[Federal Register Volume 63, Number 34 (Friday, February 20, 1998)]
[Rules and Regulations]
[Pages 8559-8562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4036]



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  Federal Register / Vol. 63, No. 34 / Friday, February 20, 1998 / 
Rules and Regulations  

[[Page 8559]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV98-985-1 FR]


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: Final rule.

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SUMMARY: This rule establishes 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.

EFFECTIVE DATES: June 1, 1998, through May 30, 1999.

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, 
DC 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, room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 205-
6632.

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 final 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 establishes 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 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 final rule limits 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 is designed to 
maintain market stability by avoiding extreme fluctuations in supplies 
and

[[Page 8560]]

prices, and may help the industry remain competitive on an 
international level by potentially 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 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 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 1, 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 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 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 regulation is similar to those which have been issued in prior 
seasons. Costs to producers and handlers resulting from this 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 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

[[Page 8561]]

Marketing Orders'' has also been reviewed and confirmed.
    The establishment of these salable quantities and allotment 
percentages allows 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 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 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. Most farms producing spearmint oil 
would fall under the SBA category of large businesses due to the added 
costs associated with the production of this crop.
    This final rule establishes 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 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.
    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 this rule were discussed at the meeting and 
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 decision to recommend the establishment of salable quantities and 
allotment percentages for both classes of spearmint oil for the 1998-99 
marketing year 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 
rule.
    A proposed rule was published in the Federal Register (62 FR 67297) 
on

[[Page 8562]]

December 24, 1997. A 30-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 meetings were widely publicized throughout 
the spearmint oil industry and all interested persons were invited to 
attend and participate on all 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.

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, 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. 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: February 12, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-4036 Filed 2-19-98; 8:45 am]
BILLING CODE 3410-02-P