Federal Register / Vol. 69, No. 204 / Friday, October 22, 2004 / Notices 62089

Accordingly, particularly given 

Respondent’s lack of a plan for a 

business monitoring system, factor one 

weights against registration 

As to factors two and three, there is 

no evidence that Mr. Kim has any 

criminal record or evidence that he 

violated any laws, which weighs in 

favor of granting the application. 

With regard to factor four, the 

applicant’s past experience in the 

distribution of chemicals, the Deputy 

Administrator agrees with Judge Randall 

that the record demonstrates Mr. Kim 

lacks experience and knowledge in the 

distribution of listed chemical products. 

While he has offered assurances that he 

now knows the risks involved in 

handling listed chemical products, the 

absence of an adequate business plan to 

minimize the risk to the general public 

is significant. 

In prior DEA decisions, this lack of 

experience in handling list I chemical 

products has been a factor in denying 

pending applications for DEA 

registration. See e.g., Direct Wholesale, 

69 FR 11,654 (2004); ANM Wholesale, 

69 FR 11,652 (2004); Xtreme 

Enterprises, Inc., 67 FR 76,195 (2002). 

The Deputy Administrator agrees with 

Judge Randall that this factor weights 

against granting Respondent’s 

application for registration. 

With regard to factor five, other 

factors relevant to and consistent with 

the public safety, the Deputy 

Administrator finds this factor weighs 

heavily against granting the application. 

Unlawful methamphetamine use is a 

growing public health and safety 

concern throughout the United States 

and specifically in the State of 

Oklahoma. Pseudoephedrine and 

ephedrine are the precursor products 

used to manufacture methamphetamine 

and users predominantly have acquired 

the precursor products needed to 

manufacture the drug from convenience 

stores and gas stations. 

The Deputy Administrator 

specifically concurs with Judge 

Randall’s finding that Max Brand is the 

product preferred by illicit 

methamphetamine manufacturers and 

users. Also, while Mr. Kim made a 

belated gesture in agreeing to eliminate 

Max Brand from his product list, it is 

only one of multiple precursor products 

used to manufacture the drug and the 

same public interest factors apply to 

other brands as well. As recognized by 

Judge Randall, ‘‘merely declining to sell 

the Max Brand product is not enough to 

outweight the other public interest 

concerns that must be taken into 

consideration here.’’

While Mr. Kim has not been involved 

in the manufacturing of 

methamphetamine, the majority of his 

proposed customers operate 

convenience stores and gas stations. As 

noted by Judge Randall, the Deputy 

Administrator has previously found that 

many considerations weighed heavily 

against registering a distributor of list I 

chemicals because, ‘‘[v]irtually all of the 

respondent’s customers, consisting of 

gas station and convenience stores, are 

considered part of the grey market, in 

which large amounts of listed chemicals 

are diverted to the illicit manufacture of 

amphetamine and methamphetamine.’’

Extreme Enterprises, Inc., supra, 67 FR 

at 76,197. As in Xtreme Enterprises, 

Inc., Mr. Kim’s lack of a criminal record, 

compliance with the law and a 

willingness to upgrade physical security 

are far outweighed by his lack of 

experience and his intent to sell 

ephedrine almost exclusively in the gray 

market. Id. 

The Deputy Administrator 

additionally takes notice that after the 

hearing on this matter concluded, 

Oklahoma enacted House Bill 2176, 

titled the ‘‘Oklahoma Methamphetamine 

Reduction Act of 2004.’’ Under this 

statute, which was signed on and made 

effective as of April 6, 2004, among its 

provisions, the sale of pseudoephedrine 

tables is now restricted to licensed 

pharmacies. Accordingly, Respondent’s 

proposed base of Oklahoma customers 

in no longer legally viable. 

Among the listed chemical products 

Respondent intends to distribute is 

phenylpropanolamine. As did Judge 

Randall, the Deputy Administrator also 

finds factor five relevant to the request 

to distribute phenylpropanolamine and 

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. See ANM 

Wholesale, 69 FR 11,652 (2004); 

William E. ‘‘Bill’’ Smith d/b/a/ B & B 

Wholesale, 69 FR 22,559 (2004); Shani 

Distributors, 68 FR 62,324 (2003). 

Based on the foregoing, the Deputy 

Administrator concludes that granting 

the pending application of Respondent 

would be inconsistent with the public 

interest. As discussed by Judge Randall, 

DEA is justified in registering only those 

applicants who grasp the severity of the 

problem and understand and can 

implement controls to stop diversion of 

listed chemical products. 

Notwithstanding the loss of his 

customer base as a result of state 

legislative action, the record here falls 

woefully short of establishing that Mr. 

Kim has the requisite level of 

understanding, ability or willingness to 

establish and maintain business controls 

and procedures adequate to prevent 

diversion of listed chemical products. 

Accordingly, the 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 

a DEA Certificate of Registration, 

previously submitted by Express 

Wholesale be, and it hereby is, denied. 

This order effective November 22, 2004.

Dated: October 5, 2004

Michele M. Leonhart, 

Deputy Administrator.

[FR Doc. 04–23707 Filed 10–21–04; 8:45 am] 

BILLING CODE 4410–09–M

DEPARTMENT OF JUSTICE

Drug Enforcement Administration 

J & S Distributors; Denial of 

Application 

On August 11, 2003, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration (DEA), issued an Order 

to Show Cause to J & S Distributors (J 

& S) proposing to deny its application, 

executed on August 30, 2000, 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 J & S 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 J & S that should not 

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 J & S Distributors at 

its proposed registered location in 

Louisville, Kentucky. The return receipt 

indicated the Order to Show Cause was 

received on August 18, 2003, by Jeffrey 

D. Guernsey, president and owner of J 

& S. DEA has not received a request for 

hearing or any other reply from J & S or 

anyone purporting to represent the 

company in this matter. 

Therefore, the Deputy Administrator 

of DEA, finding that (1) thirty days 

having passed since receipt of the Order 

to Show Cause, and (2) no request for 

hearing having been received, concludes 

that J & S has waived its hearing right. 

See Aqui Enterprises, 67 FR 12,576 

(2002). After considering relevant 

material from the investigative file in 

this matter, the Deputy Administrator 

now enters her final order without a 

hearing pursuant to 21 CFR 1309.53(c) 

62090 Federal Register / Vol. 69, No. 204 / Friday, October 22, 2004 / Notices 

and (d) and 1316.67 (2004). The 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 J 

& S Distributors 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 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. See e.g., Direct 

Wholesale, 69 FR 11,654 (2004); Yemen 

Wholesale tobacco and Candy Supply, 

Inc., 67 FR 9997 (2002); Denver 

Wholesale, 67 FR 99,986 (2002). 

The Deputy Administrator’s review of 

the investigative file reveals that on 

August 30, 2000, J & S submitted an 

application for DEA registration as a 

distributor of the List I chemicals 

epheedrine, pseudoephedrine and 

phenylpropanolamine. The application 

was submitted on behalf of J & S by 

Jeffrey Guernsey. There is no 

information before the Deputy 

Administrator that J & S had 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 

Louisville District Office initiated a preregistration investigation of J & S in 

September of 2000. 

According to the investigative file, 

during DEA’s initial pre-registration 

inspection of J & S, the firm had no 

office or warehouse to conduct its 

business, and therefore, DEA was 

unable to immediately accomplish an 

inspection. However, DEA investigators 

conducted a second on-site preregistration inspection of J & S on April 

2, 2001, when the firm subsequently 

secured office and storage space in the 

vicinity of Louisville. 

DEA’s investigation revealed that J & 

S is a sole proprietorship operated by 

Jeffrey Guernsey, along with this father 

David Guernsey. The company is a 

wholesale distributor of key chains, 

pens, ceramics, lighters and 

commemorative items. Mr. Guernsey 

provided DEA with a product list of 

predominantly novelty items. A few 

ephedra based non-drug products were 

on the list. However, no health and 

beauty aids or non-regulated cough and 

cold products were included in their 

product list. 

According to the DEA investigative 

file, Jeffrey Guernsey provided DEA 

investigators with a ‘‘customer master 

list’’ indicating he had 270 customers in 

about twenty states. Mr. Guernsey 

indicated he would acquire product 

directly from three manufacturers and 

further proposed to ship listed 

chemicals to those on his customer list 

by parcel service or truck shipment. 

DEA investigators contacted several 

purported customers of J & S, who 

indicated they did do business with the 

company. However, none of these 

customers expressed any intention of 

purchasing listed chemical products 

from J & S. 

DEA’s subsequent review of the 

company’s ‘‘customer master file list’’

revealed those entities were 

predominantly distributors or 

wholesalers located in other states. Of 

the customers listed, several did not 

have DEA registrations to handle List I 

chemical products, four had their DEA 

registrations revoked or suspended, 

another four were the subject of pending 

DEA registration actions, and another 

ten were known to DEA to be already 

receiving similar listed chemical 

products form multiple wholesale 

distributors. None of these wholesalers 

had any known retail customers other 

than convenience stores or gas stations. 

In support of J & S’ pending 

application for registration, on March 

30, 2001, Jeffrey Guernsey sent DEA a 

‘‘Letter of Compliance’’ along with a 

copy of the company’s ‘‘return policy on 

List I Chemicals.’’ The letter was signed 

by Jeffrey Guernsey as President and 

David L Guernsey, who listed himself as 

‘‘Consultant.’’ The letter outlined the 

experience of certain members of the 

Guernsey family in handling listed 

chemical products. However, Jeffrey 

Guernsey did not provide information 

as to any experience he personally had 

with List I products. 

Pursuant to 21 U.S.C. 823(h), the 

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 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 14,269 (1999); Henry J. 

Schwartz, Jr., M.D., 54 FR 16,422 (1989). 

The Deputy Administrator finds 

factors four and five relevant to J & S’

pending registration application. 

With respect to factor four, the 

applicant’s past experience in the 

distribution of chemicals, the Deputy 

Administrator finds this factor relevant 

to Jeffrey Guernsey’s apparent lack of 

experience in the handling of List I 

chemical products. The DEA 

investigative files shows that J & S is a 

retailer of general merchandise. While 

Jeffrey Guernsey provided information 

to DEA about members of his family 

who had experience in the handling of 

listed chemicals, it is unclear what role, 

if any, these family members would 

have in J & S’ overall operation. Jeffrey 

Guernsey, J & S’ sole proprietor and 

president, appears to be company’s 

primary operator and he has not 

demonstrated that he possesses any 

previous experience handling listed 

chemical products. In prior DEA 

decisions, lack of experience in 

handling List I chemicals was a factor in 

determinations to deny applications for 

DEA registration. See, K&Z Enterprises, 

69 FR 51,475 (2004); Matthew D. 

Graham, 67 FR 10,229 (2002); Xtreme 

Enterprises, Inc., 67 FR 76,195 (2002). 

Therefore, this factor similarly weights 

against granting J & S’ application. 

With respect to factor five, other 

factors relevant to and consistent with 

the public safety, the Deputy 

Administrator finds this factor relevant 

to J & S’ proposal to distribute listed 

chemical products to customers who 

have engaged in questionable business 

practices. As noted above, several of J & 

S’ proposed customers have had DEA 

registrations revoked or suspended, or 

are already receiving listed chemical 

Federal Register / Vol. 69, No. 204 / Friday, October 22, 2004 / Notices 62091

products from multiple wholesale 

distributors. In addition, many of these 

purported customers have expressed no 

desire to purchase listed chemical 

products from J & S and the wholesalers 

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 10,232 

(2002); K.V.M. Enterprises, 67 FR 70,968 

(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. 

As noted above, there is no evidence 

in the investigative file that J & S has 

sought to modify its pending 

application with regard to the listed 

chemical products it seeks to distribute. 

Among the listed chemical products the 

firm intends to distribute is 

phenylpropanolamine. Accordingly, the 

Deputy Administrator also finds factor 

five relevant to J & 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. See William 

E. ‘‘Bill’’ Smith d/b/a B&B Wholesale, 

69 FR 22,559 (2004); Shani Distributors, 

68 FR 62,324 (2003). Based on the 

foregoing, the Deputy Administrator 

concludes that granting the pending 

application of J & S would be 

inconsistent with the public interest. 

Accordingly, the 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 J & S 

Distributors be, and it hereby is, denied. 

This order is effective November 22, 

2004.

Dated: October 5, 2004. 

Michele M. Leonhart, 

Deputy Administrator.

[FR Doc. 04–23706 Filed 10–21–04; 8:45 am] 

BILLING CODE 4410–09–M

DEPARTMENT OF JUSTICE

Drug Enforcement Administration 

[Docket No. 04–40] 

Sarfraz Mirza, M.D. Revocation of 

Registration 

On March 2, 2004, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration (DEA), issued an Order 

to Show Cause to Sarfraz Mirza, M.D. 

(Respondent) of Melbourne, FL, 

notifying him of an opportunity to show 

cause as to why DEA should not revoke 

his DEA Certificate of Registration, 

AM8413813, as a practitioner, pursuant 

to 21 U.S.C. 824(a)(3) and deny any 

pending applications for renewal of that 

registration pursuant to 21 U.S.C. 823(f). 

As a basis for revocation, the Order to 

Show Cause alleged that the Florida 

Department of Health had ordered an 

immediate suspension of Respondent’s 

license to practice medicine in Florida 

and accordingly, he was not authorized 

to handle controlled substances in the 

state in which he is registered. 

On May 17, 2004, through counsel, 

Respondent timely requested a hearing 

in this matter. On May 25, 2004, 

Administrative Law Judge Mary Ellen 

Bittner (Judge Bittner) issued the 

Government, as well as Respondent, an 

Order for Prehearing Statements. 

In lieu of filing a prehearing 

statement, the Government filed 

Government’s Request for Stay of 

Proceedings and Motion for Summary 

Disposition. The Government argued 

Respondent was without authorization 

to handle controlled substances in the 

State of Florida, and as a result, further 

proceedings in the matter were not 

required. Attached to the Government’s 

motion was a copy of the State of 

Florida, Department of Health’s Order of 

Emergency Suspension of License, 

indefinitely suspending Respondent’s 

license to practice medicine in Florida, 

effective as of July 29, 2003. 

On June 4, 2003, Judge Bittner issued 

a Memorandum to Counsel, staying the 

filing of prehearing statements and 

giving Respondent an opportunity to 

respond to the Government’s motion. 

Respondent failed to file a response to 

the motion. 

On August 10, 2004, Judge Bittner 

issued her Opinion and Recommended 

Decision of the Administrative Law 

Judge (Opinion and Recommended 

Decision). As part of her recommended 

ruling, Judge Bittner granted the 

Government’s Motion for Summary 

Disposition, finding the Respondent 

lacked authorization to handle 

controlled substances in Florida, the 

jurisdiction in which he is registered. 

Judge Bittner recommended that 

Respondent’s DEA registration be 

revoked and any pending applications 

for renewal or modification of that 

registration be denied. No exceptions 

were filed by either party to Judge 

Bittner’s Opinion and Recommended 

Decision and on September 15, 2004, 

the record of these proceedings was 

transmitted to the Office of the DEA 

Deputy Administrator. 

The Deputy Administrator has 

considered the record in its entirety and 

pursuant to 21 CFR 1316.67, hereby 

issues her final order based upon 

findings of fact and conclusions of law 

as hereinafter set forth. The Deputy 

Administrator adopts, in full, the 

Opinion and Recommended Decision of 

the Administrative Law Judge.

The Deputy Administrator finds that 

Respondent holds DEA Certificate of 

Registration, AM8413813. The Deputy 

Administrator further finds that, 

effective as of July 29, 2003, the State of 

Florida, Department of Health issued its 

Order of Emergency Suspension of 

License, suspending Respondent’s 

authority to practice as a physician in 

the State of Florida. There is no 

evidence in the record indicating that 

this suspension has been lifted, stayed 

or that Respondent’s license has been 

reinstated. As a result, he is not 

currently authorized to prescribe, 

dispense, administer, or otherwise 

handle controlled substances in the 

State of Florida, his place of DEA 

registration. 

DEA does not have statutory authority 

under the Controlled Substances Act to 

issue or maintain a registration if the 

applicant or registrant is without state 

authority to handle controlled 

substances in the state in which he 

conducts business. See 21 U.S.C. 

802(21), 823(f) and 924(a)(3). This 

prerequisite has been consistently 

upheld. See Karen Joe Smiley, M.D., 68 

FR 48,944 (2003); Dominick A. Ricci, 

M.D., 58 FR 51,104 (1993); Bobby Watts, 

M.D., 53 FR 11,919 (1988). Revocation 

is also appropriate when a state license 

has been suspended, but with a 

possibility of future reactivation. See 

Anne Lazar Thorn, M.D., 62 FR 12,847 

(1997). 

Here, it is clear Respondent currently 

lacks authority to handle controlled 

substances in Florida, the state in which 

he is registered with DEA as a 

practitioner. Therrefore, DEA does not 

have authority to maintain Respondent’s 

DEA Certificate of Registration for his 

Florida practice or to grant any pending 

applications for renewal or modification 

of that registration.