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K.V.M. Enterprises; Denial of Registration

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On February 25, 2002, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration (DEA), issued an Order to Show Cause to K.V.M. Enterprises (KVM) of Detroit, Michigan, notifying it of an opportunity to show cause as to why DEA should not deny its application for DEA registration as a distributor of list 1 chemicals. As a basis for the denial, the Order to Show Cause alleged that KVM's registration would not be in the public interest. The order also notified KVM that should not a request for a hearing be filed within 30 days, its hearing right would be deemed waived.

The Order to Show Cause was sent by certified mail to KVM to the address included on the application for registration. DEA received a signed receipt indicating that the Order to Show Cause was received on KVM's behalf on March 4, 2002. DEA has not received a request for hearing or any Start Printed Page 70969other reply from KVM or anyone purporting to represent it in this matter. Therefore, the Deputy Administrator, finding that (1) 30 days have passed since the receipt of the Order to Show Cause, and (2) no request for a hearing having been received, concludes that KVM is deemed to have waived its hearing right. After considering material from the investigative file in this matter, the Deputy Administrator now enters his final order without a hearing pursuant to 21 CFR 1301.43(d) and (e) and 1301.46.

The Deputy Administrator finds that on January 23, 2001, KVM submitted an application for DEA registration as a distributor of the list I chemical ephedrine (DEA chemical code number 8113). The application was submitted by Kwana McBurrows (Ms. McBurrows), owner of KVM.

Ephedrine is a legitimately imported and distributed product used in the production of bronchial dilators and asthma relief medication. Ephedrine is also a precursor chemical used in the illicit manufacture of methamphetamine. DEA has developed information which demonstrates a recent increase in the use of ephedrine in the illicit manufacture of methamphetamine: in 1998, DEA was directly involved in the seizure of 1,626 clandestine methamphetamine laboratories. Of these laboratories, there were 135 instances where ephedrine was positively identified as a precursor chemical for methamphetamine (8.3 percent of total clandestine laboratory seizures). In 1999, DEA was directly involved in the seizure of 2,025 clandestine methamphetamine laboratories. Of these laboratory seizures, there were 269 instances where ephedrine was positively identified as a precursor chemical for methamphetamine (13.3 percent of total clandestine laboratory seizures). In 2000, the number of total DEA clandestine seizures dropped to 1,815, however, those involving ephedrine products (249) remained consistent.

During a March 16, 2001, pre-registration investigation, DEA learned that KVM is a distributor of products containing Ginseng. DEA also learned that prior to submitting an application for DEA registration, Ms. McBurrows worked as a beauty consultant, and sold “Mary Kay” health and beauty products. DEA's investigation further revealed that Ms. McBurrows had no prior experience in handling list I chemicals.

DEA's investigation also revealed that KVM does not presently have any customers, but proposes to sell its products exclusively to gas stations. DEA has developed information that certain list I chemicals such as pseudoephedrine and ephedrine are often purchased in large quantities by non-traditional retail outlets such as gas station retailers who are not typically engaged in the sale of these products. These establishments in turn have sold these listed chemicals to individuals engaged in the illicit manufacture of methamphetamine.

DEA also requested information regarding proposed suppliers of list I chemicals to KVM. Ms. McBurrows informed DEA that the Hammer Corporation (Hammer) of Atlanta, Georgia is one of its potential suppliers. Hammer has been the recipient of 16 Warning Letters from DEA between October 1997 and January 2001. These letters notified Hammer that list I chemicals distributed by the firm have been associated with the illicit manufacture of methamphetamine.

Accordingly, the Deputy Administrator of the Drug Enforcement Administration, pursuant to the authority vested in him by 21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that KVM's application for DEA registration be denied, on the ground that registration of KVM would not be in the public interest. 21 U.S.C. 824(a)(4). This order is effective December 27, 2002.

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Dated: November 4, 2002.

John B. Brown, III,

Deputy Administrator.

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[FR Doc. 02-30021 Filed 11-26-02; 8:45 am]

BILLING CODE 4410-09-M