Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-01105/USCOURTS-caDC-06-01105-0/pdf.json

Parties Involved:
Chattem Chemicals, Inc.
Intervenor for Respondent
Drug Enforcement Administration
Respondent
Mallinckrodt, Inc.
Intervenor for Petitioner
Penick Corporation, Inc.
Petitioner

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 17, 2007 Decided June 26, 2007

No. 06-1105

PENICK CORPORATION, INC.,

PETITIONER

v.

DRUG ENFORCEMENT ADMINISTRATION,

RESPONDENT

CHATTEM CHEMICALS, INC. AND

MALLINCKRODT, INC.,

INTERVENORS

On Petition for Review of an Order of the

United States Drug Enforcement Agency

Wayne H. Matelski argued the cause for the petitioner. Julia

C. Tierney was on brief.

Steven J. Poplawski and Scott M. Badami were on brief for

intervenor Mallinckrodt, Inc. in support of the petitioner.

Brian M. Tomney, Attorney, United States Department of

Justice, argued the cause for the respondent. Teresa

A. Wallbaum, Attorney, was on brief.

Douglas J. Behr was on brief for intervenor Chattem

Chemicals, Inc. in support of the respondent.

USCA Case #06-1105 Document #1049288 Filed: 06/26/2007 Page 1 of 18
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Before: SENTELLE, HENDERSON and RANDOLPH, Circuit

Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Chattem

Chemicals, Inc. (Chattem) applied to the Drug Enforcement

Administration (DEA) for registration as an importer of narcotic

raw materials (NRMs) pursuant to the Controlled Substances

Act, 21 U.S.C. §§ 801 et seq., and the Controlled Substances

Import and Export Act, 21 U.S.C. §§ 952 and 958 (collectively

referred to as CSA). Penick Corp. (Penick) opposed the

application and requested a hearing before the DEA, arguing

that Chattem’s registration as a NRM importer would increase

the danger of NRM diversion to illicit use and thereby

undermine the public interest. The Deputy Administrator of the

DEA granted the application, concluding that Chattem “met its

burden of proof to show that it is in the public interest . . . to

grant its application to be registered as an importer of NRMs.”

Chattem Chems., Inc., 71 Fed. Reg. 9834, 9839 (Feb. 27, 2006).

Penick petitions for review of the Deputy Administrator’s

decision and, as detailed below, we deny the petition.

I.

The CSA requires that the importation of NRMs and the

manufacture of their alkaloids—the most prominent of which

are morphine and codeine—remain tightly controlled in order to

prevent their diversion to illicit use. Accordingly, the CSA

prohibits the importation of NRMs into the United States unless

the importing company is registered by the DEA, 21 U.S.C.

§§ 952(a), 958(a), and importation is limited to “such amounts

of [NRMs] . . . as the Attorney General finds to be necessary to

provide for medical, scientific, or other legitimate purposes,” id.

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1

The Attorney General has delegated this function under the CSA

to the Administrator of the DEA, see 28 C.F.R. § 0.100(b), who, in

turn, delegated it to the DEA Deputy Administrator, see 28 C.F.R.

§ 0.104, App. § 7(j).

§ 952(a)(1).1 The Attorney General “register[s] an applicant to

import or export [NRMs] if he determines that such registration

is consistent with the public interest and with United States

obligations under international treaties, conventions, or

protocols.” Id. § 958(a). In determining whether registration is

consistent with the public interest, the Attorney General must

consider the factors enumerated in section 823(a) of Title 21, see

id., which include:

(1) maintenance of effective controls against diversion

of particular controlled substances . . . into other than

legitimate medical, scientific, research, or industrial

channels, by limiting the importation and bulk

manufacture of such controlled substances to a number

of establishments which can produce an adequate and

uninterrupted supply of these substances under

adequately competitive conditions for legitimate . . .

purposes;

(2) compliance with applicable State and local law;

(3) promotion of technical advances in the art of

manufacturing these substances and the development of

new substances;

(4) prior conviction record of applicant under Federal

and State laws relating to the manufacture, distribution,

or dispensing of such substances;

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2

Section 1301.34(a) permits a bulk manufacturer of the controlled

substance an applicant seeks to import to “file a written request for a

hearing on the application” and “[i]f a hearing is requested, the

Administrator shall hold a hearing on the application.” 21 C.F.R.

§ 1301.34(a); see also infra note 9.

3

Penick was registered after we rejected Noramco’s challenge to

the DEA’s interpretation and application of 21 U.S.C. § 823(a) in

granting Penick’s registration. See Noramco of Del., Inc. v. DEA, 375

F.3d 1148 (D.C. Cir. 2004).

(5) past experience in the manufacture of controlled

substances, and the existence in the establishment of

effective control against diversion; and

(6) such other factors as may be relevant to and

consistent with the public health and safety.

Id. § 823(a). Pursuant to these provisions, on February 9, 2001,

Chattem applied to the DEA for registration as an importer of

NRMs and bulk manufacturer of their alkaloids.

On December 18, 2001, the DEA approved Chattem’s

application for registration as a bulk manufacturer. Its

concurrent application to import NRMs was opposed, however,

by Penick, Noramco of Delaware, Inc. (Noramco) and

Mallinckrodt, Inc. (Mallinckrodt), all of which requested a

hearing on Chattem’s application under 21 C.F.R. § 1301.34(a).2

At the time of Chattem’s application, Noramco and

Mallinckrodt were the only registered importers of NRMs, a

group that Penick joined in 2004.3 Because of these potential

competitors’ opposition, then, the administrative law judge

(ALJ) conducted hearings on Chattem’s application in

September and October 2002 at which all parties—as well as the

government—“called witnesses to testify and introduced

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documentary evidence” relating to the impact on the public

interest of Chattem’s registration. Chattem Chems., Inc., 71

Fed. Reg. at 9835. The ALJ ultimately recommended that

Chattem’s application be granted. See id.

On February 17, 2006, the Deputy Administrator heeded that

recommendation and decided “to grant [Chattem’s] application

to be registered as an importer of NRMs.” Id. at 9839. The

Deputy Administrator, applying 21 U.S.C. § 958(a), first

determined that Chattem’s registration would not violate any

international obligations of the United States because the

registration “would not likely cause significant increased

diversion” and thus it was not “ ‘essential’ to deny Chattem’s

application” in order to prevent global diversion of NRMs. Id.

at 9836. The Deputy Administrator then moved on to consider

the public interest factors outlined in 21 U.S.C. § 823(a).

Regarding Chattem’s potential impact on diversion, the Deputy

Administrator recognized that diversion “at the retail level has

greatly increased in recent years, and is an extremely serious

problem,” id. at 9836, but nonetheless concluded that “Chattem

ha[d] met its burden of proof in showing that its registration as

an importer of NRMs will not significantly interfere with the

maintenance of effective controls against diversion,” id. at 9838.

The Deputy Administrator noted the unchallenged adequacy of

Chattem’s internal security measures to prevent diversion of

narcotics to illicit use, the complete lack of “documented cases

of diversion of NRMs imported into the United States,” the

“DEA[’s] continued . . . regist[ration of] bulk manufacturers”

during the pendency of Chattem’s application and the fact that

the DEA already conducts regular inspections of Chattem as a

registered bulk manufacturer of alkaloids. Id. at 9836–37.

Accordingly, the Deputy Administrator found that the first

factor under 21 U.S.C. § 823(a) supported Chattem’s

registration. See id. at 9838.

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4

The only factor weighing against Chattem’s registration was the

applicant’s likelihood to “promot[e] . . . technical advances,” 21

U.S.C. § 823(a)(3), because “[t]here was little evidence . . . that

Chattem ha[d] achieved any noteworthy success in technical advances

in the manufacturing of controlled substances, or in the development

of new substances or patents,” Chattem Chems., Inc., 71 Fed. Reg. at

9838.

5

Because Chattem applied for both a registration and permission

to import NRMs, the Deputy Administrator noted that the proceeding

was a combined adjudication (the registration) and rulemaking (the

permission). Regarding the rulemaking, the Deputy Administrator

determined that (1) Chattem intended to import NRMs only for

legitimate use; (2) “there is nothing in the legislative history of the

[CSA] that supports any intention to limit the number of importers”

and; (3) the precise quantity of NRMs necessary for legitimate use is

The Deputy Administrator further determined that all but

one of the remaining public interest factors weighed in favor of

registration. She found that “[t]here is no significant evidence

that Chattem has failed to comply with applicable State and

local law” or violated state or federal narcotics regulations. Id.

She also determined that “the evidence showed that Chattem

possesses sufficient technology to process NRMs with

efficiency” because “Chattem introduced credible evidence . . .

that the processing of NRMs is not complicated, and that

Chattem has sufficient facilities to carry out the process,”

facilities already approved by the DEA for bulk manufacture of

NRM alkaloids. Id. at 9838–39.4

 In light of these

considerations, the Deputy Administrator concluded that

“Chattem . . . met its burden of proof to show that it is in the

public interest . . . to grant its application to be registered as an

importer of NRMs.” Id. at 9839. Penick now petitions for

review.5

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determined in separate proceedings. Chattem Chems., Inc., 71 Fed.

Reg. at 9835. Consequently, the Deputy Administrator concluded that

“Chattem’s proposed importation of [NRMs] is ‘necessary to provide

for medical, scientific, or other legitimate purposes,’ ” thereby

meeting the rulemaking requirements pursuant to 21 U.S.C. § 952(a).

Id. On appeal, neither Penick nor intervenor Mallinckrodt challenges

the rulemaking decision, focusing entirely on Chattem’s registration

(the adjudication) under 21 U.S.C. § 958(a). See Pet’r’s Br. at iii; Br.

of Intervenor Mallinckrodt at iii.

II.

The Deputy Administrator’s findings of fact are conclusive

“if supported by substantial evidence,” 21 U.S.C. § 877, viewing

“the record in its entirety,” Universal Camera Corp. v. NLRB,

340 U.S. 474, 488 (1951). And although the DEA’s reasoning,

as distinguished from its factfinding, may be set aside if the

action is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law,” Tourus Records, Inc. v.

DEA, 259 F.3d 731, 736 (D.C. Cir. 2001) (quoting 5 U.S.C.

§ 706(2)(A)), that review is narrow and “we will uphold a

decision of less than ideal clarity if the agency’s path

may reasonably be discerned,” Bowman Transp., Inc. v.

Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974).

“At a minimum,” however, the arbitrary or capricious “standard

requires the agency to ‘examine the relevant data and articulate

a satisfactory explanation for its action including a rational

connection between the facts found and the choice made.’ ”

Tourus Records, 259 F.3d at 736 (quoting Motor Vehicle Mfrs.

Ass’n of United States, Inc. v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983) (internal quotation omitted)). Our

statutory interpretation is governed by the deferential two-step

analysis of Chevron U.S.A. Inc. v. Natural Resources Defense

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6

In reviewing an agency’s interpretation of a statute it is charged

with implementing, “under the Chevron two-step, we stop the music

at step one if the Congress ‘has directly spoken to the precise question

at issue’ because we—and the agency—‘must give effect to [its]

unambiguously expressed intent.’ ” Northpoint Tech., Ltd. v. FCC,

412 F.3d 145, 151 (D.C. Cir. 2005) (quoting Chevron, 467 U.S. at

842–43) (alteration in original). “But if the statute is silent or

ambiguous, we dance on and, at step two, defer to the [agency’s]

interpretation if it is ‘based on a permissible construction of the

statute.’ ” Id. (quoting Chevron, 467 U.S. at 843).

Council, Inc., 467 U.S. 837, 842–43 (1984). See Noramco of

Del., Inc. v. DEA, 375 F.3d 1148, 1152 (D.C. Cir. 2004).

Penick raises two primary challenges to the DEA’s approval

of Chattem’s registration application: (1) the DEA misconstrued

its obligations under 21 U.S.C. § 823(a)(1) by ignoring “the

systemic impact of [Chattem’s] registration” on diversion

“throughout the chain of distribution,” Pet’r’s Br. at 12; and (2)

the DEA acted arbitrarily and capriciously by “improperly

shifting the burden of proof from Chattem to the objectors,” id.

at 15. We find neither ground meritorious.

A.

Section 823(a)(1) requires the Deputy Administrator to

consider “maintenance of effective controls against diversion of

particular controlled substances . . . into other than legitimate

medical, scientific, research, or industrial channels” in

determining whether registration is consistent with the public

interest. 21 U.S.C. § 823(a)(1). Penick argues that, in section

823(a)(1), the Congress has “directly spoken”6

 and “requires the

applicant to establish the systemic impact of its registration

throughout the chain of distribution, including the registration’s

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7

Diversion at the retail level is also referred to as “downstream”

diversion. See Chattem Chems., Inc., 71 Fed. Reg. at 9836.

impact on” diversion at the retail level.7 Pet’r’s Br. at 11–12.

Instead, Penick claims, the Deputy Administrator misinterpreted

this requirement and rendered the factor superfluous by focusing

her diversion discussion solely on Chattem’s internal security

measures, a factor properly covered by section 823(a)(5)’s

mandate to consider “the existence in the establishment of

effective control against diversion.” Id. at 12 (citing 21 U.S.C.

§ 823(a)(5)). Yet this claim fails for a simple reason: the

Deputy Administrator plainly considered and rejected the

contention that Chattem’s registration would increase retaillevel diversion.

Before the Deputy Administrator, “[t]he Government argued

that registering another importer could lead to increase[d]

diversion at the retail level because of the potential of increased

importation, increased manufacturing . . . and greater availability

of narcotic medication.” Chattem Chems., Inc., 71 Fed. Reg. at

9836. Indeed, the Deputy Administrator found “that the

diversion of . . . narcotics at the retail level has greatly increased

in recent years, and is an extremely serious problem.” Id. She

nonetheless concluded that Chattem’s registration would not

increase retail-level diversion because “there [was] little

evidence in the record that Chattem’s registration as an importer

would have any greater effect on diversion downstream

than DEA’s continued registration of bulk manufacturers.” Id.

Moreover, the Deputy Administrator noted the DEA’s ability to

control the level of NRM importation and diversion through

quotas and inspections, both of which already included Chattem

in its capacity as a registered bulk manufacturer of controlled

substances. Id. at 9836–37; cf. Noramco, 375 F.3d at 1155

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8

In any event, the Deputy Administrator’s decision to supplement

her discussion of diversion under section 823(a)(1) with evidence of

Chattem’s internal security measures was reasonable. The overall goal

of section 823(a)(1) “is to effectively control against diversion,”

Noramco, 375 F.3d at 1153, and evidence that the applicant’s facilities

include adequate controls against diversion logically connects to that

goal. Moreover, both the DEA and this court have previously upheld

importation registrations that relied on evidence of the applicant’s

internal controls as “consistent” with the consideration of section

823(a)(1), particularly where, as here, the adequacy of those controls

is not disputed. See Penick Corp., 68 Fed. Reg. 6947, 6949 (Feb. 11,

2003) (relying on Penick’s internal security measures to find that

section 823(a)(1) weighed in favor of its registration); cf. Noramco,

375 F.3d at 1153 (describing DEA’s section 823(a)(1) findings, based

solely on the applicant’s internal diversion controls, and noting that

DEA “was required to approve [applicant’s] registration”).

(rejecting, in part, claim that DEA misinterpreted CSA as not

requiring consideration of foreign diversion because “the DEA

in fact considered and rejected the contention that Penick’s

registration would increase diversion in India”). Accordingly,

we reject Penick’s challenge to the DEA’s interpretation of

section 823(a)(1).8

B.

Still, an agency’s action will be overturned if its findings are

not “supported by substantial evidence,” see, e.g., 21 U.S.C.

§ 877, or its reasoning is “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law,” 5 U.S.C.

§ 706(2)(A). Penick asserts that the DEA’s registration of

Chattem fails both of these standards because the Deputy

Administrator arbitrarily and “improperly shift[ed] the burden

of proof from Chattem to the objectors.” Pet’r’s Br. at 15. In

light of this alleged shift in the burden of proof—requiring the

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objectors to establish that Chattem’s registration does not satisfy

the public interest standards of 21 U.S.C. § 823(a) rather than

requiring Chattem to establish that its registration is in the

public interest—Penick claims that the Deputy Administrator’s

registration of Chattem was not supported by substantial public

interest evidence supplied by Chattem. See id. at 16–18. We

disagree.

It is true that an applicant for registration as an NRM

importer has “the burden of proving that the requirements for

such registration pursuant to [21 U.S.C. § 958(a) and (d)] are

satisfied,” while “[a]ny other person participating in the

[registration] hearing . . . ha[s] the burden of proving any

propositions of fact or law asserted by him/her.” 21 C.F.R.

§ 1301.44(c). Yet 21 C.F.R. § 1301.44(c) and 21 U.S.C.

§ 958(a) together simply require that the applicant prove by a

preponderance of the evidence that its registration is consistent

with the “public interest” as defined by 21 U.S.C. § 823(a).

Indeed, section 823(a)’s enumerated factors represent

components of the public interest rather than independent

requirements for registration and thus, the Deputy Administrator

may find a given registration consistent with the public interest

even if one (or possibly more) of the public interest factors is not

satisfied. See Johnson Matthey, Inc., 60 Fed. Reg. 26,050,

26,052 (May 16, 1995) (“It is well established that the Deputy

Administrator is not required to make findings with respect to

each of the [section 823(a)] factors, but has discretion to give

each factor the weight he deems appropriate, depending upon

the facts and circumstances in each case.”); cf. Air Line Pilots

Ass’n v. Dep’t of Transp., 791 F.2d 172, 177–78 (D.C. Cir.

1986) (although statute requires agency to “consider all these

factors, the weight to be given to any particular factor lies

largely within its discretion” because “[t]he Act itself does not

dictate that the Board give priority to” any one factor); MD

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9

Penick contends that the Deputy Administrator arbitrarily

departed from DEA policy—which Penick claims treats an importer’s

registration more strictly than a bulk manufacturer’s—in basing her no

diversion finding in part, “on the presumption that applicants for

registration as importers are subject to the same standards, and the

same level of scrutiny, as applicants for registration as manufacturers

of controlled substances.” Pet’r’s Br. at 21 (emphasis in original).

“An agency may of course alter its positions over time, but the agency

acts arbitrarily when it departs from its precedent without giving any

reason.” PDK Labs. v. DEA, 362 F.3d 786, 798–99 (D.C. Cir. 2004).

Yet Penick ignores the context of the Deputy Administrator’s

comparison of importers and manufacturers. The Deputy

Administrator did not suggest that importers and manufacturers be

registered under identical standards but rather that—according to

evidence offered by the government—“both bulk manufacturers of . . .

controlled substances and importers of NRMs [are] a potential source

Pharm., Inc. v. DEA, 72 F.3d 920 (unpublished judgment)

(relying on Air Line Pilots to reject claim that DEA gave “too

little weight” to section 823(a) factor).

Here, the Deputy Administrator recognized that the ultimate

burden of proof rested with Chattem, see Chattem Chems., Inc.,

71 Fed. Reg. at 9835, 9839, and relied on Chattem’s evidence

with respect to each of the enumerated public interest factors.

For instance, in deciding that section 823(a)(1) weighed in favor

of Chattem’s registration, the Deputy Administrator noted the

undisputed evidence “that Chattem maintains adequate security

at its manufacturing plant.” Id. at 9836. In addition, the Deputy

Administrator concluded that the risk of diversion at the retail

level would not be significantly increased by Chattem’s

registration in light of Chattem’s evidence that the DEA

continued to register additional bulk manufacturers of opium

alkaloids even though those manufacturers present comparable

diversion dangers. See id. at 9837.9

 Finally, the Deputy

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of increased diversion.” Chattem Chems., Inc., 71 Fed. Reg. at

9836–37 (second emphasis added). In the absence of evidence that

“Chattem’s registration as an importer would have any greater effect

on diversion downstream than DEA’s continued registration of bulk

manufacturers,” the Deputy Administrator declined to credit the

objectors’ claim that registration of an additional importer would

increase diversion beyond the DEA’s capacity to control. Id. Thus,

the Deputy Administrator recognized that, whatever differences exist

between the procedures for registering importers and manufacturers,

they possess a similar capacity to increase diversion—highlighting an

inconsistency in the objectors’ arguments rather than announcing any

shift in DEA policy. Indeed, the CSA commands the DEA to maintain

control over diversion “by limiting the importation and bulk

manufacture” of controlled substances. 21 U.S.C. § 823(a)(1)

(emphasis added). While Mallinckrodt notes that, unlike an objector

to an importer applicant, an objector to a manufacturer has no right to

a hearing, see Br. for Mallinckrodt at 4–5, the DEA eliminated

manufacturer hearings only “to discourage potential future abuse of

the hearing process” in the interest of “judicial economy.”

Registration of Mfrs. and Importers of Controlled Substances, 60 Fed.

Reg. 32,099, 32,100–01 (June 20, 1995) (final rule).

10Although the Deputy Administrator expressly cited an objector

witness’s statement on cross-examination, see Chattem Chems., Inc.,

71 Fed. Reg. at 9836, the identical statement was made by one of

Chattem’s witnesses.

Administrator relied on the existence of DEA quotas and

inspections to control diversion, see id., as well as testimony that

“there were no documented cases of diversion of NRMs

imported into the United States, and no significant diversion at

the bulk manufacturing level,” id. at 9836.10 Given all of this

evidence, the Deputy Administrator concluded that “Chattem

. . . met its burden of proof in showing that its registration as an

importer of NRMs will not significantly interfere with the

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11While the Deputy Administrator did not consider the second part

of section 823(a)(1)—the adequacy of competition in the existing

market—we have previously sustained the DEA’s interpretation of the

CSA that where, as here, “[the Deputy Administrator] determines that

there would be no increased difficulty in controlling diversion, the

requirements of [section 823(a)(1)] are satisfied, and an analysis of

adequate competition is not required.” Noramco, 375 F.3d at 1153

(alteration original) (internal quotation omitted).

12She did find that Chattem proffered “little evidence” it would

promote technical advances in manufacturing or the development of

new substances. Chattem Chems., Inc., 71 Fed. Reg. at 9838 (section

maintenance of effective controls against diversion.” Id. at

9838.11

The Deputy Administrator similarly relied on Chattem’s

evidence regarding the remaining public interest factors.

Specifically, Chattem’s vice president provided evidence that

Chattem has complied with state and local narcotics laws, see id.

at 9838 (section 823(a)(2)), and it was “undisputed” that

Chattem has never violated state or federal laws relating to

narcotic production and distribution, see id. (section 823(a)(4)).

With respect to Chattem’s past experience in the manufacture of

controlled substances (section 823(a)(5)), the Deputy

Administrator recognized that “Chattem ha[d] experience in

manufacturing [non-NRM] controlled substances” and noted

that “Chattem introduced credible evidence . . . that the

processing of NRMs is not complicated, and that Chattem has

sufficient facilities to carry out the process.” Id. Thus, the

Deputy Administrator affirmatively kept the burden of proving

the public interest on Chattem and relied on Chattem’s evidence

in concluding that each statutory public interest factor supported

its registration.12

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823(a)(3)); see also supra note 4.

The objectors primarily contended that Chattem’s

registration would increase diversion both at the retail, see id. at

9836–37, and international levels, see id. at 9837. As noted

earlier, however, the Deputy Administrator cited significant

evidence of diversion controls in rejecting the claim that

Chattem’s registration would increase retail diversion. With

respect to international diversion, the Deputy Administrator

correctly noted that we have held that the DEA need not

consider foreign diversion under section 823(a)(1), see Chattem

Chems., Inc., 71 Fed. Reg. at 9837 (citing Noramco, 375 F.3d at

1156 (“[T]he Congress was concerned with preventing diversion

in this country rather than abroad.”)), and concluded, at any rate,

that the objectors “adduced insufficient evidence that foreign

diversion was likely to occur . . . and no evidence of the effect

of such diversion . . . on the diversion of narcotics in the United

States,” id.

Given the significant evidence Chattem supplied, the Deputy

Administrator’s decision was neither based on insubstantial

evidence nor arbitrary or capricious. We “will not disturb the

decision of an agency that has ‘examine[d] the relevant data and

articulate[d] a satisfactory explanation for its action including a

rational connection between the facts found and the choice

made.’ ” MD Pharm., Inc. v. DEA, 133 F.3d 8, 16 (D.C. Cir.

1998) (quoting State Farm, 463 U.S. at 43). This is all that is

required in our limited review of the DEA’s decision.

III.

Penick raises an additional challenge to Chattem’s

registration which we also reject. The DEA may register an

importer only if “it determines that such registration is

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consistent . . . with United States obligations under international

treaties, conventions, or protocols.” 21 U.S.C. § 958(a). Penick

asserts that Chattem’s registration is inconsistent with the

United Nations Single Convention on Narcotic Drugs of 1961

(Single Convention), 18 U.S.T. 1407, which obligates the United

States “to take all necessary measures to ensure that the

international movement of narcotics is limited to legitimate

medical and scientific needs,” Chattem Chems., Inc., 71 Fed.

Reg. at 9836. The Single Convention’s commentary, see Nat’l

Org. for Reform of Marijuana Laws v. DEA, 559 F.2d 735, 751

(D.C. Cir. 1977), notes that “it may be advisable or even

essential to keep to a minimum the number of . . . manufacturers

and international traders (importers as well as exporters) . . .

engaged in these activities.” Commentary on the Single

Convention on Narcotic Drugs, 1961 (Commentary), United

Nations, New York, 1973, p. 264. Although the Deputy

Administrator found Chattem’s registration consistent with the

Single Convention, Penick argues that (1) the Single Convention

requires the DEA to control diversion by “first . . . restricting the

registration of importers.” Pet’r’s Br. at 20 (emphasis in

original) and (2) the Deputy Administrator improperly ignored

the danger of increased foreign diversion from Chattem’s

registration. Penick’s contentions ignore the requirements of the

Single Convention, the Deputy Administrator’s opinion and our

precedent.

First, the Single Convention does not, as Penick asserts,

require that the number of importers be limited as the first step

in preventing diversion. Instead, the commentary merely

suggests “it may be advisable or even essential to keep to a

minimum the number of . . . importers” without defining the

“minimum” that would be “advisable,” Commentary at 264

(emphasis added), and the Deputy Administrator found “that the

evidence did not show that it would be ‘advisable’ or ‘essential’

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to deny Chattem’s application for registration,” Chattem

Chems., Inc., 71 Fed. Reg. at 9836 (quoting Commentary at

264). Indeed, the Deputy Administrator considered Chattem’s

registration’s potential effect on downstream diversion and the

potential “contribution of foreign diversion to diversion in the

United States,” Chattem Chems., Inc., 71 Fed. Reg. at 9837,

specifically referencing this diversion discussion in finding that

Chattem’s registration would not circumvent the Single

Convention, see id. at 9836 (Single Convention not violated

because “registration of Chattem would not likely cause

significant increased diversion”); id. at 9836–38 (considering

retail and foreign diversion in concluding that Chattem’s

registration did not carry increased risk of diversion).

Moreover, while the Deputy Administrator considered

evidence of foreign diversion only to the extent such diversion

might “contribut[e] . . . to diversion in the United States,” id. at

9838, her decision is consistent with our holding that, in

enacting the CSA, “the Congress was concerned with preventing

diversion in this country rather than abroad,” Noramco, 375 F.3d

at 1156. In light of the speculative nature of any increased

foreign diversion stemming from Chattem’s registration and the

existence of alternative means of controlling diversion, such as

quotas, “the Deputy Administrator f[ound] no substantial

evidence in the record that Chattem’s registration as an importer

would result in a significant increase in foreign diversion of

NRMs, or that such diversion, if it were to occur, would

significantly increase diversion of controlled substances in this

country.” Chattem Chems., Inc., 71 Fed. Reg. at 9838. Because

the Deputy Administrator’s conclusion under 21 U.S.C. § 958(a)

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13Although we decline Chattem’s invitation to impose sanctions

on Penick, see Br. for Chattem at 28 (“This petition for review is

frivolous and damages and double costs should be awarded under Fed.

R. App. P. 38 . . . .”), we note, as evidenced above, the similarity

between Penick’s challenges to Chattem’s registration and Noramco’s

earlier challenges to Penick’s registration, which we rejected in

Noramco of Del., Inc. v. DEA, 375 F.3d 1148 (D.C. Cir. 2004). The

Deputy Administrator expressly relied on Noramco to find Chattem’s

registration consistent with the CSA and our decision today—iterating

the deference we owe to the DEA in these circumstances—should

curtail this rite of passage for new entrants in the NRM importation

market.

is consistent with the Single Convention, the evidence and our

precedent, we reject Penick’s challenge.13

For the foregoing reasons, Penick’s petition for review is

denied.

So ordered.

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