[Federal Register Volume 71, Number 222 (Friday, November 17, 2006)]
[Notices]
[Pages 66975-66983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19400]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 03-12]


Daniel Koller, D.V.M., Denial of Application; Introduction and 
Procedural History

    On November 22, 2002, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Daniel Koller, D.V.M. (Respondent) of San Diego, 
California, and Portland, Oregon. The Show Cause Order proposed to 
revoke Respondent's DEA Certificate of Registration, BK 5633525, as a 
veterinary practitioner, which was issued to him at his San Diego 
address, and to deny his pending application for a registration as a 
veterinary practitioner at the proposed registered location of 3150 NE 
82nd Avenue, Portland, Oregon. As grounds for the action, the Show 
Cause Order alleged that Respondent's registration would be 
inconsistent with the public interest. See 21 U.S.C. 823(f) and 
824(a)(4).
    In pertinent part, the Show Cause Order alleged that on December 5, 
2001, Respondent submitted an application for a registration as a 
veterinary practitioner at 3150 NE 82nd Avenue, Portland, Oregon, and 
that on the application, Respondent had indicated that the State of 
California had revoked his state license in 1978 for non-drug related 
conduct but had re-instated his license in 1982. See Show Cause Order 
at 2. The Show Cause Order alleged that on February 13, 2002, DEA 
Diversion Investigators (DIs) interviewed Respondent at his proposed 
registered location. See id. The Show Cause Order alleged that 
Respondent told the DIs that he had started over 30 veterinary clinics 
under the name ``Companion Pet Clinic'' in Oregon, Arizona, Washington 
and Idaho, and that Respondent obtains a DEA registration for the 
particular clinic and operates the clinic until he finds a veterinarian 
to purchase the practice. See id. The Show Cause Order also alleged 
that Respondent ``retain[s] a financial interest in each new clinic.'' 
Id.
    The Show Cause Order further alleged that during the interview, 
Respondent told the DIs that he maintained a law practice in San Diego, 
California, and that he anticipated hiring temporary veterinarians at 
the Portland location during the periods in which he returned to San 
Diego, and that the temporary veterinarians and clinic support staff 
would have access to the safe in which the controlled substances were 
stored. See id. at 3. The Show Cause Order alleged ``that by affording 
such access, [Respondent] would not be providing effective controls and 
procedures against diversion.'' Id.
    The Show Cause Order alleged that during the on-site inspection, 
the DIs observed that a partial bottle of Pentobarbital euthanasia 
solution, a Schedule II controlled substance, was stored in a safe. See 
id. at 3. The Show Cause Order further alleged that Respondent had a 
bottle of Ketamine, a Schedule III controlled substance, in his 
laboratory coat pocket. See id. The Show Cause Order alleged that 
Respondent told the DIs that he had brought the Ketamine from his 
registered location in San Diego, and that he had borrowed the 
Pentobarbital from the Companion Pet Clinic in Forest Grove, Oregon. 
See id. The Show Cause Order alleged that these acts ``constitute[] a 
violation of 21 CFR 1301.12, which requires each separate location to 
be registered.'' Id. at 3.
    The Show Cause Order next alleged that Respondent had told the DIs 
that the California Veterinary Board was going to place him in a 
diversion program because Respondent had self-administered Telazol, a 
Schedule III controlled substance which is used as a veterinary 
anesthetic. See id. The Show Cause Order further alleged that 
Respondent explained that he had taken this drug because he had 
undergone knee replacement surgery and had trouble sleeping. See id. 
The Show Cause Order also alleged that Respondent failed to disclose to 
the DIs that on December 20, 2001, the California Veterinary Board had 
ordered the interim suspension of his license as a result of his 
Telazol abuse and that the order remained in effect on the date of the 
interview. See id.
    The Show Cause Order alleged that on October 27, 2001, San Diego 
police officers and paramedics responded to a 911 call placed by 
Respondent's daughter which reported that Respondent's wife had 
suddenly lost consciousness and that Respondent was lying on a bed in a 
semi-conscious state. See id. The Show Cause Order alleged that upon 
arrival at Respondent's residence, paramedics found that Respondent's 
wife had fresh puncture wounds with blood oozing from her left arm and 
that Respondent had fresh puncture wounds with blood oozing from his 
right arm. See id. The Show Cause Order also alleged that the 
paramedics found a hypodermic needle with fresh blood on it lying near 
Respondent. See id. The Show Cause Order further alleged that 
Respondent was under the influence of a controlled substance, that 
Respondent was arrested, and that during a search incident to the 
arrest, police found a 5 ml. vial of Telazol, a Schedule III controlled 
substance, in his right front pants pocket, and that the vial's top had 
been punctured. See id.
    The Show Cause Order next alleged that the police obtained a 
warrant and conducted a search of Respondent's residence. See id. at 5. 
The Show Cause Order alleged that during the search, the police did not 
find any controlled substance dispensing logs, purchasing records, or 
inventory reports in Respondent's residence, even though federal law 
requires controlled substance records to be maintained at the 
registered location. See id. at 6. The Show Cause Order also alleged 
that the police found a variety of controlled substances during the 
search most of which were not secured in a safe. See id. at 5.
    The Show Cause Order next alleged that in January 2000, Dr. 
Parminder Nagra, a friend and business associate of Respondent (who 
owned a Companion

[[Page 66976]]

Pet Clinic located at 8483 SW. Canyon Road, Portland, Oregon, and was a 
partner in a clinic located at 14292-A SW. Allen Blvd, Beaverton, 
Oregon) was killed in an automobile accident. See id. at 7-8. The Show 
Cause Order alleged that in March 2000, Respondent contacted DEA's 
Portland office seeking an application for a registration at the Canyon 
Road clinic that was inherited by Dr. Nagra's widow and told a DEA 
investigator that he was seeking to stock the facility with controlled 
substances to maintain its operational capacity. See id. at 8. The Show 
Cause Order further alleged that Respondent told the DEA investigator 
that he resided in, and practiced law in, San Diego, and that he did 
not intend ``to move to Oregon to be a veterinarian at the Canyon Road 
clinic.'' Id.
    The Show Cause Order further alleged that during a telephone 
conversation on May 26, 2000, Respondent told a DEA investigator that 
he had been ordering controlled substances that were shipped to his San 
Diego address, which he then mailed to the Canyon Road facility. See 
id. The Show Cause Order alleged that Respondent acknowledged that this 
was a violation of Federal law, but ``DEA [was] forcing [Respondent] to 
operate like this.'' Id. The Show Cause Order alleged that during the 
conversation Respondent again stated that while he lived in San Diego, 
he had opened numerous clinics in California, Oregon, Washington, and 
Arizona, that Respondent had obtained DEA registrations for the clinics 
in order to stock them with controlled substances, and that he 
maintained each registration until he either sold the clinic or found a 
permanent veterinarian who would work there and obtain his or her own 
registration. See id.
    The Show Cause Order further alleged that on July 28, 2000, DEA 
investigators interviewed Respondent at DEA's San Diego field office to 
discuss the nature of Respondent's business practices and whether 
Respondent's activities complied with Federal law. See id. at 9. The 
Show Cause Order alleged that during the interview, Respondent stated 
that he practiced as a relief veterinarian approximately two weeks per 
month and also practiced administrative law at his San Diego residence. 
See id.
    The Show Cause Order alleged that during the interview, Respondent 
stated that a potential buyer had been found for the Beaverton, Oregon 
clinic, who would run the clinic for a six-month trial period, but if 
the arrangement proved unsatisfactory, Respondent could not guarantee 
that he would refrain from sending controlled substances to the 
Beaverton clinic in order to keep it open. See id. The Show Cause Order 
further alleged that Respondent told DEA investigators that during the 
period in which he was attempting to find a permanent veterinarian for 
the Beaverton clinic, he had ordered controlled substances that were 
delivered to his San Diego residence and then shipped them to 
Beaverton. See id. at 9-10. The Show Cause Order alleged that because 
the Beaverton location was not registered, Respondent's conduct 
constituted an unlawful distribution of controlled substances. See id.
    Finally, the Show Cause Order alleged that Respondent's existing 
registration should be revoked because Respondent lacked authority 
under California law to handle controlled substances. Id. at 10. The 
Order also alleged that Respondent's conduct in overdosing on 
veterinary controlled substances and failing to adequately safeguard 
controlled substances at his San Diego location constituted acts which 
rendered his registration inconsistent with the public interest. Id. As 
for his pending application for a registration, the Show Cause Order 
alleged that Respondent ``anticipate[d] permitting temporary 
veterinarians and unregistered technicians to have access to controlled 
substances at the proposed registered location * * * despite being told 
that DEA would not permit such access.'' Id. at 11. The Show Cause 
Order concluded by alleging that Respondent's ``past experience 
dispensing controlled substances, [his] failure to comply with 
pertinent laws and regulations regarding controlled substances, and 
[his] failure to maintain effective controls against diversion, renders 
[his] registration * * * inconsistent with the public interest.'' Id.
    Respondent, through his counsel, requested a hearing. The matter 
was assigned to Administrative Law Judge (ALJ) Mary Ellen Bittner, who 
conducted a hearing in Portland, Oregon, on November 4-6, 2003, and May 
11, 2004. At the hearing, both parties presented testimonial and 
documentary evidence; following the hearing, both parties submitted 
briefs.
    On November 15, 2005, the ALJ submitted her decision. The ALJ held 
that because Respondent's registration had expired on December 31, 
2003, and Respondent had not filed a renewal application, the 
revocation aspect of the proceeding was moot. See ALJ at 11 n.2. With 
respect to his pending application, the ALJ held that Respondent ``is 
unable or unwilling to accept the responsibilities inherent in a DEA 
registration'' and therefore recommended that it ``be denied.'' Id. at 
33. Neither party filed exceptions. The record was then transmitted to 
me for final agency action.
    Having considered the record as a whole, I hereby issue this 
decision and final order. I adopt the ALJ's findings of fact and 
conclusions of law except as expressly noted herein. For the reasons 
set forth below, I concur with the ALJ's recommendation that 
Respondent's application be denied.

Findings

    Respondent holds a D.V.M. degree which he obtained from the 
University of California at Davis School of Veterinary Medicine in 
1974. Respondent also holds a J.D. degree which he obtained from the 
University of California's Hastings College of Law in 1981. Respondent 
has maintained practices in both veterinary medicine and the law. See 
id. at 11.
    At the time this proceeding commenced, Respondent held a California 
Veterinarian's License with an expiration date of January 31, 2003. 
Govt. Exh. 10. Respondent also holds a license to practice veterinary 
medicine in Oregon.
    Respondent also held DEA Registration, BK 5633525, which was issued 
to him at the registered location of 12897 Corbett St., San Diego, 
California, and which had an expiration date of December 31, 2003. Id. 
at n. 11. Respondent did not, however, file a timely renewal 
application of his DEA registration, and thus the registration expired. 
Id.
    In April 1982, Respondent and his partner Bill Barnett opened the 
first Companion Pet Clinic in Tigard, Oregon. Sometime thereafter, 
Respondent and his partner hired Kevin Knighton, D.V.M., to work as a 
veterinarian at the Tigard clinic. In 1983, Dr. Knighton bought out Mr. 
Barnett's interest and became Respondent's partner. Between 1983 and 
1990, Respondent and Dr. Knighton established about eighteen to twenty 
clinics. Under their business plan, Respondent and his partner hired 
young veterinarians who desired to eventually own their own practices. 
After a period of several years, Respondent and his partner sold the 
clinics to the veterinarian for a minimal down payment and financed the 
balance at ten to twelve percent interest. Dr. Knighton testified that 
while either he or Respondent held a DEA registration for a clinic, 
both the full time and relief veterinarians they hired did not have 
registrations. See ALJ at 11-12, Tr. 432-38.

[[Page 66977]]

    Dr. Knighton testified that at the clinics, controlled substances 
were maintained in a locked safe, and that only certain personnel had 
access to the key. Tr. 437. Dr. Knighton also testified that the 
clinics kept a controlled substances logbook for each controlled 
substance and that every cc (a volumetric measure) used was logged. Id. 
at 437-38. Dr. Knighton further testified that to his knowledge, no 
controlled substances were diverted from any of these clinics. Id. at 
437.
    Mrs. Baldev Nagra testified that in 1989, she and her husband, 
Parminder Nagra, a veterinarian, emigrated to the United States. In 
1991, the Nagras purchased the Companion Pet Clinic which was located 
in West Slope, Oregon, from Respondent and Dr. Knighton. The Nagras 
also became limited partners in the Veterinary Investment Group, an 
entity which Respondent established to construct and develop new 
clinics. See ALJ at 13.\1\ One of the Veterinary Investment Group's 
projects was the construction of a new clinic in Beaverton, Oregon, 
which was built for Dr. Nagra, and which Dr. Nagra would take over 
after selling his West Slope clinic. Tr. 258-60.
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    \1\ Other members of the partnership were John Madigan and his 
wife, Sheri Morris, D.V.M., who owned Companion Pet Clinics in West 
Linn, Clackamas and Tigard, Oregon.
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    In January 2000, Dr. Nagra was killed in an automobile accident. 
According to the testimony of Mr. John Madigan, it was essential to 
find a full time veterinarian for the Beaverton facility because the 
partnership was incurring expenses of ten to fifteen thousand dollars 
per month whether it was open or closed. Id. at 261. Mr. Madigan 
further testified that Dr. Nagra had been the DEA registrant at the 
Beaverton facility, id. at 263, and that it took about six months 
before the partnership could hire a full time veterinarian. Id. at 277.
    Mrs. Nagra testified that the West Slope clinic was a large 
investment for the Nagras, and that following her husband's death, the 
clinic could not obtain controlled substances because the clinic did 
not have a full time veterinarian with a DEA registration for the 
location. Id. at 221-22. Mrs. Nagra further testified that she 
contacted Respondent because the clinic needed controlled substances to 
remain open and that Respondent subsequently ordered controlled 
substances which he sent to the clinic. Id. at 225. Mrs. Nagra 
testified that she logged the drugs in and that Respondent supplied her 
with drugs from San Diego for ``probably five months,'' at which point 
the clinic hired a full time veterinarian who obtained a registration 
for the facility. Id. at 226-27.
    Mrs. Nagra testified that there were no shortages of controlled 
substances during this period. Id. at 225. Mrs. Nagra also testified 
that she was looking for veterinarians for the Beaverton clinic and 
eventually hired Fredrick Zborowski, D.V.M., who, at some point in the 
year 2000, obtained a DEA registration for the Beaverton location. Id. 
at 229-30.
    With respect to his sending controlled substances to the West Slope 
clinic, Respondent testified that while ``it might be a violation * * * 
the purpose was honorable'' because he did it ``to help someone in 
distress.'' Id. at 390. Respondent also testified that it would be 
``unjust and unfair'' if the clinic had been closed down and Mrs. Nagra 
had lost her investment. Id. Respondent further testified that he did 
not regret violating the law and that he ``would do that again because 
[he] wasn't hurting anyone.'' Id.
    Pamela Meyer, a DI from the DEA San Diego Field Division testified 
that on July 28, 2000, Respondent and his wife Ellen Koller met with 
her, another DI and their Group Supervisor, to discuss whether 
Respondent's practices complied with DEA regulations and to interview 
him regarding an application he had submitted for a registration at the 
Beaverton, Oregon clinic. Id. at 68-71. Respondent told the DIs that he 
worked as a relief veterinarian in California about two weeks per 
month, and that he also practiced law out of his home. Id. at 69. 
According to the DI, Respondent admitted that he was receiving drugs at 
his San Diego home and sending them to the Beaverton clinic. Id. at 71. 
The DI further testified that while Respondent had a registration for 
his California home, the Beaverton location was not registered. Id. at 
72. One of the DIs then informed Respondent ``that he could only 
receive drugs at a registered location,'' and the DIs gave Respondent a 
copy of the Code of Federal Regulations. Id. at 73.
    The DIs further advised Respondent that if he practiced as a relief 
veterinarian and took controlled drugs to another location, he had to 
document the use of the drugs. Id. Respondent was cooperative and 
admitted to the DIs that he knew what he was doing was wrong and that 
was why he was seeking the registration. Id. at 75. The DI also 
testified that Respondent said he would comply with the regulations and 
that there was no evidence that Respondent subsequently sent controlled 
substances to Oregon.\2\ Id. at 74.
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    \2\ At the hearing, the government did not pursue any potential 
violations arising out of Respondent's sending controlled substances 
to the Beaverton clinic.
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Respondent's Arrest and the California Veterinary Board Proceeding

    The record establishes that on October 27, 2001, Respondent's 
daughter observed her mother, Mrs. Ellen Koller, faint in the doorway 
of the bedroom of their San Diego residence. Fearing that her mother 
had overdosed, Respondent's daughter called 911 and requested 
assistance. When the paramedics arrived, they found Mrs. Koller 
unconscious and lying on the floor; her right arm had a fresh puncture 
wound from which blood was oozing. When Mrs. Koller did not respond to 
first aid, including treatment with Narcan, a drug used to treat opiate 
overdoses, the paramedics took her to the hospital.\3\ See ALJ at 15; 
Gov. Exh. 4, at 3 & 5.
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    \3\ According to the testimony of Mrs. Koller, Respondent ``had 
taken some Telazol and gone to sleep, and I decided that I wanted to 
try it too, but I had been drinking earlier, and so I didn't know 
the dosage. And I took some* * *.'' Tr. 507.
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    The paramedics found Respondent lying on a bed in a semi-conscious 
state; his left arm also had a fresh puncture wound from which blood 
was oozing. The paramedics further observed that there were several 
hypodermic needles and syringes next to Respondent. See ALJ at 15; Gov. 
Exh. 4, at 5.
    While the paramedics were attending Mrs. Koller, Respondent became 
belligerent and tried to prevent them from treating her. The paramedics 
called for assistance and the police arrived. Upon their arrival, one 
of the officers ordered Respondent to place his hands behind himself. 
Respondent refused. The officer then grabbed Respondent's hands but 
Respondent resisted, prompting the officer to use pepper spray to 
restrain him. The officer then arrested Respondent and conducted a 
search incident to arrest. Govt. Exh. 4, at 6.
    During the search, the officer found a small vial containing a 
liquid in one of Respondent's pants pockets. The vial was labeled 
Tiletamine. The vial's rubber top had been punctured and three-quarters 
of the liquid was missing. Tiletamine (Telazol) is a veterinary 
anesthetic and a Schedule III controlled substance. See 21 CFR 
1308.13(c). Moreover, the officer found that Respondent displayed 
several symptoms that are indicative of a person who is under the 
influence of a controlled substance. Gov. Exh. 4, at 6.

[[Page 66978]]

    The police subsequently obtained a warrant, and later that night 
conducted a search of Respondent's residence. During the search, the 
police found four uncapped needles and syringes on the headboard of the 
bed in the master bedroom; another needle and syringe was found under 
the mattress of this bed. In a bathroom drawer over which Respondent's 
wife exercised dominion and control, the police found twenty-one 
tablets of controlled substances that were ``mostly veterinarian 
narcotics.'' Gov. Exh. 4, at 7. The police also found Dexfenfluramine 
(a Schedule IV controlled substance, see 21 CFR 1308.14(d)), 
Diphenoxylate (a Schedule V controlled substance, see 21 CFR 
1308.15(c)), and Diazepam (a Schedule IV controlled substance, see 21 
CFR 1308.14(c)), in a bathroom vanity drawer over which Respondent's 
wife exercised dominion and control. Respondent's wife testified, 
however, that she had a prescription for the Diazepam and that she had 
purchased Phentermine in Mexico for a neighbor. She also testified that 
she had obtained the Diphenoxylate in Mexico to treat her dog's 
diarrhea. ALJ at 16.
    The police also found five vials of Nandrolone, an anabolic steroid 
and Schedule III controlled substance, in Respondent's office. See id. 
at 8. Moreover, the police did not find any logbooks which recorded the 
purchase, use and storage of the controlled substances recovered from 
Respondent's residence. Id. at 8.
    Respondent testified that at the time of this incident, he had 
undergone knee replacement surgery for his left knee in 2000 and his 
right knee in 2001, that his recovery from the latter procedure was 
painful, and he took the Tiletamine because it helped him sleep and the 
drug prescribed by his physician gave him a bad hangover. Tr. 373-74. 
Respondent explained that there was ``no excuse for what I did to 
myself.'' Id. at 374. Respondent added that: ``I had to have other 
reasons. It wasn't just the pain, or it wasn't just the sleep. It had 
to be other reasons.'' Id. at 374.
    In his testimony, Respondent disputed the accuracy of the police 
reports. According to Respondent, when he awoke, he was ``confronted 
with about a half dozen people in my bedroom,'' and that as he regained 
his senses, the police ``tried to prevent'' him from checking out his 
wife and that ``[s]he was doing fine.'' \4\ Tr. 375. Respondent also 
testified that while he was arrested, no charges were ever filed 
against him. Id.
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    \4\ The ALJ did not specifically credit the testimony that 
Respondent's wife ``was doing fine.'' As ultimate factfinder, I 
decline to credit it based on the record as whole including the 
police reports and Respondent's Exh. 8, in which Respondent admitted 
that his wife was ``unconscious'' and ``not breathing.'' Id. at 6.
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    The police did, however, report the incident to the California 
Veterinary Medical Board. ALJ at 17. According to the testimony of 
Susan Geranen, the Executive Officer of the California Board, on 
December 20, 2001, the California Office of Administrative Hearings 
issued an interim order suspending Respondent's veterinary license.
    Subsequently, on August 29, 2002, Ms. Geranen filed an Accusation 
against Respondent. As relevant here, the Accusation alleged that 
Respondent had violated Section 4883 of the California Business and 
Professions Code (Veterinary Medical Practice Act) by illegally using 
and administering to himself and his wife a controlled substance. See 
Gov. Exh. 10, at 6. The Accusation further alleged that Respondent 
violated Cal. Health & Safety Code Sec.  11158(a) by ``dispens[ing] a 
Schedule III controlled substance to himself and his wife without a 
valid prescription.'' Id. at 8. Next, the Accusation alleged that 
Respondent violated DEA regulations by failing to store in a securely 
locked and substantially constructed cabinet the various controlled 
substances that were found in his home by the police on October 27, 
2001. Id. 8-9. The Accusation further alleged that during the search of 
Respondent's home, the police did not find any medical records or any 
of the records required to be maintained under the Controlled 
Substances Act's (CSA) implementing regulations. See id. at 9; see also 
21 CFR 1304.22(c).
    On January 28, 2003, a hearing was held before a state ALJ. The ALJ 
subsequently found that on October 27, 2001, Respondent had injected 
himself with Telazol, a drug containing Tiletamine and Zolazepam, a 
Schedule III controlled substance, and a drug which has been approved 
only for use in animals. See Gov. Exh. 16, at 2. The state ALJ further 
found that Respondent did not have a prescription for the drug. 
Moreover, the state ALJ found that Respondent had ``furnished the drug 
to his wife who injected herself with it.'' Id.
    The state ALJ found that ``Respondent's daughter knew respondent 
used drugs and left drugs lying around the house,'' and that 
``Respondent's wife knew respondent used Telazol.'' Id. at 2. The state 
ALJ further found that ``Respondent's handling of drugs in his home 
endangered the health, safety and welfare of his wife and daughter.'' 
Id. The state ALJ also made a finding that during the October 27, 2001 
incident, the paramedics found Respondent's wife ``unconscious and not 
breathing. Her daughter found her in that condition and called 
paramedics because she was turning blue.'' Id. The state ALJ thus 
concluded that Respondent's conduct violated Cal. Bus. & Prof. Code 
Sec.  4883(g)(2)(B), ``because he endangered the lives of himself, his 
wife and his daughter,'' as well as Cal. Healthy & Safety Code Sec.  
11171, ``by furnishing Telazol to his wife.'' Id. at 2.
    The State ALJ further found that Respondent did not have any 
medical records in his home and also ``did not have any controlling 
logs indicating the purchase of, use of, or storage of the controlled 
substances that were recovered in his home.'' Id. at 3. The State ALJ 
found that ``[n]one of the controlled substances were locked in a 
secure cabinet'' as required by 21 CFR 1301.75(b), that Respondent was 
``not authorized to have controlled substances * * * at his home * * * 
without meeting federal regulations,'' and that Respondent ``did not 
lawfully possess the controlled substances'' that were found by the San 
Diego police. Id.
    Upon reviewing Respondent's evidence as to his rehabilitation, the 
State ALJ also found that Respondent had ``failed to establish that he 
no longer represents a threat to the public.'' Gov. Exh. 16, at 5. The 
state ALJ thus upheld the interim order and suspended Respondent's 
California veterinary license pending a further hearing. See Gov. Exh. 
3.
    Ms. Geranen testified that a further hearing had been scheduled for 
September 2003, but was canceled pending the negotiation of a 
settlement agreement. Respondent introduced into evidence a copy of the 
agreement. See Resp. Exh. 8. In this document, Respondent admitted that 
on October 27, 2001, he ``illegally used and administered to himself a 
controlled substance,'' that he ``appeared to be under the influence of 
a narcotic drug,'' and that the responding officials found that 
Respondent had ``pin point pupils and blood from a fresh injection 
site.'' Id. at 7. Respondent further admitted that the authorities 
found a used syringe next to him and a vial of Telazol with its top 
punctured and \3/4\ of its contents missing in his pant's pocket. Id. 
Moreover, ``[t]he vial was clearly labeled `for animal use only' and 
`not for human use.' '' Id. Respondent admitted that a blood sample 
that was taken from him by the San Diego Police Department

[[Page 66979]]

tested positive for Zolazepam, a Schedule III controlled substance that 
is used in Telazol. Id. Respondent also admitted that ``he dispensed a 
Schedule III controlled substance to himself without a valid 
prescription.'' Id. at 8.
    Moreover, Respondent admitted that the paramedics found that his 
wife was ``not breathing,'' that she was ``lying unconscious on the 
floor in the doorway to the master bedroom'' with ``pin point pupils,'' 
and that she had a ``fresh injection site in her left arm, which was 
bleeding.'' Id. at 6. Respondent also admitted that his wife ``was 
under the influence of a narcotic or narcotic type drug and was 
experiencing a possible narcotic overdose.'' Id. at 7.
    Respondent further admitted that he ``violated federal statutes 
regulating controlled substances'' by failing ``to store a controlled 
substance [Telazol] at his home in a securely locked, substantially 
constructed cabinet.'' Id. at 8. Moreover, Respondent admitted that he 
``violated federal statutes regulating controlled substances'' by 
``failing to maintain records regarding controlled substances in his 
possession'' such as medical records and controlling logs. Id. at 9.
    The settlement agreement proposed to revoke Respondent's California 
Veterinary License but stay the revocation for a four-year probationary 
period. The agreement further proposed the suspension of Respondent's 
State license for a period of two years effective from December 20, 
2001, the date of the original Interim Suspension Order. See id. at 10. 
The agreement also further required that Respondent undergo a 
psychological evaluation, that he participate in a drug rehabilitation 
program for the length of the probation, that he submit to random drug 
testing, that he abstain from the use of controlled substances unless 
lawfully prescribed, and that he surrender his DEA registration. See 
id. at 13-15. While the agreement was signed by Respondent, as well as 
a State Deputy Attorney General and state ALJ, the agreement apparently 
was not adopted by the California Board. See ALJ at 19. Moreover, the 
ALJ found that Respondent's California veterinary license expired on 
January 31, 2005.

Respondent's Application for Registration of the NE 82nd Ave. Clinic

    The ALJ found that Respondent opened a new Companion Pet Clinic at 
3150 NE 82nd Ave., Portland, Oregon (hereinafter 82nd Avenue), on 
January 2, 2002. ALJ at 19. Respondent testified that he went to 
Portland in December 2001 to open the clinic and took with him a bottle 
of Euthasol, a drug containing pentobarbital which is used to euthanize 
animals, and a bottle of ketamine, a drug used as an anesthetic. ALJ at 
19-20. These drugs are Schedule III controlled substances. See 21 CFR 
1308.13(c).
    According to the testimony of Heidi Lang, D.V.M., who started 
working at the clinic in August 2002, a controlled substance 
(euthanasia solution) was then being stored at the facility. Tr. 495-
96. Dr. Lang further testified that she obtained a DEA registration at 
the facility's location shortly after starting work at the clinic. Id. 
at 500. The record does not, however, specify on what date this 
occurred. Id. at 500.
    On December 5, 2001, Respondent applied for a registration at the 
82nd Avenue location. ALJ at 20. On his application, Respondent was 
asked whether he had ``ever had a state professional license or 
controlled substance registration revoked, suspended, denied, 
restricted, or placed on probation?'' Gov. Exh. 2, at 2. Respondent 
answered ``yes.'' Id.\5\ Respondent explained that his California 
veterinary license had been ``revoked in 1978 for non drug related 
conduct'' and ``was reinstated in 1982.'' Id.
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    \5\ The application asked a similar question of applicants that 
are corporations, associations, and partnerships. Respondent also 
answered ``yes'' to this question. Gov. Exh. 2, at 2.
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    Because Respondent had given an affirmative answer to two of the 
liability questions, his application was forwarded to the Portland DEA 
office for further investigation. Accordingly, on February 13, 2002, 
two DIs went to the 82nd Avenue clinic to interview Respondent and 
conduct a pre-registration investigation.
    During the meeting, Respondent told the DIs that he was in the 
business of opening up new clinics to provide affordable veterinary 
care, getting the practice running, and then selling them off. Tr. 107. 
Respondent further stated that he worked as a relief veterinarian in 
California and also practiced law there. Id. at 111.
    The DIs found that the 82nd Avenue facility provided adequate 
physical security. Id. at 108. During their inspection, however, the 
DIs found that two controlled substances (euthanasia solution and 
Ketamine) were being stored on the premises. Id. The facility was not a 
registered location under the CSA. Id. See also 21 U.S.C. 822(e).
    The DIs discussed with Respondent the issue of who would have 
access to the controlled substances while he was in California. Id. at 
113. Respondent told the DIs that he would staff the clinic with relief 
veterinarians. Id. One of the DIs testified that it was DEA's position 
that the relief veterinarians would have to be employees of Respondent 
(assuming he obtained a registration) and that if the relief 
veterinarians were not employees but rather independent contractors, 
they could not act under Respondent's registration for that facility 
unless Respondent ``was there to provide adequate security.'' Id. at 
114. According to the DI, a relief veterinarian who was an independent 
contractor would have to have their own registration for the location 
either to dispense or to administer a controlled substance at the 
location. Id. at 114-15. The DI further testified that his 
investigation did not find any incidents of diversion at other 
Companion Pet Clinics. ALJ at 22.
    On February 19, 2002, Respondent sent a letter to one of the DIs 
contending that they were misinterpreting 21 CFR 1301.12(a) and 
1301.22. In the letter, Respondent wrote:

    The fact is that veterinarians take off one to two days a week 
and have relief veterinarians work in their hospital. Some owner 
veterinarians take off for more than a week at a time and either 
have their associate veterinarian work the hospital or a number of 
relief veterinarians work the hospital or clinic. In all these 
situations, there is but one DEA REGISTRATION used, though the other 
veterinarians use and log the use of the controlled substances. Your 
concept of having each relief veterinarian have their own 
registration and their own drugs is not practical nor does it exist 
in practice. Even the associate veterinarians generally do not have 
a DEA REGISTRATION for the office they work out of full time.

Govt. Exh. 6, at 1.\6\

    \6\ The record contains extensive evidence regarding the 
practices of veterinary clinics with respect to the handling of 
controlled substances, as well as the need of practice owners to 
hire relief veterinarians who work under the DEA registration of the 
owner. See ALJ at 23-28. The record also contains extensive 
testimony on the issue of whether relief veterinarians are properly 
considered agents of the facility owner and what procedures are in 
place to protect against the diversion of controlled substances. See 
id.
---------------------------------------------------------------------------

    In the letter, Respondent argued that the DIs were unwarranted in 
their ``concerns about tracking the scheduled drugs and having too many 
people [with] access to the scheduled drugs.'' Id. Respondent also 
maintained that ``the DEA Registrant is responsible for any diversion 
of the scheduled drugs in his hospital.'' Id. at 1-2. Respondent 
further contended that ``[t]he fact that I am a dual professional, with 
a law office in San Diego should not have an effect on the 
certification process either. I am a resident of this state while I am 
here. I own two homes in this state.'' Id. at 2.

[[Page 66980]]

Finally, Respondent sought to have DEA either give him a registration 
for his new facility or transfer his California registration to the 
82nd Ave. facility. In the event DEA decided not to grant him a new 
registration, Respondent demanded a hearing.\7\
---------------------------------------------------------------------------

    \7\ In a subsequent letter dated April 10, 2002, Respondent 
complained to one of the DIs that DEA's ``delay is causing me and my 
clients a great deal of inconvenience and harm'' and threatened ``to 
petition the courts to make [DEA] act one way or the other.'' Gov. 
Exh. 7.
---------------------------------------------------------------------------

    According to the ALJ's report, Respondent's wife ``testified that 
as of October 2001, Respondent was planning on opening the 82nd [Ave.] 
clinic and had been trying for two years to obtain a DEA registration 
for it.'' ALJ at 22. Moreover, Respondent's wife ``testified that as 
part of that effort, she and Respondent had met with DEA personnel at 
the agency's office in San Diego, and that DEA personnel had told them 
that Respondent could not ship drugs from California to Oregon and that 
he could not have registrations in both Oregon and California.'' Id. at 
22-23. Respondent's wife further testified that ``the delay could not 
be attributed to the October 2001 incident because Respondent's efforts 
to change his registered address were `way before that happened.' '' 
Id. at 23 (quoting Tr. 513).
    The ALJ did not specifically credit this testimony. As ultimate 
factfinder, I expressly decline to credit the testimony that asserts 
that Respondent had been trying to obtain a registration for the 82nd 
Avenue clinic ``for two years,'' and that Respondent had attempted to 
obtain a registration at this address ``way before'' the October 27, 
2001 incident. While it is clear that the testimony was offered in an 
attempt to show that DEA officials dragged their feet with respect to 
Respondent's application for the 82nd Avenue clinic and/or to justify 
his violations of the CSA, see Tr. at 367,\8\ the record contains 
substantial evidence that refutes this claim.
---------------------------------------------------------------------------

    \8\ Respondent testified: ``I asked for that way before I abused 
drugs. I asked for it a year before.'' I likewise decline to credit 
this testimony.
---------------------------------------------------------------------------

    Respondent's application for the 82nd Avenue clinic was dated 
December 5, 2001, and the date stamp indicates that DEA received the 
application on December 14, 2001. See Gov. Exh. 2, at 2. Furthermore, 
Respondent submitted a response to the Show Cause Order. In that 
document, Respondent asserted that he ``first requested'' a 
modification of his registration ``from California to the 82nd Avenue 
practice'' on ``December 12, 2001 and again on February 19, 2002.'' ALJ 
Exh. 2, at 5.; see also id. at 1 (``Daniel Koller requested this 
modification prior to opening this clinic [on] December 12, 2001.''); 
id at 2 (``Dr. Koller requested a registration at the 82nd Location on 
December 12, 2001.''). Thus, the documentary evidence establishes that 
Respondent did not apply for the registration until December 2001, 
shortly before he opened the clinic.
    With respect to the opening of the 82nd Avenue facility, Respondent 
testified that ``I brought up Euthasol * * * because I had a bottle, 
and I brought up Ketamine.'' Tr. 378. Respondent also testified that 
``you don't close down operations. You don't stop businesses and put 12 
people on the unemployment line because of a registration that is being 
withheld at that time unreasonably.'' Id. at 379.
    Respondent further testified that it was ``an absurdity'' to 
``claim that I'm violating the law by taking drugs from California [by] 
carrying them to Oregon,'' and that ``I can take those drugs anywhere I 
want as long as I have a valid DEA registration, which I did'' when he 
transported the drugs to the 82nd Avenue clinic. Id. at 393. Respondent 
then maintained that ``the fact that I'm working out of a non-
registered facility with my drugs that I pull from a registered 
facility and it's registered to me, there's no violation there. It just 
simply is not a violation of any act or any statute or any 
regulation.'' Id. at 394.

Respondent's Evidence as to His Rehabilitation

    In support of his claim that he was no longer abusing controlled 
substances, Respondent introduced documentary evidence and called Dr. 
Standish McCleary, his psychologist, to testify. Dr. McCleary testified 
that he had been seeing Respondent since February 2002 and that he was 
still treating him at the time of the hearing.
    Dr. McCleary testified that Respondent did not have a history of 
drug and alcohol abuse and had ``conscientiously addressed'' the 
problems that led to his abuse of controlled substances. Tr. 349. Dr. 
McCleary testified that Respondent had been ``very direct'' in 
admitting his abuse of controlled substances, id. at 348, and that he 
had ``no reason to believe that the behavior has repeated itself and 
will be at all likely to repeat itself.'' Id. at 347. Dr. McCleary 
further testified that ``he saw no danger in [Respondent's] full 
reinstatement to veterinary practice,'' and that ``there is an 
extraordinarily low probability that [Respondent] will ever'' re-abuse 
controlled substances. Id. at 349-50. Dr. McCleary further testified 
that he thought Respondent had been going to AA meetings but did not 
know whether he had received any other treatment. Id. at 352.
    Respondent also introduced into evidence a letter from a 
psychiatrist, Dr. Mark Kalish, which apparently was prepared for the 
State hearing discussed above. The letter reports the result of a 
psychiatric examination of Respondent that was performed on January 27, 
2003. According to the letter, Respondent reported that he had not used 
any controlled substances since a previous examination by Dr. Kalish a 
year earlier, ``and that he [had] submitted to random drug tests, which 
have confirmed his abstinence.'' Resp. Exh. 2, at 3. Dr. Kalish also 
conducted a clinical examination and reviewed available documents 
(although the letter does not state what documents were reviewed). See 
id. The letter concluded with Dr. Kalish's opinion that Respondent 
``does not represent a danger to the public should he be allowed to 
practice veterinary medicine.'' Id.
    Finally, Respondent submitted a letter documenting a May 7, 2002 
examination that was conducted by Dr. Walton E. Byrd, a psychiatrist 
who examined him at the request of the Oregon Board of Veterinary 
Medicine. See Resp. 4, at 1. The assessment found that Respondent had 
``dissociative anesthetic abuse--Telazol, in remission,'' and further 
noted that a urinalysis conducted that day was free of illicit 
substances. Id. at 4. The letter concluded with Dr. Byrd stating that 
he ``would support [Respondent's] continued licensure'' subject to his 
continuing therapy with his psychologist, his attendance at weekly 
twelve-step meetings, his meeting ``with a monitoring professional 
designated by the Veterinary Board,'' and his undergoing random urine 
testing ``over a two- to five-year period.'' Id.
    Respondent also introduced into evidence ten reports of drug tests 
conducted at a Kaiser Permanente Facility in Portland, Oregon. See 
Resp. Exh. 5. While all the reports are negative, many of the tests 
occurred only days apart and there is no evidence in the record 
establishing how the dates were chosen and whether they were bona fide 
random tests.\9\
---------------------------------------------------------------------------

    \9\ The Government did not, however, introduce any evidence 
rebutting Respondent's assertion of rehabilitation.
---------------------------------------------------------------------------

Discussion

    Section 303(f) of the Controlled Substances Act provides that an 
application for a practitioner's registration may be denied upon a

[[Page 66981]]

determination ``that the issuance of such registration would be 
inconsistent with the public interest.'' 21 U.S.C. 823(f). In making 
the public interest determination, the Act requires the consideration 
of the following factors:

    (1) The recommendation of the appropriate State licensing board 
or professional disciplinary authority.
    (2) The applicant's experience in dispensing * * * controlled 
substances.
    (3) The applicant's conviction record under Federal or State 
laws relating to the manufacture, distribution, or dispensing of 
controlled substances.
    (4) Compliance with applicable State, Federal, or local laws 
relating to controlled substances.
    (5) Such other conduct which may threaten the public health and 
safety.

Id.

    ``[T]hese factors are * * * considered in the disjunctive.'' Robert 
A. Leslie, M.D., 68 FR 15227, 15230 (2003). I ``may rely on any one or 
combination of factors, and may give each factor the weight [I] deem[] 
appropriate in determining whether * * * an application for 
registration [should be] denied.'' Id. Moreover, case law establishes 
that I am ``not required to make findings as to all of the factors.'' 
Hoxie v. DEA, 419 F.3d 477, 483 (6th Cir. 2005); see also Morall v. 
DEA, 412 F.3d 165, 173-74 (DC Cir. 2005).
    As an initial matter, I note that the ALJ found that Respondent's 
Registration, BK5633525, expired on December 31, 2003, and that 
Respondent did not file a renewal application, let alone a timely one, 
for this registration. See 21 CFR 1301.36(i). DEA precedents establish 
that where ``a registrant has not submitted a timely renewal 
application prior to the expiration date, then the registration expires 
and there is nothing to revoke.'' Ronald J. Riegel, D.V.M., 63 FR 
67132, 67133 (1998); see also Cadiz Thrift-T Drug, Inc., 64 FR 15803, 
15805 (1999). Therefore, the revocation portion of this proceeding is 
moot and only Respondent's application for a registration at the 82nd 
Avenue location remains a live controversy.
    With respect to Respondent's application, I have carefully 
considered Respondent's evidence concerning his rehabilitation. But as 
explained below, even granting that Respondent has proved by a 
preponderance of the evidence that he is rehabilitated, the record 
establishes that granting his application would be inconsistent with 
the public interest. Most significantly, Respondent's record of 
compliance with the CSA and his testimony at the hearing regarding his 
past violations demonstrate convincingly that he cannot be entrusted 
with a new registration. I thus deny his application.

Factor One--The Recommendation of the State Licensing Board

    The ALJ found that at the time of the hearing, Respondent's 
California veterinary license was suspended. It is undisputed, however, 
that Respondent has a valid veterinary license in Oregon. Therefore, I 
agree with the ALJ that this factor ``carries little weight,'' ALJ at 
32, in the analysis of whether granting Respondent's application would 
be consistent with the public interest.

Factor Two--Respondent's Experience in Dispensing Controlled Substances

    The record established that Respondent administered to himself, 
Tiletamine, (Telazol), a Schedule III controlled substance which is 
approved for use only as an anesthetic in animals. Respondent obviously 
did not have a prescription, let alone a valid one, for the drug. See 
21 CFR 1306.04.
    The ALJ found that Respondent misused this controlled substance 
because of ``a medical condition that has since ameliorated,'' and that 
Respondent had proved by a preponderance of the evidence that he was 
not likely to re-abuse the drug. ALJ at 32. I agree and note in 
particular the testimony of Respondent's psychologist, Dr. Standish 
McCleary, that in his opinion, Respondent was unlikely to re-abuse 
controlled substances. The Government's cross-examination of Dr. 
McCleary does not lead me to question his conclusion and the Government 
offered no evidence to rebut it.
    The conduct at issue in this case is not, however, limited to 
Respondent's self-abuse of a controlled substance, and involves a 
variety of acts which have no nexus to his self-abuse. Therefore, I 
conclude that Respondent's rehabilitation is entitled to little weight 
in the public interest analysis.

Factor Three--Respondent's Record of Drug-Related Convictions

    It is undisputed that Respondent has never been convicted of a 
federal or state criminal offense related to the manufacture, 
distribution, or dispensing of controlled substances. I therefore agree 
with the ALJ's conclusion that this factor weighs against a finding 
that granting Respondent application would be inconsistent with the 
public interest. As the ALJ further concluded, this factor is not 
dispositive. See ALJ at 32.

Factor Four--Respondent's Compliance with Applicable Federal, State and 
Local Laws

    The record in this case establishes multiple instances of 
Respondent's non-compliance with the Controlled Substances Act. As 
explained below, Respondent committed serious violations of the Act, 
which, if tolerated would undermine the statute's carefully crafted 
scheme for regulating the distribution of controlled substances and 
preventing the diversion of controlled substances into illegitimate 
uses and drug abuse.
    As the Supreme Court recently explained, the CSA creates ``a closed 
regulatory system making it unlawful to manufacture, distribute, 
dispense, or possess any controlled substance except in a manner 
authorized by the [Act].'' Gonzales v. Raich, 545 U.S. 1,--(2005) 
(citing 21 U.S.C. 841(a)(1) & 844(a)). As relevant here, ``[t]he CSA 
and its implementing regulations set forth strict requirements 
regarding registration, * * * drug security, and recordkeeping.'' Id.
    Under the Act, a veterinarian falls within the definition of a 
``practitioner,'' and upon obtaining a registration, a veterinarian has 
legal authority to prescribe, administer or distribute a controlled 
substance to an ``ultimate user,'' the latter being a person who has 
lawfully obtained a controlled substance ``for an animal owned by him 
or a member of his household.'' 21 U.S.C. 802(21); id. Sec.  802(27). 
The Act provides that ``[p]ersons registered * * * to manufacture, 
distribute, or dispense controlled substances * * * are authorized to 
possess, manufacture, distribute, or dispense such substances * * * to 
the extent authorized by their registration and in conformity with the 
other provisions of the [Act].'' Id. Sec.  822(b).
    Under the CSA's implementing regulations, the various controlled 
substance activities recognized by the Act ``are deemed to be 
independent of each other.'' 21 CFR 1301.13(e). Moreover, ``[a]ny 
person who engages in more than one group of independent activities 
shall obtain a separate registration for each group of activities'' 
unless the activity is a permitted coincident activity under a 
particular category of registration.\10\ Id. Furthermore, the CSA 
requires that a registrant obtain ``a separate registration * * * at 
each principal place of

[[Page 66982]]

business or professional practice where the applicant, manufactures, 
distributes, or dispenses controlled substances.'' Id. Sec.  822(e). 
Having provided this background, I next address the various instances 
in which Respondent's conduct violated the CSA.
---------------------------------------------------------------------------

    \10\ The regulations impose different security requirements 
based on the activity. Thus, distributors are subject to more 
extensive requirements than practitioners. See generally 21 CFR 
1301.71--1301.76.
---------------------------------------------------------------------------

    The record establishes that on October 27, 2001, paramedics found 
Respondent's wife unconscious and lying on the floor; her right arm had 
a fresh puncture wound with blood oozing from it. According to the 
police report, Respondent's daughter ``believed that her mother was 
dead from a drug overdose,'' Gov. Exh. 4, at 3, and Respondent's wife 
did not respond to first aid. At the hearing, Respondent's wife 
testified that she had taken Telazol. Tr. 507. Moreover, Respondent's 
own evidence (the proposed California stipulation) includes the 
admission that his wife ``was under the influence of a narcotic or 
narcotic type drug and was experiencing a possible narcotic overdose.'' 
Resp. Exh. 8, at 6-7.
    I do not have to find that Respondent dispensed Telazol to his wife 
to conclude that Respondent violated the CSA. Even crediting the 
testimony of Respondent's wife that she decided to try the Telazol on 
her own initiative, it is clear that she would not have been able to do 
so if Respondent had complied with the requirement that the drug be 
``stored in a securely locked, substantially constructed cabinet.'' 21 
CFR 1301.75(b). Indeed, in the stipulated agreement which Respondent 
entered into evidence he admitted as much.
    Moreover, notwithstanding that Respondent stored controlled 
substances at his San Diego residence/registered location, Respondent 
failed to maintain the required records. 21 CFR 1304.22(c). 
Specifically, Respondent was required to maintain a record of each 
substance received, the date of receipt, the number of units, and the 
name, address and registration number of the person that distributed 
the substance to him. Id. Respondent was also required to maintain a 
record naming the substance, indicating the number of units or volume 
dispensed, and the name and address to whom the substance was 
dispensed. Id. The record clearly establishes that none of these 
records were being maintained and thus Respondent violated these 
provisions of the CSA as well.
    Respondent also violated the CSA when, at the request of Mrs. 
Nagra, he ordered controlled substances on her behalf, had them shipped 
to his registered location, and then redistributed them to the Nagras' 
clinic. According to Mrs. Nagra's testimony, this activity occurred 
over a five month period following her husband's death.
    Under the CSA's regulations, Mr. Nagra's registration terminated 
with his death. 21 CFR 1301.52(a). Respondent's distribution of 
controlled substances to the clinic violated federal law for two 
reasons: 1) Respondent was not registered as a distributor, See id. 
1301.13(e), and 2) the Nagras' facility was no longer registered. Id. 
1307.11(a). (requiring separate registrations for independent 
activities). While DEA regulations allow a practitioner to distribute a 
limited amount of a controlled substance to another practitioner, the 
practitioner who receives the distribution must be ``registered under 
the Act to dispense that controlled substance.'' Id.\11\ Respondent 
therefore cannot avail himself of this exemption.
    The record establishes that Mrs. Nagra contacted Respondent because 
the clinic did not have a veterinarian with a registration at its 
location and no distributor would sell controlled substances to it. Tr. 
221-22. Moreover, it is also clear that Respondent undertook to supply 
the clinic to circumvent the law.
    To justify his violation of the CSA, Respondent asserted that his 
purpose in distributing the drugs was ``honorable,'' and that it would 
have been ``unjust and unfair'' if the clinic had closed down and Mrs. 
Nagra had lost her investment. Respondent's reasons are not a valid 
excuse for his violations of the Act.
    Nationwide, there are thousands of solo practitioners who 
administer controlled substances in the course of their professional 
practices.\12\ Unfortunately, some die while they are still actively 
practicing medicine. In enacting the CSA, Congress did not, however, 
recognize the prevention of economic loss to the heirs of a registrant 
as grounds for an exemption from the Act's requirements. See 21 U.S.C. 
822(c); Cf. United States v. Oakland Cannabis Buyers' Cooperative, 532 
U.S. 483, 491 (2001) (rejecting medical necessity exception to the CSA 
and noting that a defense of legal necessity ``cannot succeed when the 
legislature itself had made a determination of values'') (citation 
omitted). Excusing Respondent's distribution to an unregistered 
location would undermine the closed system of distribution and the 
principle that at each registered location, there is an individual 
registrant who is accountable for the proper security, record keeping 
and use of controlled substances.
---------------------------------------------------------------------------

    \11\ The security requirements applicable to non-practitioners 
expressly require that ``[b]efore distributing a controlled 
substance to any person who the registrant does not know to be 
registered to possess the controlled substance, the registrant shall 
make a good faith inquiry with [DEA] or with the appropriate State 
controlled substances registration agency, if any, to determine that 
the person is registered to possess the controlled substance.'' 21 
CFR 1301.74(a). A practitioner who distributes under 21 CFR 
1307.11(a), must comply with this regulation. See id. 1301.76(c).
    \12\ According to testimony in this case, there are 24,000 
veterinary clinics in the United States and more than half of them 
are run by solo practitioners. See ALJ at 23.
---------------------------------------------------------------------------

    Respondent further violated the CSA when he took controlled 
substances from California to the 82nd Avenue Portland, Oregon 
facility, which was not registered, and stored them there. At the 
hearing, Respondent admitted that he brought two controlled substances, 
Euthasol and Ketamine, from San Diego to the 82nd Avenue clinic, in 
December 2001, prior to his opening of this clinic in January 2002, and 
that these substances were being administered to patients. A DI 
testified that during the February 13, 2002 on site inspection, both 
controlled substances were being stored at the 82nd Avenue clinic. 
Moreover, Dr. Heidi Lang testified that in August 2002, when she began 
working at the clinic, euthanasia solution was being stored there. The 
clinic did not become a registered location until Dr. Lang obtained a 
registration for it at some point after commencing her employment.
    As to these events, Respondent testified that it was ``an 
absurdity'' to claim that he violated the law by taking controlled 
substances from California to Oregon, and that because he had a DEA 
registration for his San Diego residence he could ``take those drugs 
anywhere [he] want[ed].'' Tr. 393. Respondent further contended that 
``the fact that I'm working out of a non-registered facility with my 
drugs that I pull from a registered facility and it's registered to me, 
there's no violation there. It just simply is not a violation of any * 
* * statute or regulation.'' Id. at 394.
    Contrary to the understanding of Respondent, the CSA expressly 
prohibits this conduct. Section 302(e) provides that ``[a] separate 
registration shall be required at each principal place of business or 
professional practice where the applicant * * * distributes[] or 
dispenses controlled substances.'' 21 U.S.C. 822(e); see also 21 CFR 
1301.12(a). Respondent's 82nd Avenue clinic was a ``principal place of 
business or professional practice'' where he ``dispensed controlled 
substances.'' Respondent clearly failed to comply with the Act by 
storing controlled substances at the clinic for approximately eight 
months without first obtaining a registration for the location. See 21 
U.S.C. 841(a)(1).

[[Page 66983]]

    Respondent's testimony regarding his various violations is 
especially disturbing. With respect to his conduct in distributing 
controlled substances to the Nagras' clinic, Respondent testified that 
he didn't ``have any regrets'' and that he ``would do that again 
because I wasn't hurting anyone.'' Tr. at 390. As for his conduct at 
the 82nd Avenue clinic, Respondent explained that ``you don't close 
down operations. You don't stop businesses and put 12 people on the 
unemployment line because of a registration that is being withheld at 
that time unreasonably.'' \13\ Id. at 379.
---------------------------------------------------------------------------

    \13\ As I have previously found, the evidence in the record 
establishes that Respondent did not apply for a registration for 
this location until December 2001, shortly before opening the 
clinic. Furthermore, Respondent indicated on his application that 
his state license had previously been suspended thus triggering a 
more detailed investigation. DEA personnel subsequently determined 
that Respondent had previously been investigated for distributing 
controlled substances to the Nagras' clinic, that he was storing 
controlled substances at the 82nd Ave. clinic, and became aware of 
the events surrounding Respondent's abuse of Telazol and the State 
of California's suspension of his license. As this proceeding has 
established, it was not unreasonable to withhold Respondent's 
registration. What was unreasonable was Respondent's commencement of 
operations without obtaining a registration in violation of Federal 
law.
---------------------------------------------------------------------------

    Respondent's statements reflect a stunning disregard for the 
requirements of Federal law. The CSA's implementing regulations 
expressly provide that ``[n]o person required to be registered shall 
engage in any activity for which registration is required until the 
application for registration is granted and a Certificate of 
Registration is issued * * * to such person.'' 21 CFR 1301.13(a). 
Contrary to Respondent's understanding, he was required to comply with 
the Act and its regulations even if it interfered with his business 
plan or violated his sense of fairness.
    In sum, Respondent's repeated violations of the CSA provide ample 
grounds to deny his application. Moreover, Respondent's attitude leaves 
me with the firm impression that, if given the opportunity, he will 
violate the Act again. Moreover, Respondent's rehabilitation from drug 
abuse does not mitigate the violations of the Act he committed by 
distributing controlled substances to the Nagras' clinic, an 
unregistered location, and commencing operations at the 82nd Avenue 
clinic without obtaining a registration. I thus conclude that this 
factor is dispositive and compels a finding that granting Respondent a 
new registration would be inconsistent with the public interest.\14\
---------------------------------------------------------------------------

    \14\ In light of Respondent's numerous violations of the CSA 
discussed above, it is unnecessary to decide whether Respondent's 
practice of employing relief veterinarians to run his clinic in 
Oregon while living in San Diego (more than 1,000 miles away) 
complied with the CSA. I note, however, that at the hearing, the 
Government asserted that if a relief veterinarian is an independent 
contractor, the relief vet. cannot act as an agent of the clinic 
owner/registrant under 21 CFR 1301.22. According to the Government, 
the relief vet. must be an employee of the clinic owner in order to 
comply with the regulation.
    This position is incorrect. Neither the CSA nor the regulation 
precludes a relief veterinarian who is an independent contractor 
from acting as the agent of the registrant. In the CSA, Congress 
defined the term ``agent'' to mean ``an authorized person who acts 
on behalf of or at the direction of a manufacturer, distributor, or 
dispenser.'' 21 U.S.C. 802(3). Moreover, the CSA further exempts 
from registration ``[a]n agent or employee of any registered 
manufacturer, distributor, or dispenser of any controlled substance 
* * * if such agent or employee is acting in the usual course of his 
business or employment.'' Id. Sec.  822(c). The plain language of 
the statute thus demonstrates that Congress did not limit the 
exemption to the employees of a practitioner. Furthermore, in 
appropriate circumstances, an independent contractor may act as an 
agent. See, e.g., I Restatement of the Law (Second) Agency Sec.  14 
N, at 80 (1958) (``One who contracts to act on behalf of another and 
subject to the other's control except with respect to his physical 
conduct is an agent and also an independent contractor.''). The 
status of the person acting under the registration as an employee or 
independent contractor is thus not determinative of compliance with 
the CSA.
    What is relevant for purposes of compliance is that the 
registrant must exercise effective control of the agent. Doing so 
requires that a registrant properly supervise and monitor its agents 
to protect against the diversion of controlled substances; reliance 
solely on the CSA's existing recordkeeping requirements does not 
necessarily establish that a registrant is exercising effective 
control of its agents.
---------------------------------------------------------------------------

Order

    Accordingly, pursuant to the authority vested in me by 21 U.S.C. 
823(f), and 28 CFR 0.100(b) and 0.104, I hereby order that the pending 
application of Respondent, Daniel Koller, D.V.M., for a DEA Certificate 
of Registration as a practitioner, be, and it hereby is, denied. This 
order is effective December 18, 2006.

    Dated: November 3, 2006.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E6-19400 Filed 11-16-06; 8:45 am]
BILLING CODE 4410-09-P