[Federal Register: April 26, 2004 (Volume 69, Number 80)]
[Notices]
[Page 22559-22561]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26ap04-106]
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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