CHM Wholesale Co.; Denial of Application

On or about April 11, 2001, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration (DEA), issued an Order to Show Cause (OTSC) by certified mail to CHM Wholesale Company (CHM), located in Chicago, Illinois, notifying it of an opportunity to show cause as to why the DEA should not deny its application, dated June 8, 2000, for a DEA Certificate of Registration as a distributor of the List I chemicals ephedrine and pseudoeophedrine, pursuant to 21 U.S.C. 823(h), as being inconsistent with the public interest. The order also notified CHM that, should no request for hearing be filed within 30 days, the right to a hearing would be waived.

The OTSC was returned, marked “Return to Sender—Moved, Left No Address.” The OTSC subsequently was sent by certified mail to the residential address of CHM's owner, Hyun Jin Kim (Kim), where it was received, June 4, 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 CHM 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 that on or about June 8, 2000, an application was received by the DEA Chemical Operations Registration section on behalf of CHM for DEA registration as a distributor of the two above-mentioned List I chemicals. The DEA pre-registration inspection on September 7, 2000, revealed that Kim and CHM had no prior experience in distributing List I chemical products. Kim further stated that he had lived in Chicago only three months. He stated he previously had lived in Houston, Texas, where he had operated a number of different retail businesses.

CHM provided a supplier list in response to DEA's request. The DEA investigation revealed both of CHM's proposed suppliers were the recipients of 15 Warning Letters between them. These letters notified the recipients that List I chemicals distributed by them were being diverted and were being discovered in various illicit settings consistent with the clandestine manufacture of methamphetamine. CHM was unable to provide a list of proposed customers.

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 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.

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 14,269 (1999). See also Henry J. Schwartz, Jr., M.D., 54 FR 16,422 (1989).

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

Regarding factor one, the maintenance of effective controls against the diversion of listed chemicals, the DEA pre-registration inspection documented inadequate security arrangements, in that there was no separate secure enclosure at the proposed business location wherein the List I chemical products would be stored. The inspection also revealed inadequate recordkeeping arrangements, in that CHM failed to provide information regarding planned controls to prevent diversion.

Also relevant to this factor, Kim stated to DEA investigators that he planned to relocate CHM's business premises. No further information has been received by DEA regarding the relocation, however, and therefore DEA has been unable to inspect the new proposed business location.

Regarding factor four, the applicant's past experience in the distribution of chemicals, the DEA investigation revealed that Kim could provide no verifiable evidence of previous experience related to handling or distributing listed chemicals.

Regarding factor five, other factors relevant to and consistent with the public safety, the Administrator finds that both of CHM's proposed suppliers were the recipients of 15 Warning Letters between them; one of the proposed suppliers was the subject of a current DEA investigation regarding the diversion of listed chemicals. CHM could not provide a customer list, so DEA investigators could not verify a legitimate customer base for the distribution of List I chemical products. The investigation further showed CHM had inadequate security and no apparent recordkeeping arrangements for listed chemical products. The Administrator concludes that CHM is not prepared to be entrusted with the responsibilities of a DEA registration.

Therefore, for the above-stated reasons, the Administrator concludes that it would be inconsistent with the public interest to grant the application of CHM.

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 CHM Wholesale Company be denied. This order is effective April 4, 2002.

Certificate of Service

This is to certify that the undersigned, on February 25, 2002, placed a copy of the Final Order referenced in the enclosed letter in the interoffice mail addressed to Robert Walker, Esq., Office of Chief Counsel, Drug Enforcement Administration, Washington, DC 20537; and caused a copy to be mailed, postage prepaid registered return receipt to Mr. Hyun Jin Kim, CHM Wholesale Company, 2428 W. Jarvis, Chicago, Illinois 60645.

Karen C. Grant.