[Federal Register Volume 69, Number 80 (Monday, April 26, 2004)]
[Notices]
[Pages 22559-22561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9336]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 03-20]


William E. ``Bill'' Smith d/b/a B & B Wholesale; Denial of 
Application

    On March 31, 2003, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to B & B Wholesale (Respondent), proposing to deny 
its application executed on May 21, 2002, for DEA Certificate of 
Registration as a distributor of list I chemicals. The Order to Show 
Cause alleged that granting the application of the Respondent 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 was delivered to the Respondent by 
certified mail, and the Respondent timely requested a hearing under the 
business name ``William ``B'' Smith d/b/a B & B Wholesale.'' On April 
25, 2003, the presiding Administrative Law Judge Mary Ellen Bittner 
(Judge Bittner) issued an Order for Prehearing Statements, directing 
the Respondent to file a prehearing statement no later than June 9, 
2003. However, the Respondent did not file a prehearing statement as 
directed. In her June 26, 2002, Order Terminating Proceedings, Judge 
Bittner deemed the Respondent as having waived its right to a hearing 
in the matter. Following the termination of proceedings, Judge Bittner 
transmitted the matter to the Deputy Administrator for issuance of a 
final order.
    In light of the above, the Acting Deputy Administrator similarly 
finds that the Respondent has waived its hearing right. 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).
    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 May 21, 2002, from the 
Respondent located in Huntingdon, Tennessee. The application was 
submitted on behalf of the Respondent by its owner, Bill Smith (Mr. 
Smith). The Respondent seeks DEA registration as a distributor of the 
list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. 
There is no evidence in the investigative file that the Respondent has 
sought to modify its pending registration application in any respect.
    On August 1, 2002, a DEA Diversion Investigator conducted a pre-
registration inspection of the Respondent's premises, where he met with 
Mr. Smith. During the inspection, the Diversion Investigator advised 
Mr. Smith of regulatory requirements and problems surrounding the 
diversion of list I chemicals. The Diversion Investigator also reviewed 
security, recordkeeping and distribution procedures with Mr. Smith and 
provided him with appropriate materials regarding DEA requirements for 
handlers of listed chemicals.
    Mr. Smith stated that he is sole owner and the only employee of his 
company. DEA's investigation revealed that the Respondent is a 
distributor of general merchandise, and distributes a variety of items 
including gloves, lighters, novelty items, sundry items and a variety 
of other merchandise. The company is located in a predominantly 
residential area at Mr. Smith's residence, and sells various items that 
would be carried in a convenience store.
    Mr. Smith further disclosed that he previously owned Bill's Bait 
and Tackle in Huntingdon, Tennessee, a business he owned and operated 
for approximately twenty-five years. According to Mr. Smith, Bill's 
Bait and Tackle sold a variety of fishing and tackle items and also 
sold list I chemical products. Following the dissolution of that 
business, Mr. Smith started B&B Wholesale in May 2002. The DEA 
investigative file reveals that an application for an unspecified DEA 
registration was filed on behalf of Bill's Bait and Tackle by Bill 
Smith, however, that application was withdrawn in January 1999.
    Mr. Smith further stated that approximately five to ten percent of 
his business would be devoted to the sale of list I chemical products. 
Among the list I products that Mr. Smith planned for distribution were 
brand names such as Mini Thins, Max Brand, Tylenol Cold and Sinus, 
Tylenol Allergy and Sinus, Vicks NyQuil Liquitabs, Alka Seltzer Plus, 
Cold, Actifed, Sudafed and Advil Cold and Sinus. Mr. Smith added that 
he would limit the amount of Mini Thin and Max Alert products 
specifically in stock to 288 bottles.
    When asked about potential suppliers of listed chemicals to his 
company, Mr. Smith informed DEA personnel that he planned to purchase 
these products from a company located in East, Lexington, Tennessee. In 
an unrelated investigation of that company, DEA found that the company 
supplied its listed chemical products primarily to convenience stores 
and gas stations. That investigation further revealed that

[[Page 22560]]

the company's own suppliers have been identified as companies whose 
products have been seized from clandestine methamphetamine labs, and 
the company was unable to account for quantities of listed chemicals it 
bought and sold.
    With respect to potential customers, Mr. Smith stated that he has 
approximately forty to fifty customers, which are primarily convenience 
stores and gas stations. Of that number, approximately thirty-five 
customers planned on purchasing list I chemical products from the 
Respondent. Mr. Smith also stated that he verifies and identifies a 
customer by physically going to the site. Mr. Smith further explained 
that his customer base range is within 100 miles of Huntingdon, 
Tennessee and his customers have told him that when he received his DEA 
Registration Certificate, they would only buy list I chemical products 
from the Respondent.
    DEA's investigation further revealed that the Respondent's proposed 
storage area for listed chemicals is the front cab of a Ford Ranger 
truck. Mr. Smith told the DEA that list I chemical products would be 
stored in the front of the cab only and would be stored only from the 
time that he picked them up on Wednesday morning to the time they were 
delivered on the same day. Mr. Smith further stated that the doors to 
the truck remained locked when the vehicle was not occupied, and the 
truck contains an electronic burglar alarm that emits an audible sound 
when activated. When not in use, the truck is parked outdoors in a 
driveway.
     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, four and five 
relevant to the Respondent'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 the Respondent. Mr. 
Smith has proposed the storage of listed chemical products inside of a 
pickup truck which is routinely parked in an outside driveway. Despite 
Mr. Smith assurances that he can safely secure these products, the 
Acting Deputy Administrator finds the prospect of listed chemicals 
being stored in an unattended vehicle as fraught with the dangers of 
diversion. Therefore, this factor weighs against the granting of the 
respondent'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. Smith's apparent lack of experience in the 
handling of list I chemical products. The DEA investigative file shows 
that the Respondent is a retailer of general merchandise and before 
that, Mr. Smith operated a bait and tackle concern. Mr. Smith's past 
history as an entrepreneur suggests that he has not had any experience 
in handling listed chemical products. In prior DEA decisions, such a 
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 weights against the 
granting of the Respondent's pending application.
    With respect to factor five, other factors relevant to and 
consistent with the public safety, the Acting Deputy Administrator 
finds this factor relevant to the Respondent'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.
    On a related note, factor five is relevant to the distribution 
practices of the Respondent's proposed supplier of listed chemicals 
which have resulted in the diversion of these products. The Acting 
Deputy Administrator also finds this factor relevant to the stated 
intentions of some of the Respondent's customers who have expressed the 
desire to purchase only listed chemicals products from the Respondent, 
despite the latter's sale of various other products.
    As noted above, there is no evidence in the investigative file that 
the Respondent has sought to modify its pending application with regard 
to listed chemical products it seeks to distribute. Among the listed 
chemical products the Respondent intends to distribute is 
phenylpropanolamine. In light of this development, the Acting Deputy 
Administrator also finds factor five relevant to the Respondent'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 
of an application for registration. Shani Distributors, supra. Based on 
the foregoing, the Acting Deputy Administrator concludes that granting 
the pending application of the Respondent 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 William E. ``Bill'' d/b/a B&B Wholesale be, and it hereby 
is, denied. This order is effective May 26, 2004.


[[Page 22561]]


    Dated: March 29, 2004.
Michele M. Leonhart,
Acting Deputy Administrator.
[FR Doc. 04-9336 Filed 4-23-04; 8:45 am]
BILLING CODE 4410-09-M