[Federal Register Volume 67, Number 43 (Tuesday, March 5, 2002)]
[Notices]
[Pages 9994-9995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5225]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


State Petroleum Inc.; Denial of Application

    On or about January 23, 2001, the Deputy Assistant Administration, 
Office of Diversion Control, Drug Enforcement Administration (DEA), 
issued an Order to Show Cause (OTSC) by certified mail to State 
Petroleum, Inc. (State Petroleum), located in Dearborn, Michigan, 
notifying it of an opportunity to show cause as to why the DEA should 
not deny in application, dated June 17, 2000, for a DEA Certificate of 
Registration as a distributor of the List I chemicals ephedrine and 
pseudoephedrin, pursuant to 21 U.S.C. 823(h), as being inconsistent 
with the public interest. The order also notified State Petroleum that, 
should no request for hearing be filed within 30 days, the right to a 
hearing would be waved.
    The OTSC was received, as indicated by tbe signed postal return 
receipt, received by DEA February 12, 2001. Since that time, no further 
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 State Petroleum is deemed to have waived its right to a 
hearing. After considering relevant material from the investigate 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 as follows. List I chemicals are chemicals 
that may be used in the manufacture of a controlled substance in 
violation of the Controlled Substances Act 21 u.S.C. 802(34); 21 CFR 
1310.02(a). Pseudoephedrine and ephedrine are List I chemicals that are 
commonly used to illegally manufacture methamphetamine, a Schedule II 
controlled substance. Methamphetamine is an extremely potent central 
nervous system stimulant, and its abuse is a growing problem in the 
United States.
    The Administrator finds that on or about June 17, 2001, an 
application was received by the DEA Chemical Operations Registration 
section on behalf of State Petroleum for DEA registration as a 
distributor of the two above-mentioned List I chemicals. The DEA pre-
registration inspection on July 7, 2001, revealed that State Petroleum 
had no prior experience in distributing List I chemical products. A 
corporate representative stated to DEA investigators that State 
Petroleum was in the business of wholesaling automotive chemical and 
petroleum products. The DEA inspection revealed State Petroleum 
appeared unprepared to accept the responsibilities of a DEA registant. 
The inspection noted deficiencies in State Petroleum's proposed 
recordkeeping system that clearly show the firm's ability to comply 
with DEA's recordkeeping requirements. The DEA investigation also 
revealed a number of State Petroleum's proposed supplier was out of 
business and a random sampling of proposed customers either were not 
interested in distributing List I chemical products, or were already 
receiving List I chemical products from other suppliers.
    Pursuant to 21 U.S.C. Sec. 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 14,269 (1999), See also Henry J. Schwartz, Jr., M.D., 54 FR 16,422 
(1989).
    The Administrator finds factors one, four, and five relevant to 
this case.
    Regarding factor one, the maintenance of effective controls against 
the diversion of listed chemicals, the DEA pre-registration inspection 
documented inadequate recordkeeping arrangements, in that State 
Petroleum intended to sell List I chemicals solely on a ``cash and 
carry'' basis, and there would be no computerized database with which 
to track sales to determine whether thresholds and recordkeeping 
requirements were being met. State Petroleum admitted that its proposed 
``cash and carry'' plan for distribution of List I chemical products 
would be inadequate to meet DEA recordkeeping requirements.
    Regarding factor four, the applicant's past experience in the 
distribution of chemicals, the DEA investigation revealed that State 
Petroleum has no previous experience related to handling or 
distributing listed chemicals.
    Regarding factor five, other factors relevant to and consistent 
with the public safety, the Administrator finds that State Petroleum is 
unprepared to successfully meet the requirements of a DEA List I 
chemical registrant. State Petroleum admitted its proposed 
recordkeeping system would be inadequate to comply with DEA 
requirements. State Petroleum further could not explain any planned 
controls against diversion.
    In addition, State Petroleum's proposed supplier was out of 
business, and a random sampling of its proposed customers either had no 
interest in List I chemical products, or were already receiving their 
List I chemical products from other suppliers. Thus State Petroleum 
failed to provide DEA with information demonstrating it had a 
legitimate source for List I chemical

[[Page 9995]]

products; and further failed to provide DEA with information 
demonstrating it had a legitimate customer base for List I chemical 
products.
    Therefore, for the above-stated reasons, the Administrator 
concludes that it would be inconsistent with the public interest to 
grant the application of State Petroleum.
    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 Certificate of Registration submitted by State Petroleum, 
Inc. be denied. This order is effective April 4, 2002.

    Dated: February 22, 2002.
Asa Hutchinson,
Administrator.

Certificate of Service

    This is to certify that the undersigned, on February 25, 2002, 
placed a copy of the Final Order referenced in the enclosed letter in 
the interoffice mail addressed to Wayne Patrick, Esq., Office of Chief 
Counsel, Drug Enforcement Administration, Washington, DC 20537; and 
caused a copy to be mailed, postage prepaid, registered return receipt 
to Mr. Mohammed Saghir, State Petroleum, Inc., 6200 Miller Road, 
Dearborn, Michigan 48126.

Karen C. Grant.
[FR Doc. 02-5225 Filed 3-4-02; 8:45 am]
BILLING CODE 4410-09-M