[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]
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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