[Federal Register Volume 63, Number 221 (Tuesday, November 17, 1998)]
[Proposed Rules]
[Pages 63804-63807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30673]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV-99-985-1 PR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Salable Quantities and Allotment Percentages for the 
1999-2000 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 1999-2000 marketing year, 
which begins on June 1, 1999. This proposal would establish salable 
quantities and allotment percentages for Class 1 (Scotch) spearmint oil 
of 1,199,290 pounds and 65 percent, respectively, and for Class 3 
(Native) spearmint oil of 1,125,755 pounds and 55 percent, 
respectively. 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 December 17, 1998.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, PO Box 
96456, Washington, DC 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) 326-2724; Fax: (503) 326-7440; 
or Anne M. Dec, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, room 2525-S, PO Box 96456, Washington, 
DC 20090-6456; telephone: (202) 720-2491; Fax: (202) 205-6632. Small 
businesses may request information on complying with this regulation, 
or obtain a guide on complying with fruit, vegetable, and specialty 
crop marketing agreements and orders by contacting Jay Guerber, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, PO Box 96456, room 2525-S, Washington, DC 20090-6456; 
telephone (202) 720-2491, Fax: (202) 205-6632, or E-mail: 
Jay__N__G[email protected]. You may view the marketing agreement and 
order small business compliance guide at the following web site: http:/
/www.ams.usda.gov/fv/moab.html.

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

[[Page 63805]]

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 1999-2000 marketing year, which begins on June 1, 1999. 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 1999-2000 marketing year at its 
October 7, 1998, meeting. With 6 members in favor, 1 member opposed, 
and 1 member abstaining, the Committee recommended the establishment of 
a salable quantity and allotment percentage for Class 1 (Scotch) 
spearmint oil of 1,199,290 pounds and 65 percent, respectively. The 
member in opposition favored the establishment of a lower salable 
quantity and allotment percentage. With 6 members in favor and 2 
members abstaining, the Committee recommended the establishment of a 
salable quantity and allotment percentage for Class 3 (Native) 
spearmint oil of 1,125,755 pounds and 55 percent, respectively. The 
member abstaining does not currently produce Native spearmint oil. The 
chairman, as is traditional with this committee, abstained on both the 
Scotch and the Native spearmint oil recommendations.
    This proposed rule would limit the amount of spearmint oil that 
handlers may purchase from, or handle for, producers during the 1999-
2000 marketing year, which begins on June 1, 1999. 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 39 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 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. The average price for Native 
spearmint oil in 1997 was $11.00. 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 1999-2000 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, 1999--598,929 pounds. This figure 
is derived by subtracting the estimated 1998-99 marketing year trade 
demand of 900,000 pounds from the revised 1998-99 marketing year total 
available supply of 1,498,929 pounds.
    (B) Estimated world production for the 1998-99 marketing year--
3,280,758 pounds. This figure is based on information the Committee has 
compiled.
    (C) Estimated Far West production for the 1998-99 marketing year--
1,278,508 pounds.
    (D) Approximate Far West percentage of total world production in 
1998-99--39 percent. This is down from the 1980 level of approximately 
80 percent.
    (E) Total estimated allotment base for the 1999-2000 marketing 
year--1,845,061 pounds. This figure represents a one percent increase 
over the revised 1998-99 allotment base.
    (F) Recommended 1999-2000 allotment percentage--65 percent. This 
figure is based upon recommendations made at the October 7, 1998, 
meeting, as well as at the five Scotch spearmint oil production area 
meetings held during September.
    (G) The Committee's computed 1999-2000 salable quantity--1,199,290 
pounds. This figure is the product of the recommended allotment 
percentage and the total estimated allotment base.
    (H) Estimated available supply for the 1999-2000 marketing year--
1,798,219 pounds. This figure is derived by adding the computed salable 
quantity to the estimated June 1, 1999, carry-in volume, and represents 
the total amount of Scotch spearmint oil that could be available to the 
market during the 1999-2000 marketing year.
    (I) Estimated trade demand for Far West Scotch spearmint oil during 
the 1999-2000 marketing year--910,000 pounds. This figure is based upon 
estimates provided to the Committee by buyers of spearmint oil.
    (J) Estimated carry-out on June 1, 2000--888,219 pounds. This 
figure is the difference between the 1999-2000 estimated trade demand 
and the 1999-2000 estimated available supply.

(2) Class 3 (Native) Spearmint Oil

    (A) Estimated carry-in on June 1, 1999--54,815 pounds. This figure 
is the difference between the estimated 1998-99 marketing year trade 
demand of 1,170,000 pounds and the revised 1998-99 marketing year total 
available supply of 1,224,815 pounds.

[[Page 63806]]

    (B) Estimated trade demand (domestic and export) for the 1999-2000 
marketing year--1,155,000 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 1999 production--1,100,185 
pounds. This figure is the difference between the estimated 1999-2000 
marketing year trade demand and the estimated carry-in on June 1, 1999.
    (D) Total estimated allotment base for the 1999-2000 marketing 
year--2,046,828 pounds. This figure represents a one percent increase 
over the revised 1998-99 allotment base.
    (E) Computed allotment percentage--53.8 percent. This percentage is 
computed by dividing the required salable quantity by the total 
estimated allotment base.
    (F) Recommended allotment percentage--55 percent. This is the 
Committee's recommendation based on the computed allotment percentage 
and input received at the four Native spearmint oil production area 
meetings held during September.
    (G) The Committee's recommended salable quantity--1,125,755 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 1,199,290 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 1,125,755 pounds 
and allotment percentage of 55 percent are based on anticipated supply 
and trade demand during the 1999-2000 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 1999-2000 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 1999-
2000 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 1999-
2000 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 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 2 of the 9 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 producing farms would fall into the SBA category of large 
businesses.
    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 1999-2000 marketing year. The 
Committee

[[Page 63807]]

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. The average price for Native 
spearmint oil in 1997 was $11.00.
    Alternatives to the proposal included not regulating the handling 
of spearmint oil during the 1999-2000 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 1.3 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 effective as 
soon as possible to provide producers sufficient time prior to the 
beginning of the 1999-2000 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.

    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. 985.218 is added to read as follows:

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


Sec. 985.218  Salable quantities and allotment percentages--1999-2000 
marketing year.

    The salable quantity and allotment percentage for each class of 
spearmint oil during the marketing year beginning on June 1, 1999, 
shall be as follows:
    (a) Class 1 (Scotch) oil--a salable quantity of 1,199,290 pounds 
and an allotment percentage of 65 percent.
    (b) Class 3 (Native) oil--a salable quantity of 1,125,755 pounds 
and an allotment percentage of 55 percent.

    Dated: November 9, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-30673 Filed 11-16-98; 8:45 am]
BILLING CODE 3410-02-P