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has waived its right to a hearing. See 21 Mr. Butt has no prior experience in the
Dated: December 1, 2006. CFR 1309.53(c). I therefore enter this wholesale distribution of List I
Michele M. Leonhart, final order without a hearing based on chemicals. Moreover, Mr. Butt told the
Deputy Administrator. relevant material found in the DIs that he does not verify the identity
[FR Doc. E6–20981 Filed 12–8–06; 8:45 am] investigative file and make the of his customers by asking them to
BILLING CODE 4410–09–P following findings. present an ID.
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71558 Federal Register / Vol. 71, No. 237 / Monday, December 11, 2006 / Notices
The DIs also explained to Mr. Butt Factor One—Maintenance of Effective or its owner, has been convicted of any
DEA’s recordkeeping requirements. The Controls Against Diversion drug related criminal offense.
DIs then sought and obtained a list of
The investigative file establishes that Factor Four—The Applicant’s Past
the firm’s established customers; the DIs
Respondent does not have in place Experience in the Manufacture or
subsequently attempted to visit eleven Distribution of Chemicals
of them. Only two of these effective controls against diversion.
establishments expressed any interest in According to the file, Respondent does According to the investigative file,
buying List I products from Respondent. not verify the identity of his customers. neither Respondent, nor its owner, has
As for the other nine stores visited by Verifying the identity of purchasers of any experience in the wholesale
the DIs, two of the stores could not be List I chemicals is essential to ensuring distribution of List I chemical products.
found at the address given by Mr. Butt. that these products are being bought to Numerous DEA final orders have made
At another two stores, the owner/ meet legitimate consumer demand and clear that because of the potential for
manager could not recall whether he not for use in the illicit manufacture of diversion, an applicant’s (and its
had ever purchased merchandise from methamphetamine. See 21 CFR controlling person’s) lack of experience
Respondent. At a third location, the 1309.71(b)(8) (requiring the assessment in distributing List I chemicals is a
owner stated that he had never of ‘‘[t]he adequacy of the registrant’s or factor which weighs heavily against
purchased any merchandise from applicant’s systems for monitoring the granting an application for a
Respondent. At three other stores, the receipt, distribution, and disposition of registration. Tri-County Bait
owners told the DIs that they had only List I chemicals in its operations’’). Distributors, 71 FR 52160, 52613 (2006);
purchased a limited amount of items Respondent’s practice of failing to Jay Enterprises, 70 FR 24620, 24621
from Respondent and would not identify its customers thus raises a (2005); ANM Wholesale, 69 FR 11652,
consider buying any List I products substantial risk that if it was granted a 11653 (2004).
from it as they already had other registration, its products would be Factor Five—Other Factors That Are
suppliers. Finally, at another store, the diverted. Cf. Alra Laboratories, Inc. v. Relevant To and Consistent With Public
owner had never heard of Respondent. DEA, 54 F.3d 450, 451 (7th Cir. 1995) Health and Safety
(‘‘[a]n agency rationally may conclude
Discussion that past performance is the best Numerous DEA orders recognize that
Under 21 U.S.C. 823(h), an applicant predictor of future performance’’). I thus convenience stores and gas-stations
conclude that Respondent, if granted a constitute the non-traditional retail
to distribute List I chemicals is entitled
registration, would not maintain market for legitimate consumers of
to be registered unless the registration
effective controls against diversion. products containing pseudoephedrine
would be ‘‘inconsistent with the public
and ephedrine. See, e.g., Tri-County Bait
interest.’’ In making this determination, In support of this finding, I further Distributors, 71 FR at 52161; D & S
Congress directed that I consider the note the discrepancies between the Sales, 71 FR 37607, 37609 (2006);
following factors: customer information Respondent Branex, Inc., 69 FR 8682, 8690–92
(1) Maintenance by the applicant of provided and what the DIs found during (2004). DEA orders also establish that
effective controls against diversion of listed the customer verifications. This is not a the sale of certain List I chemical
chemicals into other than legitimate case where there are slight variances, products by non-traditional retailers is
channels; but rather material differences between an area of particular concern in
(2) Compliance by the applicant with the information provided by an
applicable Federal, State, and local law; preventing diversion of these products
applicant and that discovered by DEA into the illicit manufacture of
(3) Any prior conviction record of the
applicant under Federal or State laws relating
investigators. While Respondent methamphetamine. See, e.g., Joey
to controlled substances or to chemicals represented that the list included his Enterprises, 70 FR 76866, 76867 (2005).
controlled under Federal or State law; established customers, four of the stores As Joey Enterprises explains, ‘‘[w]hile
(4) Any past experience of the applicant in did not appear to have had a business there are no specific prohibitions under
the manufacture and distribution of relationship with Respondent, and even the Controlled Substances Act regarding
chemicals; and among those that did have a the sale of listed chemical products to
(5) Such other factors as are relevant to and relationship, most of them had no [gas stations and convenience stores],
consistent with the public health and safety. interest in purchasing List I chemical DEA has nevertheless found that [these
Id. products from it. Finally, some of the entities] constitute sources for the
‘‘These factors are considered in the stores could not be found at the address diversion of listed chemical products.’’
disjunctive.’’ Joy’s Ideas, 70 FR 33195, provided by Respondent. This Id. See also TNT Distributors, 70 FR
33197 (2005). I may rely on any one or information does not inspire confidence 12729, 12730 (2005) (special agent
a combination of factors, and may give that the products Respondent would testified that ‘‘80 to 90 percent of
each factor the weight I deem handle would remain within the ephedrine and pseudoephedrine being
appropriate in determining whether an legitimate chain of distribution. I thus used [in Tennessee] to manufacture
application for registration should be conclude that this factor establishes that methamphetamine was being obtained
denied. See, e.g., Starr, 71 FR at 39367; Respondent’s application should be from convenience stores’’); OTC
Energy Outlet, 64 FR 14269 (1999). denied. Distribution Co., 68 FR 70538, 70541
Moreover, I am ‘‘not required to make Factors Two and Three—Compliance (2003) (noting ‘‘over 20 different
findings as to all of the factors.’’ Hoxie With Applicable Law and the seizures of [gray market distributor’s]
v. DEA, 419 F.3d 477, 482 (6th Cir. Applicant’s Prior Record of Relevant pseudoephedrine product at clandestine
2005); Morall v. DEA, 412 F.3d 165, Criminal Convictions sites,’’ and that in eight month period
mstockstill on PROD1PC61 with NOTICES
173–74 (D.C. Cir. 2005). In this case, I distributor’s product ‘‘was seized at
conclude that Factors One, Four, and The file does not contain any clandestine laboratories in eight states,
Five, establish that granting evidence that Respondent has failed to with over 2 million dosage units seized
Respondent’s application would be comply with applicable Federal, State or in Oklahoma alone.’’); MDI
inconsistent with the public interest and local laws. The file also does not Pharmaceuticals, 68 FR 4233, 4236
that its application should be denied. contain any evidence that Respondent, (2003) (finding that ‘‘pseudoephedrine
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Federal Register / Vol. 71, No. 237 / Monday, December 11, 2006 / Notices 71559
products distributed by [gray market 24621. Accord Prachi Enterprises, 69 FR 0.100. The Administrator, in turn, has
distributor] have been uncovered at 69407, 69409 (2004). redelegated this function to the Deputy
numerous clandestine Here, Respondent clearly lacks Administrator, pursuant to 28 CFR
methamphetamine settings throughout effective controls against diversion, has 0.104.
the United States and/or discovered in no experience in the wholesale The 2007 aggregate production quotas
the possession of individuals apparently distribution of List I chemical products, represent those quantities of controlled
involved in the illicit manufacture of and yet intends to distribute these substances that may be produced in the
methamphetamine’’). products to non-traditional retailers, a United States in 2007 to provide
Moreover, during clandestine lab market in which the risk of diversion is adequate supplies of each substance for:
seizures, DEA has frequently found high substantial. Given these findings, it is The estimated medical, scientific,
count List I chemical products, thus indisputable that granting Respondent’s research, and industrial needs of the
indicating that these are the preferred application would be ‘‘inconsistent with United States; lawful export
products for illicit methamphetamine the public interest.’’ 21 U.S.C. 823(h). requirements; and the establishment
manufacturers. See OTC Distribution, 68 and maintenance of reserve stocks (21
Order U.S.C. 826(a) and 21 CFR 1303.11).
FR at 70541, MDI Pharmaceuticals, 68
FR at 4236. While Respondent proposed Pursuant to the authority vested in me These quotas do not include imports of
to sell traditional products, he also by 21 U.S.C. 823(h), and 28 CFR controlled substances for use in
sought to sell similar high count 0.100(b) & 0.104, I hereby order that the industrial processes.
products. application of Respondent Taby On August 29, 2006, a notice of the
Enterprises of Osceola, Inc., for a DEA proposed initial 2007 aggregate
Significantly, all of Respondent’s
Certificate of Registration as a production quotas for certain controlled
proposed customers participate in the
distributor of List I chemicals be, and it substances in schedules I and II was
non-traditional market for ephedrine
hereby is, denied. This order is effective published in the Federal Register (71
and pseudoephedrine products. DEA
January 10, 2007. FR 51214). All interested persons were
orders recognize that there is a
Dated: December 1, 2006. invited to comment on or object to these
substantial risk of diversion of List I
proposed aggregate production quotas
chemicals into the illicit manufacture of Michele M. Leonhart,
on or before September 19, 2006.
methamphetamine when these products Deputy Administrator. Five responses were received within
are sold by non-traditional retailers. See, [FR Doc. E6–20978 Filed 12–8–06; 8:45 am] the published comment period resulting
e.g., Joy’s Ideas, 70 FR at 33199 (finding BILLING CODE 4410–09–P in comments on a total of 25 schedule
that the risk of diversion was ‘‘real, I and II controlled substances. The
substantial and compelling’’); Jay responses commented that the proposed
Enterprises, 70 FR at 24621 (noting DEPARTMENT OF JUSTICE aggregate production quotas for
‘‘heightened risk of diversion’’ should alfentanil, aminorex, cocaine, codeine
application be granted). Under DEA Drug Enforcement Administration
(for conversion), dihydrocodeine,
precedents, an applicant’s proposal to [DEA #290E] ecgonine, fentanyl, hydrocodone,
sell into the non-traditional market hydromorphone, levorphanol,
weighs heavily against the granting of a Controlled Substances: Established methadone, methadone intermediate,
registration under factor five. So too Initial Aggregate Production Quotas methamphetamine, methylphenidate,
here. for 2007 morphine (for conversion), nabilone,
Because of the methamphetamine noroxymorphone (for conversion),
AGENCY: Drug Enforcement
epidemic’s devastating impact on oxycodone, oxycodone (for conversion),
Administration (DEA), Justice.
communities and families throughout oxymorphone, oxymorphone (for
ACTION: Notice of aggregate production
the country, DEA has repeatedly denied conversion), remifentanil, sufentanil,
an application when an applicant quotas for 2007.
tetrahydrocannabinols and thebaine
proposed to sell into the non-traditional SUMMARY: This notice establishes initial were insufficient to provide for the
market and analysis of one of the other 2007 aggregate production quotas for estimated medical, scientific, research
statutory factors supports the controlled substances in schedules I and and industrial needs of the United
conclusion that granting the application II of the Controlled Substances Act States, for export requirements and for
would create an unacceptable risk of (CSA). the establishment and maintenance of
diversion. Thus, in Xtreme Enterprises, reserve stocks.
DATES: Effective Date: December 11,
67 FR 76195, 76197 (2002), my DEA has taken into consideration the
predecessor denied an application 2006. above comments along with the relevant
observing that the respondent’s ‘‘lack of FOR FURTHER INFORMATION CONTACT: 2006 manufacturing quotas, current
criminal record, compliance with the Christine A. Sannerud, Ph.D., Chief, 2006 sales and inventories, 2007 export
law and willingness to upgrade her Drug & Chemical Evaluation Section, requirements, additional applications
security system are far outweighed by Drug Enforcement Administration, received, and research and product
her lack of experience with selling List Washington, DC 20537, Telephone: development requirements. Based on
I chemicals and the fact that she intends (202) 307–7183. this information, the DEA has adjusted
to sell ephedrine almost exclusively in SUPPLEMENTARY INFORMATION: Section the initial aggregate production quotas
the gray market.’’ More recently, I 306 of the CSA Title 21 United States for alfentanil, aminorex, amobarbital,
denied an application observing that the Code section 826 (21 U.S.C. 826) codeine (for conversion),
respondent’s ‘‘lack of a criminal record requires that the Attorney General dextropropoxyphene, dihydrocodeine,
mstockstill on PROD1PC61 with NOTICES
and any intent to comply with the law establish aggregate production quotas gamma hydroxybutyric acid, ibogaine,
and regulations are far outweighed by for each basic class of controlled hydrocodone, metazocine, nabilone,
his lack of experience and the substance listed in schedules I and II. noroxymorphone (for conversion),
company’s intent to sell ephedrine and This responsibility has been delegated oxycodone, oxycodone (for conversion),
pseudoephedrine exclusively to the gray to the Administrator of the DEA by 28 oxymorphone, oxymorphone (for
market.’’ Jay Enterprises, 70 FR at Code of Federal Regulations (CFR) conversion), remifentanil, sufentanil,
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