[Federal Register Volume 61, Number 34 (Tuesday, February 20, 1996)]
[Proposed Rules]
[Pages 6329-6332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3653]



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DEPARTMENT OF AGRICULTURE
7 CFR Part 985

[Docket No. A0-79-2; FV95-985-4]


Spearmint Oil Produced in the Far West; Emergency Final Decision 
and Referendum Order on Proposed Amendment of Marketing Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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SUMMARY: This emergency final decision would amend the Federal 
marketing order for spearmint oil produced in the Far West (Order). The 
amendment was proposed by the Department of Agriculture (Department). 
The proposed amendment would remove from the regulated production area, 
the portions of California and Montana currently regulated under the 
Order.

DATES: A referendum shall be conducted from March 2 through March 15, 
1996, for the purpose of determining whether the proposed amendment is 
favored by producers who were engaged in the production of spearmint 
oil in the production area during the representative period. The 

[[Page 6330]]
representative period for the purpose of the referendum herein ordered 
is June 1, 1994, to May 31, 1995.

FOR FURTHER INFORMATION CONTACT: (1) Caroline C. Thorpe, Marketing 
Order Administration Branch, Fruit and Vegetable Division, AMS, USDA, 
AMS, room 2526-S, P.O. Box 96456, Washington, DC 20090-6456; telephone, 
(202) 720-5127, or FAX: (202) 720-5698.
    (2) Robert Curry, Northwest Marketing Field Office, Marketing Order 
Administration Branch, Fruit and Vegetable Division, AMS, USDA, 1220 
S.W. Third Avenue, room 369, Portland, Oregon, 97204; telephone: (503) 
326-2725, or FAX: (503) 326-7440.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued October 4, 1995, and published in the Federal 
Register on October 11, 1995 (60 FR 52869); Correction to Notice of 
Hearing issued November 8, 1995, and published in the Federal Register 
on November 13, 1995 (60 FR 57144); and Notice of Order Filed on 
Proposed Rulemaking concerning the filing of post-hearing briefs issued 
November 30, 1995, and published in the Federal Register on December 5, 
1995 (60 FR 62229).
    This administrative action is governed by the provisions of 
sections 556 and 557 of Title 5 of the United States Code and is 
therefore excluded from the requirements of Executive Order 12866.

Preliminary Statement

    A public hearing was held on November 14, 1995, to consider a 
proposed amendment of Marketing Order No. 985 (7 CFR Part 985), 
regulating the handling of spearmint oil produced in the Far West, 
hereinafter referred to collectively as the ``Order''. The hearing was 
held pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601 et seq.), hereinafter referred to 
as the Act, and the applicable rules of practice and procedure 
governing proceedings to formulate marketing agreements and marketing 
orders (7 CFR Part 900).
    The Notice of Hearing contained one proposal by the Department, 
which redefined the production area under the Order to exclude those 
portions of the area with no historic record of commercial production 
of spearmint oil.
    After the conclusion of the hearing, the deadline for filing post-
hearing briefs was set at December 22, 1995. Briefs and comments which 
were filed, are ruled upon elsewhere in this decision.
    The material issues of record are as follows: (1) Should areas with 
no historic record of commercial production of spearmint oil continue 
to be regulated under the Order? (2) Does the ``production area'' as 
defined in the Order constitute the smallest practicable area which 
should be regulated consistent with carrying out the policy of the Act? 
(3) Do existing circumstances warrant expediting the amendment process 
by omitting the recommended decision?

Small Business Considerations

    In accordance with the provisions of the Regulatory Flexibility Act 
(RFA) (5 U.S.C. 601 et seq.), the Administrator of the AMS has 
determined that this action would not have a significant economic 
impact on a substantial number of small entities. Small agricultural 
service firms, which include handlers regulated under the Order, have 
been defined by the Small Business Administration (SBA) (13 CFR 
121.601) as those having annual receipts of less than $5,000,000. Small 
agricultural producers are defined as those with annual receipts of 
less than $500,000.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders and 
rules issued thereunder are unique in that they are brought about 
through group action of essentially small entities acting on their own 
behalf. Thus, both the RFA and the Act have small entity orientation 
and compatibility. Interested persons were invited to present evidence 
at the hearing on the probable impact that the proposed amendment to 
the Order would have on small businesses.
    During the 1994-95 marketing year from June 1, 1994, through May 
31, 1995, approximately 8 handlers were regulated under the Order. In 
addition, there are about 260 growers of spearmint in the regulated 
area. The Act requires the application of uniform rules on regulated 
handlers. A minority of handlers and producers covered under the Order 
are small businesses. The Order itself is tailored to the size and 
nature of these small businesses. Marketing orders, and amendments 
thereto, are unique in that they are normally brought about through 
group action of entities on their own behalf. Thus, both the RFA and 
the Act are compatible with respect to small entities.
    The proposed amendment to the Order would delete portions of the 
production area currently covered by the Order which have no historic 
record of commercial production of spearmint oil. This change would 
provide that the Order cover the smallest regional production area 
practicable, consistent with program objectives. The proposed amendment 
should not have a significant economic impact on handlers or producers.
    The amendment proposed herein has been reviewed under Executive 
Order 12778, Civil Justice Reform. It is not intended to have 
retroactive effect. If adopted, the proposed amendment would not 
preempt any State or local laws, regulations, or policies, unless they 
present an irreconcilable conflict with the amendment.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the Order, any provision of the Order, or any 
obligation imposed in connection with the Order is not in accordance 
with law and requesting a modification of the Order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing, the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.

Findings and Conclusions

    The following findings and conclusions are based on evidence 
presented at the hearing and the record thereof:
    (1) Should areas with no historic record of commercial production 
of spearmint oil continue to be regulated under the Order?
    The Order regulates Far West spearmint oil through the 
establishment of annual allotment percentages and salable quantities. 
The objective of such regulation is to balance supplies with market 
demand, thereby reducing price fluctuations and improving returns to 
producers. The Order, and regulations issued thereunder, apply only to 
spearmint oil produced in the defined ``production area''. The Order 
currently defines the production area as all the area within the States 
of Washington, Idaho, Oregon; that portion of California and Nevada 
north of the 37th parallel; and that portion of Montana and Utah west 
of the 111th meridian. This definition was established when the Order 
came into effect on April 14, 1980 (45 F.R. 25039), and was based on 
the 

[[Page 6331]]
record of a hearing held in October 1979.
    At the time the Order became effective, the production area as 
defined was found to be the smallest regional production area 
practicable to effectuate the declared policy of the Act. This included 
all the areas in the Far West and northwestern United States having the 
potential of commercially producing quality spearmint oil.
    Witnesses who testified at this amendment hearing included 
Department employees, a representative of the Spearmint Oil 
Administrative Committee (committee), a grower from Nevada, an official 
with the Montana Department of Agriculture, and representatives of the 
Montana Mint Growers' Association. All witnesses supported the proposal 
to no longer regulate portions of California and Montana under the 
Order.
    The record supports excluding these two areas from coverage 
primarily because there has been no historic record of commercial 
production of spearmint oil in those areas. Record evidence shows that 
in 1994, there were 1,500 acres of spearmint harvested in Idaho, 10,500 
acres in Washington, 1,700 acres in Oregon, and 160 acres in Utah and 
Nevada combined. No harvested acreage was recorded for those parts of 
California and Montana included under the Order. Likewise, evidence 
shows that spearmint oil was produced in all States regulated under the 
Order with the exception of California and Montana. There has been no 
recorded commercial production of spearmint oil in California or 
Montana since the inception of the Order. Testimony at the hearing also 
indicated that there is no evidence of current commercial production in 
those states.
    2. Does the ``production area'' as defined in the Order constitute 
the smallest practicable area which should be regulated consistent with 
carrying out the policy of the Act?
    The evidence of record is that the Order has been successful in 
establishing orderly marketing conditions for Far West spearmint oil. 
Specifically, the establishment of the Order has reduced price 
volatility and ensured market stability. In the 13 years preceding the 
Order's promulgation, prices for spearmint oil fluctuated between $4.16 
and $11.62 per pound. From 1982 to 1992, while the Order was in effect, 
prices ranged between $11.29 and $14.03 per pound.
    Inclusion in the production area requires a demonstration that the 
areas covered have similar crop and marketing conditions. When the 
Order was promulgated, the finding for including California and Montana 
in the production area was based on evidence that production and 
marketing conditions in those areas would be similar to those of other 
spearmint-producing States. This has proven to be incorrect. The record 
indicates that land in California and Montana suitable for the 
production of spearmint oil is limited, and weather conditions are a 
deterrent to consistent spearmint production. Amending the Order by 
removing California and Montana, would result in the Order covering the 
smallest regional production area practicable to effectuate the 
declared policy of the Act.
    For the above reasons, it is concluded that the production area 
should be redefined to exclude California and Montana. Accordingly, the 
production area as defined in this amendment is found to be the 
smallest practicable area which should be regulated consistent with 
carrying out the policy of the Act.

Modification of Proposed Amendment

    As a modification to the proposal, testimony was submitted for the 
record in support of the proposed amendment that further proposed the 
production area not be reduced again by amendment for at least 5 years. 
The intent of the modification was to provide sufficient time to gather 
and analyze data on the impact of removing California and Montana from 
Order coverage. As submitted for the record, the 5-year period would 
provide stability for the industry before any other amendments to 
reduce the production area are considered.
    However, a prohibition on amending the Order's definition of 
production area for 5 years would unduly limit the Secretary's 
discretion and authority to administer the Order consistent with the 
terms of the Act. Therefore, this modification is denied.
    One grower from Nevada testified that the hearing should be 
reopened to consider excluding Nevada from the production area. 
According to his testimony, there are only 37 acres of commercial 
spearmint production in the State of Nevada. As such, the witness 
concluded that Nevada is not a significant producer of spearmint oil 
and should be excluded from Order coverage.
    One post-hearing brief and one comment were submitted in support of 
removing Nevada from regulation under the Order. There was no other 
information provided by those in the spearmint industry to support this 
action.
    Record evidence shows that Nevada, unlike California and Montana, 
currently has commercial production of spearmint oil, and there has 
been production of spearmint oil in that State every year since the 
inception of the Order. Record evidence indicates that producing 
acreage in Nevada has been as high as 230 acres.
    The evidence supports excluding from Order coverage only those 
areas with no history of commercial production of spearmint oil. There 
was no other evidence presented at the hearing as to whether there is a 
``significant'' level of production that should justify an area's 
inclusion under the Order, nor any evidence as to what that threshold 
level should be. Also, no evidence was presented to show that the 
marketing of spearmint oil grown in Nevada does not impact or compete 
with the marketing of spearmint oil grown in other areas covered by the 
Order.
    For these reasons, the proposal to exclude Nevada from the 
production area is denied.
    This decision calls for a referendum to be conducted among 
producers of spearmint oil to determine if they support the proposed 
amendment to remove California and Montana from the Order's production 
area. If a sufficient number of producers support the amendment, the 
Order will continue in its amended form. To become effective, the 
amendment must be approved by a two-thirds majority, either by number 
of voters favoring it or by volume of production represented in the 
referendum. If the amendment is not approved by producers, the 
Secretary would consider terminating the Order.
    As previously discussed, the Act requires that the Order must cover 
the smallest regional production area practicable. Based on the record 
evidence it is found that the production area as proposed to be amended 
constitutes the smallest practicable area.
    3. Do existing circumstances warrant expediting the amendment 
process by omitting a recommended decision in this proceeding?
    Witnesses who testified at the hearing strongly supported expedited 
handling of this formal rulemaking proceeding. The record indicates 
that there has been uncertainty within the spearmint oil industry for 
some time with respect to the possible redefinition of the Order's 
production area. Record evidence shows that such uncertainty has the 
potential of hampering the ability of individual producers and handlers 
to make sound economic decisions concerning their operations. The 
proposed amendment could affect planting, contracting, lending and 
other important economic decisions of those in the industry. There 

[[Page 6332]]
was no evidence provided in opposition to expediting this proceeding.
    Only through omission of a recommended decision in this proceeding 
is it possible to have the outcome of the amendment and the future of 
the Order determined prior to the next marketing year, which begins 
June 1, 1996. As stated on the record, this is very important to 
producers and handlers of spearmint oil who need to plan their 
marketing and production strategies for next year.
    It is therefore found that good cause exists for omission of a 
recommended decision in accordance with Sec. 900.12(d) of the rules of 
practice and procedure governing proceedings to formulate marketing 
agreements and marketing orders (7 CFR Part 900).

Rulings on Briefs Filed by Interested Persons

    Four briefs and comments were filed in this proceeding. None 
opposed the proposed amendment.
    One brief and one comment were filed after the filing deadline. 
However, they did not introduce issues which were different from those 
covered at the hearing or in the other briefs and comments.
    The comments and briefs were carefully considered, along with 
evidence in the record, in making the findings and reaching the 
conclusions contained herein. To the extent that any suggested findings 
or conclusions contained in any of the briefs or arguments are 
inconsistent with the findings and conclusions contained herein, the 
request to make such findings or to reach such conclusions is denied on 
the basis of facts found and stated in connection with this decision.

Marketing Order

    Annexed hereto and made a part hereof is a document entitled, 
``Order Amending the Order Regulating the Handling of Spearmint Oil 
Produced in the Far West.'' This document has been decided upon as the 
detailed and appropriate means of effectuating the foregoing findings 
and conclusions. It is hereby ordered, That this entire decision, be 
published in the Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR 900.400 et seq.) 
to determine whether the issuance of the annexed order amending the 
order regulating the handling of spearmint oil produced in the Far West 
is approved or favored by producers, as defined under the terms of the 
order, who during the representative period were engaged in the 
production of spearmint oil in the Far West.
    The representative period for the conduct of such referendum is 
hereby determined to be June 1, 1994, through May 31, 1995.
    The agents of the Secretary to conduct such referendum are hereby 
designated to be Gary D. Olson and Robert J. Curry, Marketing Order 
Administration Branch, Northwest Marketing Field Office, Fruit and 
Vegetable Division, AMS, USDA, 1220 S.W. Third Avenue Room 369 
Portland, Oregon 97204, telephone (503) 326-2724; or FAX (503) 326-
7440.
    In accordance with the Paperwork Reduction Act of 1980 [44 U.S.C. 
chapter 35], the ballot materials used in the referendum herein ordered 
have been submitted to and approved by the Office of Management and 
Budget (OMB) and have been assigned OMB No. 0581-0065 for spearmint 
oil. It has been estimated that it will take an average of 10 minutes 
for each of the approximately 260 producers of Far West Spearmint to 
cast a ballot. Participation is voluntary. Ballots postmarked after 
February 24, 1996, will not be included in the vote tabulation.

List of Subjects in 7 CFR Part 985

    Marketing agreements, Oils and fats, Reporting and recordkeeping 
requirements, Spearmint oil.

    Dated: February 13, 1996.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.

Order Amending the Order Regulating the Handling of Spearmint Oil 
Produced in the Far West 1

    \1\  This order shall not become effective unless and until the 
requirements of Sec. 900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
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Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary and in addition to the findings and determinations 
previously made in connection with the issuance of the order; and 
all of said previous findings and determinations are hereby ratified 
and affirmed, except insofar as such findings and determinations may 
be in conflict with the findings and determinations set forth 
herein.
    (a) Findings and Determinations Upon the Basis of the Hearing 
Record. Pursuant to the provisions of the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601 et seq.), and the 
applicable rules of practice and procedure effective thereunder (7 
CFR Part 900), a public hearing was held on the proposed amendment 
to the Marketing Agreement and Order No. 985 (7 CFR Part 985), 
regulating the handling of spearmint oil produced in the Far West.
    Upon the basis of the evidence introduced at such hearing and 
the record thereof, it is found that:
    (1) The order, as hereby proposed to be amended, and all of the 
terms and conditions thereof, will tend to effectuate the declared 
policy of the Act;
    (2) The order, as hereby proposed to be amended, regulates the 
handling of spearmint oil produced in the Far West in the same 
manner as, and is applicable only to persons in the respective 
classes of oil specified in the marketing order upon which hearings 
have been held;
    (3) The order, as hereby proposed to be amended, is limited in 
application to the smallest regional production area which is 
practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several orders applicable to subdivisions 
of the production area would not effectively carry out the declared 
policy of the Act;
    (4) The order, as hereby proposed to be amended, prescribes, 
insofar as practicable, such different terms applicable to different 
parts of the production area as are necessary to give due 
recognition to the differences in the production and marketing of 
spearmint oil grown in the production area; and
    (5) All handling of spearmint oil produced in the production 
area is in the current of interstate or foreign commerce or directly 
burdens, obstructs, or affects such commerce.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of spearmint oil produced in the Far West shall 
be in conformity to, and in compliance with, the terms and 
conditions of the said order as hereby proposed to be amended as 
follows:

PART 985--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL 
PRODUCED IN THE FAR WEST

    1. The authority citation for 7 CFR Part 985 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Section 985.5 is revised as follows:

Sec. 985.5  Production area.

    Production area means all the area within the States of Washington, 
Idaho, Oregon, and that portion of Nevada north of the 37th parallel 
and that portion of Utah west of the 111th meridian. The area shall be 
divided into the following districts:
    (a) District 1. State of Washington.
    (b) District 2. The State of Idaho and that portion of the States 
of Nevada and Utah included in the production area.
    (c) District 3. The State of Oregon.

[FR Doc. 96-3653 Filed 2-16-96; 8:45 am]
BILLING CODE 3410-02-P