[Federal Register Volume 69, Number 48 (Thursday, March 11, 2004)]
[Notices]
[Pages 11652-11653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5479]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


ANM Wholesale; Denial of Application

    On February 28,2003, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to ANM Wholesale (ANM) proposing to deny its 
application executed on January 9, 2001, for DEA Certificate of 
Registration as a distributor of list I chemicals. The Order to Show 
Cause alleged that granting the application of ANM would be 
inconsistent with the public interest as that term is used in 21 U.S.C. 
823(h) and 824(a). The Order to Show Cause also notified ANM 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 ANM at its proposed registered location 
in Tampa, Florida and was received on March 15, 2003. DEA has not 
received a request for hearing or any other reply from ANM or anyone 
purporting to represent the company in this matter.
    Therefore, the Acting Deputy Administrator of DEA, finding that (1) 
thirty days having passed since the delivery of the Order to Show Cause 
to the applicant's last known address, and (2) no request for a hearing 
having been received, concludes that ANM 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 Deputy 
Administrator now enters her final order without a hearing pursuant to 
21 CFR 1309.53(c) and (d) and 1316.67 (2003). The Acting Deputy 
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. 
Phenylpropanolamine, also a list I chemical, is presently a 
legitimately manufactured and distributed product used to provide 
relief of the symptoms resulting from irritation of the sinus, nasal 
and upper respiratory tract tissues, and is also used for weight 
control. Phenylpropanolamine is also a precursor chemical used in the 
illicit manufacture of methamphetamine and amphetamine. Methamphetamine 
is an extremely potent central nervous system stimulant, and its abuse 
is an ongoing public health concern in the United States.
    The Acting Deputy Administrator's review of the investigative file 
reveals that in or around early 2001, an application dated January 9, 
2001, was received by DEA on behalf of ANM located in Tampa, Florida. 
The application was submitted on behalf of ANM by its owner, Mohamed A. 
Fawaz (Mr. Fawaz). ANM sought DEA registration as a distributor of the 
list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. 
There is no evidence in the investigative file that ANM has sought to 
modify its pending application in any respect.
    Following receipt of the above application, on April 25, 2001, DEA 
diversion investigators conducted an on-site pre-registration 
inspection at ANM's proposed registered location. The location 
requested by ANM for DEA registration was Mr. Fawaz's residence. Mr. 
Fawaz informed DEA investigators that since 2000, ANM's primary 
business was selling cigars, cigarettes and over-the-counter items to 
gas stations located throughout Hillsborough and Polk counties in 
Florida. These items were sold out of Mr. Fawaz's residence. During the 
inspection, investigators advised Mr. Fawaz of regulatory requirements 
and problems surrounding the diversion of list I chemicals. The 
investigators also reviewed security, recordkeeping and distribution 
procedures with Mr. Fawaz, and provided him with appropriate materials 
regarding DEA requirements for handlers of listed chemicals.
    With regard to its anticipated sale of listed chemical products, 
Mr. Fawaz estimated that ANM's annual sales involving list I chemicals 
would be approximately 1% of the firm's total sales. Mr. Fawaz stated 
that ANM's customers were primarily located within a thirty mile area 
of Tampa, and he then provided DEA investigators with a list of twenty-
seven customers who purchased cigars, cigarettes and over-the-counter 
items from ANM. The customer list was comprised primarily of gas 
stations and convenience stores. According to the investigative file, 
Mr. Fawaz further disclosed that he had no prior experience in the sale 
or marketing of over-the-counter medications that contain list I 
chemicals, and he was unfamiliar with the milligram strengths of the 
listed chemical products that he planned to sell.
    A DEA investigator then inquired with the State of Florida, 
Planning and Growth Management/Permit and Zoning Department (the Zoning 
Department) for Hillsborough County to determine whether Mr. Fawaz's 
operation of a business at a residential location was in compliance 
with state zoning requirements. DEA was informed by a representative of 
the Zoning Department that Mr. Fawaz's residence was located in a 
``Residential Area Only Zone'' and not in a ``Commercial Zone Area'' of 
Hillsborough County. Therefore, ANM was not in compliance with the 
zoning laws for Hillsborough County.
    After receiving the above information, a DEA investigator advised 
Mr. Fawaz of the need to obtain zoning authorization for his business. 
DEA subsequently learned that Mr. Fawaz contacted the Zoning Department 
where he disclosed his plan to keep list I chemical products stored in 
his vehicle at an undisclosed location. The Zoning Department then 
informed Mr. Fawaz that he could apply for a rezoning permit for his 
place of residence; however Mr. Fawaz declined to submit the 
application.
    DEA subsequently informed Mr. Fawaz that based on the latter's 
expressed plan to store listed chemical products in an automobile, it 
was unlikely that ANM's application for registration would be approved, 
since storage of such products in this manner would not be in 
compliance with DEA security and controlled premise requirements. Mr. 
Fawaz was further reminded of the Florida zoning requirements for his 
business. Mr. Fawaz then informed DEA investigators that he declined 
the opportunity to

[[Page 11653]]

apply for a rezoning permit because he did not think an application 
would be approved. He further expressed the desire not to relocate his 
business or his occupational license from his residence.
    Pursuant to 21 U.S.C. 823(h), the Acting Deputy Administrator may 
deny an application for Certificate of Registration if she 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 Deputy Administrator 
may rely on any one or combination of factors, and may give each factor 
the weight she 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 Henry J. Schwartz, Jr., 
M.D., 54 FR 16422 (1989).
    The Acting Deputy Administrator finds factors one, two, four and 
five relevant to ANM's pending registration application.
    With regard to factor one, maintenance of effective controls 
against diversion of listed chemicals into other than legitimate 
channels, the DEA pre-registration inspection documented inadequate 
security at the proposed registered location of ANM. Mr. Fawaz proposed 
initially to store listed chemical products at his residential 
location. However, when he discovered that his residential location did 
not comply with local zoning laws, Mr. Fawaz then proposed storing 
listed chemicals in a vehicle.
    With regard to factor two, compliance with applicable Federal, 
State, and local law, the Acting Deputy Administrator notes that 
Florida state and county law requires zoning approval for the operation 
of a particular business in areas known as ``Commercial Zones.'' As of 
the date of DEA's inspection, the Zoning Department had not approved 
ANM for a permit because of the firm's location in a residential area. 
Mr. Fawaz does not own a zoning permit for his business, and at the 
time of DEA's investigation, he had no intention of obtaining one. The 
failure to obtain a proper zoning permit for business purposes has been 
cited under factor two as a basis for the denial of an application for 
DEA registration to distribute list I chemicals. See, Daniel E. Epps, 
Jr., 67 FR 9987 (2002).
    With respect to factor four, the applicant's past experience in the 
distribution of chemicals, the Acting Deputy Administrator finds this 
factor relevant to Mr. Fawaz's lack of experience in the handling of 
list I chemical products. In prior DEA decisions, the lack of 
experience in the handling list I chemicals was a factor in a 
determination to deny a pending application for DEA registration. See, 
Matthew D. Graham, 67 FR 10229 (2002); Xtreme Enterprises, Inc., 67 FR 
76195 (2002). Therefore, this factor similarly weighs against the 
granting of ANM's pending application. In addition, the Acting Deputy 
Administrator finds factor four relevant to Ms. Fawaz's apparent 
unfamiliarity with listed chemical products, as evidenced by his lack 
of knowledge regarding the milligram strengths of the listed chemical 
products that he planned to sell.
    With respect to factor five, other factors relevant to and 
consistent with the public safety, the Acting Deputy Administrator 
finds this factor relevant to ANM's proposal to distribute listed 
chemical products primarily to convenience stores and gas stations. 
While there are no specific prohibitions under the Controlled Substance 
Act regarding the sale of listed chemical products to these entities, 
DEA has nevertheless found 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., supra.
    As noted above, there is no evidence in the investigative file that 
ANM ever sought to modify its pending application with respect to 
listed chemical products it seeks to distribute. Among the listed 
chemical products that the firm seeks to distribute is 
phenylpropanolamine. In light of this development, the Acting Deputy 
Administrator also finds factor five relevant to ANM's request to 
distribute phenylpropanolamine, and the apparent lack of safety 
associated with the use of that product. DEA has previously determined 
that an applicant's request to distribute phenylpropanolamine 
constitutes a ground under factor five for denial for an application 
for registration. Shani Distributors, 68 FR 62324 (2003). Based on the 
foregoing, the Acting Deputy Administrator concludes that granting the 
pending application of ANM would be inconsistent with the public 
interest.
    Accordingly, the Acting Deputy Administrator of the Drug 
Enforcement Administration, pursuant to the authority vested in her 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 ANM Wholesale be, and it hereby is, denied. This order is 
effective April 12, 2004.

    Dated: February 20, 2004.
Michele M. Leonhart,
Acting Deputy Administrator.
[FR Doc. 04-5479 Filed 3-10-04; 8:45 am]
BILLING CODE 4410-09-M