Federal Register / Vol. 72, No. 43 / Tuesday, March 6, 2007 / Notices 9969 

1The CSA imposes extensive recordkeeping 

requirements on List I chemical distributors. See 21 

CFR Pt. 1310. 

another product (Lipodrene), which also 

contained ephedrine alkaloids. On 

January 12, 2006, the U.S. Attorney’s 

Office filed an additional complaint 

which sought the forfeiture of these 

products. U.S. Marshalls seized these 

products, which were valued at 

approximately $ 16,000. 

Discussion 

Under 21 U.S.C. 823(h), an applicant 

to distribute List I chemicals is entitled 

to be registered unless the registration 

would be ‘‘inconsistent with the public 

interest.’’ In making this determination, 

Congress directed that I consider the 

following factors: 

(1) Maintenance by the applicant of 

effective controls against diversion of 

listed chemicals into other than 

legitimate channels; 

(2) Compliance by the applicant with 

applicable Federal, State, and local law; 

(3) Any prior conviction record of the 

applicant under Federal or State laws 

relating to controlled substances or to 

chemicals controlled under Federal or 

State law; 

(4) Any past experience of the 

applicant in the manufacture and 

distribution of chemicals; and 

(5) Such other factors as are relevant 

to and consistent with the public health 

and safety. 

Id. 

‘‘These factors are considered in the 

disjunctive.’’ Joy’s Ideas, 70 FR 33195, 

33197 (2005). I may rely on any one or 

a combination of factors, and may give 

each factor the weight I deem 

appropriate in determining whether an 

application for registration should be 

denied. See, e.g., David M. Starr, 71 FR 

39367 (2006); Energy Outlet, 64 FR 

14269 (1999). Moreover, I am ‘‘not 

required to make findings as to all of the 

factors.’’ Hoxie v. DEA, 419 F.3d 477, 

482 (6th Cir. 2005); Morall v. DEA, 412 

F.3d 165, 173–74 (D.C. Cir. 2005). 

Here, I conclude that an analysis of 

each factor is unnecessary and that 

Respondent’s application should be 

denied based on Factor Two, its record 

of non-compliance with applicable 

laws. 

As recognized in numerous final 

orders, the illicit manufacture and abuse 

of methamphetamine have had 

pernicious effects on families and 

communities throughout the nation. 

Preventing the diversion of list I 

chemicals into the illicit manufacture of 

methamphetamine is of critical 

importance in protecting the public 

from the devastation wreaked by this 

drug. 

While the investigative file in this 

case contains no evidence establishing 

the risk of diversion by establishments 

such as those which Respondent 

proposed to distribute its products to, 

the firm’s record of non-compliance 

with other federal laws does not inspire 

confidence in its willingness to 

faithfully obey DEA regulations. Here, 

the investigative file establishes two 

separate instances in which Respondent 

violated the FDA Act. Moreover, FDA 

found these violations well after the rule 

banning ephedrine alkaloids went into 

effect. 

In section 303(h) of the CSA, Congress 

broadly directed that the Attorney 

General consider ‘‘compliance by the 

applicant with applicable Federal, State, 

and local law,’’ 21 U.S.C. 823(h)(2), in 

determining whether to grant a list I 

distributor’s registration. In contrast to 

the provision applicable to a 

practitioner’s registration, Congress did 

not limit the subject matter of the laws 

that are properly considered in 

determining whether an applicant’s 

compliance record supports granting it 

a registration. Cf. id. § 823(f)(4) 

(directing consideration of a 

practitioner’s ‘‘[c]ompliance with 

applicable State, Federal, or local laws 

relating to controlled substances’’). 

Moreover, Respondent’s apparent 

willingness to sell products which have 

been banned (as evidenced by the fact 

that banned products were found not 

once, but twice at its facility) and/or its 

inability to properly document its 

compliance with the FDA act (with 

respect to its assertion that it intended 

to export the products found in the first 

incident), are sufficiently probative of 

the manner in which it would likely 

fulfill its obligations as a registrant 

under the Controlled Substances Act.1 I 

thus conclude that granting it a 

registration would ‘‘be inconsistent with 

the public interest.’’ Id. § 823(h). 

Order 

Pursuant to the authority vested in me 

by 21 U.S.C. 823(h), and 28 CFR 

0.100(b) & 0.104, I order that the 

application of Respondent ATF Fitness 

Products, Inc., for a DEA Certificate of 

Registration as a distributor of list I 

chemicals be, and it hereby is, denied. 

This order is effective April 5, 2007. 

Dated: February 23, 2007. 

Michele M. Leonhart, 

Deputy Administrator. 

[FR Doc. E7–3856 Filed 3–5–07; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

Georgia Convenience Wholesale, Inc.; 

Denial of Application 

On February 6, 2006, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration, issued an Order to 

Show Cause to Georgia Convenience 

Wholesale, Inc., (Respondent) of 

Doraville, Georgia. The Show Cause 

Order proposed to deny Respondent’s 

pending application for a Certificate of 

Registration to distribute list I chemicals 

on the ground that its registration 

‘‘would be inconsistent with the public 

interest.’’ Show Cause Order at 1 (citing 

21 U.S.C. 823(h)). 

The Show Cause Order specifically 

alleged that on April 19, 2005, 

Respondent applied for a registration to 

distribute list I chemicals including 

pseudoephedrine, ephedrine and 

phenylpropanolamine (PPA), and that 

these products ‘‘are commonly used to 

illegally manufacture 

methamphetamine, a Schedule II 

controlled substance.’’ Show Cause 

Order at 1–2. The Show Cause Order 

alleged that Respondent was proposing 

to distribute these products to 

convenience stores, and that ‘‘law 

enforcement officials have observed that 

an overwhelming proportion of 

precursors found at illicit 

methamphetamine sites have involved 

non-traditional pseudoephedrine and 

ephedrine brands sold through 

convenience stores.’’ Id. at 2. The Show 

Cause Order also alleged that as nontraditional products ‘‘become more 

tightly regulated, even traditional 

products are subject to diversion.’’ Id. 

The Show Cause Order further alleged 

that during a pre-registration 

investigation, Respondent’s owner/ 

operator was not aware that PPA had 

been withdrawn from the over-thecounter market. Id. Relatedly, the Show 

Cause Order alleged that Respondent 

had also sought registration for other list 

I chemicals even though these 

chemicals ‘‘were not ingredients in any 

over-the-counter drug product.’’ Id. 

Finally, the Show Cause Order alleged 

that Respondent ‘‘does not have 

adequate experience or familiarity with 

products and the sales potentials in the 

industry to carry out the responsibilities 

of a registrant and prevent the diversion 

of listed chemical precursors into illicit 

activities.’’ Id. at 3. 

On or about February 24, 2006, the 

Show Cause Order, which also notified 

Respondent of its right to request a 

hearing, was served by certified mail, 


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9970 Federal Register / Vol. 72, No. 43 / Tuesday, March 6, 2007 / Notices 

1The FDA is, however, currently proposing to 

remove combination ephedrine-guaifenesin 

products from its over-the-counter (OTC) drug 

monograph and to declare them not safe and 

effective for OTC use. See 70 FR 40232 (2005). 

return receipt requested, as evidenced 

by the signed return receipt card. Since 

that time, neither Respondent, nor 

anyone purporting to represent it, has 

responded. Because (1) more than thirty 

days have passed since service of the 

Show Cause Order, and (2) no request 

for a hearing has been received, I 

conclude that Respondent has waived 

its right to a hearing. See 21 CFR 

1309.53(c). I therefore enter this final 

order without a hearing based on 

relevant material contained in the 

investigative file and make the 

following findings. 

Findings 

Respondent is a Georgia corporation 

which is located at 4030 Pleasantdale 

Road, Doraville, Georgia. Respondent is 

a wholesale distributor of general 

merchandise to convenience stores, gas 

stations, candy stores, dollar stores, 

party stores, and liquor stores in the 

Atlanta, Georgia metropolitan area. 

Respondent has been in business since 

May 2005. 

On April 19, 2005, Respondent’s 

president, Mr. Mohammad S. Yaqoob, 

applied for a DEA Certificate of 

Registration to distribute list I 

chemicals. Specifically, Respondent 

applied to distribute ephedrine, 

methylephedrine, nmethlypseudoephedrine, 

norpseudoephedrine, 

phenylpropanolamine (PPA), and 

pseudoephedrine. 

As explained in numerous DEA final 

orders, both pseudoephedrine and 

ephedrine currently have therapeutic 

uses. See, e.g., Tri-County Bait 

Distributors, 71 FR 52160, 52161 

(2006).1 Both chemicals are, however, 

regulated under the Controlled 

Substances Act because they are 

precursor chemicals which are easily 

extracted from non-prescription 

products and used in the illicit 

manufacture of methamphetamine, a 

Schedule II controlled substance. See 21 

U.S.C. § 802(34); 21 CFR 1308.12(d). 

Methamphetamine is a powerful and 

highly addictive central nervous system 

stimulant. See, e.g., Tri-County Bait 

Distributors, 71 FR at 52161. The illegal 

manufacture and abuse of 

methamphetamine pose a grave threat to 

this country. Methamphetamine abuse 

has destroyed numerous lives and 

families and ravaged communities. 

Moreover, because of the toxic nature of 

the chemicals which are used to make 

the drug, the illegal manufacture of 

methamphetamine causes serious 

environmental harms. Id. 

On June 9, 2005, two DEA Diversion 

Investigators (DIs) went to Respondent’s 

proposed registered location to conduct 

a pre-registration investigation. The DIs 

met with Mr. Yaqoob, who informed the 

investigators that he had purchased the 

business on May 1, 2005. The DIs also 

met with Mr. Omar, Respondent’s VicePresident. 

Both Mr. Yaqoob and Mr. Omar told 

the DIs that each had previously owned 

a gas station and had sold list I chemical 

products. Mr. Yaqoob informed the DIs 

that Respondent’s list I customers 

would be convenience stores and gas 

stations. Numerous DEA orders have 

found that these establishments are nontraditional (or gray market) retailers of 

list I chemical products. See, e.g., T. 

Young Associates, Inc., 71 FR 60567, 

60568 (2006). 

Mr. Yaqoob also provided the DIs 

with a list of the list I chemical products 

Respondent intended to distribute. The 

list was comprised entirely of 

traditional cold and sinus medicines 

that contain pseudoephedrine. When 

one of the DIs asked Mr. Yaqoob why he 

had originally requested authorization 

to handle other list I chemicals, Mr. 

Yaqoob stated that he had not known 

exactly which drug codes were needed 

to handle pseudoephedrine so he asked 

for the additional codes. Mr. Yaqoob, 

however, had submitted a letter, which 

is dated prior to the onsite inspection, 

withdrawing Respondent’s request to 

handle PPA, methylephedrine, nmethlypseudoephedrine, and 

norpseudoephedrine. 

The investigation determined that 

Respondent’s business is located in a 

large brick building which has an alarm 

system with motion detectors, glass 

break strips, and metal contact strips, 

and is monitored by a security 

company. Moreover, the doors were 

equipped with metal cross bars and 

dead bolt locks. Finally, the list I 

products were to be stored in a separate 

room (which was to remain locked at all 

times) and not in the warehouse. 

Furthermore, Respondent appeared to 

have adequate procedures for handling 

the list I products, as well as for 

identifying and verifying new 

customers. 

Discussion 

Under 21 U.S.C. 823(h), an applicant 

to distribute list I chemicals is entitled 

to be registered unless the registration 

would be ‘‘inconsistent with the public 

interest.’’ In making this determination, 

Congress directed that I consider the 

following factors: 

(1) Maintenance by the applicant of 

effective controls against diversion of listed 

chemicals into other than legitimate 

channels; 

(2) Compliance by the applicant with 

applicable Federal, State, and local law; 

(3) Any prior conviction record of the 

applicant under Federal or State laws relating 

to controlled substances or to chemicals 

controlled under Federal or State law; 

(4) Any past experience of the applicant in 

the manufacture and distribution of 

chemicals; and 

(5) Such other factors as are relevant to and 

consistent with the public health and safety. 

Id. 

‘‘These factors are considered in the 

disjunctive.’’ Joy’s Ideas, 70 FR 33195, 

33197 (2005). I may rely on any one or 

a combination of factors, and may give 

each factor the weight I deem 

appropriate in determining whether an 

application for registration should be 

denied. See, e.g., David M. Starr, 71 FR 

39367 (2006); Energy Outlet, 64 FR 

14269 (1999). Moreover, I am ‘‘not 

required to make findings as to all of the 

factors.’’ Hoxie v. DEA, 419 F.3d 477, 

482 (6th Cir. 2005); Morall v. DEA, 412 

F.3d 165, 173–74 (D.C. Cir. 2005). 

In this case, I acknowledge that 

factors one, two, and three would not 

bar Respondent’s registration. I find 

dispositive, however, that Respondent 

lacks relevant experience in the 

wholesale distribution of list I 

chemicals (factor four) and that it 

intends to distribute list I chemicals to 

the gray market (factor five), a market in 

which the risk of diversion is 

substantial. Consistent with DEA 

precedents, I hold that Respondent’s 

registration would be inconsistent with 

the public interest. 

Factor One—The Maintenance of 

Effective Controls Against Diversion 

This investigative file does not 

establish that Respondent would fail to 

maintain adequate procedures to protect 

against diversion. Moreover, the file 

establishes that Respondent would 

provide adequate security of list I 

chemical products to protect them from 

theft. Thus, this factor does not support 

a finding that Respondent’s registration 

would be inconsistent with the public 

interest. 

Factors Two and Three—Compliance 

With Applicable Laws and the 

Applicant’s Prior Record of Relevant 

Criminal Convictions 

There is no evidence that Respondent 

is not in compliance with applicable 

Federal, State, or local laws. Relatedly, 

there is no evidence that Respondent, or 

any person affiliated with it, has ever 

been convicted of a crime under either 

Federal or State laws relating to 


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Federal Register / Vol. 72, No. 43 / Tuesday, March 6, 2007 / Notices 9971 

2Effective September 30, 2006, retail distributors 

are now required to maintain a logbook which 

records the name and address of each purchaser of 

ephedrine or a pseudoephedrine product containing 

more than 60 mg. of the chemical, the date and time 

of the sale, the product name and the quantity sold. 

3Respondent initially sought registration for 

additional chemicals beyond pseudoephedrine and 

ephedrine even though it intended only to carry 

products containing pseudoephedrine. According to 

the documentary evidence, Respondent withdrew 

its request to be registered for these chemicals 

before the inspection. Accordingly, I conclude that 

Respondent’s initial request to be registered for the 

additional chemicals does not support a finding 

that it lacks adequate product knowledge. 

controlled substances or listed 

chemicals. I thus conclude that neither 

factor supports a finding that 

Respondent’s registration would be 

inconsistent with the public interest. 

Factor Four—The Applicant’s Past 

Experience in the Distribution of Listed 

Chemicals 

DEA precedent establishes that ‘‘an 

applicant’s lack of experience in 

distributing list I chemicals creates a 

greater risk of diversion and thus weighs 

heavily against the granting of an 

application.’’ Tri-County Bait 

Distributors, 71 FR at 52163. According 

to the investigative file, Respondent’s 

president and vice-president previously 

owned gas stations at which they sold 

list I chemical products. But as I 

explained in Tri-County Bait 

Distributors, merely engaging in the 

retail sale of these products is not 

sufficient to establish that an applicant 

has experience which is relevant to 

fulfilling the regulatory obligations of a 

wholesaler of these products. Id. 

Distributors of list I chemicals are 

subject to a comprehensive and complex 

regulatory scheme.See 21 CFR parts 

1309 and 1310. Moreover, prior to the 

enactment of the Combat 

Methamphetamine Epidemic Act of 

2005, retail distributors of ephedrine 

and pseudoephedrine were generally 

exempt from recordkeeping and 

reporting requirements.2

Accordingly, for an applicant’s (or its 

key employee’s) experience to be 

relevant, the key employee must have 

been actively involved in the fulfillment 

of a registrant’s regulatory obligations as 

a wholesale distributor and demonstrate 

adequate knowledge of the applicant’s 

proposed products.3 Because neither of 

Respondent’s key employees has such 

experience, I conclude that this factor 

supports a finding that granting it a 

registration would be inconsistent with 

the public interest. 

Factor Five—Other Factors That Are 

Relevant to and Consistent With Public 

Health and Safety 

Numerous DEA orders recognize that 

convenience stores and gas-stations 

constitute the non-traditional retail 

market for legitimate consumers of 

products containing pseudoephedrine 

and ephedrine. See, e.g., Tri-County Bait 

Distributors, 71 FR at 52161; D & S 

Sales, 71 FR 37607, 37609 (2006); 

Branex, Inc., 69 FR 8682, 8690–92 

(2004). DEA orders also establish that 

the sale of list I chemical products by 

non-traditional retailers is an area of 

particular concern in preventing 

diversion of these products into the 

illicit manufacture of 

methamphetamine. See, e.g., Joey 

Enterprises, 70 FR 76866, 76867 (2005). 

As Joey Enterprises explains, ‘‘[w]hile 

there are no specific prohibitions under 

the Controlled Substances Act regarding 

the sale of listed chemical products to 

[gas stations and convenience stores], 

DEA has nevertheless found that [these 

entities] constitute sources for the 

diversion of listed chemical products.’’

Id. See also TNT Distributors, 70 FR 

12729, 12730 (2005) (special agent 

testified that ‘‘80 to 90 percent of 

ephedrine and pseudoephedrine being 

used [in Tennessee] to manufacture 

methamphetamine was being obtained 

from convenience stores’’); OTC 

Distribution Co., 68 FR 70538, 70541 

(2003) (noting ‘‘over 20 different seizure 

of [gray market distributor’s] 

pseudoephedrine product at clandestine 

sites,’’ and that in eight-month period, 

distributor’s product ‘‘was seized at 

clandestine laboratories in eight states, 

with over 2 million dosage units seized 

in Oklahoma alone.’’); MDI 

Pharmaceuticals, 68 FR 4233, 4236 

(2003) (finding that ‘‘pseudoephedrine 

products distributed by [gray market 

distributor] have been uncovered at 

numerous clandestine 

methamphetamine settings throughout 

the United States and/or discovered in 

the possession of individuals apparently 

involved in the illicit manufacture of 

methamphetamine’’). 

Significantly, all of Respondent’s 

proposed customers participate in the 

non-traditional market for ephedrine 

and pseudoephedrine products. DEA 

orders recognize that there is a 

substantial risk of diversion of list I 

chemicals into the illicit manufacture of 

methamphetamine when these products 

are sold by non-traditional retailers. See, 

e.g. Joy’s Ideas, 70 FR at 33199 (finding 

that the risk of diversion was ‘‘real’’ and 

‘‘substantial’’); Jay Enterprises, Inc., 70 

FR 24620, 24621 (2005) (noting 

‘‘heightened risk of diversion’’ should 

application be granted). Under DEA 

precedents, an applicant’s proposal to 

sell into the non-traditional market 

weighs heavily against the granting of a 

registration under factor five. So too 

here. 

Because of the methamphetamine 

epidemic’s devastating impact on 

communities and families throughout 

the country, DEA has repeatedly denied 

an application when an applicant 

proposed to sell into the non-traditional 

market and analysis of one of the other 

statutory factors supports the 

conclusion that granting the application 

would create an unacceptable risk of 

diversion. Thus, in Xtreme Enterprises, 

67 FR 76195, 76197 (2002), my 

predecessor denied an application 

observing that the respondent’s ‘‘lack of 

a criminal record, compliance with the 

law and willingness to upgrade her 

security system are far outweighed by 

her lack of experience with selling list 

I chemicals and the fact that she intends 

to sell ephedrine almost exclusively in 

the gray market.’’ I have repeatedly 

adhered to this reasoning in denying 

applications to distribute list I 

chemicals to the non-traditional market. 

See, e.g., Jay Enterprises, 70 FR at 

24621; Prachi Enterprises, 69 FR 69407, 

69409 (2004). 

Here, Respondent’s key persons have 

no experience in the wholesale 

distribution of list I chemical products 

and yet the firm intends to distribute 

these products to non-traditional 

retailers, a market in which the risk of 

diversion is substantial. See Taby 

Enterprises of Osceola, Inc., 71 FR 

71557, 71559 (2006). Given these 

findings, I hold that granting 

Respondent’s application would be 

‘‘inconsistent with the public interest.’’

21 U.S.C. 823(h). 

Order 

Pursuant to the authority vested in me 

by 21 U.S.C. 823(h), and 28 CFR 

0.100(b) and 0.104, I order that the 

application of Georgia Convenience 

Wholesale, Inc., for a DEA Certificate of 

Registration as a distributor of list I 

chemicals be, and it hereby is, denied. 

This order is effective April 5, 2007. 

Dated: February 23, 2007. 

Michele M. Leonhart, 

Deputy Administrator. 

[FR Doc. E7–3839 Filed 3–5–07; 8:45 am] 

BILLING CODE 4410–09–P 


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