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UNITED STATES v. CHEMICALS

June 12, 1998

UNITED STATES OF AMERICA, Plaintiff,
v.
CHEMICALS FOR RESEARCH AND INDUSTRY, Defendant.



The opinion of the court was delivered by: ILLSTON

ORDER GRANTING PLAINTIFF'S MOTION FOR SUPPLEMENTAL PRELIMINARY INJUNCTION

 On February 25, 1998, the Court heard argument on plaintiff's motion for a supplemental preliminary judgment. Having considered the arguments of counsel and the papers submitted, the Court hereby GRANTS plaintiff's motion as follows:

 I

 BACKGROUND

 Defendant Chemicals for Research and Industry ("CFRI"), a chemical and laboratory supply company located in Oakland, California, has had a long and antagonistic relationship with the United States Department of Justice ("DOJ") and Drug Enforcement Administration (DEA) (collectively "the government"). In the early 1990's, CFRI filed two actions based on the government's attempts to limit CFRI's sales of chemicals to individuals using the chemicals to manufacture methamphetamine. First, in CFRI v. Thornburgh, 762 F. Supp. 1394 (N.D. Cal. 1991), the district court issued a preliminary injunction against the government, enjoining the government from notifying chemical suppliers that they should refrain from selling certain chemicals to CFRI. The government's agents had "suspected that chemicals sold by plaintiff have been diverted to use at illegal methamphetamine manufacturing laboratories." 762 F. Supp. at 1395. The case later settled.

 Second, in CFRI v. Reno, C 93-1041 CAL (N.D. Cal. 1993), CFRI challenged the DEA's practice of stopping vehicles registered to individuals after the vehicles had stopped at CFRI. The Court agreed that CFRI and its customers would likely prevail on its claims that their Fourth and Fifth Amendment rights had been violated, and issued another preliminary injunction in favor of CFRI. The court noted in issuing its decision that it considered it "significant that there has been no charge here that CFRI has been violating any drug law . . . ." May 7, 1993 Hearing on CFRI's Motion for a Preliminary Injunction at 22. The case later settled.

 On July 1, 1996, the government began the present action, alleging that CFRI had violated the Controlled Substances Act, 21 U.S.C. § 801, et seq. (the "Act"), as amended by the Chemical Diversion and Trafficking Act of 1988, and sought declaratory relief, preliminary and permanent injunctive relief, and civil penalties, based on CFRI's "failure to report 4042 suspicious purchases of listed chemicals as required by the Act, its failure to make 24 reports of suspicious purchases of listed chemicals at the earliest practicable opportunity . . . and its failure in 99 instances to maintain adequate records as required by the Act and the CDTA's implementing regulations." Complaint P 1. *fn1"

 On November 26, 1996, the Court enjoined defendant Chemicals for Research and Industry (CFRI) "from failing to report" to the DEA sales of ethyl ether when (1) the sales are made to individual purchasers not connected with a business entity; or (2) the sales are made by cash or a combination of cash and cashiers' checks or cash and money orders; or (3) the sales are made in conjunction with other chemicals commonly used with ethyl ether in the illicit manufacture of PCP, including bromobenzene, petroleum ether, magnesium turnings, iodine crystals, cyclohexanone, pyridine, hydrochloric acid, sodium bisulfite or metabisulfite, phenyl magnesium bromide, sodium hydroxide, or metal catalysts (including palladium, palladium-on-carbon, ruthenium, or ruthenium dioxide).

 Meanwhile, Congress enacted the Comprehensive Methamphetamine Control Act of 1996 (CMCA). The CMCA named iodine and hydrochloric gas as "list II" chemicals: chemicals "specified by regulation of the Attorney General as a chemical that is used in manufacturing a controlled substance . . . ." 21 U.S.C. § 802(35)(I)-(J). The CMCA also makes it "unlawful" "to distribute a laboratory supply to a person who uses, or attempts to use, that laboratory supply to manufacture a controlled substance or a listed chemical, in violation of this subchapter or subchapter II of this chapter, with reckless disregard for the illegal uses to which such a laboratory supply will be put." 21 U.S.C. § 842(a)(11). *fn2" Finally, the CMCA explicitly authorizes the Attorney General to "commence a civil action for appropriate declaratory or injunctive relief relating to violations of [ 21 U.S.C. § 843] or [ 21 U.S.C. § 842]." 21 U.S.C. § 843(f) ("Injunctions").

 On February 18, 1997, the government filed a first amended complaint for reporting violations.

 Then, on November 14, 1997, the government filed concurrently a motion to file a "second supplemental complaint" and the present motion for a supplemental preliminary injunction.

 On February 2, 1998, the Court granted the government's motion to file its supplemental complaint. That complaint included four new counts: one brought under 21 U.S.C. § 842(a)(11), and three brought under 21 U.S.C. § 843(a)(7). 21 U.S.C. § 843(a)(7) makes it "unlawful" "to . . . distribute . . . any equipment, chemical, product, or material which may be used to manufacture a controlled substance or listed chemical, knowing, intending, or having reasonable cause to believe, that it will be used to manufacture a controlled substance or listed chemical in violation of this subchapter or subchapter II of this chapter . . . ."

 The count brought under 21 U.S.C. § 842(a)(11) concerns CFRI's alleged sales of iodine, red phosphorous, HCL gas, and/or Freon. The counts brought under 21 U.S.C. § 843(a)(7) concern CFRI's alleged sales of, respectively, (1) iodine, red phosphorous, and HCL gas; (2) Freon or a combination of Freon and sodium hydroxide; and (3) PCP precursor chemicals (ethyl ether, bromobenzene, magnesium turnings, iodine crystals, cyclohexanone, and sodium metabisulfite).

 In the present motion for a preliminary injunction, the government asks the Court to enter an injunction enjoining CFRI from engaging in any further sales of iodine, red phosphorous, HCL gas, Freon, and sodium hydroxide, as well as the PCP precursor ...


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