[Federal Register Volume 73, Number 71 (Friday, April 11, 2008)]
[Rules and Regulations]
[Pages 19743-19746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-7866]



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  Federal Register / Vol. 73, No. 71 / Friday, April 11, 2008 / Rules 
and Regulations  

[[Page 19743]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket Nos. AMS-FV-07-0134; FV08-985-1 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 2007-2008 
Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule revising the quantity of 
Class 3 (Native) spearmint oil that handlers may purchase from, or 
handle for, producers during the 2007-2008 marketing year. This rule 
continues in effect the action that increased the Native spearmint oil 
salable quantity from 1,162,336 pounds to 1,172,956 pounds, and the 
allotment percentage from 48 percent to 53 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 Date: May 12, 2008.

FOR FURTHER INFORMATION CONTACT: Susan M. Coleman, Marketing 
Specialist, or Gary D. Olson, Regional Manager, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 
326-7440, or E-mail: [email protected] or [email protected].
    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.''
    USDA 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 in effect the action that increased the quantity of Native 
spearmint oil produced in the Far West that may be purchased from or 
handled for producers by handlers during the 2007-2008 marketing year, 
which ends on May 31, 2008. 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 original salable quantity and allotment percentages for Scotch 
and Native spearmint oil for the 2007-2008 marketing year were 
recommended by the Committee at its October 4, 2006, meeting. The 
Committee recommended salable quantities of 886,667 pounds and 
1,062,336 pounds, and allotment percentages of 45 percent and 48 
percent, respectively, for Scotch and Native spearmint oil. A proposed 
rule was published in the Federal Register on January 22, 2007 (71 FR 
2639). Comments on the proposed rule were solicited from interested 
persons until February 21, 2007. No comments were received. 
Subsequently, a final rule establishing the salable quantities and 
allotment percentages for Scotch and Native spearmint oil for the 2007-
2008 marketing year was published in the Federal Register on March 29, 
2007 (72 FR 14657).
    This rule continues in effect the action that revised the quantity 
of Native spearmint oil that handlers may purchase from, or handle for, 
producers during the 2007-2008 marketing year, which ends on May 31, 
2008. Pursuant to authority contained in Sec. Sec.  985.50, 985.51, and 
985.52 of the order, the Committee, with seven of its eight members 
present, met on October 17, 2007, and unanimously recommended that the 
2007-2008 Native spearmint oil allotment percentage be increased by 5 
percent.
    Thus, taking into consideration the following discussion on 
adjustments to the Native spearmint oil salable quantities, this rule 
continues in effect the action that increased the 2007-2008 marketing 
year salable quantities and allotment percentages for Native spearmint 
oil to 1,172,956 pounds and 53 percent.
    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

[[Page 19744]]

producer's individual allotment base for the applicable class of 
spearmint oil.
    The total industry allotment base for Native spearmint oil for the 
2007-2008 marketing year was estimated by the Committee at the October 
4, 2006, meeting at 2,213,200 pounds. This was later revised at the 
beginning of the 2007-2008 marketing year to 2,213,124 pounds to 
reflect a 2006-2007 marketing year loss of 76 pounds of base due to 
non-production of some producers' total annual allotments. When the 
revised total allotment base of 2,213,124 pounds is applied to the 
originally established allotment percentage of 48 percent, the 
initially established 2007-2008 marketing year salable quantity of 
1,062,336 pounds is effectively modified to 1,062,300.
    By increasing the salable quantity and allotment percentage, this 
final rule makes an additional amount of Native spearmint oil available 
by releasing oil from the reserve pool. As of February 20, 2008, the 
reserve pool is estimated at 258,435 pounds. When applied to each 
individual producer, the allotment percentage increase allows each 
producer to take up to an amount equal to their allotment base from 
their reserve for this respective class of oil. 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 October 31 of each marketing 
year.
    The following table summarizes the Committee recommendations:

Native Spearmint Oil Recommendation

    (A) Estimated 2007-2008 Allotment Base--2,213,200 pounds. This is 
the estimate on which the original 2007-2008 Native spearmint oil 
salable quantity and allotment percentage was based.
    (B) Revised 2007-2008 Allotment Base--2,213,124 pounds. This is 76 
pounds less than the estimated allotment base of 2,213,200 pounds. This 
is less because some producers failed to produce all of their 2006-2007 
allotment.
    (C) Original 2007-2008 Allotment Percentage--48 percent. This was 
unanimously recommended by the Committee on October 4, 2006.
    (D) Original 2007-2008 Salable Quantity--1,062,336 pounds. This 
figure is 48 percent of the estimated 2007-2008 allotment base of 
2,213,200 pounds.
    (E) Adjustment to the Original 2007-2008 Salable Quantity--
1,062,300 pounds. This figure reflects the salable quantity initially 
available after the beginning of the 2006-2007 marketing year due to 
the 76-pound reduction in the industry allotment base to 2,213,124 
pounds.
    (F) First Revision to the 2007-2008 Salable Quantity and Allotment 
Percentage:
    (1) Increase in Allotment Percentage--5 percent. The Committee 
recommended a 5 percent increase at its October 17, 2007, meeting.
    (2) 2007-2008 Allotment Percentage--53 percent. This figure is 
derived by adding the increase of 5 percent to the original 2007-2008 
allotment percentage of 48 percent.
    (3) Calculated Revised 2007-2008 Salable Quantity--1,172,956 
pounds. This figure is 53 percent of the revised 2007-2008 allotment 
base of 2,213,124 pounds.
    (4) Computed Increase in the 2007-2008 Salable Quantity--110,656 
pounds. This figure is 5 percent of the revised 2007-2008 allotment 
base of 2,213,124 pounds.
    The 2007-2008 marketing year began on June 1, 2007, with an 
estimated carry-in of 83,417 pounds of salable oil. When the estimated 
carry-in is added to the revised 2007-2008 salable quantity of 
1,062,300 pounds, a total estimated available supply for the 2007-2008 
marketing year of 1,145,717 pounds results. In actuality, this final 
rule made an additional 98,097 pounds of Native spearmint oil 
available, since not all producers have reserve pool oil. This resulted 
in a revised available supply of 1,243,814 pounds. As of February 20, 
2008, 1,030,839 pounds of oil has already been sold or committed for 
the 2007-2008 marketing year, which leaves 212,975 pounds available for 
sale.
    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 and producers who were not in attendance. The handlers 
have estimated that the demand for 2007-2008 year will be 1,200,000 
pounds, which would leave 43,814 pounds as a carry out at the end of 
the year. However, when the Committee made its original recommendation 
for the establishment of the Native spearmint oil salable quantity and 
allotment percentage for the 2007-2008 marketing year, it had 
anticipated that the year would end with an ample available supply. 
Therefore, the industry may not be able to meet market demand without 
this increase.
    Based on its analysis of available information, USDA has determined 
that the salable quantity and allotment percentage for Native spearmint 
oil for the 2007-2008 marketing year should be increased to 1,172,956 
pounds and 53 percent, respectively.
    This rule finalizes an interim final rule that relaxed the 
regulation of Native spearmint oil and will allow producers to meet 
market demand while improving producer returns. In conjunction with the 
issuance of this rule, the Committee's revised marketing policy 
statement for the 2007-2008 marketing year has been reviewed by USDA. 
The Committee's marketing policy statement, a requirement whenever the 
Committee recommends implementing volume regulations or recommends 
revisions to existing volume regulations, meets the intent of Sec.  
985.50 of the order. During its discussion of revising the 2007-2008 
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.

Final 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 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

[[Page 19745]]

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.
    There are seven spearmint oil handlers subject to regulation under 
the order, and approximately 58 producers of Scotch spearmint oil and 
approximately 92 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 $6,500,000, 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 one of the seven handlers regulated by the order could 
be considered a small entity. 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 19 of the 58 Scotch spearmint oil producers and 22 of 
the 92 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 oil 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 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.
    This rule continues in effect the action that increased the 
quantity of Native spearmint oil that handlers may purchase from, or 
handle for, producers during the 2007-2008 marketing year, which ends 
on May 31, 2008. Specifically, this action increases the 2007-2008 
marketing year salable quantity and allotment percentage for Native 
spearmint oil to 1,172,956 and 53 percent.
    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 2007-2008 
producer allotments are based, are 45 percent for Scotch and 53 percent 
for Native (a 5 percentage point increase from the original allotment 
percentage of 48 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 $1.40 
decline in the season average producer price per pound of Far West 
spearmint oil (combining the two classes of spearmint oil) resulting 
from the higher quantities that would be produced and marketed if 
volume controls were not used.
    A previous price decline estimate of $1.45 per pound was based on 
the original 2007-2008 allotment percentages (45 percent for Scotch and 
48 percent for Native) published in the Federal Register on March 29, 
2007 (72 FR 14657). The revised estimate reflects the impact of the 
additional quantities that will be made available by this rule compared 
to the original allotment percentages. In actuality, this rule made 
98,097 pounds of Native spearmint oil available, which is lower than 
the computed increase of 110,656 pounds, since not all producers have 
reserve pool oil. Loosening the volume control restriction resulted in 
the smaller price decline estimate of $1.40 per pound.
    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 meeting, the Committee 
considered alternatives to the increase finalized herein. The Committee 
not only considered leaving the salable quantity and allotment 
percentage unchanged, but also looked at various increases. 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 
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, as 
noted in the initial regulatory flexibility analysis, USDA has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this rule.
    The AMS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.
    The Committee's meeting was widely publicized throughout the 
spearmint oil industry and all interested persons were invited to 
attend the meeting and participate in Committee deliberations. Like all 
Committee meetings, the October 17, 2007, meeting was a public meeting 
and all entities, both large and small, were able to express their 
views on this issue.
    An interim final rule concerning this action was published in the 
Federal Register on December 17, 2007. Copies of the rule were mailed 
by the Committee's staff to all committee

[[Page 19746]]

members, producers, handlers, and other interested persons. In 
addition, the rule was made available through the Internet by USDA and 
the Office of the Federal Register. That rule provided for a 60-day 
comment period which ended February 15, 2008. No comments were 
received.
    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.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing this interim final rule, without change, as published in the 
Federal Register (72 FR 71199) 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.

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

    Accordingly, the interim final rule amending 7 CFR part 985, which 
was published at 72 FR 71199 on December 17, 2007, is adopted as a 
final rule without change.

    Dated: April 8, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-7866 Filed 4-10-08; 8:45 am]
BILLING CODE 3410-02-P