[Federal Register Volume 62, Number 247 (Wednesday, December 24, 1997)]
[Proposed Rules]
[Pages 67297-67300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33592]



[[Page 67297]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV-98-985-1 PR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Salable Quantities and Allotment Percentages for the 
1998-99 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish the quantity of spearmint 
oil produced in the Far West, by class, that handlers may purchase 
from, or handle for, producers during the 1998-99 marketing year. 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 for the 
purpose of avoiding extreme fluctuations in supplies and prices, and 
thus help to maintain stability in the spearmint oil market.

DATES: Comments must be received by January 23, 1998.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent in triplicate to 
the Docket Clerk, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, 
P.O. Box 96456, Washington, D.C. 20090-6456; Fax: (202) 205-6632. 
Comments should reference the docket number and the date and page 
number of this issue of the Federal Register and will be made available 
for public inspection in the Office of the Docket Clerk during regular 
business hours.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, 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 Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, 
D.C. 20090-6456; telephone: (202) 720-2491; Fax: (202) 205-6632. Small 
businesses may request information on compliance with this regulation 
by contacting: Jay Guerber, Marketing Order Administration Branch, 
Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2523-S, 
Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 205-
6632.

SUPPLEMENTARY INFORMATION: This proposed 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 proposed 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 
proposed rule would establish the quantity of spearmint oil produced in 
the Far West, by class, that may be purchased from or handled for 
producers by handlers during the 1998-99 marketing year, which begins 
on June 1, 1998. This proposed 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.
    Pursuant to authority contained in sections 985.50, 985.51, and 
985.52 of the order, the Committee recommended the salable quantities 
and allotment percentages for the 1998-99 marketing year at its October 
8, 1997, meeting. With 6 members favoring the recommendation and 1 
member opposed, the Committee recommended the establishment of a 
salable quantity and allotment percentage for Class 1 (Scotch) 
spearmint oil of 1,187,077 pounds and 65 percent, respectively. The 
member in opposition favored the establishment of a higher salable 
quantity and allotment percentage. In a unanimous vote, the Committee 
recommended the establishment of a salable quantity and allotment 
percentage for Class 3 (Native) spearmint oil of 1,155,217 pounds and 
57 percent, respectively.
    This proposed rule would limit the amount of spearmint oil that 
handlers may purchase from, or handle for, producers during the 1998-99 
marketing year, which begins on June 1, 1998. Salable quantities and 
allotment percentages have been placed into effect each season since 
the order's inception in 1980.
    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 marketing order). Spearmint oil is also produced in the Midwest. 
The production area covered by the marketing order accounts for 
approximately 65 percent of the annual U.S. production of Scotch 
spearmint oil and approximately 90 percent of the annual U.S. 
production of Native spearmint oil.
    When the order became effective in 1980, the United States produced 
nearly 100 percent of the world's supply of Scotch spearmint oil, of 
which approximately 80 percent was produced in the regulated production 
area in the Far West. International production characteristics have 
changed in recent years, however, with foreign Scotch spearmint oil 
production contributing significantly to world production. Although 
still a leader in production, the Far West's market share has decreased 
to approximately 41 percent of the world total. Therefore, the 
Committee's recommendation for Scotch spearmint oil could maintain 
market stability by avoiding extreme fluctuations in supplies and 
prices, and would help the industry remain competitive on an 
international level by hopefully regaining some of the Far West's 
historical share of the global market. The Committee's recommendation 
is intended to foster market stability so that the Far West's Scotch 
spearmint oil market share will not only be retained, but expanded as 
well.
    The order has contributed extensively to the stabilization of 
producer prices, which prior to 1980 experienced wide fluctuations from 
year to year. For example, between 1971 and 1975 the

[[Page 67298]]

price of Native spearmint oil ranged from $3.00 per pound to $11.00 per 
pound. In contrast, under the order, prices have stabilized between 
$10.50 and $11.50 per pound for the past ten years. With approximately 
90 percent of the U.S. production located in the Far West, the method 
of calculating the Native spearmint oil salable quantity and allotment 
percentage primarily utilizes information on price and available supply 
as they are affected by the estimated trade demand.
    The proposed salable quantity and allotment percentage for each 
class of spearmint oil for the 1998-99 marketing year is based upon the 
Committee's recommendation and the data presented below.

(1) Class 1 (Scotch) Spearmint Oil

    (A) Estimated carry-in on June l, 1998--456,994 pounds. This 
figure is derived by subtracting the estimated 1997-98 marketing 
year trade demand of 853,987 pounds from the revised 1997-98 
marketing year total available supply of 1,310,981 pounds.
    (B) Estimated world production for the 1997-98 marketing year--
2,186,128 pounds.
    (C) Estimated Far West production for the 1997-98 marketing 
year--892,628 pounds.
    (D) Far West percentage of total world production in 1997-98--41 
percent. This is down from the 1980 level of approximately 80 
percent.
    (E) Total estimated allotment base for the 1998-99 marketing 
year--1,826,272 pounds. This figure represents a one percent 
increase over the revised 1997-98 allotment base.
    (F) Recommended 1998-99 allotment percentage--65 percent. This 
figure is based upon recommendations made at the October 8, 1997, 
meeting, as well as at the five production area meetings held during 
September.
    (G) The Committee's computed 1998-99 salable quantity--1,187,077 
pounds. This figure is the product of the recommended allotment 
percentage and the total estimated allotment base.
    (H) Estimated available supply for the 1998-99 marketing year--
1,644,071 pounds. This figure is derived by adding the computed 
salable quantity to the June 1, 1998, carry-in volume, and 
represents the total amount of Scotch spearmint oil that could be 
available to the market during the 1998-99 marketing year.
    (I) Estimated trade demand for Far West Scotch spearmint oil 
during the 1998-99 marketing year--900,000 pounds. This figure is 
based upon estimates provided to the Committee by buyers of 
spearmint oil.
    (J) Estimated carry-out on June 1, 1999--744,071 pounds. This 
figure is the difference between the 1998-99 estimated trade demand 
and the 1998-99 estimated available supply.

(2) Class 3 (Native) Spearmint Oil

    (A) Estimated carry-in on June 1, 1998--34,756 pounds. This 
figure is the difference between the estimated 1997-98 marketing 
year trade demand of 1,150,000 pounds and the revised 1997-98 
marketing year total available supply of 1,184,756 pounds.
    (B) Estimated trade demand (domestic and export) for the 1998-99 
marketing year--1,178,401 pounds. This figure is based on the 
average of the three most recent years' sales figures and input from 
spearmint oil buyers.
    (C) Salable quantity required from 1998 production--1,143,645 
pounds. This figure is the difference between the estimated 1998-99 
marketing year trade demand and the estimated carry-in on June 1, 
1998.
    (D) Total estimated allotment base for the 1998-99 marketing 
year--2,026,696 pounds. This figure represents a one percent 
increase over the revised 1997-98 allotment base.
    (E) Computed allotment percentage--56.4 percent. This percentage 
is computed by dividing the required salable quantity by the total 
estimated allotment base.
    (F) Recommended allotment percentage--57 percent. This is the 
Committee's recommendation based on the computed allotment 
percentage.
    (G) The Committee's recommended salable quantity--1,155,217 
pounds. This figure is the product of the recommended allotment 
percentage and the total estimated allotment base.

    The salable quantity is the total quantity of each class of 
spearmint oil which handlers may purchase from or handle on behalf of 
producers during a marketing year. Each producer is allotted a share of 
the salable quantity by applying the allotment percentage to the 
producer's allotment base for the applicable class of spearmint oil.
    The Committee's recommended Scotch spearmint oil salable quantity 
of 1,187,077 pounds and allotment percentage of 65 percent are based on 
the Committee's goal of maintaining market stability by avoiding 
extreme fluctuations in supplies and prices, and thereby helping the 
industry remain competitive on the international level. The Committee's 
recommended Native spearmint oil salable quantity of 1,155,217 pounds 
and allotment percentage of 57 percent are based on anticipated supply 
and trade demand during the 1998-99 marketing year. The proposed 
salable quantities are not expected to cause a shortage of spearmint 
oil supplies. Any unanticipated or additional market demand for 
spearmint oil which may develop during the marketing year can be 
satisfied by an increase in the salable quantities. Both Scotch and 
Native spearmint oil producers who produce more than their annual 
allotments during the 1998-99 season may transfer such excess spearmint 
oil to a producer with spearmint oil production less than his or her 
annual allotment or put it into the reserve pool.
    This proposed regulation, if adopted, would be similar to those 
which have been issued in prior seasons. Costs to producers and 
handlers resulting from this proposed action are expected to be offset 
by the benefits derived from a stable market, a greater market share, 
and possible improved returns. In conjunction with the issuance of this 
proposed rule, the Committee's marketing policy statement for the 1998-
99 marketing year has been reviewed by the Department. The Committee's 
marketing policy statement, a requirement whenever the Committee 
recommends volume regulations, fully meets the intent of section 985.50 
of the order. During its discussion of potential 1998-99 salable 
quantities and allotment percentages, the Committee considered: (1) The 
estimated quantity of salable oil of each class held by producers and 
handlers; (2) the estimated demand for each class of oil; (3) 
prospective production of each class of oil; (4) total of allotment 
bases of each class of oil for the current marketing year and the 
estimated total of allotment bases of each class for the ensuing 
marketing year; (5) the quantity of reserve oil, by class, in storage; 
(6) producer prices of oil, including prices for each class of oil; and 
(7) general market conditions for each class of oil, including whether 
the estimated season average price to producers is likely to exceed 
parity. Conformity with the Department's ``Guidelines for Fruit, 
Vegetable, and Specialty Crop Marketing Orders'' has also been reviewed 
and confirmed.
    The establishment of these salable quantities and allotment 
percentages would allow for anticipated market needs. In determining 
anticipated market needs, consideration by the Committee was given to 
historical sales, and changes and trends in production and demand. This 
rule also provides producers with information on the amount of 
spearmint oil which should be produced for next season in order to meet 
anticipated market demand.
    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 initial 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

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small entities acting on their own behalf. Thus, both statutes have 
small entity orientation and compatibility.
    There are 9 spearmint oil handlers subject to regulation under the 
order, and approximately 124 producers of Class 1 (Scotch) spearmint 
oil and approximately 110 producers of Class 3 (Native) spearmint oil 
in the regulated production area. 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, the Committee 
estimates that two of the nine handlers regulated by the order would be 
considered small entities. Most of the handlers are large corporations 
involved in the international trading of essential oils and the 
products of essential oils. In addition, the Committee estimates that 
29 of the 124 Scotch spearmint oil producers and 14 of the 110 Native 
spearmint oil producers would be classified as small entities under the 
SBA definition. 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 oil for weed, insect, and 
disease control. A normal spearmint oil 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 oil 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 
oil producing farms would fall into the SBA category of large 
businesses in order to remain economically viable due to added costs 
associated with the production of spearmint oil.
    This proposed rule would establish the quantity of spearmint oil 
produced in the Far West, by class, that handlers may purchase from, or 
handle for, producers during the 1998-99 marketing year. The committee 
recommended this rule for the purpose of avoiding extreme fluctuations 
in supplies and prices, and thus help to maintain stability in the 
spearmint oil market. This action is authorized by the provisions of 
sections 985.50, 985.51 and 985.52 of the order.
    Small spearmint oil producers generally are not extensively 
diversified and as such are more at risk to market fluctuations. Such 
small farmers 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.
    The order has contributed extensively to the stabilization of 
producer prices, which prior to 1980 experienced wide fluctuations from 
year to year. For example, between 1971 and 1975 the price of Native 
spearmint oil ranged from $3.00 per pound to $11.00 per pound. In 
contrast, under the order, prices have stabilized between $10.50 and 
$11.50 per pound for the past ten years.
    Alternatives to the proposal included not regulating the handling 
of spearmint oil during the 1998-99 marketing year, and recommending 
either higher or lower levels for the salable quantities and allotment 
percentages. The Committee reached its recommendation to establish 
salable quantities and allotment percentages for both classes of 
spearmint oil after careful consideration of all available information, 
including: (1) The estimated quantity of salable oil of each class held 
by producers and handlers; (2) the estimated demand for each class of 
oil; (3) prospective production of each class of oil; (4) total of 
allotment bases of each class of oil for the current marketing year and 
the estimated total of allotment bases of each class for the ensuing 
marketing year; (5) the quantity of reserve oil, by class, in storage; 
(6) producer prices of oil, including prices for each class of oil; and 
(7) general market conditions for each class of oil, including whether 
the estimated season average price to producers is likely to exceed 
parity. Based on its review, the Committee believes that the salable 
quantity and allotment percentage levels recommended will achieve the 
objectives sought.
    Without any regulations in effect, the Committee believes the 
industry would return to the pattern of cyclical prices of prior years, 
as well as suffer the potentially price depressing consequence that a 
release of the nearly 1.2 million pounds of spearmint oil reserves 
would have on the market. According to the Committee, higher or lower 
salable quantities and allotment percentages would not achieve the 
intended goals of market and price stability, with market share 
maintenance and growth.
    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 would 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 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 
proposed 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 are also 
invited to submit information on the regulatory and informational 
impacts of this action on small businesses.
    A 30-day comment period is provided to allow interested persons the 
opportunity to respond to the proposal, including any regulatory and 
informational impacts of this action on small businesses. Thirty days 
is deemed appropriate because this rule would need to be in place as 
soon as possible to provide producers sufficient time prior to the 
beginning of the 1998-99 marketing year to adjust their cultural and 
marketing plans accordingly. All written comments received within the 
comment period will be considered before a final determination is made 
on this matter.

List of Subjects in 7 CFR Part 985

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


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    For the reasons set forth in the preamble, 7 CFR Part 985 is 
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. A new Sec. 985.217 is added to read as follows:

    Note: This section will not appear in the Code of Federal 
Regulations.


Sec. 985.217  Salable quantities and allotment percentages--1998-99 
marketing year.

    The salable quantity and allotment percentage for each class of 
spearmint oil during the marketing year beginning on June 1, 1998, 
shall be as follows:
    (a) Class 1 (Scotch) oil--a salable quantity of 1,187,077 pounds 
and an allotment percentage of 65 percent.
    (b) Class 3 (Native) oil--a salable quantity of 1,155,217 pounds 
and an allotment percentage of 57 percent.

    Dated: December 18, 1997.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 97-33592 Filed 12-23-97; 8:45 am]
BILLING CODE 3410-02-P