[Federal Register Volume 74, Number 71 (Wednesday, April 15, 2009)]
[Notices]
[Pages 17517-17524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-8621]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 05-43]


Gregg & Son Distributors; Grant of Conditional Registration

    On August 3, 2005, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Gregg & Son Distributors (Respondent), of Powell, 
Tennessee. The Show Cause Order proposed the revocation of, and the 
denial of its pending application to renew, Respondent's DEA 
Certificate of Registration, which authorizes it to distribute the List 
I chemicals pseudoephedrine and ephedrine, on the ground that its 
registration ``is inconsistent with the public interest.'' Order to 
Show Cause at 1.
    More specifically, the Show Cause Order alleged that Respondent's 
customers for List I chemical products ``are almost exclusively * * * 
entities such as convenience stores and small independent grocery 
stores,'' and that these retailers are a primary source for the 
diversion of these products into the illicit manufacture of 
methamphetamine, a schedule II controlled substance. Id. at 1-2. The 
Order further alleged that Respondent was selling ``products that are 
not sold in traditional retail outlets, including over one dozen 
ephedrine products and various pseudoephedrine products,'' id. at 2-3, 
that according to an expert utilized by the Agency, ``the average small 
store could expect to sell monthly only about $ 10.00 to $ 30.00 worth 
of pseudoephedrine products,'' and ``that the potential for sales of 
combination ephedrine products [was] about only one-fourth of [these] 
sales levels.'' Id. at 4. Relatedly, the Order alleged that ``it is 
highly unlikely that [Respondent's customers] would sell a large volume 
of List I chemical products for legitimate uses,'' that Respondent's 
``sales of combination ephedrine products and pseudoephedrine products 
are inconsistent with the known legitimate market and known end-user 
demand for products of this type,'' and that Respondent ``is serving an 
illegitimate market for these products.'' Id. at 4-5.
    The Show Cause Order further alleged that in March 2005, DEA 
Investigators conducted an inspection of Respondent. Id. at 2. 
According to the allegations, the Investigators conducted an audit of 
six ephedrine products distributed by Respondent between December 27, 
2003, and March 15, 2005, and found ``substantial underages and 
overages for these products.'' Id. at 3.
    The Order also alleged that during the inspection, the 
Investigators discovered that Respondent sold ```lovers' roses,' 
devices with small roses contained inside a glass vial cylinder,'' and 
that ``[t]hese products are considered drug paraphernalia because the 
vials are used to smoke methamphetamine and [crack] cocaine.'' Id. The 
Order further alleged that Mr. Dennis Gregg, Respondent's owner, 
``acknowledged that he was aware of the illicit use of lovers' roses.'' 
Id.
    Finally, the Order alleged that after the inspection, Investigators 
visited three of Respondent's customers and obtained information which 
indicated that Respondent's products were being diverted. Id. at 3. 
More specifically, the Order alleged that at the first store, one 
customer purchased two (forty-eight count) bottles each day, and that 
at a second store, the manager stated that she had only a few customers 
who purchased the products but that they did so regularly, and ``that 
she believed that most of the List I chemical products sold in her 
store went to `meth labs.''' Id. at 3. Finally, the Order alleged that 
at the third store, the owner stated ``that he was a former law 
enforcement officer'' and that ``he was certain that most or all of the 
ephedrine sold at his store [was] used for illicit methamphetamine 
production.'' Id. at 3-4.
    On or about August 30, 2005, Respondent requested a hearing on the 
allegations; the matter was placed on the docket of the Agency's 
Administrative Law Judges (ALJ). On April 18 and 19, 2006, a hearing 
was held in Nashville, Tennessee, at which both parties called 
witnesses to testify and submitted documentary evidence. Following the 
hearing, both parties submitted briefs containing their proposed 
findings of fact, legal conclusions, and argument.
    On February 29, 2008, nearly twenty-two months after the hearing, 
the ALJ issued her recommended decision (ALJ). Because Respondent's 
sales levels of ephedrine products ``far exceed the expected legitimate 
market demand,'' the ALJ concluded that the Government had established 
its prima facie case that its continued registration is inconsistent 
with the public interest. ALJ at 41. The ALJ reasoned, however, that a 
sanction less severe than revocation was warranted because Tennessee 
had recently enacted legislation that ``placed extensive limits upon 
the products [Respondent could] sell,'' that Respondent was in 
``compliance with the Act,'' id., and that the Agency had not provided 
evidence that its sales of gel cap products were excessive. Id. at 39. 
The ALJ further concluded that there was a ``lack of evidence in [the] 
record showing that soft-gel listed chemical products have actually 
been made into methamphetamine at illicit laboratories.'' Id. at 41.
    The Government filed exceptions to the ALJ's decision, and 
Respondent filed a Response to the Government's exceptions.\1\ 
Thereafter, the record was forwarded to me for final agency action.
---------------------------------------------------------------------------

    \1\ Therein, the Government argued that the record not only 
showed that listed chemical products in gel cap form have been 
diverted, but that in various decisions I have previously rejected 
the ALJ's reasoning that the Agency cannot revoke a registration 
until the actual diversion of gel cap products is substantiated. 
Exceptions at 2-3 (citing Holloway Distributing, 72 FR 42118 (2007), 
T. Young Associates, 71 FR 60567 (2006)).
    The Government further argued that the ALJ ignored its evidence 
of Respondent's sales of gel cap products between June 2005 and 
November 2005, which showed it was ``sell[ing] inordinate amounts of 
ephredrine-based products in gel cap form.'' Id. at 5. In support of 
its contention, the Government provided in its exceptions a list of 
Respondent's average monthly sales of these products to its various 
customers during this period. Id. at 6-9. Noting testimony in 
another proceeding that the average monthly retail sale of ephedrine 
products at convenience stores was $12.48, and that a monthly retail 
sale of $60.00 ``at a convenience store would occur about once in a 
million times in random sampling,'' id. at 9, the Government 
contended ``that virtually all'' of Respondent's gel-cap ephedrine 
customers were ``selling extraordinary amounts [which are] far 
beyond what would be expected in a legitimate market.'' Id.
    While I consider the calculations, I note that this data was not 
provided--as it should have been--while the record was open. To make 
clear, it is the Government's obligation as part of its burden of 
proof and not the ALJ's responsbility to sift through the records 
and highlight that information which is probative of the issues in 
the proceeding. Cf. Southwood Pharmaceuticals, Inc., 72 FR 36487, 
36503 n.25 (2007).

---------------------------------------------------------------------------

[[Page 17518]]

    Having considered the entire record in this matter, I conclude that 
the Government has not established a prima facie case that Respondent's 
continued registration is inconsistent with the public interest. I 
conclude, however, that Respondent violated federal law by distributing 
drug paraphernalia. While this conduct warrants the suspension of 
Respondent's registration, because it has otherwise complied with 
federal law and regulations I conclude that the suspension should be 
stayed. I make the following findings.

Findings of Fact

    Respondent is a distributor of sundry items including non-
prescription drug products containing ephedrine and pseudoephedrine to 
convenience stores, small groceries, and gas stations located in 
eastern Tennessee.\2\ Tr. 169. Respondent is owned by Mr. Dennis Gregg 
and is run out of Mr. Gregg's home in Powell, Tennessee. Id. at 168-69; 
GX 1. Mr. Gregg has been involved in the wholesale distribution 
business since 1973 and started Respondent sometime around 1991.\3\ Id. 
at 171.
---------------------------------------------------------------------------

    \2\ Respondent also has customers in North Carolina and 
Virginia. Tr. 169.
    \3\ The record does not establish whether Respondent is 
organized as a corporation, a partnership, or a sole proprietorship.
---------------------------------------------------------------------------

    Respondent has held a DEA Certificate of Registration to distribute 
ephedrine, pseudoephedrine and phenylpropanolamine (PPA) \4\ since 
1998. GX 1, at 2. While the expiration date of the last registration 
issued to Respondent is September 30, 2005, id., on August 8, 2005, 
Respondent filed an application to renew its registration. Joint Status 
Report at 1. I therefore find that Respondent filed a timely renewal 
application and that its registration remains in effect pending the 
issuance of this Order. See 5 U.S.C. Sec.  558(c).
---------------------------------------------------------------------------

    \4\ While Respondent has held a registration to distribute PPA 
since 1998, it is undisputed that Respondent had long since stopped 
selling products containing PPA and had requested that it be deleted 
from the list of chemicals it is authorized to distribute. Tr. 178.
---------------------------------------------------------------------------

    Both ephedrine and pseudoephedrine have legitimate therapeutic 
uses.\5\ See, e.g., Tri-County Bait Distributors, 71 FR 52160, 52161 
(2006). Both chemicals are, however, regulated as list I chemicals 
under the Controlled Substances Act because are they extractable from 
non-prescription drug products and have been frequently diverted into 
the illicit manufacture of methamphetamine, a schedule II controlled 
substance. See 21 U.S.C. 802(34); 21 CFR 1308.12(d).
---------------------------------------------------------------------------

    \5\ Under the Food, Drug and Cosmetic Act, ephedrine (in 
combination with guaifenesin) is currently approved for marketing as 
a non-prescription bronchodilator. See 70 FR 40233 (2005).
---------------------------------------------------------------------------

    Methamphetamine ``is a powerful and addictive central nervous 
system stimulant.'' T. Young Associates, Inc., 71 FR 60567 (2006). As 
noted in numerous Agency decisions, the illegal manufacture and abuse 
of methamphetamine pose a grave threat to this Nation. Id. 
Methamphetamine abuse has destroyed numerous lives and families, and 
has had a devastating impact on many communities. Id. Moreover, because 
of the toxic nature of the chemicals used in making the drug, illicit 
methamphetamine laboratories create serious environmental harms. Id.

The Investigation of Respondent

    Respondent was first inspected by a DEA Investigator in 1998. Tr. 
239. At the time of the inspection, Respondent was selling bottled 
pseudoephedrine, and during the inspection, the Investigator told Mr. 
Gregg that ``pseudoephedrine was a very dangerous product.'' Id. at 
179. The DI, however, made no similar reference to ephedrine being 
dangerous. Id. at 241. Thereafter, Respondent stopped selling bottled 
pseudoephedrine and limited his sales of the product to two-tablet 
packages. Id. at 179-80. Respondent did, however, continue to sell 
combination ephedrine products in bottles containing forty-eight and 
sixty tablets, as well as six-tablet packages. Id. at 180.
    In August 2003, another DI requested that Respondent provide him 
with information regarding its average monthly sales of List I products 
to its various customers. Id. at 182-83. Mr. Gregg's wife compiled the 
information and provided it to the DI. Id. at 183-84; see also RX 6. 
The DI subsequently called Mr. Gregg's wife and told her that the 
report was ``exactly what he needed.'' Tr. 183. The DI did not raise 
any objection as to the quantities of products being sold by 
Respondent. Id.
    On March 15, 2005, several DIs visited Respondent to perform an 
inspection. As part of the inspection, the DIs obtained a product list 
(GX 3) from Mr. Gregg and chose several products to be audited. Tr. 58-
61. While the DIs obtained various records from Respondent and 
commenced an audit, id., the Government did not introduce into evidence 
the results of the audit.\6\
---------------------------------------------------------------------------

    \6\ Mr. Gregg maintained that the audit was inaccurate because 
the DIs had left out numerous invoices documenting both Respondent's 
purchases and its distributions. See RX 5. Because the Government 
did not introduce the audit results, it is unnecessary to resolve 
this factual dispute.
---------------------------------------------------------------------------

    During the audit, and upon determining that Respondent was 
distributing what he termed ``gray market products,'' one of the DIs 
asked Respondent to voluntarily surrender his registration. Id. at 33. 
During the hearing, the DI testified that he did so even though there 
was no evidence that Respondent had violated any rule of the Agency and 
that he had requested the surrender ``solely based on [Respondent's] 
handling * * * of gray market products.'' Id. at 51.
    The DI further testified that during the inspection, he determined 
that Respondent was selling an item known as a ``Love Rose.'' \7\ Id. 
at 33. According to the DI, this item, which includes a small flower 
packaged inside of a glass tube, constitutes ``drug paraphernalia'' 
because it is easily adapted for use in, and frequently used for, 
smoking both crack cocaine and methamphetamine, and is ``commonly 
referred to as [a] crack pipe.'' Id. at 33-34.
---------------------------------------------------------------------------

    \7\ Throughout the proceeding, the parties referred to this item 
as both a ``Love Rose'' and ``Lover's Rose.'' Accordingly, these 
terms are used interchangeably in this decision.
---------------------------------------------------------------------------

    During the inspection, Mr. Gregg acknowledged that he knew that 
this item was used to smoke crack and told the DI ``that he didn't want 
to sell them anymore.'' Id. at 35. Mr. Gregg testified that 
approximately a month before the inspection he had decided that because 
the item was misused, once he sold his remaining stock of the item 
(which he did to a single person, id. at 293), he would stop carrying 
them. Id. at 218-19. According to Mr. Gregg, several of his customers 
had told him that they thought the product was ``being used for a crack 
pipe,'' but that he would ``occasionally'' see people in stores buying 
this item and that with respect to some of them he ``could tell they're 
not going to smoke something with it.''

[[Page 17519]]

Id. at 292. As for other customers he saw purchasing the items, Mr. 
Gregg maintained that he could not ``judge them'' and what they would 
use the product for because he is ``just a human'' and ``not God.'' Id.
    Respondent also introduced into evidence a document which listed 
his purchases of this product from the Sessions Specialty Company. RX 
10. According to the document, between April 28, 2003, and February 18, 
2005, Respondent purchased 225 units at a total cost of $396.25. Id. 
Respondent's last purchase of the item was in February 2005, when it 
obtained twenty-five units for which it paid $36.25. Id.
    Following the inspection, a DI visited three of Respondent's 
customers. At the first store, the Westgate Market, the manager told 
the DI that there were ``very few customers for the List I'' products 
that the store obtained from Respondent, but that the customers ``were 
repeat customers.'' Tr. 36.
    At the second store, the Sloan Center, which was a truck stop 
complex with both a large gas station and convenience store, the 
manager told the DI ``that she was aware that all these * * * List I 
chemical products were used for methamphetamine.'' Id. at 37. The 
manager also stated that the store had sold other products which are 
used in the illicit manufacture of methamphetamine including steel 
wool, matches, coffee filters, and that because ``in her experience,'' 
the products ``were selling much too quickly'' to be satisfying 
legitimate consumer demand, ``she had removed [the products] from the 
shelves.'' Id. at 37-38. The DI also testified that the manager had 
told him ``about the only people that bought'' the listed chemical 
products, but offered no further details regarding their 
characteristics. Id. at 37.
    Finally, the DI visited the Tellico Pride, which was managed by a 
former police officer. Id. at 39. The manager told the DI that he knew 
``from his experience'' as both a police officer and store manager that 
the ephedrine products the store sold were being used for 
methamphetamine production.\8\ Id. at 39.
---------------------------------------------------------------------------

    \8\ The DI also visited a law enforcement station located in the 
Cherokee National Forest, which was approximately ten miles from the 
Tellico Pride store. Tr. 40-41. There, the DI was told that the 
authorities had found six sites where waste created by illicit 
methamphetamine manufacturers had been dumped. Id. at 40-41.
---------------------------------------------------------------------------

    The DI did not relate any of this information to Mr. Gregg. Tr. 71-
72. Moreover, Mr. Gregg testified that none of his customers had ever 
told him that the combination ephedrine products he sold were being 
diverted, id. at 202-03; and that he did not believe that his products 
were being diverted. Id. at 260. Mr. Gregg further stated that if a 
customer told him this, he would tell them to ``call the officials'' 
and he ``would not sell to that customer.'' Id. at 203.\9\
---------------------------------------------------------------------------

    \9\ Mr. Gregg further testified that he did not become aware of 
the risk that combination ephedrine products could be diverted until 
the spring of 2005, when the DIs explained this to him, and the 
State of Tennessee enacted the Meth Free Tennessee Act. Id. at 261. 
Respondent also introduced into evidence several posters (which he 
provided to his customers) directed at retail store employees which 
listed various items used to make methamphetamine including 
ephedrine. See RX 7. Mr. Gregg's testimony certainly pushes the 
limits of plausibility.
---------------------------------------------------------------------------

    On cross-examination, Mr. Gregg maintained that he would 
periodically ask his customers if they have repeat customers and told 
them not to sell more than two thirty-six count blister packs to a 
customer. Id. at 322-23. He also did not recall any customer telling 
him that people were purchasing the products every other day, although 
he acknowledged that some customers had told him that people were 
buying the products either once or twice a week. Id. at 323-24. He 
further maintained that he told his stores that they should not sell to 
persons who showed up every day. Id. at 325.
    As evidence of his efforts to prevent diversion, Mr. Gregg provided 
posters to some of his customers which listed products that could be 
diverted into meth. production. See RX 7. Moreover, even prior to the 
enactment of the Meth Free Tennessee Act, Mr. Gregg had provided to 
most of his ephedrine customers ``hundreds of * * * acrylic cases'' for 
storing the products, which are placed ``behind the counter.'' Tr. 192-
193. Mr. Gregg testified that he placed stickers inside the cabinets 
which stated that customers could only purchase ``two bottles a day'' 
and that the products could not be sold to minors. Id. at 196. Mr. 
Gregg maintained that he would stamp his sales invoices with the 
following statement: ``Please limit a customer two bottles of ephedrine 
per day.'' Id.; see also RX 12.
    Furthermore, following the passage of the Meth Free Tennessee Act, 
which prohibited sales of tablet-form listed chemical products, 
Respondent retrieved the products from his customers and sold them to 
stores in neighboring States where the products were still legal. Tr. 
202. Nor is it disputed that Respondent provides adequate security for 
the products at its registered location. Finally, Respondent offered 
evidence that it is conducting weekly audits of its handling of list I 
chemical products, id. at 213-14, and Respondent has never been issued 
a warning letter regarding its handling of the products.

Respondent's Sales Levels and the Market for List I Chemicals

    The Government's principal allegation in this proceeding is that 
Respondent was selling combination ephedrine products at levels that 
far exceed legitimate demand for the products for their approved 
therapeutic use as a bronchodilator, and that the products Respondent 
sells are likely being diverted. See Order to Show Cause at 4. As proof 
of this allegation, the Government submitted a declaration from an 
expert witness which concluded that ``the vast majority of American 
consumers'' purchase non-prescription drug products at pharmacies, 
supermarkets, large discount merchandisers, or through electronic 
shopping/mail-order establishments. GX 10, at 5 (declaration of 
Jonathan Robbin). Relatedly, the expert stated that convenience stores 
and gas stations such as Respondent's customers ``constitute [the] 
nontraditional market for the sale of * * * non-prescription drug 
pseudoephedrine products.'' Id. at 6.
    In this declaration (which was initially prepared five years 
earlier for a proceeding which involved a different Tennessee 
wholesaler), the expert further concluded that ``the normal expected 
retail sale of pseudoephedrine (hcl) tablets in a convenience store may 
range between $10 and $30 per month, with an average of about $20 per 
month,'' and that the average store would spend ``about $12 per month 
acquiring an inventory of pseudoephedrine (hcl) tablets at wholesale 
from a distributor.'' Id. at 8-9. The expert also stated that a sale of 
pseudoephedrine by a convenience store ``of over $100 a month * * * 
would be expected to occur in random sampling about once in a million 
raised to the tenth power, a number nearly equal to a count of all the 
atoms in the universe.'' Id. at 8.
    The expert further opined that sales of combination ephedrine 
products are about one-fourth the amount of pseudoephedrine sales and 
thus sales of ephedrine at the same level as pseudoephedrine sales are 
considerably less likely to be for legitimate demand than sales of 
pseudoephedrine. Id. at 10-11. The expert thus concluded that sales of 
listed chemical products in

[[Page 17520]]

amounts similar to Respondent's sales \10\ are inconsistent with 
legitimate demand for the products. Id. at 11.
---------------------------------------------------------------------------

    \10\ The expert did not review any data pertaining to 
Respondent.
---------------------------------------------------------------------------

    Notably, the expert's declaration contains no explanation as to his 
basis for concluding that ephedrine sales are only one-fourth of 
pseudoephedrine sales. See generally id. at 1-12. Moreover, after the 
record closed in this matter, the expert's methodology for calculating 
the sales levels of ephedrine was challenged in another proceeding and 
found wanting. See Novelty Distributors, Inc., 73 FR 52689, 52693-94 
(2008).
    It is true that in this matter, Respondent did not raise similar 
challenges to the expert's methodology.\11\ The Agency cannot, however, 
ignore the ultimate finding in Novelty which rejected the expert's 
conclusions as to the expected sales range of ephedrine products. 
Moreover, since the issuance of the Novelty decision, the Government 
has not offered any briefing as to why it would still be appropriate to 
adopt the expert's conclusions.\12\ I therefore conclude that the 
expert's declaration does not constitute substantial evidence as to the 
expected sales range of ephedrine products to meet legitimate demand at 
convenience stores and gas stations. See 5 U.S.C. Sec.  556(d).
---------------------------------------------------------------------------

    \11\ Respondent did, however, argue that the declaration should 
be given ``minimal consideration'' because it was executed in 
September 2003, the expert did not review ``any information 
concerning'' Respondent, and it was ``not based upon the most recent 
statistical figures available.'' Resp. Proposed Findings at 19.
    \12\ Nor has the Government sought a remand to put on additional 
evidence as to the expected sales range to meet legitimate demand.
---------------------------------------------------------------------------

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 [its] registration under section 823 of this 
title inconsistent with the public interest as determined under such 
section.'' 21 U.S.C. 824(a)(4). Moreover, under section 303(h), ``[t]he 
Attorney General shall register an applicant to distribute a list I 
chemical unless the Attorney General determines that registration of 
the applicant is inconsistent with the public interest.'' 21 U.S.C. 
823(h). In making the public interest determination, Congress directed 
that the following factors be considered:

    (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. Sec.  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 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 (DC Cir. 2005).
    The Government, however, bears the burden of proof. 21 CFR 
1301.44(d). Having considered the entire record in this matter, I 
conclude that the Government has not established that Respondent does 
not maintain effective controls against diversion. Moreover, while I 
find that Respondent violated Federal law when it sold the Lover's 
Roses even after he became aware that this item is used to smoke 
illicit drugs, I conclude that this single violation, which involved a 
nominal amount of this item, does not support the revocation of its 
registration. Based on the extensive evidence of Respondent's efforts 
to responsibly comply with Federal and state laws, I conclude that 
Respondent's registration should be suspended but that the suspension 
should be stayed for a period of probation.

Factor One--The Maintenance of Effective Controls Against Diversion

    It is undisputed that Respondent maintains adequate security with 
respect to the storage of listed chemicals at its registered location. 
In the Show Cause Order, the Government alleged, however, that 
Respondent did not maintain effective controls against diversion for 
two additional reasons: (1) an audit performed during the March 2005 
inspection found ``substantial underage and overages'' for several 
products, and (2) Respondent's sales of combination ephedrine products 
were ``inconsistent with the known legitimate market and known end-user 
demand for products of this type,'' and therefore Respondent ``is 
serving an illegitimate market for these products.'' Show Cause Order 
at 3-4.
    Neither of these allegations is supported by substantial evidence. 
As for the allegations pertaining to the audit, while the record 
establishes that an audit was conducted during the March 2005 
inspection, the Government did offer the audit results into evidence. 
Accordingly, there is no basis to conclude that Respondent does not 
maintain adequate ``systems for monitoring the receipt, distribution 
and disposition'' of the List I products it distributes. See 21 CFR 
1309.71(b)(8). The allegation is therefore rejected.
    The Government also argues that Respondent was distributing 
combination ephedrine products in quantities that greatly exceed 
legitimate demand for these products at convenience stores, small 
markets and gas stations, and that its sales levels are consistent with 
diversion of the products into the illicit manufacture of 
methamphetamine. See Gov. Exceptions at 3-9. Moreover, the Government 
contends that even though Respondent complied with Tennessee law by 
ceasing its distribution of tablet-form products and selling only gel-
caps to its Tennessee customers, even those sales are excessive. See 
Gov. Exceptions at 6-9 (listing Respondent's average monthly sales of 
gel cap products).
    The Government's theory is based on expert testimony, which was 
credited in other cases, regarding the average monthly retail sale of 
ephedrine products at convenience stores and the statistical 
improbability that various sales levels were consistent with legitimate 
demand. However, as explained above, in Novelty Distributors, I found 
that the methodology used by the Government's expert in determining 
these figures was unreliable. I further concluded that the expert's 
figures for the average monthly sale and the statistical improbability 
of various sales of ephedrine to meet legitimate demand were not 
supported by substantial evidence.
    Here, the Government relies on the expert's written testimony, 
which putting aside that it primarily addressed pseudoephedrine and 
offered nothing more than a conclusory assertion as to the level of 
ephedrine sales, appears to have been based on the same methodology 
which I rejected in Novelty.\13\ I therefore again conclude

[[Page 17521]]

that the Government's figures as to the monthly expected sales range to 
meet legitimate demand (and the statistical improbability of certain 
sales levels in legitimate commerce) are not supported by substantial 
evidence. Consistent with these findings, I am compelled to reject the 
Government's contention that Respondent's sales of gel-cap ephedrine 
products ``are far in excess of any legitimate market for the product'' 
and ``that the products are being diverted to the illicit manufacture 
of methamphetamine.'' \14\ Gov. Exceptions at 5; see also Show Cause 
Order at 3-4.
---------------------------------------------------------------------------

    \13\ It is noted that the expert's methodology involves various 
steps and that some of the problems identified with respect to 
ephedrine (such as the expert's purported use of consumer survey 
data which did not report any information specific to ephedrine, see 
73 FR at 52693-94), may not be a valid criticism of the methodology 
as it is applied to pseudoephedrine (because there may be more 
extensive data). Even so--and ignoring that the declaration 
discusses pseudoephedrine and not ephedrine (the chemical at issue 
in this case)--the expert's declaration contains none of the 
underlying data and calculations such as the number of stores used 
in determining the average sales per store.
    \14\ It is further noted that while the Government calculated 
the average monthly purchase of Respondent's various List I 
customers, it did not calculate the mean and standard deviation for 
all stores and did not show any instances in which sales to 
particular stores greatly exceeded what its typical customer 
purchases. See 73 FR at 52700.
---------------------------------------------------------------------------

    It is true that the Government's evidence included testimony 
regarding the hearsay statements of two store managers which raise the 
suspicion that Respondent's products were being diverted by customers 
of those stores. But there is no evidence that the managers ever 
related their suspicions to Respondent, and Mr. Gregg testified that he 
would cut off sales to a customer if the customer told him that the 
products were being diverted.\15\ Relatedly, while in 2003, Respondent 
had submitted--at the Agency's request--a report regarding its 
estimated sales of list I products at each of its customers, no one at 
the Agency ever raised any objection regarding the quantities it was 
selling.
---------------------------------------------------------------------------

    \15\ Indeed, the Government's figures for Respondent's monthly 
sales to the two stores do not stand out as suggesting that 
diversion was occurring.
---------------------------------------------------------------------------

    Nor did the Government introduce any evidence to question the 
credibility of Mr. Gregg's testimony that he had stopped selling 
bottled pseudoephedrine and sold only two tablet packages of this 
product upon being told by a DI years earlier that these products were 
dangerous and that the DI had not mentioned combination ephedrine 
products as raising the same concern. Finally, the record establishes 
that Respondent attempted to educate its customers regarding diversion 
and provided special cases to them for storing the products and had 
done so years before the enactment of laws requiring that they be kept 
either behind the counter or in a locked case. See 21 U.S.C. Sec.  
830(e)(1)(A). In sum, the record as a whole does not establish that 
Respondent has failed to maintain effective controls against diversion.

Factor Two--Respondent's Compliance With Applicable Laws

    The Government further maintains that Respondent violated Federal 
law because he knowingly sold drug paraphernalia (i.e., the Love 
Roses). Gov. Proposed Findings at 8 (citing 21 U.S.C. 863). According 
to the testimony of a DI, this product is easily modified and used to 
smoke such substances as crack cocaine and methamphetamine. Moreover, 
at the hearing, Mr. Gregg acknowledged that shortly before the March 
2005 inspection and his final sale of the product, he had become aware 
that the product was used to smoke crack. Notwithstanding this 
information, Respondent sold his remaining supply which amounted to 
approximately twenty-five of the Lover's Roses and stopped carrying the 
product.
    The ALJ rejected the Government's argument as ``tenuous,'' noting 
that under Federal law the term ``drug paraphernalia'' is defined as an 
item ``primarily intended or designed for use in ingesting, inhaling, 
or otherwise introducing [controlled substances] into the human body.'' 
ALJ at 33 (quoting 21 U.S.C. 863(d)). According to the ALJ, ``the 
primary purpose of a love rose appears to be decorative in nature * * * 
[and] [t]hus, this product was not primarily manufactured or designed 
to be used for the ingestion of a controlled substance.'' Id. (quoting 
Tr. 218) (testimony of Mr. Gregg; ``when it first started out, all it 
was, was a cute little rose in a tube'').
    The ALJ, however, failed to acknowledge Supreme Court precedent 
interpreting the same statutory language which was used in the since 
repealed statute, 21 U.S.C. Sec.  857. See Posters `N' Things, Ltd. v. 
United States, 511 U.S. 513, 516 n.5 (1994).\16\ In Posters `N' Things, 
the Court explained that Section 863(d) ``identifies two categories of 
drug paraphernalia: items `primarily intended * * * for use' with 
controlled substances and items `designed for use' with such 
substances.'' Id. at 518. With respect to the latter category, the 
Court explained that ``[a]n item is `designed for use' * * * if it `is 
principally used with illegal drugs by virtue of its objective 
features, i.e., features designed by the manufacturer.' '' Id. (quoting 
Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 501 
(1982)).
---------------------------------------------------------------------------

    \16\ As the Supreme Court explained in Posters `N' Things: ``The 
language of Sec.  863 is identical to that of former Sec.  857 
except in the general description of the offense.'' 511 U.S. at 516 
n.5. Of note, section 863 expanded the scope of prohibited acts with 
respect to drug paraphernalia and did not alter the definition of 
the term ``drug paraphernalia.'' See id. Accordingly, the Court's 
interpretation of the term applies here.
---------------------------------------------------------------------------

    As for the ``primarily intended * * * for use'' language, the Court 
acknowledged that the term ``could refer to the intent of 
nondefendants, including manufacturers, distributors, retailers, buyers 
or users.'' Id. at 519. Based on its analysis of the statute's text and 
structure, the Court concluded that the term ``is to be understood 
objectively and refers generally to an item's likely use.'' Id at 521. 
The Court further explained that where an item has multiple uses, ``it 
is the likely use of customers generally, [and] not [of] any particular 
customer, that can render a multiple-use item drug paraphernalia.'' Id. 
at 522 n.11.
    While the Court construed section 857 as imposing a scienter 
requirement of knowledge, the Court held that ``the knowledge standard 
in this context [does not] require knowledge on the defendant's part 
that a particular customer actually will use an item of drug 
paraphernalia with illegal drugs.'' Id. at 524. The Court further 
explained that ``[i]t is sufficient that the defendant be aware that 
customers in general are likely to use the merchandise with drugs. 
Therefore, the Government must establish that the defendant knew that 
the items at issue are likely to be used with illegal drugs.'' Id. 
(emphasis added) (citing United States v. United States Gypsum Co., 438 
U.S. 422, 444 (1978) (``knowledge of `probable consequences' sufficient 
for conviction'')).\17\
---------------------------------------------------------------------------

    \17\  See also United States v. Mishra, 979 F.2d 301, 307 (3d 
Cir. 1992) (``Government must prove that defendant `contemplated, or 
reasonably expected under the circumstances, that the item sold or 
offered for sale would be used with illegal drugs'') (quoted at 511 
U.S. at 524 n.13); United States v. Schneiderman, 968 F.2d 1564, 
1567 (2d Cir. 1992) (``Government must prove that defendant `knew 
there was a strong probability the items would be so used.' '') 
(quoted at 511 U.S. at 524 n.13).
---------------------------------------------------------------------------

    The ALJ's reasoning that an item is not ``drug paraphernalia,'' 
unless it was ``primarily manufactured or designed to be used for the 
ingestion of a controlled substance,'' ALJ at 33, ignores the Supreme 
Court's holding that section 863(d) identifies two different categories 
of drug paraphernalia and that the ``primarily intended * * * for use'' 
category ``refers generally to an item's likely use'' by those who use 
it. 511 U.S. at 521. Applying this standard, the evidence establishes 
that a Love Rose's likely use is to smoke illicit drugs and that 
Respondent sold the products

[[Page 17522]]

knowing that they were ``likely to be used with illegal drugs.'' Id. at 
524.
    At the outset, it should be noted that Congress expressly included 
in the definition of ``drug paraphernalia,'' a list of items which 
``constitute[e] per se drug paraphernalia.'' Id. at 519. Of relevance 
here, Congress included in this list ``metal, wooden, acrylic, glass, 
stone, plastic, or ceramic pipes with or without screens.'' 21 U.S.C. 
863(d). As the record shows, a Love Rose is nothing more than a small 
and fake flower inserted in a glass pipe, Tr. 33; that the pipe 
contains a flower does not make it any less a pipe.\18\ See Posters `N' 
Things, 511 U.S. at 518 (observing that certain items ``including 
bongs, cocaine freebase kits, and certain kinds of pipes, have no other 
use besides contrived ones (such as use of a bong as a flower vase)''). 
The item thus falls within the statutory definition of ``drug 
paraphernalia.'' See 21 U.S.C. 863(d).
---------------------------------------------------------------------------

    \18\ Indeed, even if one is cheap, if one is intent on 
expressing his/her affection for a loved one, there are plenty of 
other ways of doing so such as buying a real flower and not a fake 
one.
---------------------------------------------------------------------------

    Furthermore, even if the Love Rose does not fall strictly within 
the ``list of * * * items constituting per se drug paraphernalia,'' 511 
U.S. at 519, there was ample evidence establishing that the item's 
``likely use'' is to ingest illicit drugs. Id. at 521. An agency 
Investigator testified that the Lover's Roses are ``commonly referred 
to as crack pipes,'' and that they are ``used to smoke crack'' and 
methamphetamine. Tr. 34; cf. Sharon Tubbs, A Crack Pipe by Any Other 
Name, St. Petersburg Times (Aug. 10, 2001) (Floridian Section) (``The 
outsider assumes the rose tubes are meant to attract the impulse buyer 
who picks up a chintzy gift for his sweetie. But for addicts, the buy 
is anything but an impulse. Addicts go to stores looking for rose 
tubes, calling them `stems'--street talk for [a] crack pipe.'').
    The DI further explained the ease with which this item is adapted 
for use as a crack or meth. pipe. Id. Finally, it is undisputed that at 
the time of the inspection--and before he sold his final stock--Mr. 
Gregg was aware of what this item was used for. Id. at 35. Indeed, Mr. 
Gregg testified that several of his customers had told him what the 
item was used for. Id. at 292. Thus, at the time he sold his remaining 
supply, Mr. Gregg was ``aware that customers in general [we]re likely 
to use the merchandise with drugs.'' 511 U.S. at 524.
    Contrary to the ALJ's reasoning, ALJ at 34, once Mr. Gregg became 
aware of the product's likely use, it was unlawful for him to sell it. 
As for the ALJ's rational that ``at some point the responsibility for 
the misuse of the * * * product * * * must rest upon the person * * * 
illegally ingesting a controlled substances through * * * the tube,'' 
id., Congress, by prohibiting the knowing sale of drug paraphernalia, 
has concluded otherwise. I thus hold that Respondent violated federal 
law when it sold its remaining stock of love roses. 21 U.S.C. 
863(a)(1).
    The record establishes, however, that Respondent's violation 
involved only the sale of a small quantity of this item, which was 
likely no more than twenty-five units (and for which Respondent paid $ 
36.25). RX 10. Moreover, it is undisputed that Respondent stopped 
selling the product after this sale. Furthermore, other evidence 
suggests that Respondent has promptly complied with the requirement of 
recently enacted state and federal laws. See Tr. 224-25. Accordingly, 
while Respondent's violation of 21 U.S.C. Sec.  863(a) cannot be 
condoned, the limited nature of the violation and Respondent's overall 
record of compliance with applicable laws does not support the 
conclusion that its continued registration is inconsistent with the 
public interest.\19\
---------------------------------------------------------------------------

    \19\ It is further noted that neither Respondent, nor its owner, 
has been convicted of an offense related to controlled substances or 
listed chemicals.
---------------------------------------------------------------------------

Factor Four--Respondent's Experience in the Distribution of Chemicals

    Respondent has been registered since 1998. During this period, it 
has never been issued a warning letter and the record does not 
establish any other deficiencies in its handling of list I 
chemicals.\20\ Furthermore, with the exception of the violation 
discussed above, the record indicates that Respondent has been 
attentive to his responsibilities as a registrant.
---------------------------------------------------------------------------

    \20\ Based on her finding that Respondent sold excessive 
quantities of listed chemical products, the ALJ concluded that 
``absent any change in marketing or product line, this factor would 
weigh in favor of revocation.'' ALJ at 37. Because I conclude that 
the Government's figures as to the expected sales range and 
probability of various sales levels are not supported by substantial 
evidence, I reject the ALJ's conclusion with respect to factor four.
---------------------------------------------------------------------------

    For example, it is undisputed that upon being told that bottled 
pseudoephedrine was a dangerous product, Respondent stopped carrying 
the product and limited his sales to two-tablet packages. When 
Tennessee banned tablet-form products, Respondent retrieved the 
products from his customers.
    Moreover, Respondent voluntarily submitted to the Agency 
information regarding its sales of the products and no one from the 
Agency ever objected to the quantities of products it was selling. 
Respondent also provided posters from Tennessee Meth Watch (a program 
of the Tennessee Bureau of Investigation) and the Southeast Tennessee 
Methamphetamine Task Force which identified numerous products which are 
used in the illicit manufacture of methamphetamine. RX 7. In addition, 
Respondent took steps--long before they were required by state or 
federal law--to protect the products from theft at his customers.
    While proof that Respondent was selling quantities of products that 
are consistent diversion would outweigh all of the above and would 
support an adverse finding under this factor, as explained above, the 
Government has not met its burden of proof on this allegation. I 
therefore conclude that this factor supports the continuation of 
Respondent's registration.

Factor Five--Other Factors Relevant to and Consistent With Public 
Health and Safety

    At the hearing, a DI testified that it was agency policy to seek 
the revocation of the registration issued to any person or entity which 
distributes listed chemicals to the non-traditional market. Tr. 82. 
Based on this testimony, Respondent contends that the Agency is in 
violation of the Administrative Procedure Act (APA) because it has 
adopted a substantive ``rule for effecting automatic registration 
revocations of all entities distributing List I products to gray market 
entities'' without engaging in notice and comment rulemaking under 5 
U.S.C. 553. Resp. Prop. Findings at 25-26.
    Relatedly, in an appendix, the ALJ opined that there is an 
``agency-wide policy of revoking the registrations of `gray market' 
distributors'' and that this policy ``is substantive, rather than 
procedural, in nature.'' ALJ at 46. Continuing, the ALJ recommended 
``that the [A]gency should not proceed against listed chemical 
distributors on such a `rule' alone because the [A]gency has not'' 
engaged in notice and comment rulemaking. ALJ at 47 (emphasis added).
    Neither Respondent's argument nor the ALJ's reasoning is 
persuasive. As an initial matter, at most the evidence establishes a 
policy of seeking the revocation of such registrations.\21\ See Tr. 141 
(testimony of DI acknowledging that ``the mere fact that someone sells 
on the gray market is cause for DEA to

[[Page 17523]]

seek [the] revocation of their registration'') (emphasis added). A 
policy of seeking the revocation of the registrations issued to a 
particular class of registrants is not, however, the same as a policy 
of revoking such registrations. Indeed, to equate the former with the 
latter ignores that the ultimate decision in any proceeding under 
section 304 of the Act does not rest with those who prosecute but with 
the Deputy Administrator. See 28 CFR 0.104 (Appendix section 7(h)).
---------------------------------------------------------------------------

    \21\ Notably, in its Exceptions, the Government disputes that 
there is any such policy. Exceptions at 10-11. (arguing that ``[t]he 
ALJ had no basis on which to assume that DEA has a policy of 
revoking the * * * registrations of all List I chemical distributors 
that distribute * * * in the gray market. * * * The opinions of non-
managerial employees attesting to the existence of an agency policy, 
without more, can hardly be a sufficient basis for a fact-finder to 
make a formal finding, or in this case, to simply assume, that a 
federal agency has implemented a substantial policy.'').
---------------------------------------------------------------------------

    Moreover, contrary to the understanding of both Respondent and the 
ALJ, the above described policy is not a rule within the meaning of the 
APA. As numerous courts have recognized, a policy does not constitute a 
rule unless it establishes a ``binding norm'' or ``a standard of 
conduct which has the force of law.'' See Pacific Gas & Elec. Co. v. 
FPC, 506 F.2d 33, 38 (D.C. Cir. 1974). The policy merely reflects the 
decision of those with prosecutorial authority to focus the Agency's 
resources on a particular and serious aspect of the diversion problem. 
As such, it ``does not establish a `binding norm[,]' '' which has the 
force and effect ``of law.'' Id. at 38; see also Center for Auto Safety 
v. NHTSA, 452 F.3d 798, 806 (D.C. Cir. 2006) (noting that one line of 
inquiry ``considers the effects of an agency's action, inquiring 
whether the agency has `(1) imposed any rights and obligations, or (2) 
genuinely [left] the agency and its decision-makers free to exercise 
discretion' '') (other citation omitted).\22\ Notably, in her appendix, 
the ALJ did not cite to any decision of this Agency which holds that 
the mere act of distributing to the non-traditional market constitutes 
a per se ground for revocation of an existing registration or the 
denial of an application. \23\
---------------------------------------------------------------------------

    \22\ The other line of inquiry focuses on the ``[A]gency 
expressed intentions.'' Center for Auto Safety, 452 F.3d at 798. As 
the Government points out, ``[t]here was no evidence that [the DIs] 
were authorized to speak on behalf of the agency regarding agency 
policy, that the two employees had any involvement in the 
formulation of the alleged policy, or were in managerial or 
executive positions.'' Exceptions at 11. Thus, the employees' 
testimony does not express the Agency's intention.
    \23\ In her appendix, the ALJ observed that she ``could find no 
agency final order where * * * the DEA registration was continued 
for a DEA-registered distributor selling listed chemical products to 
the `gray market,' as defined by the'' Agency. ALJ at 37. The 
absence of any such decision does not establish that there is such a 
rule because each case is decided with respect to the five factors 
set forth in 21 U.S.C. Sec.  823(h).
---------------------------------------------------------------------------

    Indeed, in this matter, the Government does not argue that 
Respondent's registration should be revoked solely because it 
distributes to the non-traditional market. Rather, the Government 
relied primarily on what it alleged were various practices of 
Respondent (such as excessive sales and poor recordkeeping) that 
increased the risk that its products were being diverted. Moreover, 
were the Government to seek revocation solely on the basis that a 
registrant was distributing to the non-traditional market (rather than 
on the basis that its policies and practices were increasing the risk 
of diversion), it would be required ``to present evidence and reasoning 
supporting its'' position, Center for Auto Safety, 452 F.3d at 807 
(quoting Pacific Gas, 506 F.2d at 38); and the registrant would be 
entitled to challenge the Government's evidence and reasoning.\24\
---------------------------------------------------------------------------

    \24\ Relying on Ford Motor Co. v. FTC, 673 F.2d 1008, 1009 (9th 
Cir. 1982), Respondent asserts that because the purported rule 
``creates a general and widespread standard for revocation'' it must 
be ``subject[ed] to notice and comment rulemaking.'' Resp. Proposed 
Findings at 25 & n.70. Respondent's reliance on Ford is peculiar 
because it is widely recognized as a sport case.
    As several leading commentators have explained: ``The Ninth 
Circuit's decision in Ford almost certainly is an aberration. It has 
been severely criticized. It is inconsistent with both [SEC v. 
Chenery, 352 U.S. 194 (1947), and NLRB v. Bell Aerospace Co., 415 
U.S. 199 (1974)]. Indeed, even the Ninth Circuit seems not to have 
followed it in subsequent cases.'' Richard J. Pierce, et al., 
Administrative Law and Process 295 (1985).
    Moreover, the preeminent treatise squarely states that Ford was 
``wrongly decided and should not be followed.'' I Richard J. Pierce, 
Administrative Law Treatise Sec.  6.9, at 384 (4th ed. 2002). As 
this authority explains: ``The [Ford] court rested its holding on 
the proposition that `an agency must proceed by rulemaking if it 
seeks to change the law and establish rules of widespread 
application.' That proposition is not supportable in Supreme Court 
decisions; rather it is directly contradicted by such decisions and 
is inconsistent with the routine practice of all courts and 
agencies.'' Id.
---------------------------------------------------------------------------

    To be sure, based on its experience, DEA has frequently recognized 
that the distribution of listed chemical products through non-
traditional retailers presents a heightened risk of diversion and has 
considered this to be an important factor in the public interest 
analysis. See, e.g., Joy's Ideas, 70 FR 33195, 33199 (2005). But as 
this case demonstrates, there is no per se rule prohibiting the 
distribution of listed chemicals to the non-traditional market and 
subjecting a registration to revocation for the mere act of 
distributing to the non-traditional market.

Sanction

    In her decision, the ALJ concluded that the Agency had met its 
burden of proof by showing that Respondent was selling excessive 
quantities of listed chemicals. Based in part on Respondent's 
compliance with the Meth Free Tennessee Act,\25\ the ALJ further 
concluded that the revocation of Respondent's registration would be too 
severe a sanction and recommended that its registration be continued 
subject to two conditions--(1) that Respondent be limited to selling 
only soft-gel products, and (2) that Respondent consent to periodic 
inspections by the Agency based on a Notice of Inspection and without a 
warrant.
---------------------------------------------------------------------------

    \25\ The ALJ also based her recommendation on what she 
maintained was ``the lack of evidence in this record showing that 
soft-gel listed * * * products have actually been made into 
methamphetamine at illicit laboratories.'' ALJ at 41. I have 
previously rejected this reasoning, and would have done so again had 
the Government proved that Respondent was selling quantities of 
products that are consistent with diversion. See Holloway 
Distributing, 72 FR 42118, 42126 (2007); T. Young Associates, 71 FR 
60567, 60573 (2006). As I have previously explained, `` `experience 
has taught DEA that in the aftermath of every major piece of 
legislation addressing the illicit manufacture of methamphetamine, 
traffickers have quickly found ways to circumvent the restrictions.' 
This Agency is not required to wait until the diversion of gelcap 
and liquid forms of pseudoephedrine reach epidemic proportions 
before acting to protect the public interest.'' Holloway 
Distributing, 72 FR at 42126 (quoting 71 FR at 60573).
---------------------------------------------------------------------------

    In Janet L. Thornton, 73 FR 50354, 50356 (2008), I explained that 
``[w]hile in some instances, this Agency has placed restrictions on a 
practitioner's registration, such restrictions must be related to what 
the Government has alleged and proved in any case.'' The ALJ's proposed 
conditions were based on her finding that Respondent had engaged in 
excessive sales. But having rejected the Government's proof as 
insufficient to support this allegation, there is no basis to impose 
these conditions.
    The only violation proved on this record is Respondent's sale of 
drug paraphernalia (i.e., the Love Roses). But as found above, the 
evidence supports the conclusion that Respondent committed only a 
single violation of the statute, and the violation involved only a 
nominal amount. Moreover, it is undisputed that following this sale, 
Respondent stopped carrying the item.
    Respondent's sale of any amount of this product (once Mr. Gregg 
learned how it was being used) violated Federal law and is a criminal 
offense. Indeed, it is stunning that Mr. Gregg sold this product after 
being told by several of his customers that it was being used to smoke 
crack cocaine. Contrary to his testimony that because he is ``not 
God,'' he could not determine why some of the persons he saw buying the 
product were

[[Page 17524]]

doing so, this Agency does not expect its registrants to possess divine 
powers. It does, however, expect that its registrants exercise common 
sense and act responsibly.
    Respondent's and Mr. Gregg's violation in selling this product 
cannot be condoned. I therefore conclude that Respondent's registration 
should be suspended for a period of six months. However, in light of 
the total record in this case, which establishes that Respondent has 
otherwise attempted to obey applicable laws and regulations, I conclude 
that the suspension should be stayed for a period of three years at 
which time the suspension will be rescinded provided Respondent does 
not commit any further violation of federal or state laws or 
regulations related to listed chemicals or controlled substances.

Order

    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 the 
application of Gregg & Son Distributors to renew its DEA Certificate of 
Registration be, and it hereby is, granted. I further order that the 
DEA Certificate of Registration issued to Gregg & Son Distributors be, 
and it hereby is suspended for a period of six months, but that the 
suspension shall be stayed for a period of three years from the date of 
this Order provided Respondent complies with all applicable laws and 
regulations as set forth above. This Order is effective immediately.

    Dated: April 3, 2009.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E9-8621 Filed 4-14-09; 8:45 am]
BILLING CODE 4410-09-P