Federal Register / Vol. 74, No. 71 / Wednesday, April 15, 2009 / Notices 17517 

1Under the Administrative Procedure Act (APA), 

an agency ‘‘may take official notice of facts at any 

stage in a proceeding-even in the final decision.’’ 

U.S. Dept. of Justice, Attorney General’s Manual on 

the Administrative Procedure Act 80 (1947) (Wm. 

W. Gaunt & Sons, Inc., Reprint 1979). In accordance 

with the APA and DEA’s regulations, Respondent 

is ‘‘entitled on timely request, to an opportunity to 

show to the contrary.’’ 5 U.S.C. 556(e); see also 21 

CFR 1316.59(e). Respondent can dispute these facts 

by filing a properly supported motion for 

reconsideration within fifteen days of service of this 

order, which shall begin on the date this order is 

mailed. 

1Therein, 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)). 

Continued 

records of this Agency,1 I find that 

Respondent’s registration expired on 

October 31, 2008, and that Respondent 

has not submitted a renewal 

application, let alone a timely one 

(which would have kept his registration 

in effect pending the issuance of this 

decision). 

It is well settled that ‘‘[i]f a registrant 

has not submitted a timely renewal 

application prior to the expiration date, 

then the registration expires and there is 

nothing to revoke.’’ Ronald J. Riegel, 63 

FR 67132, 67133 (1998); see also 

William W. Nucklos, 73 FR 34330 

(2008). Because Respondent’s 

registration has expired and there is no 

pending application to act upon, I 

conclude that this case is now moot. 

Order 

Pursuant to the authority vested in me 

by 21 U.S.C. 823(f) & 824(a), as well as 

28 CFR 0.100(b) and 0.104, I hereby 

order that the Order to Show Cause 

issued to Sylvester A. Nathan, M.D., be, 

and it hereby is, dismissed. 

Dated: April 3, 2009. 

Michele M. Leonhart, 

Deputy Administrator. 

[FR Doc. E9–8625 Filed 4–14–09; 8:45 am] 

BILLING CODE 4410–09–P 

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 twentytwo 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. 


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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). 

2Respondent also has customers in North 

Carolina and Virginia. Tr. 169. 

3The record does not establish whether 

Respondent is organized as a corporation, a 

partnership, or a sole proprietorship. 

4While 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. 

5Under the Food, Drug and Cosmetic Act, 

ephedrine (in combination with guaifenesin) is 

currently approved for marketing as a nonprescription bronchodilator. See 70 FR 40233 

(2005). 

6Mr. 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. 

7Throughout 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. 

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. 

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. § 558(c). 

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). 

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 fortyeight and sixty tablets, as well as sixtablet 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

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. 

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.’’ 


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8The 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. 

9Mr. 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. 

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. 

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

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 nonprescription 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 


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10The expert did not review any data pertaining 

to Respondent. 

11Respondent 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. 

12Nor has the Government sought a remand to 

put on additional evidence as to the expected sales 

range to meet legitimate demand. 

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 

amounts similar to Respondent’s sales 10

are inconsistent with legitimate demand 

for the products. Id. at 11. 

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. § 556(d). 

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. § 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 


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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. 

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. 

16As the Supreme Court explained in Posters ‘N’ 

Things: ‘‘The language of § 863 is identical to that 

of former § 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. 

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). 

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. 

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. 

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. § 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. § 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)). 

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

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 


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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. 

19 It is further noted that neither Respondent, nor 

its owner, has been convicted of an offense related 

to controlled substances or listed chemicals. 

20Based 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. 

21Notably, 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 

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). 

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 twentyfive 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. 

§ 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

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. 

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 twotablet 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 graymarket is cause for DEA to 


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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.’’). 

22The 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 DEAregistered 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. § 823(h). 

24Relying 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 § 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. 

25The 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). 

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)). 

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

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

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. 

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 


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17524 Federal Register / Vol. 74, No. 71 / Wednesday, April 15, 2009 / Notices 

1According to the letter, the State ‘‘ha[d] received 

information that [Respondent’s] last day of 

practicing at that location was the[e] date of [his] 

overdose on March 25, 2008,’’ and ‘‘had received 

written documentation that [Respondent’s] 

privileges were terminated at that location on 

March 26, 2008.’’ Gov. Motion at Attachment 1. 

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 

DEPARTMENT OF JUSTICE 

Federal Bureau of Investigation 

Meeting of the CJIS Advisory Policy 

Board 

AGENCY: Federal Bureau of Investigation 

(FBI), Department of Justice. 

ACTION: Meeting Notice. 

SUMMARY: The purpose of this notice is 

to announce the meeting of the Criminal 

Justice Information Services (CJIS) 

Advisory Policy Board (APB). The CJIS 

APB is a Federal advisory committee 

established pursuant to the Federal 

Advisory Committee Act (FACA). This 

meeting announcement is being 

published as required by section 10 of 

the FACA. 

The CJIS APB is responsible for 

reviewing policy issues and appropriate 

technical and operational issues related 

to the programs administered by the 

FBI’s CJIS Division, and thereafter, 

making appropriate recommendations to 

the FBI Director. The programs 

administered by the CJIS Division are 

the Integrated Automated Fingerprint 

Identification System, the Interstate 

Identification Index, Law Enforcement 

Online, National Crime Information 

Center, the National Instant Criminal 

Background Check System, the National 

Incident-Based Reporting System, Law 

Enforcement National Data Exchange, 

and Uniform Crime Reporting. 

The meeting will be open to the 

public on a first-come, first-seated basis. 

Any member of the public wishing to 

file a written statement concerning the 

CJIS Division programs or wishing to 

address this session should notify 

Senior CJIS Advisor Roy G. Weise at 

(304) 625–2730 at least 24 hours prior 

to the start of the session. The 

notification should contain the 

requestor’s name, corporate designation, 

and consumer affiliation or government 

designation along with a short statement 

describing the topic to be addressed and 

the time needed for the presentation. A 

requestor will ordinarily be allowed no 

more than 15 minutes to present a topic. 

DATES AND TIMES: The APB will meet in 

open session from 8:30 a.m. until 5 

p.m., on June 4–5, 2009. 

ADDRESSES: The meeting will take place 

at the Gaylord National, 201 Waterfront 

Street, National Harbor, Maryland, (301) 

965–2300. 

FOR FURTHER INFORMATION CONTACT: 

Inquiries may be addressed to Ms. Lori 

A. Kemp, Management and Program 

Analyst, Advisory Groups Management 

Unit, Liaison, Advisory, Training and 

Statistics Section, FBI CJIS Division; 

Module C3, 1000 Custer Hollow Road, 

Clarksburg, West Virginia 26306–0149; 

telephone (304) 625–2619; facsimile 

(304) 625–5090. 

Dated: April 1, 2009. 

Roy G. Weise, 

Senior CJIS Advisor, Criminal Justice 

Information Services Division, Federal Bureau 

of Investigation. 

[FR Doc. E9–8490 Filed 4–14–09; 8:45 am] 

BILLING CODE 4410–02–M 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

[Docket No. 08–58] 

John B. Freitas, D.O.; Revocation of 

Registration 

On August 29, 2008, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration, issued an Order to 

Show Cause to John B. Freitas, D.O. 

(Respondent), of Carthage, Missouri. 

The Show Cause Order proposed the 

revocation of Respondent’s DEA 

Certificate of Registration, BF2847715, 

which authorizes him to dispense 

controlled substances in schedules II 

through V as a practitioner, as well as 

the denial of any pending application to 

renew or modify the registration, on the 

ground that Respondent lacks authority 

to dispense controlled substances in 

Missouri, the State in which he is 

registered with DEA. Show Cause Order 

at 1. 

Respondent timely requested a 

hearing on the allegation; the matter was 

placed on the docket of the Agency’s 

Administrative Law Judges (ALJ). 

Thereafter, the Government moved for 

summary disposition. Motion for 

Summary Disp. at 1. The basis of the 

motion was that Respondent’s Missouri 

Controlled Substances Registration 

automatically terminated when 

Respondent ceased practicing at the 

location where he held his State 

registration and ‘‘did not notify the 

[State] of [his] change of address or a 

new Missouri practice location.’’ Id. at 

Attachment 1 (Letter of Michael R. 

Boeger, Asst. Administrator, Missouri 

Bureau of Narcotics & Dangerous Drugs, 

to Dr. John Freitas (May 13, 2008)).1

Thereafter, Respondent filed his 

response to the Government’s motion. 

Therein, Respondent acknowledged the 

State BNDD’s letter and further stated 

that he ‘‘does not deny that he no longer 

has the authority to handle controlled 

substances in the State of Missouri.’’ 

Respondent’s Response to Gov.’s Mot. 

for Summ. Disp. at 1. Respondent 

argued, however, that his state 

registration had not been ‘‘suspended, 

revoked, or denied under Missouri law 

by the BNDD,’’ and that under 21 U.S.C. 

824(a)(3), DEA’s authority to revoke is 

limited to those situations in which a 

registrant’s State authority has been 


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