[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)]
[Rules and Regulations]
[Pages 30579-30582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15002]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV98-985-2 FIR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Revision of the Salable Quantity and Allotment 
Percentage for Class 3 (Native) Spearmint Oil for the 1997-98 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, the provisions of 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 1997-98 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 8, 1998.

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 97204-2807; telephone: (503) 326-2724; Fax: (503) 326-
7440; or Anne M. Dec, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, room 2525, South Building, 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, South Building, P.O. Box 96456, Washington, DC 20090-6456; 
telephone (202) 720-2491; Fax: (202) 205-6632.

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, and designated 
parts of Nevada, and Utah), hereinafter referred to as the

[[Page 30580]]

``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. 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 1997-98 marketing year, which ends on May 31, 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.
    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 1997-98 marketing year, which ends on 
May 31, 1998. Thus, this rule finalizes the increase in the salable 
quantity from 1,125,351 pounds to 1,185,550 pounds and the allotment 
percentage from 56 percent to 59 percent for Native spearmint oil for 
the 1997-98 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 1997-98 marketing year were 
recommended by the Committee at its October 2, 1996, meeting. The 
Committee recommended salable quantities of 996,522 pounds and 
1,125,351 pounds, and allotment percentages of 55 percent and 56 
percent, respectively, for Scotch and Native spearmint oils. A proposed 
rule was published in the January 7, 1997, issue of the Federal 
Register (62 FR 942). A final rule establishing the salable quantities 
and allotment percentages for Scotch and Native spearmint oils for the 
1997-98 marketing year was published in the July 9, 1997, issue of the 
Federal Register (62 FR 36646).
    Pursuant to authority contained in Secs. 985.50, 985.51, and 985.52 
of the order, at its February 25, 1998, meeting, the Committee 
unanimously recommended that the allotment percentage for Native 
spearmint oil for the 1997-98 marketing year be increased by 3 percent 
from 56 percent to 59 percent. This final rule increases the 1997-98 
marketing year Native spearmint oil salable quantity of 1,125,351 
pounds to 1,185,550 pounds.
    The original total industry allotment base for Native spearmint oil 
for the 1997-98 marketing year was established at 2,009,556 pounds and 
was revised during the year to 2,006,630 pounds to reflect loss of 
2,926 pounds of base due to non-production of some producers' total 
annual allotments. When the revised total allotment base of 2,006,630 
pounds is applied to the originally established allotment percentage of 
56, the 1997-98 marketing year salable quantity of 1,125,351 pounds is 
effectively modified to 1,123,713 pounds.
    Further, Sec. 985.56(a) of the order authorizes producers who have 
produced more than their salable quantity of spearmint oil during a 
marketing year to transfer such excess to producers who have produced 
less than their salable quantity for the same marketing year. If all 
producers having such an excess transfer their excess oil to producers 
having a deficiency, all of the annual allotment is utilized. If, on 
the other hand, this option is not utilized to its full extent, some 
annual allotment is essentially lost and the effective salable quantity 
for that year is reduced by the amount of excess oil that was not 
transferred to fill deficiencies. During the 1997-98 marketing year, 
producers who were deficient by 3,957 pounds of Native spearmint oil 
chose not to have this deficiency filled by producers having excess 
oil. This also effectively reduced the already modified 1997-98 salable 
quantity by 3,957 pounds leaving a net quantity of 1,119,756 pounds.
    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 such oil from the reserve pool. When 
applied to each individual producer, the 3 percent allotment percentage 
increase allows each producer to take up to 3 percent of their 
allotment base from their Native spearmint oil reserve. If a producer 
does not have any reserve pool oil, or has less than 3 percent of their 
allotment base in the reserve pool, the increase in allotment 
percentage will actually make less than such amount available to the 
market. Currently, producers receiving 6,201 pounds of additional 
allotment through this increase do not have any Native spearmint oil in 
reserve. Thus, rather than 60,199 additional pounds, this action 
effectively makes an additional 53,998 pounds of Native spearmint oil 
available to the market.
    The following table summarizes the Committee recommendation:

Native Spearmint Oil Recommendation

    (a) Estimated 1997-98 Allotment Base--2,009,556 pounds. This is the 
estimate that the 1997-98 Native spearmint oil salable quantity and 
allotment percentage was based on.
    (b) Revised 1997-98 Allotment Base--2,006,630 pounds. This is 2,926 
pounds less than the estimated allotment base. This base was lost 
because some producers failed to produce all of their previous year's 
allotment.
    (c) Initial 1997-98 Allotment Percentage--56 percent.

[[Page 30581]]

    (d) Initial 1997-98 Salable Quantity--1,125,351 pounds. This figure 
is 56 percent of 2,009,556 pounds.
    (e) Initial Adjustment to the 1997-98 Salable Quantity--1,123,713 
pounds. This figure reflects the salable quantity initially available 
after the beginning of the 1997-98 marketing year due to the 2,296 
pound reduction in the industry allotment base to 2,006,630 pounds.
    (f) Final Adjustment to the 1997-98 Salable Quantity--1,119,756 
pounds. This figure reflects the salable quantity actually available 
during the 1997-98 marketing year after the 3,957 pound deficiency was 
subtracted from the initially adjusted salable quantity of 1,123,713 
pounds.
    (g) Increase in Allotment Percentage--3 percent. This percentage 
increase was recommended by the Committee at its February 25, 1998, 
meeting.
    (h) Revised 1997-98 Allotment Percentage--59 percent. This figure 
is derived by adding the 3 percent increase to the initial 1997-98 
allotment percentage of 56 percent.
    (i) Calculated Revised 1997-98 Salable Quantity--1,185,638 pounds. 
This figure is 59 percent of the estimated 1997-98 allotment base of 
2,009,556 pounds.
    (j) Computed Increase in the 1997-98 Salable Quantity--60,287 
pounds. This is the product of the estimated 1997-98 allotment base of 
2,009,556 and the revised 1997-98 allotment percentage of 59 percent.
    (k) Effective Increase in the 1997-98 Salable Quantity--53,998 
pounds. This figure represents the amount of Native spearmint oil 
actually being made available by this action based on the adjustments 
described herein.
    In making this latest recommendation, the Committee considered all 
available information on supply and demand. The 1997-98 marketing year 
began on June 1, 1997. 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, 1998. Without the 
increase, the Committee believes the industry would not have been able 
to meet market needs. As of February 25, 1998, approximately 89,000 
pounds of Native spearmint oil was available for market. Average demand 
for Native spearmint oil from March 1 to May 31 over the past 17 years 
has been 108,029 pounds. Therefore, based on past history the industry 
may not have been able to meet market demand without this increase. 
When the Committee made its initial recommendation for the 
establishment of the Native spearmint oil salable quantity and 
allotment percentage for the 1997-98 marketing year, it had anticipated 
that the year would end with an ample available supply. This action has 
the effect of adding 53,998 pounds of Native spearmint oil to the 
amount available for market, bringing the total available supply for 
the period February 25 through May 31, 1998, up to approximately 
144,000 pounds.
    The Department, based on its analysis of available information, has 
determined that the 1997-98 salable quantity and allotment percentage 
for Native spearmint oil for the 1997-98 marketing year should be 
increased to 1,185,638 and 59 percent, respectively.
    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 Committee's revised marketing 
policy statement for the 1997-98 marketing year has been reviewed by 
the Department. The Committee's marketing policy statement, a 
requirement whenever the Committee recommends implementing volume 
regulations or recommends revisions to existing volume regulations, 
fully meets the intent of Sec. 985.50 of the order. During its 
discussion of revising the 1997-98 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 increase in the Native spearmint oil salable quantity and 
allotment percentage allows for anticipated market needs for this class 
of oil. In determining anticipated market needs, consideration by the 
Committee was given to historical sales, and changes and trends in 
production and demand.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the 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 
marketing order and approximately 200 producers of spearmint oil in the 
regulated production area. Of the 200 producers, approximately 125 
producers hold Class 1 (Scotch) spearmint oil allotment base, and 
approximately 110 producers hold Class 3 (Native) spearmint 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, 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 oil production, most 
spearmint oil

[[Page 30582]]

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.
    Alternatives to this rule included not increasing the available 
supply of Native spearmint oil, which could potentially hurt small 
producers. The Committee reached its recommendation to increase the 
salable quantity and allotment percentage for Native spearmint oil 
after careful consideration of all available information, and believes 
that the level recommended will achieve the objectives sought. Without 
the increase, the Committee believes the industry would not be able to 
meet market needs. As of February 25, 1998, approximately 88,000 pounds 
of Native spearmint oil were available for market. Average demand for 
Native spearmint oil from March 1 to May 31 over the past 17 years has 
been 108,029 pounds. Therefore, based on past history the industry may 
not have been able 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 
1997-98 marketing year, it had anticipated that the year would end with 
an ample available supply. This revision has the effect of adding 
53,998 pounds of Native spearmint oil to the amount available for 
market, bringing the total available supply for the period February 25 
through May 31, 1998, up to 144,158 pounds.
    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 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.
    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.
    The interim final rule regarding this action was issued on April 
24, 1998, and published in the Federal Register (63 FR 23373, April 29, 
1998), with an effective date of April 30, 1998. That rule amended 
Sec. 985.216 of the rules and regulations in effect under the order and 
provided a 20-day comment period which ended May 19, 1998. 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 
1997-98 marketing year, the Committee's recommendation and other 
available information, it is found that to revise Sec. 985.216 (62 FR 
36650) to change the salable quantity and allotment percentage for 
Native spearmint oil, as hereinafter set forth, will tend to effectuate 
the declared policy of the Act.
    It is further found that 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 1997-98 marketing year, which ends May 31, 1998. 
Further, handlers are aware of this rule, which was recommended at a 
public meeting. Also, a 20-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--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL 
PRODUCED IN THE FAR WEST

    Accordingly, the interim final rule amending 7 CFR part 985 which 
was published at 63 FR 23371 on April 29, 1998, is adopted as a final 
rule without change.

    Dated: June 1, 1998
Sharon Bomer Lauritsen,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-15002 Filed 6-4-98; 8:45 am]
BILLING CODE 3410-02-P