[Federal Register Volume 68, Number 142 (Thursday, July 24, 2003)]
[Notices]
[Pages 43750-43752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18868]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Callahan's Foods; Denial of Application

    On October 28, 2001, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Callahan's Foods (Callahan's) proposing to deny 
its application, executed on May 13, 1997, for DEA Certificate of 
Registration as a distributor of list I chemicals. The Order to Show 
Cause alleged that granting the application of Callahan's would be 
inconsistent with the public interest as that term is used in 21 U.S.C. 
823(h) and 824(a)(4). The Order to Show Cause also notified Callahan's 
that should no request for a hearing be filed within 30 days, its 
hearing right would be deemed waived.
    According to the DEA investigative file, the Order to Show Cause 
was sent by certified mail to Callahan's at its proposed registered 
location in Pulaski, Virginia and was received on November 2, 2001. DEA 
has not received a request for hearing or any other reply from 
Callahan's or anyone purporting to represent the company in this 
matter.
    Therefore, the Acting Administrator of DEA, finding that (1) thirty 
days having passed since the delivery of the Order to Show Cause at the 
applicant's

[[Page 43751]]

proposed registered address, and (2) no request for hearing having been 
received, concludes that Callahan's has waived its hearing right. See 
Aqui Enterprises, 67 FR 12576 (2002). After considering relevant 
material from the investigative file in this matter, the Acting 
Administrator now enters his final order without a hearing pursuant to 
21 CFR 1309.53(c) and (d) and 1316.67 (2003). The Acting Administrator 
finds as follows:
    List I chemicals are those 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 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 Acting Administrator's review of the investigative file reveals 
that on May 21, 1997, DEA's Chemical Operations Registration section 
received an application dated May 13, 1997, on behalf of Callahan's. 
The application was submitted by the company's owner, Tony L. Callahan. 
The applicant sought DEA registration as a distributor of the list I 
chemicals, ephedrine, pseudoephedrine, and phenylpropanolamine. Because 
Callahan's submitted its application for registration on or before July 
12, 1997, the firm qualified for temporary exemption from the 
requirement of registration, pursuant to 21 CFR 1309.10.
    For reasons unknown, Callahan's registration application was not 
received by the DEA Richmond (Virginia) District Office for follow-up 
investigation until April 4, 1999. Nevertheless, on six separate 
occasions between April 27, 1999 and June 10, 1999, a DEA Diversion 
Investigator attempted to reach Tony Callahan by telephone to discuss 
information necessary for completion of the application process. There 
is no information in the investigative file demonstrating that DEA 
personnel were successful in reaching Tony Callahan during that time 
period. However, on December 3, 1999, and again on May 15, 2000, a DEA 
Diversion Investigator contacted Tony Callahan, and requested the 
following information:
    a. A list of the company's officers;
    b. A brief description of the company's main business;
    c. Percentage of the company's business pertaining to list I 
chemicals;
    d. A list of list I chemical suppliers;
    e. A list of list I chemical customers;
    f. Copies of relevant licenses; and
    g. Description of the company's security as well as a copy of any 
security contracts.
    Callahan's failed to provide the requested information. In 
response, a DEA Diversion Investigator traveled to Callahan's on 
January 4, and March 2, 2000, again requesting information necessary to 
process the company's registration application. On both occasions, the 
investigator met with Robert Callahan (son of Tony Callahan) and his 
wife Lisa. Robert and Lisa Callahan were part of the management 
structure and provided assistance to Tony Callahan in the operation of 
Callahan's. Despite DEA's repeated requests, the requested information 
was not provided.
    On February 2, 2001, the DEA Richmond office directed a letter to 
Tony Callahan. The letter recited DEA's repeated attempts to obtain 
information from Callahan's and again requested information needed to 
process its pending DEA application. The letter further informed Tony 
Callahan that pursuant to 21 CFR 1309.35, DEA ``may require an 
applicant to submit documents of written statements of fact'' relevant 
to process a pending application. The letter further stated that 
``[t]he failure of the applicant to provide such documents or 
statements within a reasonable time after [such request] shall be 
deemed a waiver by the applicant of an opportunity to present * * * 
documents or facts for consideration by DEA in granting the 
application.'' The letter concluded that should the company fail to 
respond to DEA correspondence, such failure would be deemed a 
withdrawal of Callahan's pending application, pursuant to 21 CFR 
1309.36(b). Callahan's was given thirty days to respond to DEA's 
letter. A similar letter was subsequently sent to Callahan's on April 
16, 2001.
    On or about March 5, 2001, Tony Callahan telephoned the DEA 
Richmond office and stated that he had sent the requested documents to 
DEA. However, DEA records did not show receipt of the requested 
information. Tony Callahan assured DEA personnel that he would send the 
documents.
    On April 20, 2001, Tony Callahan called the Diversion Group 
Supervisor of the DEA Richmond Office stating that he wished to 
continue the registration process and to that end, again informed DEA 
personnel that he would submit all necessary documents. However, when 
DEA personnel finally received documents from Tony Callahan on May 3, 
2001, the information contained therein was found to be incomplete with 
respect to names, addresses, phone numbers, and DEA registration 
numbers of both suppliers and customers of Callahan's Foods. During the 
following two months, DEA's repeated attempts to obtain further 
information from Callahan's, and/or arrange times for on-site 
inspections of the business were unsuccessful.
    Pursuant to 21 U.S.C. 823(h), the Acting Administrator may deny an 
application for Certificate of Registration if he determines that 
granting the registration would be inconsistent with the public 
interest as determined under that section. Section 823(h) requires the 
following factors be considered in determining the public interest:
    (1) Maintenance of effective controls against diversion of listed 
chemicals into other than legitimate channels;
    (2) Compliance with applicable Federal, State, and local law;
    (3) Any prior conviction record under Federal or State laws 
relating to controlled substances or to chemicals controlled under 
Federal or State law;
    (4) Any past experience in the manufacture and distribution of 
chemicals; and
    (5) Such other factors as are relevant to and consistent with the 
public health and safety.
    As with 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 Acting 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 denied. See, e.g. 
Energy Outlet, 64 FR 14269 (1999). See also Harry J. Schwartz, Jr., 
M.D., 54 FR 16422 (1989).
    The Acting Administrator finds factors one, four, and five relevant 
to Callahan's Foods' pending application.
    With respect to factor one, maintenance of effective controls 
against the diversion of listed chemicals, the Acting Administrator's 
review of the investigative file reveals that Callahan's Foods failed 
to provide to DEA information regarding security or any security 
contracts that the company had entered into. Therefore, the record 
before the Acting Administrator contains no information as to any 
security measures employed by Callahan's designed to prevent the 
diversion of listed chemicals.
    Regarding factor four, the applicant's past experience in the 
distribution of chemicals, DEA's investigation revealed

[[Page 43752]]

that Callahan's failed to provide information with respect to its list 
I chemical suppliers and customers. Similarly, with respect to factor 
five, other factors relevant to and consistent with the public safety, 
Callahan's failure to provide information necessary to the processing 
of its application for DEA registration supports the denial of its 
pending application. In addition, DEA investigators were unable to 
perform an on-site inspection of Callahan's to determine whether or not 
the company could adequately handle listed chemicals and the company 
provided incomplete information necessary to the processing of its DEA 
application. See, CHM Wholesale Co., 67 FR 9985 (2002).
    In light of the above, and the absence of evidence to the contrary, 
the Acting Administrator is left with the conclusion that Callahan's 
cannot be entrusted with the responsibilities of a DEA registration. As 
a result, the Acting Administrator further concludes that it would be 
inconsistent with the public interest to grant the application of 
Callahan's Foods.
    Accordingly, the Acting 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 pending 
application for DEA Certificate of Registration, previously submitted 
by Callahan's Foods be, and it hereby is denied. This order is 
effective August 25, 2003.

    Dated: July 3, 2003.
William B. Simpkins,
Acting Administrator.
[FR Doc. 03-18868 Filed 7-23-03; 8:45 am]
BILLING CODE 4410-09-M