U.S. v. Gavrilovic, s. 76-1219

• Decision Date: 16 February 1977
• Docket Number: 76-1379,76-1220,76-1381 and 76-1382,Nos. 76-1219,76-1242,s. 76-1219
• Citation: 551 F.2d 1099
• Parties: UNITED STATES of America, Appellee, v. Alex O. GAVRILOVIC, Appellant. UNITED STATES of America, Appellee, v. John R. KUEFFNER, Appellant. UNITED STATES of America, Appellee, v. Scott Edward STANTON, Appellant. UNITED STATES of America, Appellee, v. Kenneth SHERMAN, a/k/a Ken Cortells and Ken Reese, Appellant. UNITED STATES of America, Appellee, v. Michael Jeffrey SORENSON, Appellant. UNITED STATES of America, Appellee, v. Timothy John OLSON, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1099

551 F.2d 1099

UNITED STATES of America, Appellee, v. Alex O. GAVRILOVIC, Appellant.

UNITED STATES of America, Appellee, v. John R. KUEFFNER, Appellant.

UNITED STATES of America, Appellee, v. Scott Edward STANTON, Appellant.

UNITED STATES of America, Appellee, v. Kenneth SHERMAN, a/k/a Ken Cortells and Ken Reese, Appellant.

UNITED STATES of America, Appellee, v. Michael Jeffrey SORENSON, Appellant.

UNITED STATES of America, Appellee, v. Timothy John OLSON, Appellant.

Nos. 76-1219, 76-1220, 76-1242, 76-1379, 76-1381 and 76-1382.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 7, 1976.

Decided Feb. 16, 1977.

Lawrence J. Fleming, St. Louis, Mo., Howard Schainker, John J. Allan, Clayton, Mo., Graham W. LaBeaume, St. Louis, Mo., for appellants; Robert A. Hampe, St. Louis, Mo., on brief for appellants, Stanton, Gavrilovic and Kueffner.

Michael W. Reap, Asst. U. S. Atty., St. Louis, Mo., for appellee; Barry A. Short, U. S. Atty., and Michael W. Reap, Asst. U. S. Atty., St. Louis, Mo., on brief.

Vince D'Angelo, Albuquerque, N. M., on brief for appellant, Stanton; John J. Allan, St. Louis, Mo., on brief for appellant, Gavrilovic; Lawrence J. Fleming, Graham W. LaBeaume, St. Louis, Mo., Howard Schainker, Clayton, Mo., on brief for appellants, Sherman, Sorenson and Olson.

Before GIBSON, Chief Judge, and LAY and STEPHENSON, Circuit Judges.

LAY, Circuit Judge.

This is a consolidated appeal ¹ by defendants Alex O. Gavrilovic, John R. Kueffner, Scott Edward Stanton, Kenneth Sherman, Michael Jeffrey Sorenson and Timothy John Olson, who were convicted of manufacturing a controlled substance, mecloqualone, and conspiracy to manufacture and distribute that drug in violation of 21 U.S.C. §§ 841(a)(1) and 846. ² Defendant Sherman was also convicted of possession of mecloqualone with intent to distribute in violation of § 841(a)(1).

The defendants assert that their convictions should be reversed because their alleged violations of §§ 841(a)(1) and 846 took place prior to the effective date of the regulation placing mecloqualone on Schedule I of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (Drug Abuse Act), 21 U.S.C. § 801 et seq.

We agree. We find that the action of the Administrator of the Drug Enforcement Administration (DEA) with regard to the effective date of the regulation was not in compliance with 5 U.S.C. § 553(d). ³ Since we find the Administrator's action was not justified, we vacate the judgments of conviction. ⁴

I

In April of 1975 the defendants prepared to manufacture mecloqualone, a known depressant considered to have no currently accepted medical use, in a warehouse in St. Louis, Missouri. They conducted their operation under a veil of secrecy by organizing and representing themselves as Parade Manufacturing Co., a manufacturer of dyes and decals for T-shirts. The evidence also shows that in April 1975 the defendants purchased large quantities of the chemicals and equipment needed to manufacture mecloqualone. At the time the defendants commenced their operation it was not a violation of § 841(a)(1) to manufacture mecloqualone, since it was not then listed on a schedule of controlled substances. At that time, however, it was necessary to register with the Secretary of Health, Education and Welfare in order to manufacture any drug, not otherwise proscribed under the Drug Abuse Act. ⁵ Both the government and the defendants acknowledge that the defendants were not registered.

During June 1975 the DEA's St. Louis office began surveillance of the defendants' operations. On June 25, 1975, results of numerous observations prompted Thomas Maher, the agent in charge, to write the Chief Counsel of the DEA requesting that mecloqualone be made a controlled substance as soon as possible in order "to prevent a public health hazard." In support of this request, Maher stated that the defendants were capable of producing large amounts of mecloqualone and "will probably be into production within one week." Prior to receiving the letter the Administrator of the DEA had taken the first step in the administrative process of controlling mecloqualone by publishing on May 29, 1975, in the Federal Register a notice entitled "Proposed Placement of Mecloqualone and the Thiophene Analog of Phencyclidine in Schedule I." 40 Fed.Reg. 23306.

Since the DEA received no comments after publication, a hearing was not necessary. The Administrator then promulgated a regulation adding mecloqualone and the thiophene analog of phencyclidine to Schedule I and published notice of it in the Federal Register on July 8, 1975. 40 Fed.Reg. 28611. He set forth his findings that both drugs had a high potential for abuse, that neither had a currently accepted medical use, and that there was a lack of accepted safety for use of the drugs even under medical supervision. However, unless he could show "good cause" the Administrator was required to give the public 30 days notice before the regulation became effective. See 5 U.S.C. § 553(d). ⁶ Although the Administrator found the same dangers for both drugs, the effective date for the addition of the thiophene analog of phencyclidine to Schedule I was August 11, 1975, while the effective date for the addition of mecloqualone was July 10, 1975, just two days after publication in the Federal Register.

In order to justify the July 10 effective date the Administrator made the following finding of "good cause":

Effective dates. Based on investigations conducted by the Drug Enforcement Administration, the Acting Administrator hereby finds that mecloqualone, in the past, has been clandestinely manufactured for purposes of distribution and diversion outside legitimate drug channels. A most recent investigation has revealed that this clandestine manufacturing activity continues.

The Acting Administrator finds that Congress intended that the Attorney General " . . . should not be required to wait until a number of lives have been destroyed or substantial problems have already arisen before designating a drug as subject to controls of the (Act) . . ." H.R.Rep.No.91-1444 (part 1) 91st Cong., 2d Sess. 35 (1970), U.S.Code Cong. & Admin.News 1970, p. 4566.

Considering the danger inherent in mecloqualone as a drug meeting the criteria for inclusion into Schedule I, and considering that Congress intended that controls apply to drugs in a preventative manner, the Acting Administrator hereby finds, based upon the above, that the public health, as well as safety, necessitate the placement of Schedule I controls upon mecloqualone at a date earlier than thirty days from the date of publication of this order in the Federal Register.

40 Fed.Reg. 28611-12.

On July 31, 1975, the defendants were arrested, and charged with manufacturing a controlled substance and conspiracy from April 1975 to July 31, 1975. ⁷

On appeal the defendants do not challenge the placement of mecloqualone on Schedule I, but assert that the Administrator's finding of good cause was arbitrary, since he failed to demonstrate a public necessity for the early effective date.

The government, on the other hand, contends that the Administrator's finding that the continuing manufacturing of mecloqualone, an inherently dangerous drug, constituted an immediate danger to public health and safety, was sufficient to justify the July 10 effective date. The government also contends that the defendants were given adequate notice of the proposed placement of mecloqualone on Schedule I by the May 29, 1975, notice in the Federal Register. Furthermore, the government urges that the clandestine nature of defendants' operations demonstrated that they had actual knowledge that their activities were illegal.

II

It is a fundamental principle of law that "(n)o one can be criminally punished . . . except according to a law prescribed . . . by the sovereign authority before the imputed offense was committed, and which existed as a law at that time." Kring v. Missouri, 107 U.S. 221, 235, 2 S.Ct. 443, 455, 27 L.Ed. 506 (1882); and Bouie v. City of Columbia, 378 U.S. 347, 353-54, 84 S.Ct. 1697, 12 L.Ed.2d 894 (1964). Thus the basic issue, as perceived by this court, is whether the criminal prohibition against the manufacture of mecloqualone was in effect before the defendants' manufacture of the drug.

The general rule is that in the absence of an express provision, an act of Congress takes effect on the date of its enactment. Arnold v. United States, 13 U.S. (9 Cranch) 103, 119, 3 L.Ed. 671 (1815). See generally Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858 (1938); and Shwab v. Doyle, 258 U.S. 529, 42 S.Ct. 391, 66 L.Ed. 747 (1922). Here, however, because the rule making authority has been delegated to the DEA, § 553(d) of the Administrative Procedure Act, 5 U.S.C. § 500 et seq., requires publication in the Federal Register at least 30 days prior to the rule's effective date unless good cause is shown to forego the full notice period. Thus, if good cause is lacking here, the defendants' conduct which occurred within 23 days of publication would not be unlawful.

In civil cases, the courts have approved an agency finding of good cause when an emergency situation existed. See Texaco, Inc. v. FEA, 531 F.2d 1071 (Em.App.), cert. denied, 426 U.S. 941, 96 S.Ct. 2662, 49 L.Ed.2d 394 (1976); Nader v. Sawhill, 514 F.2d 1064 (Em.App.1975); Reeves v. Simon, 507 F.2d 455 (Em.App.1974), cert. denied, 420 U.S. 991, 95 S.Ct. 1426, 43 L.Ed.2d 672 (1975); California v. Simon, 504 F.2d 430 (Em.App.), cert. denied, 419 U.S. 1021, 95 S.Ct. 496, 42 L.Ed.2d 294 (1974); DeRieux v. Five Smiths, Inc., 499 F.2d 1321 (Em.App.), cert. denied, 419 U.S. 896, 95 S.Ct. 176, 42 L.Ed.2d 141 (1974). Other courts have held that the 30-day period should be closely guarded and the good cause exception sparingly used. Texaco, Inc. v. FPC, 412 F.2d 740 (3d Cir. 1969); and Kelly v. Department of Interior, 339 F.Supp. 1095, 1102 (E.D.Cal.1972). While the courts have...