.
[FR Doc. 98-28897 Filed 10-27-98; 8:45 am]
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