[Federal Register Volume 69, Number 80 (Monday, April 26, 2004)]
[Notices]
[Pages 22561-22562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9334]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Gazaly Trading; Denial of Application

    On March 14, 2003, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Gazaly Trading (Gazaly) proposing to deny its 
application executed on November 9, 2000, for DEA Certificate of 
Registration as a distributor of list I chemicals. The Order to Show 
Cause alleged that granting the application of Gazaly 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 Gazaly 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 Gazaly at its proposed registered 
location and was received on March 24, 2003. DEA has not received a 
request for hearing or any other reply from Gazaly 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 hearing 
having been received, concludes that Gazaly 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 DEA received an application dated November 9, 2000, from 
Gazaly Trading located in Orlando, Florida. The application was 
submitted on behalf of Gazaly by its owner, Redwan Gazaly (Mr. Gazaly). 
Gazaly seeks DEA registration as a distributor of the list I chemicals 
ephedrine, pseudoephedrine, and phenylpropanolamine. There is no 
evidence in the investigative file that Gazaly has sought to modify its 
pending registration application in any respect.
    Following receipt of the above application, on December 28, 2000, 
DEA Diversion Investigators conducted an on-site pre-registration 
inspection at Gazaly's proposed registered location. During the 
inspection, Diversion Investigators advised Mr. Gazaly of regulatory 
requirements and problems surrounding the diversion of list I 
chemicals. The Diversion Investigators also reviewed security, 
recordkeeping and distribution procedures with Mr. Gazaly and provided 
him with appropriate materials regarding DEA requirements for handlers 
of listed chemicals.
    During the pre-registration investigation, Mr. Gazaly informed DEA 
Diversion Investigators that he had no previous experience handling 
list I chemical products. Nevertheless, he anticipated that Gazaly's 
sale of those products would constitute approximately 10% of his 
business activity. Mr. Gazaly also further disclosed that his customers 
are convenience stores, gas stations, and general stores, and the 
purpose of obtaining a registration to distribute list I chemical was 
to ensure distribution of other products to his customers.
    Mr. Gazaly also provided DEA a list of customers to whom listed 
chemical products would be sold. Upon review of the list it was learned 
that approximately fifteen potential customers of Gazaly were 
associated with criminal targets in previous DEA investigations. 
Several of Gazaly's potential customers were also targets of ongoing 
criminal cases, apparently related to unlawful handling of listed 
chemical products. In addition, Mr. Gazaly advised DEA Diversion 
Investigators that he would only distribute list I chemicals to 
customers located in the State of Florida; however, further review of 
the customer list revealed a business establishment located outside of 
Florida that was also the target of a DEA criminal investigation.
    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 four and five 
relevant to Gazaly's pending registration application.
    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. Gazaly'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 Gazaly's pending application.
    With respect to factor five, other factors relevant to and 
consistent with

[[Page 22562]]

the public safety, the Acting Deputy Administrator finds this factor 
relevant to Gazaly'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 business establishments such as 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.
    Factor five is also relevant to Gazaly's proposal to distribute to 
potential customers under criminal investigation, or to customers 
associated with firms that were the subject of criminal investigations. 
The conduct of a potential customer has been deemed a relevant 
consideration under factor five. Shani Distributors, 68 FR 62324, 62326 
(2003).
    As noted above, there is no evidence in the investigative file that 
Gazaly ever sought to modify its pending application with regard to 
listed chemical products its 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 Gazaly's request to 
distribute phenylpropanolamine, and the apparent lack of safety 
associated with the use that product. DEA has previously determined 
that an applicant's request to distribute phenylpropanolamine 
constitutes a ground under factor five for denial of an application for 
registration. Shani Distributors, supra. Based on the foregoing, the 
Acting Deputy Administrator concludes that granting the pending 
application of Gazaly 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 Gazaly Trading be, and it hereby is, denied. This order is 
effective May 26, 2004.

    Dated: March 29, 2004.
Michele M. Leonhart,
Acting Deputy Administrator.
[FR Doc. 04-9334 Filed 4-23-04; 8:45 am]
BILLING CODE 4410-09-M