[Federal Register Volume 62, Number 112 (Wednesday, June 11, 1997)]
[Rules and Regulations]
[Pages 31704-31707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15253]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[FV96-985-3 FIR]


Spearmint Oil Produced in the Far West; Revision of the Salable 
Quantity and Allotment Percentage for Class 3 (Native) Spearmint Oil 
for the 1996-97 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a 
final rule, without change, an interim final rule increasing the 
quantity of Class 3 (Native) spearmint oil produced in the Far West 
that handlers may purchase from, or handle for, producers during the 
1996-97 marketing year. This rule was recommended by the Spearmint Oil 
Administrative Committee (Committee), the agency responsible for local 
administration of the marketing order for spearmint oil produced in the 
Far West. The Committee recommended this rule to avoid extreme 
fluctuations in supplies and prices and thus help to maintain stability 
in the Far West spearmint oil market.

EFFECTIVE DATE: June 11, 1997.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369, 
Portland, Oregon 97204-2807; telephone: (503) 326-2043; Fax: (503) 326-
7440; or Caroline C. Thorpe, Marketing Order Administration Branch, 
Fruit and Vegetable Division, AMS, USDA, room 2525, South Building, 
P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 720-8139; 
Fax: (202) 720-5698. Small businesses may request information on 
compliance with this regulation by contacting: Jay Guerber, Marketing 
Order Administration Branch, Fruit and Vegetable Division, AMS, USDA, 
P.O. Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 
720-2491; Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 985 (7 CFR part 985), regulating the handling of spearmint oil 
produced in the Far West (Washington, Idaho, Oregon, designated parts 
of Nevada, and Utah), hereinafter referred to as the ``order.'' This 
order is effective under the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''

[[Page 31705]]

    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the provisions of the marketing order now in 
effect, salable quantities and allotment percentages may be established 
for classes of spearmint oil produced in the Far West. This rule 
continues an increase in the quantity of Native spearmint oil produced 
in the Far West that may be purchased from or handled for producers by 
handlers during the 1996-97 marketing year, which ended on May 31, 
1997. This rule will not preempt any State or local laws, regulations, 
or policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
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 request 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 to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after the date of the entry of the ruling.
    The Far West spearmint oil industry is characterized by producers 
whose farming operations generally involve more than one commodity and 
whose income from farming operations is not exclusively dependent on 
the production of spearmint oil. The U.S. production of spearmint oil 
is concentrated in the Far West, primarily Washington, Idaho, and 
Oregon (part of the area covered by the order). Spearmint oil is also 
produced in the Midwest. The production area covered by the order 
normally accounts for approximately 75 percent of the annual U.S. 
production of spearmint oil.
    This rule finalizes an interim final rule that increased the 
quantity of Native spearmint oil that handlers may purchase from, or 
handle for, producers during the 1996-97 marketing year, which ends on 
May 31, 1997. Thus, this rule finalizes the increase in the salable 
quantity from 1,074,902 pounds to 1,213,692 pounds and the allotment 
percentage from 54 percent to 61 percent for Native spearmint oil for 
the 1996-97 marketing year.
    The salable quantity is the total quantity of each class of oil 
that handlers may purchase from, or handle for, producers during a 
marketing year. The salable quantity calculated by the Committee is 
based on the estimated trade demand. The total salable quantity is 
divided by the total industry allotment base to determine an allotment 
percentage. Each producer is allotted a share of the salable quantity 
by applying the allotment percentage to the producer's individual 
allotment base for the applicable class of spearmint oil.
    The initial salable quantity and allotment percentages for Scotch 
and Native spearmint oils for the 1996-97 marketing year were 
recommended by the Committee at its September 26, 1995, meeting. The 
Committee recommended salable quantities of 989,303 pounds and 
1,074,902 pounds, and allotment percentages of 55 percent and 54 
percent, respectively, for Scotch and Native spearmint oils. A proposed 
rule was published in the January 24, 1996, issue of the Federal 
Register (61 FR 1855). Comments on the proposed rule were solicited 
from interested persons until February 23, 1996. No comments were 
received. Accordingly, based upon analysis of available information, a 
final rule establishing the salable quantities and allotment 
percentages for Scotch and Native spearmint oils for the 1996-97 
marketing year was published in the March 20, 1996, issue of the 
Federal Register (61 FR 11291).
    Pursuant to authority contained in Secs. 985.50, 985.51, and 985.52 
of the order, at its November 14, 1996, meeting, the Committee 
unanimously recommended that the allotment percentage for Native 
spearmint oil for the 1996-97 marketing year be increased by 7 percent 
from 54 percent to 61 percent. This final rule increases the 1996-97 
marketing year salable quantity of 1,074,902 pounds to 1,213,692 
pounds.
    However, some Native spearmint oil producers did not produce all of 
their individual salable quantities for the 1996-97 marketing year, or 
fill their deficiencies from the prior year's production. The marketing 
order authorizes such producers to have their deficiencies filled by 
other producers who have production in excess of their salable 
quantities. This is optional for producers, but must be done before 
November 1 of each marketing year.
    The original total industry allotment base for Native spearmint oil 
for 1996-97 was established at 1,990,559 pounds and was revised to 
1,989,659 pounds to reflect loss of base due to non-production of 
producer's total annual allotments. This adjustment resulted in a 900 
pound loss of total industry base, which is reflected in the 
calculations for the revised salable quantity.
    This final rule finalizes the interim final rule that made an 
additional amount of Native spearmint oil available by increasing the 
salable quantity which releases oil from the reserve pool. Only 
producers with Native spearmint oil in the reserve pool will be able to 
use this increase in the salable quantity. Prior to November 1, 1996, 
producers without reserve pool oil or producers with an insufficient 
supply of reserve oil could have deficiencies in meeting their salable 
quantities filled by producers having excess Native spearmint oil. If 
all producers could use their salable quantity, this 7 percent increase 
in the allotment percentage would have made an additional 135,276 
pounds of Native spearmint oil available (1,989,659 x 7 percent). 
However, Native spearmint oil producers having 25,546 pounds of Native 
spearmint oil will not be able to use their reserve pool deficiencies 
this marketing year. Deficiencies usually exist because of unplanned 
problems that may reduce spearmint production. Thus, rather than 
135,276 additional pounds being made available, this action continues 
to make 113,730 additional pounds of Native spearmint oil available to 
the market.
    The following table summarizes the Committee recommendation:

Native Spearmint Oil Recommendation

(a) Actual Carry In on June 1, 1996: 45,632 pounds
(b) 1995-96 Salable Quantity: 1,074,902 pounds
(c) 1995-96 Available Supply: 1,120,534 pounds (a + b)
(d) Total Sales as of November 14, 1996: 1,036,058 pounds
(e) Calculated Available Supply as of November 14, 1996: 84,476 pounds 
(c-d)
(f) Reserve Deficiency Affecting Salable Quantity: 25,546 pounds
(g) Revised Total Allotment Base: 1,989,659 pounds
(h) Recommended Allotment Percentage as of November 14, 1996: 61 
percent
(i) Calculated Revised Salable Quantity: 1,213,692 pounds (g x h)
(j) Actual Oil Available as Salable Quantity: 1,188,146 pounds (i-f)

    The Department, based on its analysis of available information, has 
determined that an allotment percentage of 61 percent should be 
established for Native spearmint oil for the 1996-97 marketing year. 
This percentage will provide an

[[Page 31706]]

increased salable quantity of 1,213,692 and a new allotment percentage 
from 54 percent to 61 percent for Native spearmint oil for the 1996-97 
marketing year.
    This rule relaxes the regulation of Native spearmint oil and will 
allow growers to meet market needs and improved returns. In conjunction 
with the issuance of this rule, the Department has reviewed the 
Committee's revised marketing policy statement for the 1996-97 
marketing year. The Committee's marketing policy statement has been 
reviewed under the provisions as set forth in 7 CFR 985.50 and with 
other USDA guidelines.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), AMS has considered the economic impact of this action on 
small entities. Accordingly, AMS has prepared this final regulatory 
flexibility analysis.
    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 issued 
pursuant to the Act, 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 statutes have small 
entity orientation and compatibility.
    There are 8 spearmint oil handlers subject to regulation under the 
marketing order and approximately 250 producers of spearmint oil in the 
regulated production area. Of the 250 producers, approximately 135 
producers hold Class 1 (Scotch) oil allotment base, and approximately 
115 producers hold Class 3 (Native) oil allotment base. Small 
agricultural service firms are defined by the Small Business 
Administration (SBA)(13 CFR 121.601) as those having annual receipts of 
less than $5,000,000, and small agricultural producers have been 
defined as those whose annual receipts are less than $500,000.
    Based on the SBA's definition of small entities, it is estimated 
that none of the eight handlers regulated by the order would be 
considered small entities. All of the handlers are large corporations 
involved in the international trading of essential oils and the 
products of such essential oils. It is also estimated that 20 of the 
135 Scotch spearmint oil producers and 10 of the 115 Native spearmint 
oil producers would be classified as small entities under the SBA 
definition. This is based on production information gathered from 
assessments. Thus, a majority of handlers and producers of Far West 
spearmint oil may not be classified as small entities.
    The Far West spearmint oil industry is characterized by producers 
whose farming operations generally involve more than one commodity, and 
whose income from farming operations is not exclusively dependent on 
the production of spearmint oil. Crop rotation is an essential cultural 
practice in the production of spearmint for weed, insect, and disease 
control. A normal spearmint producing operation would have enough 
acreage for rotation such that the total acreage required to produce 
the crop would be about one-third spearmint and two-thirds rotational 
crops. An average spearmint producing farm would thus have to have 
considerably more acreage than would be planted to spearmint during any 
given season. To remain economically viable with the added costs 
associated with spearmint production, most spearmint producing farms 
would fall into the category of large businesses.
    Small spearmint oil producers represent a minority of farming 
operations and are more vulnerable to market fluctuations. Such small 
farmers generally need to market their entire annual crop and do not 
have the resources to cushion seasons with poor spearmint oil returns. 
Conversely, large diversified producers have the potential to endure 
one or more seasons of poor spearmint oil markets because of stronger 
incomes from alternate crops which could support the operation for a 
period of time. Despite the advantage of larger producers, increasing 
the Native salable quantity and allotment percentage will help both 
large and small producers by improving returns. In addition, this 
change may potentially benefit the small producer more than large 
producers. This is because the change ensures that small producers are 
more likely to maintain a profitable cash flow and meet annual 
expenses.
    In making this latest recommendation, the Committee considered all 
available information on supply and demand. The 1996-97 marketing year 
began on June 1, 1996. As required under Sec. 985.50, the Committee 
reviewed at a public meeting and submitted to the Department, a 
marketing policy that included the following Native spearmint oil 
information: estimated quantity; estimated demand; prospective 
production; estimated total allotment base; quantity of reserve oil; 
oil prices; market conditions; and whether the average price was 
expected to exceed parity. Handlers have indicated that with this 
action, the available supply of both Scotch and Native spearmint oils 
appears adequate to meet anticipated demand through May 31, 1997.
    Without the increase in Native spearmint oil, the Committee 
believes the industry would not be able to meet market needs. As of 
November 14, 1996, 84,476 pounds of Native spearmint oil was available 
for market. Demand for Native spearmint oil from December 1 to May 31 
over the past five years has ranged from a high of 245,661 pounds in 
1991-92 to a low of 92,658 pounds in 1992-93. The five year average is 
157,531 pounds. Therefore, given this past history the industry would 
be unlikely to meet market demand without this change. When the 
Committee made its initial recommendation for the establishment of the 
Native spearmint oil salable quantity and allotment percentage for the 
1996-97 marketing year, it had anticipated that the year would end with 
an ample available supply. This revision adds 113,730 pounds of Native 
spearmint oil to the amount available for market during the remainder 
of the 1996-97 marketing year.
    Alternatives to this rule included not to increase the available 
supply of Native spearmint oil, which could potentially hurt small 
producers. The Committee believes that the level recommended will meet 
market needs.
    Annual salable quantities and allotment percentages have been 
issued for both classes of spearmint oil since the order's inception. 
Reporting and recordkeeping requirements have remained the same for 
each year of regulation. Accordingly, this action will not impose any 
additional reporting or recordkeeping requirements on either small or 
large spearmint oil producers and handlers. All reports and forms 
associated with this program are reviewed periodically in order to 
avoid unnecessary and duplicitous information collection by industry 
and public sector agencies. The Department has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
rule.
    Finally, the Committee's meeting was widely publicized throughout 
the spearmint oil industry and all interested persons were invited to 
attend and participate on all issues. Interested persons were also 
invited to submit information on the regulatory and informational 
impacts of this action on small businesses.
    The interim final rule regarding this action was issued on January 
3, 1997, and published in the Federal Register (62 FR 1246, January 9, 
1997), with an effective date of January 9, 1997. That rule amended 
Sec. 985.215 of the rules and regulations in effect under the order.

[[Page 31707]]

That rule provided a 30-day comment period which ended February 10, 
1997. No comments were received.
    After consideration of all relevant matter presented, including 
that contained in the prior proposed, interim final, and final rules in 
connection with the establishment of the salable quantities and 
allotment percentages for Scotch and Native spearmint oils for the 
1996-97 marketing year, the Committee's recommendation and other 
available information, it is found that to revise Sec. 985.215 (61 FR 
11291) to change the salable quantity and allotment percentage for 
Native spearmint oil as effective in the interim final rule (62 FR 
1246), as hereinafter set forth, will tend to effectuate the declared 
policy of the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because this rule applies to spearmint 
produced during the 1996-97 marketing year, which ended May 31, 1997. 
Further, handlers are aware of this rule, which was recommended at a 
public meeting. Also, a 30-day comment period was provided in the 
interim final rule and no comments were received.

List of Subjects in 7 CFR Part 985

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

PART 985--SPEARMINT OIL PRODUCED IN THE FAR WEST

    Accordingly, the interim final rule amending 7 CFR part 985 which 
was published at 61 FR 1246 on January 9, 1997, is adopted as a final 
rule without change.

    Dated: June 4, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-15253 Filed 6-10-97; 8:45 am]
BILLING CODE 3410-02-P