[Federal Register Volume 68, Number 142 (Thursday, July 24, 2003)]
[Notices]
[Pages 43754-43755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18869]
[[Page 43754]]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 02-26]
J&P Distributor; Denial of Application
On December 28, 2001, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to J&P Distributor (J&P), proposing to deny its
application, executed on November 15, 2000, for DEA Certificate of
Registration as a distributor of the list I chemical ephedrine. Prior
to the issuance of the show cause order, J & P requested modification
of its application to include psuedoephedrine, also a list I chemical.
The Order to Show Cause alleged that granting J & P's application 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 was delivered to J&P by certified mail, and
the applicant timely requested a hearing. However, after the matter was
docketed before Administrative Law Judge Mary Ellen Bittner (Judge
Bittner), the Government filed a request for termination of proceedings
on the ground that J&P withdrew its request for hearing. In her April
19, 2002, Order Terminating Proceedings, Judge Bitter similarly found
that J&P had withdrawn its request for hearing and she subsequently
terminated all proceedings before her. The matter was later transmitted
to the Acting Deputy Administrator for issuance of a final order.
In light of the withdrawal of its request for hearing, the Acting
Administrator finds that J&P has waived its hearing right. 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
1301.43(d) and (e) and 1301.46. 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) and 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 Acting Administrator's review of the investigative file reveals
that in or around December 2000, an application dated November 15,
2000, was received by DEA on behalf of J&P. The applicant sought DEA
registration as a distributor of the list I chemical ephedrine. On
March 15, 2001, Pat Alexander, co-owner of J&P, submitted a written
request to add pseudoephedrine to J&P's application. Because J&P did
not submit its application for registration on or before July 12, 1997,
the firm did not qualify for temporary exemption from the requirement
of registration, pursuant to 21 CFR 1309.10. Accordingly, J&P was not
authorized to distribute listed chemicals prior to approval of its
pending application for registration. See, Aseel, Incorporated,
Wholesale Division, 66 FR 35459 (2001).
The Acting Administrator finds that J&P is a retail distributor
located in Rockmart, Georgia, and is owned by Jeff Alexander and his
wife Pat. The firm specializes in the sale of candy, hats, gloves and
other novelty items. J&P was purchased from Mrs. Alexander's brother
Larry Weaver under its former name, Novelty Plus. Novelty Plus was
previously registered with DEA as a distributor of list I chemicals
under Certificate of Registration number 002093NYY. That registration
expired on October 31, 2000.
As part of a pre-registration investigation, DEA Diversion
Investigators met with J&P's owners on March 15, 2001. J&P's owners
informed DEA personnel that the firm anticipated that its retail sale
of list I chemical products would constitute fifty-percent of the
firm's business. J&P also provided to DEA investigators a list of
ephedrine and pseudoephedrine products that it intended to sell,
including ``Heads Up'' and ``Max Alert'' brands in 60-count bottles. A
review of J&P's list of proposed customers reveals that they are
comprised primarily of convenience stores or gas stations.
J&P also provided to DEA investigators the names of two of its
proposed suppliers of list I chemical products. One of the suppliers,
located in Belvedere, South Carolina, was previously the subject of DEA
show cause proceedings to revoke its DEA registration, and was alleged
to have violated DEA requirements related to recordkeeping, excessive
purchases and failure to report suspicious orders of listed chemicals.
In addition, as part of a December 2000 seizure of listed chemical
products, law enforcement personnel in Springdale, Arizona seized
approximately 51,000 pseudoephedrine tablets. It was subsequently
determined that these products originated from J&P's proposed supplier.
During the month of July 2001, DEA conducted an unrelated
regulatory investigation of J&P's second proposed supplier of listed
chemicals, Galaxy Wholesale, Incorporated, of Mabletonton, Georgia.
During an inspection of Galaxy Wholesale's distribution records, DEA
investigators uncovered a sales invoice (with the purported signature
of Pat Alexander) which revealed that on March 1, 2001, J&P purchased
``Heads Up'' ephedrine products (60-count bottles and 6-count packets)
from Galaxy Wholesale. At the time of the purchase, J&P was not
registered with DEA to handle listed chemicals. During the pre-
registration inspection of March 15, 2001, neither Jeff or Pat
Alexander informed DEA investigators of J&P's purchase of list I
chemicals from Galaxy Wholesale when asked about their experience in
handling list I chemicals products.
DEA's investigation further revealed that between December 2000 and
March 2002, J&P sold to three retail establishments approximately 350
bottles (60-count) of various ephedrine products, as well as blister
packets of other ephedrine and pseudoephedrine products. At the time of
these sales, J&P's application for DEA registration was pending
approval.
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
[[Page 43755]]
Outlet, 64 FR 14269 (1999). See also Henry J. Schwartz, Jr., M.D., 54
FR 16422 (1989).
The Acting Administrator finds factors two, four and five relevant
to J & P's pending application.
With respect to factor two, the applicant's compliance with
applicable law, the Acting Administrator finds that between December
2000 and March 2002, J&P violated applicable law by distributing,
without a DEA registration, bottle quantities of ephedrine as well as
pseudoephedrine products to three retail establishments, in violation
of 21 U.S.C. 843(a)(9). The Acting Administrator also finds factor two
relevant to J&P's March 2001 purchase of ephedrine products from Galaxy
Wholesale while not registered with DEA, in violation of 21 U.S.C.
822(a) and 21 CFR 1309.21(a) and 1310.09.
With respect to factor four, the applicant's past experience in the
distribution of chemicals, the Acting Administrator finds that
notwithstanding the above referenced purchase and sale of listed
chemical products by the owners of J&P, the applicant has not
demonstrated that it possesses any meaningful experience in the
distribution of these products. The Acting Administrator finds J&P's
lack of experience most telling in the fact that its owners continued
the purchase and sale of listed chemical products even as its
application for registration was being reviewed by DEA. This factor
weighs against the granting of Respondent's pending application. See,
CHM Wholesale Co., 67 FR 9985 (2002); Hologram Wonders, Inc., 67 FR
10231 (2002); Southern Illinois Wholesale, Inc., 67 FR 12583 (2002).
J&P's continued sale and purchase of listed chemical products
during the pendency of its registration application is also relevant to
factor five, other factors relevant to and consistent with the public
safety. The Acting Administrator also finds factor five relevant to the
failure on the part of J&P's owners to inform DEA investigators of any
previous experience handling listed chemicals, when the firm in fact
purchased ephedrine products from Galaxy Wholesale.
The Acting Administrator also finds that J&P provided to DEA
investigators a list of customers that are comprised solely of
convenience stores and gas stations. While there are no specific
prohibitions regarding the sale of listed chemicals products to these
entities, DEA has nevertheless found on previous occasions that gas
stations and convenience stores constitute sources for the diversion of
listed chemical products. See, e.g., Sinbad Distributing, 67 FR 10232,
10233 (2002); K.V.M. Enterprises, 67 FR 70968 (2002) (denial of
application based in part upon information developed by DEA that the
applicant proposed to sell listed chemicals to gas stations, and the
fact that these establishments in turn have sold listed chemical
products to individuals engaged in the illicit manufacture of
methamphetamine); Xtreme Enterprises, Inc., 67 FR 76195 (2002).
Factor five is further relevant to J&P's proposed use of listed
chemical supplier that previously was the subject of DEA show cause
proceedings. The show cause proceedings were based on allegations that
the supplier violated laws and regulations related to its DEA
registration, and engaged in distribution practices that led to the
diversion of listed chemicals.
In light of the above, the Acting Administrator concludes that it
would be inconsistent with the public interest to grant the application
of J&P Distributor.
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 J&P Distributor be, and it hereby is, denied. This order is
effective August 25, 2003.
Dated: July 3, 2003.
William B. Simpkins,
Acting Administrator.
[FR Doc. 03-18869 Filed 7-23-03; 8:45 am]
BILLING CODE 4410-09-M