Diversion Control Division, US Department of Justice, Drug Enforcement Administration

RESOURCES > Federal Register Notices > Registrant Actions - 2002 > Southern Illinois Wholesale, Inc.; Denial of Application

Registrant Actions - 2002

[Federal Register: March 19, 2002 (Volume 67, Number 53)]
[Page 12583-12584]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]


Drug Enforcement Administration

Southern Illinois Wholesale, Inc.; Denial of Application

On or about June 27, 2001, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration (DEA), issued an Order to Show Cause (OTSC) by certified mail to Southern Illinois Wholesale, Inc. (SIW), located in Dongola, Illinois, notifying it of an opportunity to show cause as to why the DEA should not deny its application, dated December 3, 2000, for a DEA Certificate of Registration as a distributor of the List 1 chemicals ephedrine, pseudoephedrine, and phenylpropanolamine, pursuant to 21 U.S.C. 823(h), as being inconsistent with the public interest. The order also notified SIW that, should no request for hearing be filed within 30 days, the right to a hearing would be waived.

The OTSC was received July 16, 2001, as indicated by the signed postal return receipt. Since that time, no further response has been received from the applicant nor any person purporting to represent the applicant. Therefore, the Administrator of the DEA, finding that (1) thirty days having passed since receipt of the Order to Show Cause, and (2) no request for a hearing having been received, concludes that SIW is deemed to have waived its right to a hearing. After considering relevant material from the investigative file in this matter, the
Administrator now enters his final order without a hearing pursuant to 21 CFR 1301.43(d) and (e) and 1301.46.

The Administrator finds as follows. List I chemicals are chemicals that may be used in the manufacture of a controlled substance in violation of the Controlled Substances Act. 21 U.S.C. 802(34); 21 CFR 1310.02(a). Pseudoephedrine, ephedrine, and phenylpropanolamine are List I chemicals that are commonly used to illegally manufacture methamphetamine, a Schedule II controlled substance, or amphetamine, a Schedule III controlled substance. Methamphetamine is an extremely potent central nervous system stimulant, and its abuse is a growing problem in the United States.

The Administrator finds that on or about December 3, 2000, an application was submitted by and on behalf of SIW, by George W. Howard (Howard) for DEA registration as a distributor of the above-referenced List I chemicals.

During the February 23, 2001, pre-registration inspection, Howard informed DEA investigators that he proposed to sell various products from his parent's home, including List I chemical products. Howard states he had started out two yeas before, operating bubble gum vending machines, and had recently arranged through an internet consulting company to sell novelty items to retailers. He further stated that some small retail stores in the Southern Illinois and Cape Girardeau, Missouri, area would buy his other products only if he could provide List I chemical products. Howard alleged to DEA investigators that retailers in general would only do business with him if he could provide listed chemical products. He stated he wished to compete in the market that Four Seasons and Heartland held. Both of these distributors previously held DEA registrations that were surrendered during DEA actions against the companies. The DEA investigations into those companies revealed the markets they served had histories or ordering listed chemical products in quantities far greater than legitimate demand would require. DEA took action against the registrations of those two companies because the investigations showed a substantial amount of this pseudoephedrine was being diverted to the illicit manufacture of methamphetamine.

During the pre-registration inspection, Howard was unclear regarding what licenses he needed to conduct business in either Illinois or Missouri. He further stated he was using his parent's basement for storage of his products. DEA investigators noted that Howard had a tendency to delete telephone messages left for him before listening to the entire message; this resulted in a number of miscommunications between Howard and the local DEA office. In addition, at the preregistration inspection Howard was unable to locate information previously sent to him by DEA investigators concerning the responsibilities of a listed chemical registrant. He admitted that he had not been taking the registration process very seriously. Howard stated he wanted to handle List I chemical products because his competition does; and also because he wanted to recoup the cost of obtaining a DEA registration.

Pursuant to 21 U.S.C. 823(h), the Administrator may deny an application for a DEA Certificate of Registration if he determines that granting the registration would be inconsistent with the public interest. Section 823(h) requires the following factors he considered:

  1.  Maintenance by the applicant of effective controls against diversion of

    [[Page 12584]]

    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.

Like the public interest analysis for practitioners and pharmacies pursuant to subsection (f) of section 823, these factors are to be considered in the disjunctive; the Administrator may rely on any one or combination of factors and may give each factor the weight he deems appropriate in determining whether a registration should be revoked or an application for registration be denied. See, e.g. Energy Outlet, 64 FR 14269 (1999). See also Henry J. Schwartz, Jr., M.D., 54 FR 16422 (1989).

The Administrator finds factors four and five relevant to this application.

Regarding factor four, the applicant's past experience in the  distribution of chemicals, the DEA investigation revealed that Howard has no previous experience in handling listed chemicals or distributing listed chemical products. Moreover, he has limited experience in the retailing business, having begun his business about two years previously to his application.

Regarding factor five, other factors relevant to and consistent with the public safety, the Administrator finds that due to the applicant's lack of experience in handling listed chemicals, his desire to distribute to a market that prior DEA investigations show has a history of excessive distributions, his desire to distribute to customers whose primary interests appear to be List I chemical products, and his apparent unpreparedness to take on the responsibilities of a listed chemical registrant, the Administrator concludes it would be inconsistent with the public interest to grant this application.

Accordingly, the Administrator of the Drug Enforcement Administration, pursuant to the authority vested in him by 21 U.S.C. 823 and 28 CFR 0.100(b) and 0.104, hereby orders that the application for a DEA Certificate of Registration submitted by Southern Illinois Wholesale be denied. This order is effective April 18, 2002.

Dated: March 11, 2002.

Asa Hutchinson,

[FR Doc. 02-6570 Filed 3-18-02; 8:45 am]

NOTICE: This is an unofficial version. An official version of this publication may be obtained directly from the Government Publishing Office (GPO).

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