[Federal Register Volume 70, Number 232 (Monday, December 5, 2005)]
[Rules and Regulations]
[Pages 72355-72358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23620]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV05-985-2 IFR A]


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 2005-2006 
Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule amends a prior interim final rule that increased the 
quantity of Class 1 (Scotch) and Class 3 (Native) spearmint oil that 
handlers may purchase from, or handle for, producers during the 2005-
2006 marketing year. The prior interim final rule increased the Scotch 
spearmint oil salable quantity from 677,409 pounds to 1,062,898 pounds, 
and the allotment percentage from 35 percent to 55 percent. In 
addition, the prior interim final rule increased the Native spearmint 
oil salable quantity from 867,958 pounds to 1,019,600 pounds, and the 
allotment percentage from 40 percent to 47 percent. This action does 
not affect the Scotch spearmint oil salable quantity and allotment 
percentage; however, it increases the Native spearmint oil salable 
quantity by an additional 151,855 pounds from 1,019,600 pounds to 
1,171,455 pounds, and the allotment percentage by an additional 7 
percent from 47 percent to 54 percent. The marketing order regulates 
the handling of spearmint oil produced in the Far West and is 
administered locally by the Spearmint Oil Administrative Committee 
(Committee). The Committee recommended this rule for the purpose of 
avoiding extreme fluctuations in supplies and prices and to help 
maintain stability in the Far West spearmint oil market.

DATES: Effective June 1, 2005, through May 31, 2006; comments received 
by February 3, 2006 will be considered prior to issuance of a final 
rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; E-mail: [email protected]; or 
Internet: http://www.regulations.gov. All 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, or can be viewed at: 
http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Susan M. Hiller, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 
326-7440; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 
Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This 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.'' The 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 (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This 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 USDA 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 USDA 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 USDA'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 initial salable quantities and allotment percentages for Scotch 
and Native spearmint oil for the 2005-2006 marketing year were 
recommended by the Committee at its October 6, 2004, meeting. The 
Committee recommended salable quantities of 677,409 pounds and 867,958 
pounds, and allotment percentages of 35 percent and 40 percent, 
respectively, for Scotch and Native spearmint oil. A proposed rule was 
published in the Federal Register on January 12, 2005 (70 FR 2027). 
Comments on the proposed rule were solicited from interested persons 
until February 11, 2005. No comments were received. Subsequently, a 
final rule establishing the salable quantities and allotment 
percentages for Scotch and Native spearmint oil for the 2005-2006 
marketing year was published in the Federal Register on March 24, 2005 
(70 FR 14969).
    Pursuant to authority contained in Sec. Sec.  985.50, 985.51, and 
985.52 of the order, the Committee has made recommendations to increase 
the quantity of Scotch and Native spearmint oil that handlers may 
purchase from, or handle for, producers during the 2005-2006 marketing 
year, which ends on May 31, 2006. An interim final rule was published 
in the Federal Register on September 23, 2005 (70 FR 55713), which 
increased the 2005-2006 marketing year salable quantities and allotment 
percentages for Scotch and Native spearmint oil to 1,062,898 pounds and 
55 percent, and 1,019,600 pounds and 47 percent, respectively. Comments 
on the interim final rule are being solicited from interested persons 
through November 22, 2005.
    This rule amends the interim final rule that was published in the 
Federal Register on September 23, 2005, and is based on a unanimous 
Committee recommendation made at a meeting on October 5, 2005, to 
increase the Native spearmint oil salable quantity by an

[[Page 72356]]

additional 151,855 pounds from 1,019,600 pounds to 1,171,455 pounds and 
the allotment percentage by an additional 7 percent from 47 percent to 
54 percent. The Committee did not make a recommendation to increase the 
Scotch spearmint oil salable quantity or allotment percentage by an 
additional amount at this time due to stable market conditions.
    Thus, taking into consideration the following discussion on 
adjustments to the Native spearmint oil salable quantity, this rule 
increases the 2005-2006 marketing year salable quantity and allotment 
percentage for Native spearmint oil to 1,171,455 pounds and 54 percent, 
respectively. The 2005-2006 marketing year salable quantity and 
allotment percentage for Scotch spearmint oil remains unchanged at 
1,062,898 pounds and 55 percent, respectively.
    The salable quantity is the total quantity of each class of oil 
that handlers may purchase from, or handle for, producers during the 
marketing year. 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 original total industry allotment base for Native spearmint oil 
for the 2005-2006 marketing year was established at 2,169,894 pounds 
and was revised at the beginning of the 2005-2006 marketing year to 
2,169,362 pounds to reflect a 2004-2005 marketing year loss of 532 
pounds of base due to non-production of some producers' total annual 
allotments. When the revised total allotment base of 2,169,362 pounds 
is applied to the originally established allotment percentage of 40 
percent, the initially established 2005-2006 marketing year salable 
quantity of 867,958 is effectively modified to 867,745 pounds.
    By increasing the salable quantity and allotment percentage, this 
rule makes an additional amount of Native spearmint oil available by 
releasing oil from the reserve pool. When applied to each individual 
producer, this allotment percentage increase allows each producer to 
take up to an amount equal to their allotment base from their Native 
oil reserve. This action makes an additional 80,766 pounds of Native 
spearmint oil available to the market. This figure is less than the 
salable quantity increase because not all producers have enough Native 
spearmint oil left in their reserves to take full advantage of this 
release. In addition, pursuant to Sec. Sec.  985.56 and 985.156, 
producers with excess oil are not able to transfer such excess oil to 
other producers to fill deficiencies in annual allotments after 
November 1 of each marketing year. Since this increase in the Native 
spearmint oil salable quantity is effective after November 1, 71,089 
pounds of the 151,855 pound increase is not being made available.
    The following table summarizes the Committee recommendation:

Native Spearmint Oil Recommendation

    (A) Estimated 2005-2006 Allotment Base--2,169,894 pounds. This is 
the estimate on which the original 2005-2006 Native spearmint oil 
salable quantity and allotment percentage was based.
    (B) Revised 2005-2006 Allotment Base--2,169,362 pounds. This is 532 
pounds less than the estimated allotment base of 2,169,894 pounds. This 
is less because some producers failed to produce all of their 2004-2005 
allotment.
    (C) Initial 2005-2006 Allotment Percentage--40 percent. This was 
recommended by the Committee on October 6, 2004.
    (D) Initial 2005-2006 Salable Quantity--867,958. This figure is 40 
percent of 2,169,894 pounds.
    (E) Initial Adjustment to the 2005-2006 Salable Quantity--867,745 
pounds. This figure reflects the salable quantity initially available 
after the beginning of the 2005-2006 marketing year due to the 532 
pound reduction in the industry allotment base to 2,169,362 pounds.
    (F) First Revision to the 2005-2006 Salable Quantity and Allotment 
Percentage.
    (1) Increase in Allotment Percentage--7 percent. The Committee 
recommended a 7 percent increase at its August 24, 2005, meeting.
    (2) 2005-2006 Allotment Percentage--47 percent. This figure is 
derived by adding the increase of 7 percent to the initial 2005-2006 
allotment percentage of 40 percent.
    (3) Calculated Revised 2005-2006 Salable Quantity--1,019,600 
pounds. This figure is 47 percent of the revised 2005-2006 allotment 
base of 2,169,362 pounds.
    (4) Computed Increase in the 2005-2006 Salable Quantity--151,855 
pounds. This figure is 7 percent of the revised 2005-2006 allotment 
base of 2,169,362 pounds.
    (G) Second (current) Revision to the 2005-2006 Salable Quantity and 
Allotment Percentage.
    (1) Increase in Allotment Percentage--7 percent. The Committee 
recommended a 7 percent increase at its October 5, 2005, meeting.
    (2) 2005-2006 Allotment Percentage--54 percent. This figure is 
derived by adding the increase of 7 percent to the initial 2005-2006 
allotment percentage of 47 percent.
    (3) Calculated Revised 2005-2006 Salable Quantity--1,171,455 
pounds. This figure is 54 percent of the revised 2005-2006 allotment 
base of 2,169,362 pounds.
    (4) Computed Increase in the 2005-2006 Salable Quantity--151,855 
pounds. This figure is 7 percent of the revised 2005-2006 allotment 
base of 2,169,362 pounds.
    In making this recommendation, the Committee considered all 
available information on price, supply, and demand. The Committee also 
considered reports and other information from handlers and producers in 
attendance at the meeting and reports given by the Committee manager 
from handlers who were not in attendance. The 2005-2006 marketing year 
began on June 1, 2005. Handlers have reported purchases and committed 
sales of 1,051,031 pounds of Native spearmint oil for the period of 
June 1, 2005, through October 5, 2005. This amount is 109 percent of 
the total sales for the five-year average of 962,377 pounds. Handlers 
estimated the total demand for the 2005-2006 marketing year could be 
between 1,100,000 pounds to 1,300,000 pounds. These amounts exceed the 
five-year average for an entire marketing year by 137,623 pounds to 
337,623 pounds. Therefore, based on past history, the industry may not 
be 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 2005-
2006 marketing year, it had anticipated that the year would end with an 
ample available supply.
    Based on its analysis of available information, USDA has determined 
that the salable quantity and allotment percentage for Native spearmint 
oil for the 2005-2006 marketing year should be increased to 1,171,455 
pounds and 54 percent, respectively.
    This rule relaxes the regulation of Native spearmint oil and will 
allow for market needs and improve producer returns. In conjunction 
with the issuance of this rule, the Committee's revised marketing 
policy statement for the 2005-2006 marketing year has been reviewed by 
USDA. The Committee's marketing policy statement, a requirement 
whenever the Committee recommends implementing volume

[[Page 72357]]

regulations or recommends revisions to existing volume regulations, 
meets the intent of Sec.  985.50 of the order. During its discussion of 
revising the 2005-2006 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 USDA'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.
    As noted earlier, the Committee chose not to recommend an 
additional increase in Scotch spearmint oil at this time because of the 
stable market conditions. Handlers had reported purchases and committed 
sales of 792,382 pounds of Scotch spearmint oil for the period of June 
1, 2005, through October 5, 2005. Handlers estimate that the total 
demand for the 2005-2006 marketing year could be between 800,000 pounds 
and 950,000 pounds. Therefore, the current salable quantity of 
1,019,600 pounds should adequately supply the 2005-2006 marketing year.

Initial Regulatory Flexibility Analysis

    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, 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 the 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 eight spearmint oil handlers subject to regulation under 
the order, and approximately 56 producers of Scotch spearmint oil and 
approximately 88 producers of 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 $6,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000.
    Based on the SBA's definition of small entities, the Committee 
estimates that 2 of the 8 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 
14 of the 56 Scotch spearmint oil producers and 18 of the 88 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. A typical spearmint oil-producing 
operation has enough acreage for rotation such that the total acreage 
required to produce the crop is about one-third spearmint and two-
thirds rotational crops. Thus, the typical spearmint oil producer has 
to have considerably more acreage than is planted to spearmint during 
any given season. Crop rotation is an essential cultural practice in 
the production of spearmint for weed, insect, and disease control. To 
remain economically viable with the added costs associated with 
spearmint oil production, most spearmint oil-producing farms fall into 
the SBA category of large businesses.
    Small spearmint oil producers generally are not as extensively 
diversified as larger ones 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 income from alternative 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.
    This rule amends an interim final rule that was published in the 
Federal Register on September 23, 2005, and is based on a unanimous 
Committee recommendation made at a meeting on October 5, 2005, to 
increase the Native spearmint oil salable quantity by an additional 
151,855 pounds from 1,019,600 pounds to 1,171,455 pounds, and the 
allotment percentage by an additional 7 percent from 47 percent to 54 
percent. The Committee did not make a recommendation to further 
increase the Scotch spearmint oil salable quantity or allotment 
percentage at this time due to stable market conditions.
    An econometric model was used to assess the impact that volume 
control has on the prices producers receive for their commodity. 
Without volume control, spearmint oil markets would likely be over-
supplied, resulting in low producer prices and a large volume of oil 
stored and carried over to the next crop year. The model estimates how 
much lower producer prices would likely be in the absence of volume 
controls.
    The recommended allotment percentages, upon which 2005-2006 
producer allotments are based, are 55 percent for Scotch (a 20 
percentage point increase from the original allotment percentage of 35 
percent) and 54 percent for Native (a 14 percentage point increase from 
the original salable percentage of 40 percent). Without volume 
controls, producers would not be limited to these allotment levels, and 
could produce and sell additional spearmint oil. The econometric model 
estimated a $1.32 decline in the season average producer price per 
pound (from both classes of spearmint oil) resulting from the higher 
quantities that would be produced and marketed if volume controls were 
not used (i.e., if the salable percentages were set at 100 percent).
    Loosening the volume control restriction by increasing the 
allotment percentages resulted in this revised price decline estimate 
of $1.32 per pound if volume controls were not used. The initial price 
decline estimate of

[[Page 72358]]

$1.60 per pound was based on the 2005-2006 allotment percentages (35 
percent for Scotch and 40 percent for Native) published in the Federal 
Register on March 24, 2005 (70 FR 14969). The 2004 Far West producer 
price for both classes of spearmint oil was $9.48 per pound.
    The surplus situation for the spearmint oil market that would exist 
without volume controls in 2005-2006 also would likely dampen prospects 
for improved producer prices in future years because of the buildup in 
stocks.
    The use of volume controls allows the industry to fully supply 
spearmint oil markets while avoiding the negative consequences of over-
supplying these markets. The use of volume controls is believed to have 
little or no effect on consumer prices of products containing spearmint 
oil and will not result in fewer retail sales of such products.
    Based on projections available at the October 5, 2005, meeting, the 
Committee considered alternatives to the recommended Native spearmint 
oil increase. The Committee not only considered leaving the salable 
quantity and allotment percentage unchanged, but also looked at various 
increases ranging from 0 percent to 10 percent. The Committee reached 
its recommendations to increase the salable quantity and allotment 
percentage for Native spearmint oil after careful consideration of all 
available information, and believes that the levels recommended will 
achieve the objectives sought. Without the increase, the Committee 
believes the industry would not be able to meet market needs.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large spearmint oil handlers. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this rule.
    Further, the Committee's meetings were widely publicized throughout 
the spearmint oil industry and all interested persons were invited to 
attend and participate in Committee deliberations. Like all Committee 
meetings, the August 24, 2005, and October 5, 2005, meetings were 
public meetings and all entities, both large and small, were able to 
express their views on modification of the 2005-2006 salable quantities 
and allotment percentages. Finally, interested persons are invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 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.
    This rule invites comments on a further change to the salable 
quantity and allotment percentage for Native spearmint oil for the 
2005-2006 marketing year. Any comments received will be considered 
prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule increases the quantity of Native spearmint oil 
that may be marketed during the marketing year which ends on May 31, 
2006; (2) the current quantity of Native spearmint oil may be 
inadequate to meet demand for the remainder of the marketing year, thus 
making the additional oil available as soon as is practicable is 
beneficial to both handlers and producers; (3) the Committee 
recommended these changes at a public meeting and interested parties 
had an opportunity to provide input; and (4) this rule provides a 60-
day comment period and any comments received will be considered prior 
to finalization of this rule.

List of Subjects in 7 CFR Part 985

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


0
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

0
1. The authority citation for 7 CFR part 985 continues to read as 
follows:

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


0
2. In Sec.  985.224, paragraph (b) is revised to read as follows:

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


Sec.  985.224  Salable quantities and allotment percentages--2005-2006 
marketing year.

* * * * *
    (b) Class 3 (Native) oil--a salable quantity of 1,171,455 pounds 
and an allotment percentage of 54 percent.

    Dated: November 11, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-23620 Filed 12-2-05; 8:45 am]
BILLING CODE 3410-02-P