[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]



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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that J&P had withdrawn its request for hearing and she subsequently 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

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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