[Federal Register Volume 67, Number 44 (Wednesday, March 6, 2002)]
[Notices]
[Pages 10232-10234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5242]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Sinbad Distributing; Denial of Application

    On or about July 6, 2001, the Deputy Assistant Administrator, 
Office of Diversion Control, Drug Enforcement Administration (DEA), 
issued an Order to Show Cause (OTSC) by certified mail to Sinbad 
Distributing (Sinbad), located in Las Vegas, Nevada, notifying it of an 
opportunity to show cause as to why the DEA should not deny its 
application, dated April 10, 2001, for a DEA Certificate of 
Registration as a distributor of the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine, pursuant to 21 U.S.C.. 
823(h), as being inconsistent with the public interest. The order also 
notified Sinbad that, should no request for hearing be filed within 30 
days, the right to a hearing would be waived.
    The OTSC was received July 16, 2001, 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

[[Page 10233]]

having passed since receipt of the Order to Show Cause, and (2) no 
request for a hearing having been received, concludes that Sinbad 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 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, ephedrine, and phenylpropanolamine 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 April 10, 2001, an application was 
received by the DEA Chemical Operations Registration section on behalf 
of Sinbad for DEA registration as a distributor of the List I chemicals 
pseudoephedrine, phenlypropanolamine, and ephedrine.
    During the August 18, 2001, pre-registration investigation of 
Sinbad, DEA investigators learned that Sinbad is a wholesale grocery 
distributorship with no prior experience in handling List I chemical 
products. The DEA investigation further revealed Sinbad distributes its 
products almost exclusively to liquor stores, mini marts, and other 
convenience stores in Las Vegas, Clark County, and Henderson, Nevada.
    DEA investigators requested information concerning Sinbad customers 
who previously have requested pseudoephedrine products. The DEA 
investigation revealed that most of Sinbad's potential pseudoephedrine 
customers have in the past obtained excessive quantities of 
pseudoephedrine products from multiple sources.
    In response to requests by DEA investigators, Sinbad also provided 
a list of potential suppliers. A number of these suppliers have 
received Warning Letters from DEA documenting that the products they 
distribute have been found in illicit settings.
    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 relay 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).
    Regarding factor one, the maintenance of effective controls against 
the diversion of listed chemicals, the Administrator finds that the 
during the preregistration inspection of the applicant conducted August 
18, 2000, Sinbad did not demonstrate that it possessed adequate 
security and recordkeeping arrangements to prevent the diversion of 
List I chemical products. Sinbad's owner stated to DEA investigators 
that he did not plant to segregate List I chemical products in a 
separate, secure enclosure, but that such products would be stored on 
open shelves along with other products. The investigation thus revealed 
that the applicant was unprepared to address the responsibilities that 
a DEA registration would entail.
    Regarding factor two, the applicant's compliance with applicable 
law, the Administrator finds that there no evidence that the applicant 
has a record for violations of applicable Federal, State, or local law.
    Regarding factor three, there is no evidence that the applicant 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 has no experience in the 
handling of List I chemicals.
    Regarding factor five, other factors relevant to and consistent 
with the public safety, the Administrator finds that past DEA 
investigations and experience has shown that the primary source of 
diversion of List I chemicals in the areas in which Sinbad seeks to 
distribute are mini marts and other types of convenience stores. The 
DEA investigation in this case revealed that Sinbad's customer base is 
primarily these same types of stores. Sinbad's proposed customer list 
includes numerous stores of record with DEA as having excessive 
ordering histories.
    One such proposed customer, a mini mart located in Las Vegas, 
Nevada, on April 17, 2000, ordered one case (144 bottles) of 60 mg. 
pseudoephedrine tablets in 120 count bottles from a distributor in 
Michigan. Four days later, the proposed customer ordered another case 
(144 bottles) of the exact same product from a distributor located in 
Las Vegas, Nevada. Six days later, a third case was ordered. During 
this ten day period, approximately 51,840 dosage units of 60 mg. 
pseudoephedrine tablets were received and distributed. Between March 22 
and August 8, 2000, this proposed customer ordered and distributed 
approximately 200,000 pseudoephedrine 60 mg. tablets.
    Two other proposed customers, both mini marts located in Las Vegas, 
between them ordered and distributed about 629,600 dosage units of 
pseudoephedrine during an approximately 18 month period. A third 
proposed customer was indicted of four counts of illegal distribution 
of a List I chemical with knowledge it would be used to manufacture a 
controlled substance. The owner later pleaded guilty to one count of 
the indictment.
    The DEA investigation also revealed information concerning 
potential suppliers named by Sinbad. Three of the proposed suppliers of 
List I chemicals have each received numerous Warning Letters from DEA. 
These letters notified the above firms that their distribution 
practices have contributed to the diversion of List I chemical products 
to the illicit manufacture of methamphetamine. Among these suppliers, 
two had received 15 Warning Letters between them, and the third had 
surrendered its DEA List I chemical registration following the service 
of a criminal search warrant. During the search, approximately 1736 
cases of pseudoephedrine and $385,000 were seized. These three 
suppliers additionally were responsible for distributing 11,303,160 
dosage units of 60 mg. pseudoephedrine products

[[Page 10234]]

during an approximately 18 month period. This amount of pseudoephedrine 
is theoretically capable of producing approximately 1370 pounds of 
methamphetamine.
    Therefore, for the above-stated reasons, the Administrator 
concludes that it would be inconsistent with the public interest to 
grant the application of Sinbad Distributing.
    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 Sinbad Distributing 
be denied. This order is effective April 5, 2002.

    Dated: February 22, 2002.
Asa Hutchinson,
Administrator.
[FR Doc. 02-5242 Filed 3-5-02; 8:45 am]
BILLING CODE 4410-09-M