[Federal Register Volume 67, Number 14 (Tuesday, January 22, 2002)]
[Notices]
[Pages 2910-2912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1415]


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

DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Prices Power International Denial of Application

    On or about May 8, 2002, the Deputy Assistant Administrator, Office 
of Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause (OTSC) by certified mail to Price's Power 
International (PPI), located in Newport New, Virginia, notifying it of 
an opportunity to show cause as to why the DEA should not deny its 
application, dated August 25, 1998, for a DEA Certificate of 
Registration as a distributor of the List I chemicals, pursuant to 21 
U.S.C. 823(h), as being inconsistent with the public interest. The 
order also notified PPI that, should not request for hearing be filed 
within 30 days, the right to a hearing would be waived.
    The OTSC was received May 15, 2000, as indicated by the signed 
postal receipt. Since that time, no response has been received from the 
applicant nor any person purporting to represent the applicant. 
Therefore, the Administrator of the DEA, finding that (1) thirty days 
having passed since receipt of the Order to Show Cause, and (2) no 
request for a hearing having been received, concludes that PPI is 
deemed to have waived its right to a hearing. After considering 
relevant material from the investigative file in this matter, the 
Administrator now enters his final order without a hearing pursuant to 
21 CFR 1301.43(d) and (e) and 1301.46.
    The Administrator finds that on August 25, 1998, an application was 
received by the DEA Chemical Operations Registration section on behalf 
of PPI for DEA registration as a distributor of the List I chemicals 
pseudoephedrine, phenylpropanolamine, and ephedrine. PPI did not file 
this application in time to qualify for temporary exemption from 
registration pursuant to 21 CFR 1310.09. Accordingly, PPI was not 
authorized to distribute these chemicals before approval of the 
application for registration.
    On February 25, 1998, an undercover DEA Special Agent (S/A) 
contacted PPI to discuss the purchase of nine bottles

[[Page 2911]]

of ``Revive Ephedrine.'' In response, on March 9, 1998, PPI sent nine 
bottles of 100 Guaifedrine ephedrine HCL 25 mg. tablets. On March 26, 
1998, PPI sent the undercover S/A an additional twelve bottles of 100 
Guaifedrine ephedrine HCL 25 mg. tables in response to an order placed 
by an undercover DEA S/A March 11, 1998.
    On June 9, 1998, a clandestine methamphetamine laboratory was 
seized in Kansas. The seizures at the clandestine laboratory site 
included an ounce and a half of finished methamphetamine, 738 grams of 
pseudophedrine, twenty five bottles of 250 60 mg. pseudoephedrine 
tablets and nineteen bottles of 380 60 mg. pseudoephedrine tablets, all 
bearing the PPI label. Also seized were a number of order forms, 
invoices, and a catalogue from PPI. One order form detailed a shipment 
from PPI for 40 bottles of 380 60 mg. pseudoephedrine tablets (totaling 
912 grams of pseudoephedrine) and 16 bottles of 375 37.5 mg. 
phenylpropanolamine tablets (totaling 225 grams of 
phenylpropanolamine). The recipient, Gardner's Littlehouse Minimart, 
and the shipping address of this business entity, were both determined 
to be nonexistent. In addition, documents seized at the site of the 
clandestine methamphetamine laboratory documented that a Federal 
Express package shipped on or about May 27, 1998, from PPI to Gardner's 
Littlehouse Minimart contained 30 bottles of 380 60 mg. 
pseudoephendrine tablets and 30 bottles of 250 60 mg. pseudoephedrine 
tablets, for a total amount of 1134 grams of pseudoephedrine. Documents 
obtained from Federal Express revealed that previously, on or about May 
8, 1998, PPI had shipped a fourteen pound package of Gardner's 
Littlehouse Minimart, for which there is evidence to believe contained 
approximately 666 grams of pseudoephedrine.
    On June 10, 1998, a Diversion Investigator (D/I) of the DEA 
Richmond Resident Office (R/O) visited PPI and spoke with the owner, 
Niles S. Price. During the visit, the D/I attempted to explain the DEA 
guidelines concerning the handling of List I chemicals. Mr. Price 
stated that he was aware of the chemical laws, and that he had 
contacted DEA's Richmond R/O and had just received an application for 
DEA registration. At this point the visit was terminated.
    On June 15, 1998, a D/I in the DEA Kansas City District Office 
interviewed several Federal Express employees regarding the above-
referenced shipments from PPI. These interviews revealed that there 
were at least two shipments, on May 8 and May 27, 1998, from PPI to 
Gardner's Littlehouse Minimart, a nonexistent business entity at a 
nonexistent shipping address. On both occasions, following confusion in 
the attempted delivery of the shipments, Federal Express employees in 
Kansas received calls from PPI attempting to locate the shipments. On 
May 11, 1998, during the first telephone call, a Federal Express 
employee spoke with an individual whom he believed to be the owner of 
PPI, telling him that the package could not be delivered because it was 
incorrectly addressed. The second package was mailed by PPI to the same 
address about two weeks later, on May 27, 1998. After several failed 
delivery attempts, Niles S. Price telephonically contacted the Federal 
Express office in Kansas in an attempt to locate the package. On both 
occasions, an individual identifying himself as ``Randy Jones'' picked 
up the packages from Federal Express immediately following each of the 
calls from PPI.
    Also on June 15, 1998, a DEA S/A acting in an undercover capacity 
placed an order via mail with PPI for six bottles of 100 Guaifedrine 25 
mg. ephedrine tablets and three bottles of 380 Maxi Thin 60 mg. 
pseudoephedrine tablets, which were shipped and received by DEA on or 
about June 25, 1998.
    On or about July 16, 1998, in response to an order placed by an 
undercover DEA S/A, PPI shipped one bottle of 380 pseudophedrine 60 mg. 
tablets.
    On August 6, 1998, three DEA Special Agents visited PPI and spoke 
with Niles S. Price. At that time, they delivered DEA's written 
Pseudoephedrine and Phenylpropanolamine Notices, together with a letter 
advising Mr. Price that he could not conduct any List I or List II 
chemical transactions until he was registered with DEA. The agents 
further orally advised Mr. Price that he could not distribute 
pseudoephedrine or phenylpropanolamine until he registered with DEA.
    On or about September 1, 1998, in response to an order placed by an 
undercover DEA S/A, PPI shipped one bottle of 380 pseudoephedrine 60 
mg. tablets.
    Pursuant to 21 U.S.C. 823(h), the Administrator may deny an 
application for a DEA Certificate of Registration if he determines that 
granting the registration would be inconsistent with the public 
interest. Section 823(h) requires the following factors be considered:
    (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.
    Like the public interest analysis for practitioners and pharmacies 
pursuant to subsection (f) of section 823, these factors are to be 
considered in the disjunctive; the Administrator may rely on any one or 
combination of factors and may give each factor the weight he deems 
appropriate in determining whether a registration should be revoked or 
an application for registration be denied. See, e.g. Energy Outlet, 64 
FR 14269 (1999). See also Henry J. Schwartz, Jr., M.D., 54 FR 16422 
(1989).
    As a preliminary matter, DEA consistently has held that a retail 
store operates under the control of its owners, stockholders, or other 
employees, and therefore the conduct of these individuals is relevant 
in evaluating the fitness of and applicant or registrant for 
registration. See, e.g. Rick's Pharmacy, 62 FR 42595 (1997); Big T 
Pharmacy, Inc., 47 FR 51830 (1982). Since Niles S. Price is the owner 
of the applicant, and directed its operations, his conduct is relevant 
in determining whether or not to grant the applicant's application for 
registration. Moreover, PPI may be considered a retail store in that it 
distributes to both businesses and individuals, and also accepts walk-
in customers.
    Regarding factor one, the maintenance of effective controls against 
the diversion of listed chemicals, the Administrator finds that the 
preregistration inspection of the applicant conducted December 9, 1998, 
did not document any inadequacies in the applicant's security and 
recordkeeping arrangements.
    Regarding factor two, the applicant's compliance with applicable 
law, the Administrator finds that the evidence shows that PPI and Niles 
S. Price significantly violated applicable law by distributing List I 
chemicals on at least seven separate occasions from March, 1998 through 
September, 1998, when not registered to do so, in violation of 21 
U.S.C. 822 and 843(a)(9) and 21 CFR 1309.21(a).
    PPI further violated applicable law by failing to obtain proof of 
identity for at least one of its business customers, in

[[Page 2912]]

violation of 21 U.S.C. 830(a)(3) and 842(a)(9) and 21 CFR 1310.07. The 
types of evidence constituting proof of identity are set forth at 
Sec. 1310.07. That regulation states that the existence and apparent 
validity of a business entity should be checked by telephone directory, 
the local credit bureau, the local Chamber of Commerce or Better 
Business Bureau, or if the business entity is a registrant by verifying 
its DEA registration. Regarding sales to individuals or cash 
purchasers, the regulation states that the purchaser's signature, 
driver's license, and at least one other form of identification are 
required.
    Section 830(a)(3) requires that each regulated person who engages 
in a regulated transaction to identify each other party to the 
transaction. PPI is a ``regulated person'' because it is a distributor 
of listed chemicals. 21 U.S.C. 802(38). PPI engaged in at least one 
``regulated transaction'' when it shipped its May 27, 1998, Federal 
Express package containing an aggregate amount of 1134 grams of 
pseudoephedrine, exceeding the cumulative monthly threshold of one 
kilogram for that chemical established by 21 CFR 1310.04(f)(1). See 21 
U.S.C. 802(39)(A)(II). There is evidence to show that the prior May 8, 
1998, PPI shipment to Gardner's Littlehouse Minimart contained 
approximately 666 grams of pseudoephedrine, increasing PPI's 
distribution in excess of the cumulative monthly threshold for this 
List I chemical.
    It is clear from the facts of this case that PPI consistently 
violated the proof of identity requirement. PPI sent at least two 
Federal Express packages containing List I chemicals about two weeks 
apart to Gardner's Littlehouse Minimart. The DEA investigation showed 
that both this business entity and address were nonexistent. A proper 
attempt to prove the identity of Gardner's Littlehouse Minimart in 
accordance with PPI's legal duty should have raised issues regarding 
the validity of this business entity, preventing the May 8, 1998, 
Federal Express shipment of List I chemicals. PPI's contacting the 
Federal Express office in Kansas in an effort to locate this package 
indicated that PPI knew something was amiss. What renders PPI's conduct 
especially egregious in this case is that about two weeks later, on or 
about May 27, 1998, it sent another package containing List I chemicals 
to the same bogus business entity at the same bogus address, and again 
had to call Federal Express in Kansas in an effort to locate the 
package. There is substantial documentary evidence to indicate that 
much of the pseudoephedrine seized at the clandestine methamphetamine 
laboratory on June 9, 1998, was shipped from PPI. If PPI had attempted 
to verify the legitimacy of Gardner's Littlehouse Minimart in 
accordance with its legal duty, it is likely that neither the May 8 nor 
the May 27, 1998 shipments of List I chemicals would have been shipped 
and later seized at the clandestine methamphetamine laboratory.
    Regarding factor three, there is no evidence that the applicant or 
Niles S. Price has any record of convictions related to controlled 
substances or to chemicals controlled under Federal or State law.
    Regarding factor four, the applicant's past experience in the 
distribution of chemicals, the Administrator finds that the DEA 
investigation revealed that the applicant significantly violated 
applicable law, as set forth above.
    Regarding factor five, other factors relevant to and consistent 
with the public safety, the Administrator finds that PPI, through its 
owner Niles S. Price, significantly violated applicable law by 
distributing List I chemicals without being registered to do so, and by 
failing to identify the other parties to regulated List I chemical 
transactions. Mr. Price stated during the June 10, 1998, interview with 
the DEA Richmond R/O D/I that he was award of the chemical laws 
regarding the distribution of listed chemicals, and was in the process 
of obtaining a DEA Registration. Yet, on at least three occasions 
following this statement, Mr. Price through PPI continued to distribute 
List I chemicals in response to orders submitted by undercover DEA 
Special Agents. PPI even continued to distribute List I chemicals 
following the August 6, 1998, visit by the three DEA Special Agents, 
who informed Mr. Price by both written and oral notice that he could 
not distribute listed chemicals until he was registered with DEA. 
Subsequently, on or about September 1, 1998, PPI shipped additional 
List I chemicals in response to an order from an undercover DEA Special 
Agent. In addition, at PPI's December 9, 1998, preregistration 
inspection, Mr. Price stated to investigators that he requires 
customers to fax a copy of their driver's license prior to purchases, 
and that he only ships to the address listed on the license. Yet Mr. 
Price did not request any form of identification whatsoever for any of 
the five undercover purchases made by DEA Special Agents previously set 
forth above. The Administrator finds this lack of candor, taken 
together with PPI's and Mr. Price's demonstrated cavalier disregard of 
the statutory law and regulations concerning the registration and 
distribution of List I chemicals, makes questionable PPI's and Mr. 
Price's commitment to the DEA regulatory requirements designed to 
protect the public from the diversion of controlled substances and 
listed chemicals. Aseel Incorporated, Wholesale Division, 66 FR 35,459 
(2001); Terrence E. Murphy, 61 FR 2841 (1996). Indeed, this case is a 
prime example of the dangers created by the failure to follow 
applicable law regarding the distribution of listed chemicals. PPI's 
List I chemical products, distributed in violation of statutory law and 
regulation, were discovered in significant quantities at a clandestine 
methamphetamine laboratory site, together with a quantity of finished 
methamphetamine. If PPI had complied with applicable law, it is 
doubtful that these List I chemicals would have reached the hands of 
drug traffickers.
    Therefore, for the above-stated reasons, the Administrator 
concludes that it would be inconsistent with the public interest to 
grant the application of Price's Power International. The evidence 
indicates that the applicant has violated applicable law by 
distributing List I chemicals while not registered with DEA, and by 
failing to identify other parties to regulated transactions.
    Accordingly, the Administrator of the Drug Enforcement 
Administration, pursuant to the authority vested in him by 21 U.S.C. 
823 and 28 CFR 0.100(b) and 0.104, hereby orders that the application 
for a DEA Certification of Registration submitted by Aseel be denied. 
This order is effective February 21, 2001.

    December 21, 2001.
Asa Hutchinson,
Administrator.
[FR Doc. 02-1415 Filed 1-18-02; 8:45 am]
BILLING CODE 4410-09-M