[Federal Register Volume 67, Number 44 (Wednesday, March 6, 2002)]
[Notices]
[Pages 10234-10235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5243]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Y & M Distributions, Inc.; Denial of Application

    On or about July 27, 2000, the Deputy Assistant Administrator, 
Office of Diversion Control, Drug Enforcement Administration (DEA), 
issued an Order to Show Cause (OTSC) by certified mail to Y & M 
Distributors, Inc. (Y & M), located in Kissimmee, Florida, notifying it 
of an opportunity to show cause as to why the DEA should not deny its 
application, dated November 9, 1999, for a DEA Certificate of 
Registration as a distributor of the List I chemicals ephedrine, 
pseudoephedrine, and plhenylpropanolamine, pursuant to 21 U.S.C. 
823(h), as being inconsistent with the public interest. The order also 
notified Y & M that, should no request for hearing be filed within 30 
days, the right to a hearing would be waived.
    The OTSC was received August 4, 2000, as indicated by the signed 
postal receipt. In addition, on August 2, 2000, DEA investigators from 
the Orlando, Florida District Office traveled to Y & M's business 
premises and, when there was no answer to repeated knocking, affixed a 
copy of the OTSC to the front door. 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 Y & M 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 or about November 9, 1999, an 
application was received by the DEA Chemical Operations Registration 
section on behalf of Y & M for DEA registration as a distributor of the 
three above-mentioned List I chemicals. The DEA pre-registration 
inspection revealed that Y & M had no prior experience in distributing 
List I chemical products, and appeared unprepared to accept the 
responsibilities of a DEA registrant. The DEA investigation also 
revealed a number of Y & M's proposed customers and suppliers were 
being investigated for violations related to the distribution of List I 
chemicals; and further revealed substantial evidence that one of Y & 
M's corporate officers was involved in the illegal trafficking of 
pseudoephedrine.
    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 14,269 (1999). See also Henry J. Schwartz, Jr., M.D. 54 FR 16, 422 
(1989).
    The Administrator finds factors two, four, and five relevant to 
this application.
    Regarding factor two, the applicant's compliance with applicable 
law, the investigation revealed evidence tha a corporate officer of Y & 
M is currently in violation of applicable law. the DEA investigation 
revealed substantial evidence from a reliable Confidential Source that 
a corporate officer of Y & M is involved in trafficking illegal 
pseudoephedrine.
    Regarding factor four, the applicant's past experience in the 
distribution of chemicals, the DEA investigation revealed that the 
applicant 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 a corporate 
officer stated to investigators that, at the time of the pre-
registration investigation, Y & M had only been in business 
approximately one year. Further, while Y & M and its employees/officers 
have no previous experience in distributing List I chemical products, a 
corporate officer expected these products to account for 20% of Y & M's 
business.
    In addition, Y & M provided a proposed customer and supplier list 
that contains a number of firms that are currently under investigation 
for alleged diversion of List I chemicals. A corporate officer stated 
to investigators that Y & M planned to distribute List I chemical 
products to customers based outside of its usual geographical sales 
area. The corporate officer admitted that he knew maybe one or two of 
the 39 proposed customers listed. A number of the proposed customers 
are listed in a DEA computerized database as having derogatory 
information concerning their List I chemical handling practices. 
Therefore, Y & M has failed to adequately demonstrate either a 
legitimate supplier or a legitimate customer base for List I chemical 
products.
    Therefore, for the above-stated reasons, the Administrator 
concludes

[[Page 10235]]

that it would be inconsistent with the public interest to grant the 
application of Y & M. The Administrator finds the lack of knowledge 
concerning the proposed customers, the number of proposed suppliers and 
customers currently under investigation, and the lack of an adequately 
demonstrated legitimate supply of and demand for List I chemical 
products creates an environment conducive to diversion, and thus poses 
an unacceptable risk of diversion.
    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 Y & M be denied. 
This order is effective April 5, 2002.

    Dated: February 22, 2002.
Asa Hutchinson,
Administrator.
[FR Doc. 02-5243 Filed 3-5-02; 8:45 am]
BILLING CODE 4410-09-M