[Federal Register: January 8, 2004 (Volume 69, Number 5)]
[Notices]
[Page 1311-1314]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja04-39]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Shop It For Profit; Denial of Application
On November 22, 2002, the Deputy Assistant Administrator, Office of
[[Page 1312]]
Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to Shop It For Profit (SIFP) proposing to deny its
application, executed on December 28, 1999, for DEA Certificate of
Registration as a distributor of list I chemicals. The Order to Show
Cause alleged in relevant part that granting the application of SIFP
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 SIFP
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 SIFP at its proposed registered location
in Smyrna, Tennessee. The return receipt indicated that the show cause
order was received on December 7, 2002, by December Pennington (Ms.
Pennington), owner and sole proprietor of SIFP. DEA has not received a
request for hearing or any other reply from SIFP or anyone purporting
to represent the company in this matter.
Therefore, the Acting Deputy Administrator of DEA, finding that (1)
30 days having passed since receipt of the Order to Show Cause, and (2)
no request for hearing having been received, concludes that SIFP 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. At the time that
SIFP submitted its application for DEA registration,
phenylpropanolamine, also a list I chemical, was 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. As noted in previous
DEA final orders, Methamphetamine is an extremely potent central
nervous system stimulant, and its abuse is a persistent and growing
problem in the United States. Yemen Wholesale Tobacco and Candy Supply,
Inc. 67 FR 9997 (2002); Denver Wholesale, 67 FR 99986 (2002).
The Acting Deputy Administrator's review of the investigative file
reveals that on December 28, 1999, SIFP submitted an application for
DEA registration as a distributor of the list I chemicals ephedrine,
pseudoephedrine and phenylpropanolamine. The application was submitted
on behalf of SIFP by Ms. Pennington. There is no information before the
Acting Deputy Administrator that SIFP has sought to modify its pending
application with respect to any of the listed chemical products it
proposes to distribute. Upon receipt of the application, the DEA
Tennessee District Office initiated a pre-registration investigation of
SIFP on June 15, 2000.
The Acting Deputy Administrator's review of the investigative file
reveals that SIFP began its business operation in January 1999. It is
located in a residential neighborhood of Smyrna, Tennessee, and is
housed at Ms. Pennington's residence. SIFP is a retailer that
distributes candies, novelty items such as figurines, NASCAR,
collegiate and pro sports items, seasonal items such as gloves, fishing
gear and floats, as well as non-prescription medicines such as aspirin
and other cold remedies. At the time of DEA's inspection, Ms.
Pennington had lived at this location for approximately 12 years with
her then-11 year old son.
SIFP employed one other person, who along with Ms. Pennington was
responsible for delivery of merchandise to SIFP's customers. Ms.
Pennington informed a DEA investigator that approximately 5% of her
business would be made up of the distribution of listed chemical
products, but further admitted that the distribution of these products
is ``unknown territory.''
DEA's investigation revealed that the State of Tennessee does not
license chemical handlers (distributors). However, SIFP operates
pursuant to a Rutherford County (Tennessee) Business License number
(Class 3) of Gift, Novelty and Souvenir Shops. In addition, SIFP has a
Tennessee Department of Revenue Certificate of Registration Sales & Use
number. The firm also has a Department of the Treasury, Internal
Revenue Service Employer Identification number.
During the pre-registration inspection, a DEA Diversion
investigator provided Ms. Pennington with DEA publications on the
diversion of pseudoephedrine, phenylpropanolamine, combination
ephedrine products, methyl sulfone, anhydrous ammonia and iodine. The
investigator also provided copies of DEA regulations pertaining to
listed chemicals, specifically, title 21 of the Code of Federal
Regulations, sections 1300, 1309 and 1310, a copy of threshold
provisions for ephedrine, pseudoephedrine and phenylpropanolamine, as
well as a guidance document on what constitutes ``suspicious orders''
of list I chemicals.
The DEA diversion investigator further informed Ms. Pennington of
the recordkeeping and reporting requirements of a registrant, including
the reporting of losses, thefts and suspicious orders of list I
chemicals. Ms. Pennington was also informed of the requirement to
maintain all records for the regulated products for two years. Ms.
Pennington stated her willingness to comply with all recordkeeping and
reporting requirements.
With respect to the manner in which her establishment would handle
listed chemical products, Ms. Pennington informed the DEA investigator
that she would be responsible for the recordkeeping and security of
listed chemicals for SIFP and she would require her customers to
provide her with a business sales tax license number before any product
is distributed to them. DEA's investigation revealed that SIFP has
approximately 90 customers. Ms. Pennington stated that SIFP distributes
products throughout Middle Tennessee, and the firm does not sell to
individuals. Ms. Pennington also provided DEA information regarding her
proposed supplier of list I chemicals.
Ms. Pennington further informed the DEA investigator that she makes
visits (by truck) to her customers and asks if they need anything. If
products are delivered, the delivery is made by a company owned truck.
Ms. Pennington stated that her customers are allowed in her delivery
truck in order to see what items she has in stock and that she is
always present with her customers during these visits.
With respect to storage and transport of list I chemicals, Ms.
Pennington stated that these products will be stored on designated
shelves in the rear area of her truck and that the back door of the
truck has a heavy duty key lock that is kept locked. Ms. Pennington
stated that she is the only person with a key to the truck, and the
truck is usually parked in her driveway. As an additional measure of
security, Ms. Pennington also proposed parking her truck in her
backyard, an area surrounded by a wood fence. On a related matter, the
DEA diversion investigator contacted by telephone a representative of
Security Services of Murfreesboro, Inc., in Murfreesboro, Tennessee,
who informed
[[Page 1313]]
DEA that SIFP had contracted with the security company for electronic
surveillance services.
The DEA diversion investigator informed Ms. Pennington that because
of the increase in methamphetamine laboratory seizures in Tennessee and
around the country, DEA was reevaluating the registrations of its list
I chemical registrants as well as the applications of entities seeking
to distribute these products. The investigator further informed Ms.
Pennington about the diversion of list I chemical products to the
clandestine manufacture of amphetamine and methamphetamine. In
response, Ms. Pennington expressed that she was unaware of the problems
associated with these products. She added however, that if not for the
fact that SIFP's customers had requested list I chemical products, and
the possibility that SIFP may lose those same customers to competitors
that sell them, it would be her preference not to handle listed
chemicals.
On July 6, 2000, the DEA Tennessee District Office received a
customer list from Ms. Pennington. The Acting Deputy Administrator's
review reveals a customer list comprised primarily of convenience
stores, gas stations and food stores. DEA also received from Ms.
Pennington a list of products that she anticipated distributing through
her company. A review of the list by a DEA investigator revealed
several list I products under the brand names of Sudafed and``Max
Alert.'' However, several of the products that Ms. Pennington
represented as listed I chemical products were in fact not of that
category.
The Acting Deputy Administrator's review of the investigative file
further reveals that the DEA Tennessee District office reviewed
excessive purchase reports filed in that office for the period of March
to December 2000. Excessive purchase reports reflect data involving
unusually high volume purchases and sale of listed chemical products by
various entities, and flag for law enforcement personnel possible
unlawful activity with respect to these transactions. DEA's review of
the reports revealed that at least five potential customers of SIFP had
ordered in an excessive fashion, list I chemical products from a DEA
registered distributor located in Crossville, Tennessee. In addition,
DEA obtained information that at least one potential customer of SIFP
was purchasing listed chemical products from the same company that Ms.
Pennington proposed as a supplier for SIFP.
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 SIFP's pending application for registration.
With respect to factor one, maintenance of effective controls
against the diversion of listed chemicals, DEA's pre-registration
inspection documented adequate security measures taken by SIFP with
respect to the company's proposed storage of listed chemicals.
With respect to factor four, the applicant's past experience in the
distribution of chemicals, DEA's investigation revealed that the owner
of SIFP has no previous experience related to distributing or otherwise
handling listed chemicals. 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 weights against the
granting of SIFP's pending application. In addition, the Acting Deputy
Administrator finds factor four relevant to Ms. Pennington's apparent
unfamiliarity with listed chemical products as evidenced by the list of
purported list I chemical products that was supplied to DEA on behalf
of SIFP, which contained several products that were not of that
category.
With respect to factor five, other factors relevant to and
consistent with the public safety, the Acting Deputy Administrator
finds this factor relevant to SIFP's proposal to distribute listed
chemical products primarily to convenience stores and combination food
mart/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.
The Acting Deputy Administrator finds factor five relevant to the
results of DEA's verification of SIFP's proposed customers. Among the
firm's potential customers were establishments that were part of an
excessive purchase report involving listed chemicals obtained by DEA,
and one potential customer that was purchasing listed chemical products
from another supplier.
The Acting Administrator also finds factor five relevant to SIFP'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, 68 FR 62324
(2003). Based on the foregoing, the Acting Deputy Administrator
concludes that granting the pending application of SIFP 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 Shop It For Profit be, and it hereby is, denied. This
order is effective February 9, 2004.
[[Page 1314]]
Dated: December 18, 2003.
Michele M. Leonhart,
Acting Deputy Administrator.
[FR Doc. 04-345 Filed 1-7-04; 8:45 am]
BILLING CODE 4410-09-M