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ATF Fitness Products, Inc.; Denial of
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FR Doc E7-3856 [Federal Register: March 6, 2007 (Volume 72, Number
43)] [Notices] [Page 9967-9969] From the Federal Register Online via GPO
Access [wais.access.gpo.gov] [DOCID:fr06mr07-74]
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
ATF Fitness Products, Inc.; Denial of Application
On February 6, 2006, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration, issued an Order to
Show Cause to ATF Fitness Products, Inc. (Respondent) of Oakmont, Pa.
The Show Cause Order proposed to deny Respondent's pending application
for
[[Page 9968]]
registration as a distributor of the list I chemical ephedrine, on
the ground that its registration would be inconsistent with the public
interest. Show Cause Order at 1.
The Show Cause order alleged that ephedrine is a precursor chemical
that is "commonly diverted'' for use in the manufacture of
methamphetamine, a Schedule II controlled substance Id. The Show Cause
Order specifically alleged that Respondent was proposing to distribute
combination ephedrine products to gyms, fitness shops, and dietary
supplement dealers, and that only a very small amount of the legitimate
commerce in these products occurs in such smaller retail establishments.
Id. at 2. The Show Cause Order alleged that many smaller or
non-traditional retailers of combination ephedrine products "purchase
inordinate amounts of these products and become conduits for the
diversion of listed chemical[s] into illicit drug manufacturing.'' Id.
Relatedly, the Show Cause Order alleged that "[t]here is no
legitimate therapeutic market for this type of product'' at the type of
stores Respondent "propose[s] to supply,'' and that Respondent would be "fueling
the diversion of precursor chemicals into the illicit manufacture of
methamphetamine.'' Id. at 3. The Show Cause Order also alleged that in
conducting verifications of Respondent's proposed customers, DEA
investigators were unable to determine whether some of the proposed
customers intended to buy ephedrine products from it. Id. at 2.
Finally, the Show Cause Order alleged that in October 2004, the Food
and Drug Administration conducted an inspection of Respondent. Id. at 2.
The Show Cause Order alleged that during the inspection, FDA
investigators found quantities of ephedra, a banned product.
The Show Cause Order, which also informed Respondent of its right to
a hearing, was served by certified mail, return receipt requested. On
February 13, 2006, Respondent received the Show Cause Order as evidenced
by the signed return receipt card. Since that time, neither Respondent,
nor anyone purporting to represent it, has responded. Because (1) more
than thirty days have passed since Respondent's receipt of the Show
Cause Order, and (2) no request for a hearing has been received, I
conclude that Respondent has waived its right to a hearing. See 21
CFR 1309.53(c). I therefore enter this final order without a hearing
based on relevant material found in the investigative file and make the
following findings.
Findings
Ephedrine is a list I chemical that, while having a therapeutic use,
is easily extracted from lawful products and used in the illicit
manufacture of methamphetamine, a schedule II controlled substances. See
21 U.S.C.
802(34); 21
CFR 1308.12(d). As noted in numerous DEA orders, methamphetamine is
an extremely potent and addictive central nervous system stimulant. See
T. Young Associates, Inc., 71 FR 60567 (2006). The illegal manufacture
and abuse of methamphetamine pose a grave threat to this country.
Methamphetamine abuse has destroyed numerous lives and families and has
ravaged communities. Moreover, because of the toxic nature of the
chemicals used in producing the drug, illicit methamphetamine
laboratories cause serious environmental harms. Id.
Respondent is a Pennsylvania corporation which is located at 140
Pennsylvania Avenue, Oakmont, Pa. Respondent's founder and president is
Mr. James Vercellotti.
Respondent previously held a DEA Certificate of Registration to
distribute list I chemicals. The registration, however, expired on June
30, 2001. On September 5, 2001, two DEA Diversion Investigators (DIs)
conducted a regulatory investigation at Respondent's Oakmont facility.
On that date, Respondent's chief financial officer told the DIs that
Respondent had submitted a renewal application.
During the visit, William Charlesworth, Respondent's vice president,
informed the DIs that Respondent had previously purchased bulk ephedrine
powder and manufactured a combination ephedrine product, Sci-Fit
Ephedrine HCL, for Asthma Relief. Respondent's officials further
maintained that they were under the assumption that their distributor's
registration authorized them to engage in manufacturing. The DIs
subsequently advised an official of Respondent that while a
manufacturer's registration authorizes its holder to distribute, a
distributor's registration does not authorize its holder to manufacture.
On September 8, 2001, Mr. Charlesworth telephoned one of the DIs and
informed him that Respondent was withdrawing its renewal application in
part because list I products comprised less than one percent of its
sales. Respondent subsequently submitted a letter to DEA withdrawing its
application.
On May 5, 2004, Respondent submitted a new application for a
registration to distribute ephedrine. On September 28, 2004, two DIs
returned to Respondent's facility to conduct a pre-registration
investigation and met again with its president. Respondent's president
told the DIs that it was a wholesale distributor of over-the-counter
fitness products including food supplements and that it had customers
nationwide including GNC, a chain of nutritional supplement retailers,
and Walgreens, a chain of pharmacies. Respondent's president also told
the DIs that the firm had been in business for fourteen years and that
it expected that list I products would provide less than two percent of
its sales.
Respondent provided the DIs with a list of fifty potential list I
customers. Subsequently, a DI contacted ten of Respondent's customers.
Seven of the stores stated that they did not plan to purchase ephedrine
products; only two of the stores indicated that they would purchase the
products from Respondent. Respondent's president further stated that it
would require its List I customers to provide complete identification
information prior to selling the products to them and that its sales
manager would verify the existence of each business and its need for the
products.
Following the on-site inspection, DEA was notified that the Food and
Drug Administration (FDA) had conducted an inspection of Respondent's
facility. During the inspection, FDA found that Respondent had in its
possession approximately $13,500 worth of products, which either
contained MaHuang Extract, a source of ephedrine alkaloids, or claimed
to when they did not. Eight months earlier, FDA had issued a final rule
banning these products on the ground that they are adulterated and
present an unreasonable risk of illness or injury under section
402(f)(1)(A) of the Federal Food, Drug, and Cosmetic Act (FDA Act), 21
U.S.C. 342(f)(1)(A). See 69 FR 6788 (2004). The FDA's ban became
effective on April 12, 2004.
According to the FDA, Respondent's officials asserted that they
intended to export the product. Respondent's officials could not,
however, provide the documentation required to demonstrate its
compliance with section 801(e)(1) of the FDA Act, 21 U.S.C. 381(e)(1).
FDA officials also concluded that some of the products were mislabeled
in violation of federal law because they claimed to contain ingredients
that were not actually present. On February 25, 2005, the U.S.
Attorney's Office for the Western District of Pennsylvania filed a
complaint for forfeiture of the products and U.S. Marshals seized them.
Subsequently, the FDA found that Respondent had in its possession
[[Page 9969]]
another product (Lipodrene), which also contained ephedrine
alkaloids. On January 12, 2006, the U.S. Attorney's Office filed an
additional complaint which sought the forfeiture of these products. U.S.
Marshalls seized these products, which were valued at approximately $
16,000.
Discussion
Under 21
U.S.C. 823(h), an applicant to distribute List I chemicals is
entitled to be registered unless the registration would be "inconsistent
with the public interest.'' In making this determination, Congress
directed that I consider the following factors:
(1) Maintenance by the applicant of effective controls against
diversion of listed chemicals into other than legitimate channels;
(2) Compliance by the applicant with applicable Federal, State, and
local law;
(3) Any prior conviction record of the applicant under Federal or
State laws relating to controlled substances or to chemicals
controlled under Federal or State law;
(4) Any past experience of the applicant in the manufacture and
distribution of chemicals; and
(5) Such other factors as are relevant to and consistent with the
public health and safety.
Id.
"These factors are considered in the disjunctive.'' Joy's Ideas, 70
FR 33195, 33197 (2005). I may rely on any one or a combination of
factors, and may give each factor the weight I deem appropriate in
determining whether an application for registration should be denied.
See, e.g., David M. Starr, 71 FR 39367 (2006); Energy Outlet, 64 FR
14269 (1999). Moreover, I am "not required to make findings as to all of
the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); Morall
v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
Here, I conclude that an analysis of each factor is unnecessary and
that Respondent's application should be denied based on Factor Two, its
record of non-compliance with applicable laws.
As recognized in numerous final orders, the illicit manufacture and
abuse of methamphetamine have had pernicious effects on families and
communities throughout the nation. Preventing the diversion of list I
chemicals into the illicit manufacture of methamphetamine is of critical
importance in protecting the public from the devastation wreaked by this
drug.
While the investigative file in this case contains no evidence
establishing the risk of diversion by establishments such as those which
Respondent proposed to distribute its products to, the firm's record of
non-compliance with other federal laws does not inspire confidence in
its willingness to faithfully obey DEA regulations. Here, the
investigative file establishes two separate instances in which
Respondent violated the FDA Act. Moreover, FDA found these violations
well after the rule banning ephedrine alkaloids went into effect.
In section 303(h) of the CSA, Congress broadly directed that the
Attorney General consider "compliance by the applicant with applicable
Federal, State, and local law,'' 21 U.S.C. 823(h)(2), in determining
whether to grant a list I distributor's registration. In contrast to the
provision applicable to a practitioner's registration, Congress did not
limit the subject matter of the laws that are properly considered in
determining whether an applicant's compliance record supports granting
it a registration. Cf. id. Sec. 823(f)(4) (directing consideration of a
practitioner's "[c]ompliance with applicable State, Federal, or local
laws relating to controlled substances'').
Moreover, Respondent's apparent willingness to sell products which
have been banned (as evidenced by the fact that banned products were
found not once, but twice at its facility) and/or its inability to
properly document its compliance with the FDA act (with respect to its
assertion that it intended to export the products found in the first
incident), are sufficiently probative of the manner in which it would
likely fulfill its obligations as a registrant under the Controlled
Substances Act.\1\ I thus conclude that granting it a registration would
"be inconsistent with the public interest.'' Id. Sec. 823(h).
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\1\ The CSA imposes extensive recordkeeping
requirements on List I chemical distributors. See 21 CFR Pt.
1310.
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Order
Pursuant to the authority vested in me by 21
U.S.C. 823(h), and 28 CFR 0.100(b) & 0.104, I order that the
application of Respondent ATF Fitness Products, Inc., for a DEA
Certificate of Registration as a distributor of list I chemicals be, and
it hereby is, denied. This order is effective April 5, 2007.
Dated: February 23, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7-3856 Filed 3-5-07; 8:45 am]
BILLING CODE 4410-09-P
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