[Federal Register Volume 65, Number 92 (Thursday, May 11, 2000)]
[Rules and Regulations]
[Pages 30341-30345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11836]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV-00-985-2 FR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Revision of Administrative Rules and Regulations 
Governing Issuance of Additional Allotment Base to New Producers

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule reduces the number of regions established for 
issuing additional allotment base to new producers from three regions 
to two regions and revises the procedure used for determining the 
distribution of

[[Page 30342]]

additional allotment base to new producers. The Spearmint Oil 
Administrative Committee (Committee), the agency responsible for local 
administration of the marketing order for spearmint oil produced in the 
Far West, recommended this rule to provide a more equitable 
distribution of allotment base to new producers.

EFFECTIVE DATE: May 12, 2000.

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 George Kelhart, Technical Advisor, 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) 720-5698.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 
720-5698, or E-mail: [email protected].

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. This rule is not intended to have retroactive 
effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after the date of the entry of the ruling.
    The spearmint oil order is a volume control program that authorizes 
the regulation of spearmint oil produced in the Far West through annual 
allotment percentages and salable quantities for Class 1 (Scotch) and 
Class 3 (Native) spearmint oils. The salable quantity limits the 
quantity of each class of spearmint oil that may be marketed from each 
season's crop. Each producer is allotted a share of the salable 
quantity by applying the allotment percentage to that producer's 
allotment base for the applicable class of spearmint oil. Handlers may 
not purchase spearmint oil in excess of a producer's annual allotment, 
or from producers who have not been issued an allotment base under the 
order.
    Section 985.53(d)(1) requires the Committee to annually make 
additional allotment base available in an amount not greater than 1 
percent of the total allotment base for each class of spearmint oil. 
The order specifies that 50 percent of the additional allotment base be 
made available for new producers and 50 percent be made available for 
existing producers. A new producer is any person who has never been 
issued allotment base for a class of oil, and an existing producer is 
any person who has been issued allotment base for a class of oil. 
Provision is made in the order for new producers to apply to the 
Committee for the annually available additional allotment base, which 
in turn is issued to applicants in each oil class by lottery. The 
additional allotment base being made available to existing producers is 
distributed equally among all existing producers who apply.
    Section 985.53(d)(3) of the order provides authority for the 
establishment of rules governing the annual distribution of additional 
allotment base. Accordingly, on October 6, 1999, the Committee 
unanimously recommended revising Sec. 985.153 of the order's rules and 
regulations to provide a more equitable distribution of allotment base 
to new producers. Section 985.153 provides regulations for the issuance 
of additional allotment base to new and existing producers. This final 
rule: (1) Reduces the number of regions established for issuing 
additional allotment base to new producers from three regions to two 
regions; and (2) revises the procedure used for determining the 
distribution of additional allotment base to new producers to take into 
account the reduced number of regions.
    Currently, Sec. 985.153(c) establishes the regions for issuing 
additional allotment base as follows:
    (A) Region 1--The State of Oregon and those portions of Utah and 
Nevada included in the production area.
    (B) Region 2--The State of Idaho.
    (C) Region 3--The State of Washington.
    Under the current provisions, the names of all eligible new 
producers were placed in separate lots per class of oil and region. 
Names are then drawn based on the amount of additional allotment base 
available and the Committee's determination of the minimum economic 
enterprise required to produce each class of oil. These procedures 
result in three new Scotch spearmint oil producers (one from each 
region) receiving approximately 3,100 pounds of allotment base each, 
and three new Native spearmint oil producers (one from each region) 
receiving approximately 3,400 pounds of allotment base each.
    This rule replaces the three regions with the following two 
regions:
    (A) Region A--The State of Washington.
    (B) Region B--All areas of the production area outside the State of 
Washington.
    Additionally, this rule modifies the method used to draw names by 
specifying that the names of all eligible new producers are placed in 
separate lots based on two regions rather than three regions. For each 
class of oil, separate drawings will be held from a list of all 
applicants from Region A, from a list of all applicants from Region B, 
and from a list of all remaining applicants from Regions A and B 
combined. If, in any marketing year, there are no requests in a class 
of oil from eligible new producers in a region, such unused allotment 
base will be issued to two eligible new producers whose names are 
selected by drawing from a lot containing the names of all remaining 
eligible new producers from the other region for that class of oil. 
Thus, depending upon the amount of additional base available and the 
minimum economic enterprise needed for oil production, three new 
producers of each class of oil will receive equal portions of the 
additional base made available each year.

[[Page 30343]]

    The Committee made this recommendation after its analysis of 
statistics relating to current spearmint oil production and the number 
of requests received each year for additional allotment base from the 
various States included in the production area. The following tables 
show the number of actual applications for additional Scotch and Native 
spearmint oil base over the most recent ten-year period:

                              Applications for AdditionaL Scotch Spearmint Oil Base
----------------------------------------------------------------------------------------------------------------
                                                      WA           ID           OR           UT           NV
----------------------------------------------------------------------------------------------------------------
1991...........................................           99           42           17            3            0
1992...........................................           90           47           16            3            0
1993...........................................           40           21            4            1            0
1994...........................................           27           22            5            1            0
1995...........................................           42           21            3            0            0
1996...........................................           31           19            3            0            0
1997...........................................           35           16            2            0            0
1998...........................................           32           26            1            0            0
1999...........................................           25           22            0            1            0
2000...........................................           21            9            0            0            0
----------------------------------------------------------------------------------------------------------------


                              Applications for Additional Native Spearmint Oil Base
----------------------------------------------------------------------------------------------------------------
                                                      WA           ID           OR           UT           NV
----------------------------------------------------------------------------------------------------------------
1991...........................................          112           27           16            5            0
1992...........................................          100           49           19            5            0
1993...........................................           47           28            5            2            0
1994...........................................           44           24            8            3            0
1995...........................................           56           21            8            2            0
1996...........................................           44           19            3            0            0
1997...........................................           43           19            2            1            0
1998...........................................           39           23            2            0            0
1999...........................................           31           23            0            0            1
2000...........................................           26           15            2            0            0
----------------------------------------------------------------------------------------------------------------

    As shown in the above tables, there has consistently been few 
applications received from new producers in the States of Oregon, Utah, 
and Nevada, while the number of applications from new producers in 
Washington, followed to a lesser extent by the number of applications 
from new producers in Idaho, has consistently been much higher. 
Committee records also show that the number of producers, as well as 
the amount of allotment base held by those producers, is greatest in 
Washington followed in decreasing order by Idaho, Oregon, Utah, and 
Nevada. Therefore, reducing the number of regions from 3 to 2, and 
changing the procedures used in distributing the base will result in a 
more equitable distribution of allotment base to new producers. The 
changes will also make the additional allotment base available to new 
producers from the States which have historically requested the most 
base.
    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 7 spearmint oil handlers subject to regulation under the 
order, and approximately 119 producers of Class 1 (Scotch) spearmint 
oil and approximately 105 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 121.201) 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 7 handlers regulated by the order could 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 
25 of the 119 Scotch spearmint oil producers and 7 of the 105 Native 
spearmint oil producers could 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.
    Small spearmint oil producers generally are not extensively 
diversified

[[Page 30344]]

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 to the 
stabilization of producer prices.
    Section 985.53 of the order provides that each year the Committee 
make available additional allotment base for each class of oil in the 
amount of no more than 1 percent of the total allotment base for that 
class of oil. This affords an orderly method for new spearmint oil 
producers to enter into business and existing producers the ability to 
expand their operations as the spearmint oil market and individual 
conditions warrant. One-half of the 1 percent increase is issued 
annually by lot to eligible new producers for each class of oil. To be 
eligible, a producer must never have been issued allotment base for the 
class of spearmint oil such producer is making application for, and 
have the ability to produce such spearmint oil. The ability to produce 
spearmint oil is generally demonstrated when a producer has experience 
at farming, and owns or rents the equipment and land necessary to 
successfully produce spearmint oil.
    This rule: (1) Reduces the number of regions established for 
issuing additional allotment base to new producers from three regions 
to two regions; and (2) revises the procedure used for determining the 
distribution of additional allotment base to new producers to take into 
account the reduced number of regions. The Committee recommended this 
rule to provide for a more equitable distribution of allotment base to 
new producers.
    During its deliberations, the Committee considered alternatives to 
their recommendation. The first option discussed would have left 
Sec. 985.153(c) unchanged. This was rejected because of the need to 
develop a more equitable method of issuing additional base given the 
light application record from some of the States within the production 
area. The Committee also discussed eliminating the use of different 
regions in its additional allotment base issuance procedure and having 
one drawing for the calculated number of recipients per class of oil 
for the entire production area. This option was also rejected because 
it would not ensure geographic distribution of the additional base.
    The Committee made its recommendation after careful consideration 
of available information, including the aforementioned alternative 
recommendations, the minimum economic enterprise required for spearmint 
oil production, historical statistics relating to the locations of the 
producers applying for the annual additional allotment base, and other 
factors such as number of producers by State and the amount of 
allotment base held by such producers. Based on its review, the 
Committee believes that the action recommended is the best option 
available to ensure that the objectives sought will be achieved.
    The information collection requirements contained in the section of 
the order's rules and regulations being amended by this rule have been 
previously approved by the Office of Management and Budget (OMB) under 
the provisions of 44 U.S.C. chapter 35 and have been assigned OMB No. 
0581-0065. This action will not impose any additional reporting or 
record keeping requirements on either small or large spearmint oil 
producers and handlers. All reports and forms associated with this 
program are reviewed periodically 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 on February 
17, 2000 (65 FR 8069). A 60-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. A copy of the proposed rule was faxed and mailed to 
the Committee office, which in turn notified Committee members and 
spearmint oil producers and handlers of the proposed action. In 
addition, the Committee's meeting was widely publicized throughout the 
spearmint oil industry and all interested persons were invited to 
attend and participate 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.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    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, 7 CFR Part 985 is 
amended as follows:

PART 985--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL 
PRODUCED IN THE FAR WEST

    1. The authority citation for 7 CFR Part 985 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.


    2. In Sec. 985.153, paragraph (c) is revised to read as follows:


Sec. 985.153  Issuance of additional allotment base to new and existing 
producers.

* * * * *
    (c) Issuance--(1) New producers. (i) Regions: For the purpose of 
issuing additional allotment base to new producers, the production area 
is divided into the following regions:
    (A) Region A. The State of Washington.
    (B) Region B. All areas of the production area outside the State of 
Washington.
    (ii) Each year, the Committee shall determine the size of the 
minimum economic enterprise required to produce each class of oil. The 
Committee shall thereafter calculate the number of new producers who 
will receive allotment base under this section for each class of oil. 
The Committee shall include that information in its announcements to 
new producers in each region informing them when to submit requests for 
allotment base. The Committee shall

[[Page 30345]]

determine whether the new producers requesting additional base have 
ability to produce spearmint oil. The names of all eligible new 
producers from each region shall be placed in separate lots per class 
of oil. For each class of oil, separate drawings shall be held from a 
list of all applicants from Region A, from a list of all applicants 
from Region B, and from a list of all remaining applicants from Regions 
A and B combined. If, in any marketing year, there are no requests in a 
class of oil from eligible new producers in a region, such unused 
allotment base shall be issued to two eligible new producers whose 
names are selected by drawing from a lot containing the names of all 
remaining eligible new producers from the other region for that class 
of oil. The Committee shall immediately notify each new producer whose 
name was drawn and issue that producer an allotment base in the 
appropriate amount.
* * * * *

    Dated: May 5, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-11836 Filed 5-10-00; 8:45 am]
BILLING CODE 3410-02-P