[Federal Register Volume 62, Number 157 (Thursday, August 14, 1997)]
[Rules and Regulations]
[Pages 43461-43466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21524]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Docket No. FV97-985-1 FR]
Marketing Order Regulating the Handling of Spearmint Oil Produced
in the Far West; Revision of Administrative Rules and Regulations
Governing Issuance of Additional Allotment Base to New and Existing
Producers
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule reduces the number of regions established for
issuing additional allotment bases to new producers from four to three,
revises the procedure used for issuing additional allotment bases when
no requests are received from a region for a class of spearmint oil,
and eliminates obsolete language pertaining to the
[[Page 43462]]
issuance of additional allotment bases to existing producers during the
1992-93 and 1993-94 marketing years. The Spearmint Oil Administrative
Committee (Committee), the agency responsible for local administration
of the marketing order for spearmint oil produced in the Far West,
recommended this rule to ensure that a maximum number of new producers
receive additional allotment base each year at a level determined by
the Committee to be a minimum economic enterprise.
EFFECTIVE DATE: This final rule becomes effective August 15, 1997.
FOR FURTHER INFORMATION CONTACT: Robert J. Curry or Gary D. Olson,
Northwest Marketing Field Office, Marketing Order Administration
Branch, Fruit and Vegetable Division, AMS, USDA, 1220 SW Third Avenue,
room 369, Portland, Oregon 97204; telephone: (503) 326-2043; Fax: (503)
326-7440; or Anne M. Dec, Marketing Order Administration Branch, Fruit
and Vegetable Division, AMS, USDA, room 2525-S, South Building, P.O.
Box 96456, Washington, D.C. 20090-6456; telephone: (202) 720-2491; 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 2523-S, Washington, D.C. 20090-6456; telephone: (202)
720-2491; Fax: (202) 720-5698.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Order No. 985 (7 CFR Part 985), as amended, regulating the handling of
spearmint oil produced in the Far West (Washington, Idaho, Oregon, and
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.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
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 date of the entry of the ruling.
The spearmint oil order is a volume control program that authorizes
the regulation of spearmint oil produced in the Far West through annual
allotment percentages and salable quantities for Class 1 (Scotch) and
Class 3 (Native) spearmint oils. The salable quantity limits the
quantity of each class of spearmint oil that may be marketed from each
season's crop. Each producer is allotted a share of the salable
quantity by applying the allotment percentage to that producer's
allotment base for the applicable class of spearmint oil. Handlers may
not purchase spearmint oil in excess of a producer's annual allotment,
or from producers who have not been issued an allotment base under the
order.
Section 985.53(d)(3) of the order provides for rules to be
established by the Committee, with the approval of the Secretary, for
distribution of additional allotment bases. Pursuant to the authority
in that section, the Committee unanimously recommended revising section
985.153 of the order's rules and regulations at its meeting on March
18, 1997. Section 985.153 provides regulations for the issuance of
additional allotment bases to new and existing producers. This final
rule modifies portions of section 985.153 to reflect current conditions
within the Far West spearmint oil industry relative to the annual
issuance of additional allotment bases to both new and existing
producers. This rule reduces the number of regions established for
issuing additional allotment bases to new producers from four to three,
revises the procedure used for issuing additional allotment bases when
no requests are received from a region for a class of spearmint oil,
and eliminates obsolete language pertaining to the issuance of
additional allotment bases to existing producers during the 1992-93 and
1993-94 marketing years.
Section 985.53(d)(1) provides that, beginning with the 1982-83
marketing year, the Committee annually makes additional allotment bases
available in an amount not greater than 1 percent of the total
allotment base for each class of spearmint oil. The order specifies
that, each year, 50 percent of the additional allotment bases be made
available for new producers and 50 percent be made available for
existing producers. A new producer is any person who has never been
issued allotment base for a class of oil, and an existing producer is
any person who has been issued allotment base for a class of oil.
Provision is made in the order for new producers to apply to the
Committee for the additional allotment base, which in turn is issued to
applicants in each oil class by lottery. The additional allotment bases
being made available to existing producers are distributed equally
among all existing producers who apply.
The order was amended on June 26, 1996 (61 FR 32924), by redefining
the production area to exclude those portions of the area with no
historic record of commercial production of spearmint oil. The
amendment thus removed the regulated portions of California and
Montana, leaving the defined production area to mean the States of
Washington, Oregon, and Idaho, and portions of the States of Nevada and
Utah.
Based on the order prior to the amendment, section 985.153(c)
established the regions for issuing additional allotment base as
follows:
(A) Region 1--Those portions of Montana and Utah included in the
production area.
(B) Region 2--The State of Oregon and those portions of Nevada and
California included in the production area.
(C) Region 3--The State of Idaho.
(D) Region 4--The State of Washington.
During past additional allotment base lotteries, the name of one
new producer per class of oil in each of the above four regions was
drawn by Committee staff. The lottery usually resulted in four new
Scotch spearmint oil producers receiving approximately 2,300 pounds of
allotment base each, and four new Native spearmint oil producers
receiving approximately 2,500 pounds of allotment base each.
This rule replaces the above four regions with the following three
regions:
(A) Region 1--The State of Oregon and those portions of Utah and
Nevada included in the production area.
(B) Region 2--The State of Idaho.
(C) Region 3--The State of Washington.
The Committee made this recommendation primarily because of
[[Page 43463]]
the removal of Montana and California from the production area, as well
as its analysis of statistics relating to current spearmint oil
production and the number of requests received each year for additional
allotment base from the various states included in the production area.
For example, Committee records show that the average number of
applications by state for additional allotment base from 1986 to 1996
for Class 1 and Class 3 spearmint oil, respectively, is 63.2 and 73.2
percent for Washington, 26.7 and 21.5 percent for Idaho, 9.6 and 11.2
percent for Oregon, 1.4 and 2.6 percent for Utah, and 0.2 and 0.2
percent for Nevada. Records also show that the number of producers, as
well as the allotment bases held by those producers, is greatest in
Washington followed in decreasing order by Idaho, Oregon, Utah, and
Nevada. This rule increases the potential of having a significant
number of applicants from each region each year, thus bringing about
equity in issuing the additional allotment base. It also increases the
amount of allotment base that is issued to each new producer.
In reaching its recommendation to establish three regions the
Committee also considered the importance of issuing as many blocks of
additional allotment base as are possible at a level considered
economically viable to each recipient. The Committee also resolved that
each region should receive an equal number of these blocks. To
establish a reasonable minimum economic enterprise required to produce
each class of spearmint oil, the Committee relied on available
statistical information and on the spearmint oil production experience
of each member. Using this information and experience, the Committee
concluded that producers require approximately 14 acres for Scotch
spearmint oil production and approximately 13 acres for Native
spearmint oil production to be economically viable. Using a 5-year
average yield and a nominal allotment percentage of 55 as a basis, the
Committee calculated that each new block of additional allotment base
should be approximately 3,000 pounds for Scotch spearmint oil, and
approximately 3,400 pounds for Native spearmint oil.
The Committee used the following formula to establish a range of
possible allotments for additional base: (Number of Acres x Average
Yield per Acre = Production) Allotment Percentage = Allotment
Base Required for Viability. For example, applying this formula to a
theoretical 14-acre Scotch spearmint oil operation with a 5-year
average yield of 126 pounds per acre and a nominal 55 percent
allotment, each new producer would receive an allotment base of 3,207
pounds. To obtain the total additional allotment base available for new
Scotch spearmint oil producers during the 1997-98 marketing year, the
total allotment base of 1,811,556 was multiplied by 0.5 percent (50
percent of the additional allotment base). The result, 9,058 pounds,
when divided equally among the three new regions, would provide three
new Class 1 producers with 3,019 pounds of allotment base each.
Similarly, an example with a theoretical 13-acre Native spearmint
oil operation, using a 5-year average yield of 151 pounds per acre and
a nominal allotment percentage of 55, results in an allotment base of
3,569 pounds for each new producer. The total additional allotment base
available for new Native spearmint oil producers during the 1997-98
marketing year, 10,048 pounds, was obtained by multiplying the total
allotment base of 2,009,556 pounds by 0.5 percent. Thus, equal
distribution among the three new regions would result in three new
Class 3 producers each receiving 3,349 pounds of allotment base.
From such calculations the Committee determined that there should
be three regions, that a reasonable minimum economic unit would
currently be approximately 3,000 pounds for Scotch spearmint oil and
approximately 3,400 pounds for Native spearmint oil, and that currently
there should be one new producer per class per region drawn during the
annual allotment base lottery. Based on the current total industry
allotment bases, the Committee concluded that any more than one
recipient per class of oil in a region would result in an inadequate
level of allotment base being issued to each new producer.
The amount of allotment base to be issued to new Scotch spearmint
oil producers is slightly higher than the approximate amount the
Committee believes necessary for an economically viable production
unit. The amount to be issued to new Native spearmint oil producers is
only slightly lower than the Committee's guideline of 3,400 pounds. In
both cases, the amount to be allocated to new producers is higher than
under the previous four district system.
The Committee also recommended changing the procedure used to
distribute unused additional allotment base for each class of oil in
the event requests for such are not received from eligible new
producers in one or more of the three proposed regions. Previously, if
the Committee did not receive requests for additional allotment base
for a class of oil from one or more regions, the unused allotment base
was divided equally among the eligible new producers within the other
regions receiving allotment base for that class of oil. That procedure
occasionally resulted in a reduction in the number of additional
allotment base recipients. To insure that a maximum number of new
producers receive allotment base for each class of oil each year, the
Committee recommended that, in the event no requests for additional
allotment base for a class of oil are received from a region, the
unused allotment base be issued to an eligible new producer whose name
is drawn by lot from all remaining eligible new producers from all
regions for that class of oil.
Finally, the Committee recommended that obsolete language in
section 985.153(c)(2) pertaining to existing producers, but specific to
the 1992-93 and 1993-94 marketing years, be removed. This language is
specific to action taken on June 26, 1992 (57 FR 28569), to issue
additional allotment base to existing producers with less than 3,000
pounds of allotment base to bring them up to a level not to exceed
3,000 pounds.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, the 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
order and approximately 250 producers of spearmint oil in the regulated
production area. Of the 250 producers, approximately 135 producers hold
Class 1 spearmint oil allotment base, and approximately 115 producers
hold Class 3 spearmint oil allotment base. Small agricultural service
firms are defined by the Small Business Administration (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.
[[Page 43464]]
The Far West spearmint oil industry is characterized by producers
whose farming operations generally involve more than one commodity, and
whose incomes from farming operations are not exclusively dependent on
the production of spearmint oil. In the production of the spearmint
plant, crop rotation is an essential cultural practice for weed,
insect, and disease control. An average spearmint oil producing
operation has acreage sufficient enough to ensure that the total
acreage available for the production of the crop is approximately one-
third spearmint and two-thirds rotational crops. Consequently, most
spearmint oil producers have considerably more acreage available than
is planted to spearmint during any given season. To remain economically
viable with the added costs associated with spearmint oil production,
most such farms would fall into the category of large businesses.
Small spearmint oil producers generally are not extensively
diversified and as such are more at risk to market fluctuations. Such
small producers generally need to market their entire annual crop and
do not have the luxury of having other crops 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 incomes from alternate crops could support the
operation for a period of time. Being reasonably assured of a stable
price and market provides small producing entities with the ability to
maintain proper cash flow and to meet annual expenses. Thus, the market
and price stability provided by the order potentially benefit the small
producer more than such provisions benefit large producers. Even though
a majority of handlers and producers of spearmint oil may not be
classified as small entities, the volume control feature of this order
has small entity orientation. Records show that the order has
contributed extensively to the stabilization of producer prices.
Based on the Small Business Administration's definition of small
entities, the Committee estimates that none of the eight handlers
regulated by the order would be considered small entities. All are
large corporations involved in the international trading of essential
oils and the products of essential oils. Further, the Committee
estimates that 17 of the 135 Scotch spearmint oil producers and 10 of
the 115 Native spearmint oil producers would be classified as small
entities. Thus, a majority of handlers and producers of Far West
spearmint oil may not be classified as small entities.
Section 985.53 of the order provides that each year the Committee
make available additional allotment bases for each class of oil in the
amount of no more than 1 percent of the total allotment base for that
class of oil. This affords an orderly method for new spearmint oil
producers to enter into business and existing producers the ability to
expand their operations as the spearmint oil market and individual
conditions warrant. One-half of the 1 percent increase is issued
annually by lot to eligible new producers for each class of oil. To be
eligible, a producer must never have been issued allotment base for the
class of spearmint oil such producer is making application for, and
have the ability to produce such spearmint oil. The ability to produce
spearmint oil is generally demonstrated when a producer has experience
at farming, and owns or rents the equipment and land necessary to
successfully produce spearmint oil.
This final rule reduces the number of regions established for the
purpose of issuing annual additional allotment bases to new producers
from four to three. It also changes the procedure used to issue
additional allotment bases should no requests be received from eligible
new producers in one or more of these three regions. This final rule
also deletes obsolete provisions in section 985.153(c)(2) that pertain
to the issuance of additional allotment base to existing producers
during the 1992-93 and 1993-94 marketing years. The Committee
recommended this rule for the purpose of ensuring equity in the
distribution of additional allotment base following the order amendment
that removed the regulated portions of California and Montana from the
production area. Further, this rule will help to ensure that a maximum
number of eligible new producers receive additional allotment base each
year at a level determined by the Committee to be the minimum economic
enterprise needed to produce each class of spearmint oil.
To establish a reasonable minimum economic enterprise required for
the production of each class of spearmint oil, the Committee relied on
available statistical information and on the spearmint oil production
experience of each member. Using this information and experience, the
Committee concluded that producers require approximately 14 acres for
Scotch spearmint oil production and approximately 13 acres for Native
spearmint oil production to be economically viable. Using a 5-year
average yield and a nominal allotment percentage of 55 as a basis, the
Committee calculated that each new block of additional allotment base
should be approximately 3,000 pounds for Scotch spearmint oil, and
approximately 3,400 pounds for Native spearmint oil.
The Committee used the following formula to establish a range of
possible allotments for additional base: (Number of Acres x Average
Yield per Acre=Production) Allotment Percentage = Allotment
Base Required for Viability. For example, applying this formula to a
theoretical 14-acre Scotch spearmint oil operation with a 5-year
average yield of 126 pounds per acre and a nominal allotment percentage
of 55, each new producer would receive an allotment base of 3,207
pounds. To obtain the total additional allotment base available for new
Scotch spearmint oil producers during the 1997-98 marketing year, the
Committee multiplied the total industry allotment base of 1,811,556 by
0.5 percent (50 percent of the additional allotment base). The result,
9,058 pounds, when divided equally among the three new regions, allots
3,019 pounds each for three new Class 1 producers.
Similarly, an example with a theoretical 13-acre Native spearmint
oil operation, using a 5-year average yield of 151 pounds per acre and
a nominal allotment of 55 percent, would result in an allotment base of
3,569 pounds for each new producer. To determine the actual total
additional allotment base available for new Native spearmint oil
producers during the 1997-98 marketing year, the Committee multiplied
the total industry allotment base of 2,009,556 pounds by 0.5 percent.
The result, 10,048 pounds, when equally distributed among the three new
regions, ensures that three new Class 3 producers would receive 3,349
pounds of allotment base each.
From such calculations the Committee determined that there should
be three regions, that a reasonable minimum economic unit would
currently be approximately 3,000 pounds for Scotch spearmint oil and
approximately 3,400 pounds for Native spearmint oil, and that currently
there should be one new producer per class per region drawn during the
annual allotment base lottery. Based on the current total industry
allotment bases, the Committee concluded that any more than one
recipient per class of oil in a region would result in an inadequate
level of allotment base being issued to each new producer.
The amount of allotment base to be issued to new Scotch spearmint
oil producers is slightly higher than the approximate amount the
Committee
[[Page 43465]]
believes necessary for an economically viable production unit. The
amount to be issued to new Native spearmint oil producers is only
slightly lower than the Committee's guideline of 3,400 pounds. In both
cases, the amount to be allocated to new producers will be higher than
under the previous four district system.
During its deliberations, the Committee considered alternatives to
this proposal. The first option discussed would have left section
985.153(c) unchanged. This was rejected because of the need to develop
a more equitable method of issuing additional base in light of the
order amendment that removed California and Montana from the production
area. The Committee also discussed the possibility of eliminating the
use of different regions in its additional allotment base issuance
procedures. In such a scenario, available additional allotment base
would be distributed equally to those new producers drawing the
allotment regardless of their spearmint acreage location. However, this
option was also rejected because the Committee determined that such a
procedure has the statistical potential of adding more new producers to
those states with a greater number of current producers than to the
states with few producers.
The Committee made its recommendation after careful consideration
of available information, including the aforementioned alternative
recommendations, the order amendment that removed Montana and
California from the production area, the minimum economic enterprise
required for spearmint oil production, historical statistics relating
to the locations of the producers applying for the annual additional
allotment base, and other factors such as number of producers by state
and the amount of allotment base held by such producers. Based on its
review, the Committee believes that the action recommended is the best
option available to ensure that the objectives sought will be achieved.
The information collection requirements contained in the section of
the order's rules and regulations amended by this rule have been
previously approved by the Office of Management and Budget (OMB) under
the provisions of 44 U.S.C. chapter 35 and have been assigned OMB No.
0581-0065. This action does not impose any additional reporting or
record keeping 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
duplicative 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.
A proposed rule was published in the Federal Register (62 FR 36236)
on July 7, 1997. A 15-day comment period was provided to allow
interested persons the opportunity to respond to the proposal,
including any regulatory and informational impacts of this action on
small businesses. Copies of the rule were faxed and mailed to the
Committee office, which in turn notified Committee members and
spearmint oil producers and handlers of the proposed action. In
addition, the Committee's meeting was widely publicized throughout the
spearmint oil industry and all interested persons were invited to
attend and participate in the discussion on these issues. A copy of the
proposal was also made available on the Internet by the U.S. Government
Printing Office. No comments were received.
Accordingly no changes are made to the rule as proposed.
After consideration of all relevant matter presented, including the
information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, 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 the Committee plans an August
15, 1997, distribution of additional allotment base to new and existing
producers for the marketing year beginning on June 1, 1998. The
Committee devised the August distribution date so that producers may
make cultural and marketing plans in advance of the 1998-99 marketing
year. Furthermore, this rule was recommended at a public meeting and
all affected parties are aware of it. Also, a comment period of 15 days
was provided for in the proposed rule.
List of Subjects in 7 CFR Part 985
Marketing agreements, Oils and fats, Reporting and recordkeeping
requirements, Spearmint oil.
For the reasons set forth in the preamble, 7 CFR Part 985 is
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. In Sec. 985.153, paragraph (c) is revised to read as follows:
Sec. 985.153 Issuance of additional allotment base to new and existing
producers.
* * * * *
(c) Issuance--(1) New producers. (i) Regions: For the purpose of
issuing additional allotment base to new producers, the production area
is divided into the following regions:
(A) Region 1. The State of Oregon and those portions of Utah and
Nevada included in the production area.
(B) Region 2. The State of Idaho.
(C) Region 3. The State of Washington.
(ii) Each year, the Committee shall determine the size of the
minimum economic enterprise required to produce each class of oil. The
Committee shall thereafter calculate the number of new producers who
will receive allotment base under this section for each class of oil.
An equal number of grants of the additional allotment base for each
class of oil that is available to new producers each marketing year
shall be issued to producers within each region. The Committee shall
include that information in its announcements to new producers in each
region informing them when to submit requests for allotment base. The
Committee shall determine whether the new producers requesting
additional base have ability to produce spearmint oil. The names of all
eligible new producers in each region shall be placed in a lot for
drawing. A separate drawing shall be held for each region. If, in any
marketing year, there are no requests in a class of oil from eligible
new producers in a region, such unused allotment base shall be issued
to an eligible new producer whose name is selected by drawing from a
lot containing the names of all remaining eligible new producers from
all regions for that class of oil. The Committee shall immediately
notify each new producer whose name was drawn and issue that producer
an allotment base in the appropriate amount.
(2) Existing producers. (i) The Committee shall review all requests
from existing producers for additional allotment base.
(ii) Each existing producer of a class of spearmint oil who
requests additional allotment base and who has the ability to produce
additional quantities of that class of spearmint oil, shall be eligible
to receive a share of the additional allotment base for that class of
oil. Additional allotment base to be issued by the Committee for a
class of oil shall be distributed equally among the
[[Page 43466]]
eligible producers for that class of oil. The Committee shall
immediately notify each producer who is to receive additional allotment
base by issuing that producer an allotment base in the appropriate
amount.
* * * * *
Dated: August 8, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-21524 Filed 8-13-97; 8:45 am]
BILLING CODE 3410-02-P