24602 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

1 The ALJ’s Decision will be cited as ‘‘ALJ.’’ 

2 The FDA is, however, currently proposing to 

remove combination ephedrine-guaifenesin 

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

monograph and to delare them not safe and 

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

requirements. Shan has demonstrated 

that it has brought the facility into 

compliance. The Consent Decree 

requires Shan to pay, based on its 

limited financial ability, a civil penalty 

of $101,000 in three annual 

installments, and provides that Shan 

will comply with reporting 

requirements set forth in the Consent 

Decree. 

The Department of Justice will receive 

for a period of thirty (30) days from the 

date of this publication comments 

relating to the Consent Decree. 

Comments should be addressed to the 

Assistant Attorney General, 

Environment and Natural Resources 

Division, P.O. Box 7611, U.S. 

Department of Justice, Washington, DC 

20044–7611, and should refer to United 

States v. Shan Industries, LLC, D.J. Ref. 

90–5–2–1–08362/1. Such comments 

may also be sent by e-mail to 

pubcomment-ees.enrd@usdoj.gov. 

The Consent Decree may be examined 

at the Office of the United States 

Attorney, District of New Jersey, 970 

Broad Street, 7th Floor, Newark, NJ 

07102, and at U.S. EPA Region 2, 290 

Broadway, New York, NY 10007–1866. 

During the public comments period, the 

Consent Decree may also be examined 

on the following Department of Justice 

Web site: http://www.usdoj.gov/enrd/ 

Consent—Decrees.html. 

A copy of the Consent Decree may 

also be obtained by mail from the 

Consent Decree Library, P.O. Box 7611, 

U.S. Department of Justice, Washington, 

DC 20044–7611 or by faxing or emailing a request to Tonia Fleetwood 

(tonia.fleetwood@usdoj.gov), fax no. 

(202) 514–0097, phone confirmation 

number (202) 514–1547. In requesting a 

copy from the Consent Decree Library, 

please enclose a check in the amount of 

$6.50 (25 cents per page reproduction 

cost) payable to the U.S. Treasury or, if 

by e-mail or fax, forward a check in that 

amount to the Consent Decree Library at 

the stated address. 

Maureen Katz, 

Assistant Chief, Environmental Enforcement 

Section, Environment and Natural Resources 

Division. 

[FR Doc. 07–2161 Filed 5–2–07; 8:45 am] 

BILLING CODE 4410–15–M 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

[Docket No. 05–3] 

John J. Fotinopoulos; Revocation of 

Registration 

On October 7, 2004, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Enforcement 

Administration, issued an Order to 

Show Cause to John J. Fotinopoulos 

(Respondent) of Gainesville, Florida. 

The Show Cause Order proposed the 

revocation of Respondent’s DEA 

Certificate of Registration, 002964JTY, 

as a distributor of listed chemicals, on 

the ground that his continued 

registration would be inconsistent with 

the public interest. See 21 U.S.C. 

824(a)(4) & 823(h). The Show Cause 

Order also proposed the denial of 

Respondent’s pending applications for 

modification and renewal of his 

registration. 

The Show Cause Order alleged that 

Respondent distributed listed chemicals 

to the non-traditional market. More 

specifically, the Show Cause Order 

alleged that in July 2003, Respondent 

moved his business from SW 47th St., 

Gainesville, Florida, to a trailer park 

located at SW Archer Road, Gainesville, 

Florida, but failed to request a 

modification of his registered location 

as required by DEA regulations until 

January 15, 2004. Show Cause Order at 

2–3. The Show Cause Order further 

alleged that from July 2003 through 

January 2004, Respondent violated 

federal law by distributing listed 

chemicals from his new location which 

was not registered. Id. at 3. 

The Show Cause Order also alleged 

that in 2001, a DEA investigator had 

inspected Respondent and found his 

recordkeeping and customer 

identification practices to be 

inadequate. Id. The Show Cause Order 

further alleged that during a May 2004 

inspection, DEA investigators had again 

determined that Respondent’s 

recordkeeping was inadequate, that he 

was unable to identify whether certain 

products were regulated because they 

contained listed chemicals, and that he 

was unfamiliar with the regulations 

pertaining to thresholds and regulated 

transactions. Id. Relatedly, the Show 

Cause Order alleged that Respondent 

told investigators that he kept 

information pertaining to his customers 

in his head. Id. Finally, the Show Cause 

Order alleged that Respondent’s security 

arrangements were inadequate. See id. 

Respondent, through his counsel, 

timely requested a hearing. The matter 

was assigned to Administrative Law 

Judge (ALJ) Gail Randall, who 

conducted a hearing in Gainesville, 

Florida, on April 19 and 20, 2005. At 

the hearing, both parties introduced 

documentary evidence and called 

witnesses to testify; both parties also 

submitted post-hearing briefs. 

On October 11, 2006, the ALJ issued 

her decision.1 In her decision, the ALJ 

found that four of the five statutory 

factors, see 21 U.S.C. 823(h), supported 

the revocation of Respondent’s 

registration and the denial of his 

pending applications for renewal and 

modification of the registration. ALJ at 

41. Neither party filed exceptions. 

Having reviewed the record as a 

whole, I hereby issue this decision and 

final order. I adopt the ALJ’s findings of 

fact and conclusions of law except as 

expressly noted herein. I further adopt 

the ALJ’s recommendation that 

Respondent’s registration should be 

revoked and his pending applications 

for renewal and modification should be 

denied and make the following findings. 

Findings of Fact 

Respondent distributes assorted 

products including maps, cigarette 

lighters, rolling papers, prophylactics, 

batteries, and over-the-counter drug 

products to convenience stores, gas 

stations and liquor stores in northern 

Florida and southern Georgia. Gov. Ex. 

27. Respondent is the holder of DEA 

Certificate Registration, No. 002964JTY, 

which authorizes him to distribute list 

I chemical products. ALJ at 3. Since 

1998, Respondent has held a registration 

at his former residence which was 

located at 4000 SW 47th Street, 

Gainesville, Florida. Id. In early July 

2003, Respondent moved from this 

address to a mobile home park located 

at 7117 SW Archer Road, Gainesville, 

Florida. Tr. 286. 

On November 10, 2003, Respondent 

filed an application to renew his 

registration and paid the fee. Gov. Ex. 3; 

Tr. 289. On the application, Respondent 

sought to distribute pseudoephedrine 

and ephedrine from his new address. 

Gov. Ex. 3, at 2. 

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).2 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 

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Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24603 

3 The illicit manufacture of methamphetamine is 

an increasing problem in the State of Florida. See 

Planet Trading, Inc., 72 FR 11055, 11056 (2007). As 

I noted in Planet Trading, during the period 

October 1, 2004, through September 30, 2005, law 

enforcement authorities seized 340 clandestine 

laboratories statewide. Id. By contrast, in 1999, only 

20 clandestine laboratories were seized. See gov. 

Ex. 9. 

4 Respondent testified that at the time of his 

move, he phoned DEA headquarters to notify the 

Agency that he had changed his address. Tr. 286– 

87. Respondent further testified that he was told to 

contact the DEA Miami office, who told him to call 

the Orlando office. Id. According to Respondent’s 

testimony, a person in the Orlando office told him 

to fax his new address to that office. Id. at 287. 

Respondent testified that he then faxed a written 

notice of his new address to DEA Orlando from the 

office of the trailer park where he now lives. Id. The 

ALJ did not specifically credit any of this 

testimony. See ALJ at 9 (FOFs 26 & 27). Nor do I. 

As the ALJ noted, Respondent acknowledged that 

he ‘‘could not find a copy of that fax,’’ id. at 9 (FOF 

27; citing Tr. 287), and Respondent did not produce 

any phone records to support his assertions. 

5 Relatedly, at the hearing, Respondent was asked 

if he knew ‘‘what the Code of Federal Regulations 

are [sic]?’’ Tr. 319. Respondent answered: ‘‘No.’’ Id. 

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.3 Id. 

Because Respondent had changed his 

address, DEA did not renew his 

registration, which had an expiration 

date of December 31, 2003. ALJ at 10 

(FOF 31). Respondent was told to 

contact the DEA Orlando office; on 

January 15, 2004, Respondent faxed a 

letter to that office informing it of his 

new address. Id.; Gov. Ex. 2.4

In January 2001, a DEA Diversion 

Investigator (DI) had conducted a cyclic 

investigation at Respondent’s prior 

location. During this inspection, the DI 

instructed Respondent regarding the 

obligations of a registrant including the 

recordkeeping requirements and the 

duty to report suspicious orders. Tr. 

207. The DI also provided Respondent 

with DEA Warning Notices; one of these 

documents specifically informed 

Respondent that pseudoephedrine and 

ephedrine drug products were being 

diverted into the illicit manufacture of 

methamphetamine. Id. at 207, 211–12; 

Gov. Ex. 6. Respondent acknowledged 

that during the inspection, the DI had 

discussed with him the subject of 

suspicious orders; in his testimony, he 

further asserted that the DI did not 

provide him with specific written 

guidelines pertaining to threshold 

amounts. Tr. 281–82. 

During this inspection, the DI found 

Respondent’s records to be ‘‘in 

disarray.’’ Id. at 208. The DI was 

‘‘unable to determine * * * who 

[Respondent’s] customers were because 

they were not fully identified.’’ Id. 

While Respondent provided a customer 

list to the DI, the list frequently stated 

just a store name and street. Id. at 210. 

Furthermore, because Respondent’s 

records did not allow for the 

identification of specific customers, the 

DI was unable to determine whether 

Respondent had engaged in any 

regulated transactions. Id. at 208–09. 

Respondent told the DI that he would 

maintain a ledger sheet for each of his 

listed chemical customers which would 

include the name of the person he dealt 

with. Id. at 209. The DI also suggested 

to Respondent that he keep the invoices 

for listed chemical products apart from 

his other invoices. Id. at 302. At the 

hearing, Respondent testified that he 

had ‘‘attempted’’ to do so, but had not 

‘‘succeeded’’ in keeping the invoices 

‘‘separate.’’ Id. 

On direct examination, Respondent 

testified that he kept track of his sales 

of listed chemical products ‘‘mostly * * 

* in my mind.’’ Id. at 303. Respondent 

further stated that he ‘‘visit[ed] the 

store[s] regular[ly],’’ and that he knew 

‘‘something’s wrong’’ ‘‘if [the store] 

ordered two weeks ago and * * * reorder[ed] after two weeks.’’ Id. 

Respondent asserted, however, that he 

had ‘‘never had any’’ suspicious 

transactions. Id. at 304. 

Under DEA’s rules, a request to 

modify a registration is ‘‘handled in the 

same manner as an application for 

registration,’’ 21 CFR 1309.61, and in 

the case of a chemical distributor, 

requires an on-site inspection. Upon 

receipt of Respondent’s January 2004 

request to modify his registration, the 

same DI who had conducted the 2001 

inspection told Respondent that he 

could not distribute listed chemicals 

from his new address because he was 

not registered there. Tr. 225. 

In May 2004, the DI visited 

Respondent at his new address to 

conduct an on-site inspection. During 

this visit, the DI found that Respondent 

was in possession of both 

pseudoephedrine and ephedrine 

products. Id. at 226. More specifically, 

Respondent had ‘‘several hundred 

boxes’’ of listed chemical products. Id. 

at 219. Respondent was not aware that 

the products contained listed 

chemicals.5 Id. 

Moreover, during the visit, the DI 

asked Respondent to mark which of the 

products on his product list contained 

listed chemicals. Id. 218. While 

Respondent correctly indicated that 

products such as Mini Two-Way 

contained listed chemicals, he failed to 

mark any of the traditional products on 

his list such as Tylenol Cold and 

Tylenol Sinus, which contain 

pseudoephedrine. Id. 

The DIs subsequently contacted 

Respondent’s suppliers. One of the 

suppliers stated that it had sold ‘‘almost 

700,000’’ dosage units of combination 

ephedrine products to Respondent after 

January 1, 2004, based on his 

representation to it ‘‘[t]hat DEA had told 

him that he [could] keep purchasing 

that product.’’ Id. at 227. The DI 

subsequently asked everyone in the 

Orlando diversion group whether they 

had given Respondent permission to 

continue handling listed chemical 

products; no one had. Id. 

During the inspection, the DI asked 

Respondent about his recordkeeping, 

specifically, whether he was keeping a 

separate ledger as he had promised the 

investigator during the 2001 inspection. 

Id. at 215, 268. Respondent was not and 

told the DI that ‘‘he didn’t remember 

that conversation.’’ Id. at 268. 

The DI asked to see Respondent’s 

purchase records from his suppliers. Id. 

at 228. Respondent could not provide 

them because they were not ‘‘filed or 

organized in any manner.’’ Id. 

Respondent did provide the DI with 

seven ledger books containing copies of 

his sales invoices, which covered the 

period from September through 

December 2003. Id. at 239; see also 

Resp. Ex. 1 at 59–192. With respect to 

Respondent’s listed chemical products, 

the invoices did not contain information 

regarding the product strength or 

number of tablets in a bottle/package. 

Tr. 240. While some of the invoices gave 

an address, others only listed the name 

of the store, the street it was on, and the 

city it was located in. Id. at 242–43; see 

also Gov. Ex. 29. For example, one of 

the invoices stated that products had 

been sold to a Chevron on ‘‘Beach 

Boulevard, Jacksonville.’’ Tr. 242–43. 

After conducting research using the 

internet and yellow pages, as well as 

driving the length of the street, the DI 

determined that there were three 

Chevron stations on the street. Id. at 

243. 

The ALJ also found that ‘‘[m]ost of * 

* * Respondent’s invoices failed to list 

the individual contact person for the 

customer.’’ ALJ 13 (FOF 43, citing Tr. 

243, Gov. Ex. 29, Resp. Ex. 1). 

Furthermore, one of the invoices 

indicated that Respondent had sold a 

case (144 bottles) of Max Brand, a 

product which typically contains sixty 

tablets of 60 mg. pseudoephedrine, see 

Gov. Ex. 25, at 4; Gov. Ex. 26, at 12, to 

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24604 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

6 While Respondent testified that ‘‘Steve’’ was 

‘‘Steve Lee, the owner of the Week 3, which is 

located on 576 South Edgewood, Jacksonville,’’ Tr. 

307, Respondent’s customer list indicated that the 

name of the store located at this address was the 

‘‘Quick Trip Food Store.’’ Gov. Ex. 28, at 3. 

7 This is not to say that the Government must 

review every single invoice and compile sales 

amounts for every single store. Rather, to establish 

excessive sales and support a finding of diversion, 

the Government need only analyze the sales made 

to selected stores. The Government cannot, 

however, rely solely on a single sale absent other 

evidence that the products were diverted. 

‘‘Steve.’’ Gov. Ex. 29, at 2. The invoice 

lacked essential identifying information 

such as the person’s last name, a store 

name, and address. See id.6

At least one of the other invoices, 

which listed the sale of Max Brand 

products, contained no identifying 

information at all. Tr. 157 & 243, Resp. 

Ex. 1, at 402. When asked who had 

purchased the products listed on 

invoice number 361516, Respondent 

answered: ‘‘I’m not sure. It’s been quite 

some time. But I would say * * * it was 

to Steve again and probably a—or 

whatever.’’ Tr. 308. Respondent further 

explained that he had not written the 

name down because he was either ‘‘busy 

or tired.’’ Id. 

The DI testified that because of the 

condition of Respondent’s records, he 

was unable to determine whether 

Respondent had engaged in any 

regulated transactions. Id. at 241. 

Moreover, when the DI asked 

Respondent what the threshold was for 

a regulated transaction, Respondent did 

not know. Id. at 242. When the DI 

discussed with Respondent the 

inadequacy of his recordkeeping, 

Respondent replied that ‘‘he was just 

too busy’’ to ‘‘write all this information 

down.’’ Id. at 243–44. Respondent 

further stated that the records ‘‘were 

good enough for him.’’ Id. at 244. 

Respondent acknowledged that he 

could not tell if he had engaged in any 

regulated transactions ‘‘without going 

back and going through every * * * 

invoice.’’ Id. Regarding the 

identification of his customers, 

Respondent told the DI ‘‘[t]hat he knew 

who they were and that all the 

information was kept in his head.’’ Id. 

Furthermore, when asked by his counsel 

whether he had records that allowed 

him ‘‘to identify more particularly 

where these various customers are?’’ 

Respondent answered: ‘‘Yes and no * * 

*. I [can] go home and find the exact 

address because some of the stores are 

listed in the phone book. Same thing the 

Gainesville phone book.’’ Id. at 298. 

During the on-site inspection, the DI 

also examined Respondent’s security 

arrangements. Respondent was storing 

his listed chemical products in an 

aluminum storage shed that was 

mounted on a foundation of cement 

blocks. Id. at 250, 292. The storage shed 

was secured with a combination lock. 

Id. at 292. The shed apparently did not 

have an alarm. Id. Respondent further 

testified that he stored the products in 

the shed because his mobile home was 

too small, and ‘‘nobody can see what is 

in the shed.’’ Id. at 293. Respondent 

further stated that his customers did not 

come to his home and while people 

(neighbors) ‘‘may see cases from 

different things * * * they wouldn’t 

know what is the contents [of] the case.’’ 

Id. at 294. According to the DI, 

Respondent’s listed chemical products 

were commingled with other products 

in the shed. Id. at 252–53. Furthermore, 

Respondent would ‘‘spend[] up to a 

week at a time on the road’’ leaving his 

property unsupervised. Id. at 267. 

The Government also called Jonathan 

Robbin, who testified as an expert 

witness. Mr. Robbin testified 

extensively regarding his findings 

regarding the market for listed chemical 

products, his review of the records of 

another distributor, and the expected 

monthly sales range to meet legitimate 

demand for listed chemical products at 

non-traditional retailers of these 

products such as gas stations, 

convenience stores, and liquor stores. 

Unlike in numerous other cases, the 

Government did not produce a 

compilation of Respondent’s sales of 

listed chemical products which showed 

the average sale amount per store, per 

month, over a sustained period of time. 

Instead, the Government asked Mr. 

Robbin to testify regarding several 

isolated invoices. While Mr. Robbin 

testified that some of Respondent’s 

invoices were ‘‘rather curious’’ and were 

suggestive of excessive sales, id. at 154, 

he also stated that ‘‘definitive 

conclusions’’ could not be drawn from 

individual invoices. Id. at 156. Mr. 

Robbin further stated that ‘‘[w]e should 

really analyze all their records to come 

up with definitive conclusions.’’ Id. 

I agree. A single invoice does not 

prove that a store engaged in excessive 

sales (and that its products were 

diverted) because it does not establish 

the length of time it took the store to sell 

the products. Without other invoices 

showing the dates and amounts of 

additional purchases, the possibility 

remains that the products remained in 

inventory for a substantial period and 

that the sales were to meet legitimate 

demand. In sum, the isolated invoices 

do no more than create a suspicion that 

Respondent engaged in excessive sales. 

Accordingly, I find that the 

Government’s proof on the issue of 

excessive sales does not satisfy the 

substantial evidence test. See NLRB v. 

Columbia Enameling & Stamping Co., 

306 U.S. 292, 300 (1939) (‘‘Substantial 

evidence is more than a scintilla, and 

must do more than create a suspicion of 

the existence of the fact to be 

established.’’).7

Another issue in this case involved 

the employment status of Mr. Justin J. 

Paden, who serviced Respondent’s 

customers in the Tallahassee area. 

Specifically, the Government attempted 

to prove that Mr. Paden was not an 

employee of Respondent because he did 

not withhold federal income tax from 

Mr. Paden’s compensation, he did not 

pay the employer’s share of Mr. Paden’s 

Social Security taxes, and he did not 

pay worker’s compensation or 

unemployment taxes. Tr. 310–11. The 

Government viewed Mr. Paden as an 

independent contractor, id. at 223 & 

311, and considered Respondent’s use 

of Mr. Paden to distribute listed 

chemical products to be a violation of 

the Controlled Substances Act. Id. at 

224 (testimony of DI) (‘‘any time that 

[Mr. Paden] sold product, it would 

actually be an illegal distribution’’). 

The ALJ found, however, that ‘‘Mr. 

Paden worked under the direct 

supervision of the Respondent, and 

serviced only the Respondent’s 

customers,’’ that ‘‘his pay was 

calculated’’ based on his sales to 

Respondent’s customers, and that he 

drove a van provided by, and insured 

by, Respondent. ALJ at 35. The ALJ thus 

concluded ‘‘that the relationship 

between Mr. Paden and the Respondent 

was one of employer and employee, 

based on their conduct.’’ Id. Ultimately, 

I conclude that it is immaterial whether 

Mr. Paden was an employee or an 

independent contractor because the 

evidence clearly establishes that Mr. 

Paden was subject to Respondent’s 

control and therefore acted as his agent. 

Discussion 

Section 304(a) of the Controlled 

Substances Act provides that a 

registration to distribute a list I chemical 

‘‘may be suspended or revoked * * * 

upon a finding that the registrant * * * 

has committed such acts as would 

render his registration under section 823 

of this title inconsistent with the public 

interest as determined under such 

section.’’ 21 U.S.C. 824(a)(4). 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; 

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(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. section 823(h). 

‘‘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 a 

registration should be revoked or an 

application for a modification of a 

registration should be denied. See, e.g., 

David M. Starr, 71 FR 39367, 39368 

(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 

conclude that factors one, two, four, and 

five establish that Respondent’s 

continued registration would be 

‘‘inconsistent with the public interest,’’ 

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

Respondent’s registration will be 

revoked and his pending applications 

for renewal and modification of the 

registration will be denied. 

Factors One and Two—Maintenance of 

Effective Controls Against Diversion 

and Compliance With Applicable Laws 

and Regulations 

The ALJ found that Respondent does 

not maintain effective controls against 

diversion. While the ALJ reasoned that 

the Government had not proved that 

Respondent’s physical security 

arrangement were inadequate—because 

the storage shed appeared to be ‘‘as 

secure as the DEA-approved past 

location in his mobile home,’’ ALJ at 

34—she further concluded that 

‘‘Respondent’s failure to properly 

maintain records * * * is especially 

egregious.’’ Id. at 35. While I agree with 

the ALJ’s finding that Respondent’s 

recordkeeping is inadequate, and her 

ultimate conclusion that this factor 

‘‘favors revocation,’’ id. at 36, I further 

conclude that Respondent’s proposed 

storage would provide inadequate 

security. 

The applicable DEA regulation directs 

that eight factors be considered in 

assessing the adequacy of security. See 

21 CFR 1309.71(b). Among the factors 

are ‘‘[t]he type, form, and quantity of 

List I chemicals handled,’’ ‘‘[t]he 

location of the premises and the 

relationship such location bears on the 

security needs,’’ ‘‘[t]he type of building 

construction * * * and the general 

characteristics of the building,’’ ‘‘[t]he 

availability of electronic detection and 

alarm systems,’’ and ‘‘[t]he extent of 

unsupervised public access to the 

facility.’’ Id. Here, the record establishes 

that Respondent proposed to store listed 

chemicals, which are easily converted 

into methamphetamine, in an aluminum 

storage shed (located apparently in his 

back yard), which was secured with a 

combination lock. Moreover, 

notwithstanding that Respondent was 

frequently away from his home for 

lengthy periods, the shed did not have 

an alarm. 

It is obvious that such arrangements 

are inadequate to protect these products 

from theft. A thief using readily 

available bolt cutters would make short 

work of the lock, and without an alarm, 

a thief would be far more likely to 

succeed in stealing the chemicals. 

The fact that similar arrangements 

were approved in the past does not 

estop the Agency from requiring greater 

security measures. Respondent did not 

rely on any representations of DEA 

personnel that the security 

arrangements at his new location met 

the Agency’s requirements. Indeed, 

while DEA regulations provide that an 

‘‘applicant desiring to determine 

whether a proposed system of security 

controls * * * is adequate may submit 

materials and plans regarding the 

proposed security controls’’ for review 

by either the Special Agent in Charge or 

the Office of Diversion Control, 21 CFR 

1309.71(c), Respondent made no such 

submission. As found above, the illegal 

manufacture of methamphetamine has 

become an increasingly serious 

problem. Accordingly, whatever 

arrangements were previously deemed 

satisfactory are not necessarily still 

adequate to protect against theft. I 

therefore conclude that Respondent’s 

proposed security arrangements would 

not provide effective controls against 

diversion. 

The ALJ, however, also correctly 

observed that ‘‘the inquiry into the 

effectiveness of the Respondent’s 

controls ‘does not end when products 

leave [their] physical location.’ ’’ ALJ at 

35 (quoting D & S Sales, 71 FR 37607, 

37610 (2006)). As the ALJ recognized, 

maintaining proper records is also an 

essential part of providing effective 

controls against diversion. See id. 

Indeed, as the ALJ explained, 

Respondent’s ‘‘recordkeeping was so 

inadequate that neither he nor the DEA 

would be able to detect excessive 

purchases or other suspicious 

transaction behavior by his customers.’’ 

Id. at 35–36. 

As found above, many of 

Respondent’s sale invoices lacked 

essential information. The invoices 

almost always failed to include 

information pertaining to product 

strength and count. The invoices also 

frequently lacked complete street 

addresses and the name of the contact 

person at a particular establishment; 

indeed, the testimony showed that on 

some streets there were multiple stores 

which used the same name. Moreover, 

in one instance, an invoice documented 

a large sale of a listed chemical product 

to a person identified only as ‘‘Steve’’; 

in another instance, purchaser 

information was completely missing. 

While Respondent services 

approximately 150 stores, he testified 

that he kept track of his listed chemical 

sales to individual customers ‘‘mostly * 

* * in my mind.’’ Tr. 303. Moreover, 

Respondent further told the DI ‘‘that all 

the information [regarding the identity 

of his customers] was kept in his head.’’ 

Id. at 244. Respondent further 

contended that he could ascertain the 

exact address of his various customers 

‘‘because some of the stores are listed in 

the phone book.’’ Id. at 298. 

These statements are absurd. While it 

is true that the Government did not 

establish whether Respondent ever 

exceeded the 1,000 grams threshold and 

thus engaged in a regulated transaction, 

see 21 CFR 1300.02(b)(28)(i), as the ALJ 

found, ‘‘this may well be attributed to * 

* * Respondent’s deficient 

recordkeeping.’’ ALJ at 36. Moreover, as 

the ALJ further explained, ‘‘there was no 

means to determine if the Respondent’s 

customers received in excess of the 

threshold amounts during any given 

month.’’ Id. Relatedly, Respondent’s 

purchase records were not ‘‘filed or 

organized in any manner.’’ Tr. 228. 

While registrants who engage in 

regulated transactions are subject to 

additional recordkeeping and reporting 

requirements, see 21 CFR 1310.03, 

under DEA regulations, every registrant 

must maintain adequate records to 

monitor the receipt and distribution of 

listed chemical products. See id. 

1309.71(b)(8) (directing the 

consideration of ‘‘[t]he adequacy of [a] 

registrant’s * * * systems for monitoring 

the receipt, distribution, and disposition 

of List I chemicals’’). Absent 

maintaining proper records, legitimate 

registrants might fail to discover that 

their sales to an entity have exceeded 

the cumulative threshold and report the 

transaction. Furthermore, disreputable 

registrants could engage in regulated 

transactions and hide behind their poor 

recordkeeping to escape liability. 

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24606 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

8 Respondent’s purchases of products in this 

period also far exceeded the inventory found in his 

storage shed during the May 2004 inspection. 

9 The ALJ properly rejected the Government’s 

contention that because Mr. Paden was not 

registered, Respondent violated federal law by 

distributing listed chemical products to him. Even 

if Mr. Paden was not an employee, but rather an 

independent contractor, the evidence shows that he 

was clearly Respondent’s agent. See 21 U.S.C. 

802(3) (defining ‘‘agent’’ as ‘‘an authorized person 

who acts on behalf of or at the direction of a 

manufacturer, distributor, or dispenser’’). 

Under the plain language of the Act, an agent of 

a registered distributor is not ‘‘required to register 

and may lawfully possess any * * * list I chemical 

* * * if such agent. * * * is acting in the usual 

course of his business.’’ 21 U.S.C. § 822(c). See also 

21 CFR 1309.24(a) (‘‘The requirement of registration 

is waived for any agent * * * of a person who is 

registered * * * if such agent * * * is acting in the 

usual course of his * * * business[.]’’); Daniel Koller, 

D.V.M., 71 FR 66975, 66983 n.14 (2006). 

10 Relatedly, I acknowledge that there is no 

evidence that Respondent has been convicted of a 

crime, under either Federal or State laws, relating 

to controlled substances or listed chemicals. 

11 As found above, methamphetamine trafficking 

has increased substantially in Florida. 

12 See OTC Distribution Co., 68 FR 70538, 70541 

(2003) (noting ‘‘over 20 different seizures 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 

Finally, the record establishes that 

Respondent violated federal law by 

distributing listed chemical products 

from his new location without a valid 

registration. Under federal law, a 

registration is location specific. See 21 

U.S.C. 822(f) (‘‘A separate registration 

shall be required at each principal place 

of business * * * where the applicant * 

* * distributes * * * list I chemicals.’’); 

see also 21 CFR 1309.23(a). Moreover, 

federal law clearly provides that a 

registrant is ‘‘authorized to possess [or] 

distribute’’ a listed chemical only ‘‘to 

the extent authorized by their 

registration and in conformity with the 

other provisions of this subchapter.’’ 21 

U.S.C. 822(b). Furthermore, in contrast 

to a renewal application, which, if 

timely filed, keeps a registration in 

effect past its expiration date and until 

the Agency makes a final determination 

on the application, see 5 U.S.C. 558(c), 

a request for a modification is treated as 

a new application. See 21 CFR 1309.61 

(a ‘‘request for modification shall be 

handled in the same manner as an 

application for registration,’’ and, if 

approved, ‘‘the Administrator shall 

issue a new certificate of registration’’). 

Accordingly, a request for modification 

does not authorize a registrant to engage 

in listed chemical activities until the 

modification is approved and the new 

certificate of registration is issued. Cf. 

Orlando Wholesale, L.L.C., 71 FR 71555, 

71557 (2006) (applicant’s change of 

address following pre-registration 

inspection renders application moot). 

The record contains numerous 

invoices showing that Respondent 

distributed listed chemicals out of his 

new and unregistered location. See Gov. 

Ex. 29; Resp. Ex. 1. Furthermore, the 

record contain substantial evidence 

establishing that even after Respondent 

was told by a DEA Investigator to stop 

distributing listed chemicals, he 

proceeded to obtain ‘‘almost 700,000’’ 

dosage units of combination ephedrine 

products from a distributor by 

representing to it that DEA had 

authorized him to continue to purchase 

them. Id. at 227. While the record does 

not contain invoices documenting the 

sale of these products, the quantity 

involved makes it obvious that 

Respondent was not purchasing the 

products for his personal use but rather 

to distribute them.8 Respondent’s 

distribution of list I chemicals after 

being told that he could no longer do so 

is egregious misconduct and manifests a 

flagrant disregard for the requirements 

of federal law. 9

I thus concur with the ALJ’s 

conclusion that this factor ‘‘weighs 

heavily in favor of revocation.’’ ALJ at 

38. Indeed, were there no other 

evidence of Respondent’s noncompliance with federal law and 

regulations, this conduct would provide 

reason alone to revoke his registration.10

Factor Four—Respondent’s Experience 

in Distributing Listed Chemicals 

According to the record, Respondent 

has been registered since 1998. Yet 

notwithstanding his several years of 

experience, Respondent has not learned 

very much about the products that are 

regulated and DEA’s rules. Moreover, as 

explained above, Respondent’s 

experience is characterized by his 

disregard for Federal laws and 

regulations and unsatisfactory business 

practices. 

For example, when asked if he knew 

‘‘what the Code of Federal Regulations 

are [sic]?,’’ Respondent answered: ‘‘No.’’ 

Tr. 319. Moreover, during the May 2004 

pre-registration inspection, Respondent 

had ‘‘several hundred boxes’’ of 

pseudoephedrine products in his 

possession. Id. at 219, 226. Respondent 

was not aware, however, that the 

products contained this listed chemical. 

Id. at 219. Respondent was also unaware 

that products he carried such as Tylenol 

Cold and Tylenol Sinus contained 

pseudoephedrine. Id. at 218. 

Beyond that, I note that Respondent’s 

experience is characterized by (as 

charitably described by the ALJ) his 

‘‘lackadaisical attitude.’’ ALJ at 39. As 

noted by the ALJ, Respondent justified 

his failure to adequately document his 

sales on the grounds that ‘‘he was just 

too busy or too tired.’’ Id. Respondent’s 

attitude is simply incompatible with his 

continued participation in the 

distribution of list I chemicals. 

Accordingly, I adopt the ALJ’s 

conclusion ‘‘that this factor strongly 

favors revocation.’’ 

Factor Five—Other Factors Relevant to 

Public Health and Safety 

As found above, the illicit 

manufacture and abuse of 

methamphetamine have had pernicious 

effects on families and communities 

throughout the nation.11 Cutting off the 

supply source of methamphetamine 

traffickers is of critical importance in 

protecting the public from the 

devastation wreaked by this drug. 

While listed chemical products 

containing both ephedrine and 

pseudoephedrine have legitimate 

medical uses, DEA orders have 

established that convenience stores and 

gas-stations constitute the nontraditional retail market for legitimate 

consumers of products containing these 

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

Distributors, 71 FR at 52161–62; D & S 

Sales, 71 FR at 37609; Branex, Inc., 69 

FR 8682, 8690–92 (2004). DEA has 

further found 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’’ if 

application to distribute to nontraditional retailers was granted). 

Accordingly, ‘‘[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.’’ 

Joey Enterprises, Inc., 70 FR 76866, 

76867 (2005). 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’’).12 Here, it 

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Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24607 

the possession of individuals apparently involved 

in the illicit manufacture of methamphetamine’’). 

1 Upon being directed by the ALJ to file a 

response to the Government’s motion, Respondent 

sought a six month extension. The ALJ concluded, 

however, that an extension of such duration would 

unduly delay the proceedings. Instead, the ALJ 

granted Respondent a sixty day extension. 

appears that all of Respondent’s 

customers are convenience stores and 

gas stations, which are non-traditional 

retailers of list I chemical products and 

entities which DEA has repeatedly 

found are conduits for the diversion of 

these products into the illicit 

manufacture of methamphetamine. 

Here, unlike in other cases where the 

Government’s evidence established that 

a distributor had made excessive sales 

and that these sales supported a finding 

of diversion, the Government’s proof 

does not support such a finding. 

Nonetheless, Respondent’s wholly 

inadequate recordkeeping substantially 

hinders the efforts of this Agency and its 

local partners to investigate the 

suppliers of methamphetamine 

traffickers and the traffickers 

themselves. Moreover, even if 

Respondent’s recordkeeping is 

attributable to neglect, it still impedes 

the protection of public safety. I 

therefore conclude that this factor also 

supports a finding that Respondent’s 

continued registration would be 

inconsistent with the public interest. 

In sum, Respondent violated Federal 

law by distributing products from an 

unregistered location. Indeed, this 

misconduct is especially egregious 

because he did so even after being told 

by a DEA official to stop. Respondent 

also does not maintain effective controls 

against diversion as evidenced by his 

wholly inadequate recordkeeping and 

the inadequate security he provided for 

list I products. Moreover, 

notwithstanding his years of experience 

distributing list I chemicals, Respondent 

clearly lacked knowledge of which 

products contained listed chemicals and 

he did not even know what the Code of 

Federal Regulations is. Finally, 

Respondent’s attitude reflects 

indifference to his obligations under 

federal law and regulations. Given all of 

the above, it is indisputable that 

Respondent’s continued registration 

would be inconsistent with the public 

interest. 

Order 

Accordingly, pursuant to the 

authority vested in me by 21 U.S.C. 

823(h) & 824(a), as well as 28 CFR 

0.100(b) & 0.104, I order that DEA 

Certificate of Registration, 002964JTY, 

issued to John J. Fotinopoulos be, and 

it hereby is, revoked. I further order that 

the pending applications for 

modification and renewal of the 

registration issued to John J. 

Fotinopoulos be, and they hereby are, 

denied. This order is effective June 4, 

2007. 

Dated: April 25, 2007. 

Michele M. Leonhart, 

Deputy Administrator. 

[FR Doc. E7–8453 Filed 5–2–07; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

[Docket No. 06–52] 

Green Acres Farms, 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 Green Acres Farms, Inc., 

(Respondent) of Tacoma, Washington. 

The Show Cause Order proposed to 

deny Respondent’s pending application 

for registration as a bulk manufacturer 

of the Schedule I controlled substances 

marijuana and tetrahydrocannabinols, 

on the grounds that its registration 

would be inconsistent with the public 

interest, see 21 U.S.C. 823(a), and with 

the United States’ obligations under the 

Single Convention on Narcotic Drugs, 

March 30, 1961, 18 U.S.T. 1407. Show 

Cause Order at 1. 

More specifically, the Show Cause 

Order alleged that on June 28, 2004, 

Respondent’s owners, Mr. and Mrs. 

Keith Yale, submitted an application to 

DEA to manufacture marijuana and 

tetrahydrocannabinols and that DEA 

then sent the Yales a standardized 

questionnaire which all applicants for 

registration to manufacture controlled 

substances in Schedules I and II are 

required to complete. See id. The Show 

Cause Order alleged that Respondent’s 

owners indicated on the questionnaire 

that the firm sought to grow marijuana 

to supply ‘‘persons who qualify to 

receive marijuana under the Washington 

State Medical Use of Marijuana Act.’’ 

See id. at 2. The Show Cause Order 

further alleged that Mrs. Yale stated on 

the questionnaire that she had obtained 

authorization from a physician to use 

marijuana and that she planned to use 

some of the marijuana grown by 

Respondent. Id. The Show Cause Order 

also alleged that Respondent intended 

‘‘to supply marijuana to patients in 

other states, which have laws that 

permit the ‘medical use’ of marijuana,’’ 

and that Respondent also intended to 

distribute its marijuana to Washingtonbased pharmacies and cooperatives. Id. 

The Show Cause Order alleged that 

Respondent’s owners had also stated 

that they intended to extract THC from 

their marijuana and develop an 

ingestible form of medication to create 

an alternative to smoked marijuana. Id. 

The Show Cause Order further alleged 

that neither marijuana nor 

tetrahydrocannabinols have been 

approved under the Food, Drug and 

Cosmetic Act, as ‘‘safe and effective’’ for 

medical use, and neither drug has an 

‘‘accepted medical use in * * * the 

United States.’’ Id. at 3 (citing 21 U.S.C. 

321(p) & 812(b)(1)(B)). Relatedly, the 

Show Cause Order alleged that 

Respondent’s proposed distribution of 

marijuana would constitute a felony 

under 21 U.S.C. 841(a)(1). Id. at 4. 

Finally, the Show Cause Order alleged 

that Respondent’s proposed activity was 

not permitted under the Washington act. 

See id. at 4. 

Respondent requested a hearing; the 

matter was assigned to Administrative 

Law Judge (ALJ) Mary Ellen Bittner. 

Thereafter, the Government moved for 

summary disposition.1

The basis for the Government’s 

motion was that marijuana and 

tetrahydrocannabinols have not been 

approved under the Food, Drug and 

Cosmetic Act, 21 U.S.C. 321(p), as ‘‘safe 

and effective’’ for medical use. Gov. 

Mot. at 3–4. The Government also 

argued that both marijuana and 

tetrahydrocannabinols are Schedule I 

controlled substances and ‘‘have no 

currently accepted medical use in 

treatment in the United States.’’ Id. 

(citing 21 U.S.C. 812(b)(1)(B)). 

Relatedly, the Government argued that 

‘‘there is a lack of accepted safety for 

use of these [drugs] under medical 

supervision.’’ Id. (citing 21 U.S.C. 

812(b)(1)(C)). The Government further 

noted this Agency’s previous denial of 

a similar application to grow marijuana 

for medical use. Id. at 5 (citing Church 

of the Living Tree, 68 FR 17403 (2003)). 

The Government also argued that in 

United States v. Oakland Cannabis 

Buyer’s Coop, 532 U.S. 483 (2001), the 

Supreme Court had rejected the 

‘‘medical necessity’’ defense raised by 

an entity which distributed marijuana 

for purportedly medical purposes. Gov. 

Mot. at 5. According to the Government, 

‘‘any distribution of marijuana as 

proposed by [Respondent] would 

constitute an unlawful distribution of a 

controlled substance in violation of 21 

U.S.C. 841(a)(1), a felony.’’ The 

Government further contended that 

unless and until ‘‘these substances are 

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