[Federal Register Volume 83, Number 195 (Tuesday, October 9, 2018)]
[Proposed Rules]
[Pages 50527-50531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21844]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Doc. No. AMS-SC-17-0073; SC18-985-1A PR]


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 2018-2019 
Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Far West Spearmint Oil Administrative Committee (Committee) to increase 
the quantity of Class 3 (Native) spearmint oil that handlers may 
purchase from, or handle on behalf of, producers during the 2018-2019 
marketing year. The Committee recommended this action to avoid extreme 
fluctuations in supplies and prices and to help maintain stability in 
the Far West spearmint oil market.

DATES: Comments must be received by December 10, 2018.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or internet: http://www.regulations.gov. All comments should reference the document 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.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent, Senior Marketing 
Specialist, or Gary D. Olson, Regional Director, Northwest Marketing 
Field

[[Page 50528]]

Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or 
email: [email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). 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). Part 985 (referred to 
as ``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 Committee locally administers the Order 
and is comprised of spearmint oil producers operating within the area 
of production, and a public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review.
    Additionally, because this proposed rule does not meet the 
definition of a significant regulatory action, it does not trigger the 
requirements contained in Executive Order 13771. See OMB's Memorandum 
titled ``Interim Guidance Implementing Section 2 of the Executive Order 
of January 30, 2018, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2018).
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the provisions of the 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 increase the quantity of Native spearmint oil produced in the Far 
West that handlers may purchase from, or handle on behalf of, producers 
during the 2018-2019 marketing year, which ends on May 31, 2019.
    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.
    This proposal invites comments on a revision to the quantity of 
Native spearmint oil that handlers may purchase from, or handle on 
behalf of, producers during the 2018-2019 marketing year. The salable 
quantity and allotment percentage for Native spearmint oil for the 
2018-19 marketing year was established at 1,307,947 pounds and 53 
percent, respectively, in a final rule published in the Federal 
Register on July 24, 2018 (83 FR 34935). This proposed rule would 
increase the Native spearmint oil salable quantity from 1,307,947 
pounds to 1,357,315 pounds and the allotment percentage from 53 percent 
to 55 percent.
    Under the volume regulation provisions of the Order, the Committee 
meets each year to adopt a marketing policy for the ensuing year. When 
the Committee's marketing policy considerations indicate a need to 
limit the quantity of spearmint oil available to the market to 
establish or maintain orderly marketing conditions, the Committee 
submits a recommendation to the Secretary of Agriculture for volume 
regulation.
    Volume regulation under the Order is effectuated through the 
establishment of a salable quantity and allotment percentage applicable 
to each class of spearmint oil handled in the production area during a 
marketing year. The salable quantity is the total quantity of each 
class of oil that handlers may purchase from, or handle on behalf of, 
producers during a given marketing year. The allotment percentage for 
each class of oil is derived by dividing the salable quantity by the 
total industry allotment base for that same class of oil. The total 
industry allotment base is the aggregate of all allotment base held 
individually by producers. Producer allotment base is the quantity of 
each class of spearmint oil that the Committee has determined is 
representative of a producer's spearmint oil production. Each producer 
is allotted a pro rata share of the total salable quantity of each 
class of spearmint oil each marketing year. Each producer's annual 
allotment is determined by applying the allotment percentage to the 
producer's individual allotment base for each applicable class of 
spearmint oil.
    The full Committee met on October 25, 2017, to consider its 
marketing policy for the 2018-2019 marketing year. At that meeting, the 
Committee determined that marketing conditions indicated a need for 
volume regulation of both classes of spearmint oil (Scotch and Native) 
for the 2018-2019 marketing year. The Committee recommended salable 
quantities of 760,660 pounds and 1,307,947 pounds, and allotment 
percentages of 35 percent and 53 percent, respectively, for Scotch and 
Native spearmint oil. A proposed rule to that effect was published in 
the Federal Register on April 6, 2018 (83 FR 14766). Comments on the 
proposed rule were solicited from interested persons until June 5, 
2018. No comments were received. Subsequently, a final rule 
establishing the salable quantities and allotment percentages for 
Scotch and Native spearmint oil for the 2018-2019 marketing year was 
published in the Federal Register on July 24, 2018 (83 FR 34935).
    Pursuant to authority contained in Sec. Sec.  985.50, 985.51, and 
985.52, the full eight-member Committee met again on July 18, 2018, to 
evaluate the current year's volume control regulation. At the meeting, 
the Committee assessed the current market conditions for spearmint oil 
in relation to the salable quantities and allotment percentages 
established for the 2018-2019 marketing year. The Committee considered 
a number of factors, including the current and projected supply and the 
estimated future demand for all classes of spearmint oil. The Committee 
determined that the established salable quantity and allotment 
percentage in effect for Native spearmint oil for the 2018-2019 
marketing year should be increased to accommodate a rise in market 
demand for that class of spearmint oil.
    At the July 18, 2018, meeting, the Committee recommended increasing 
the 2018-2019 marketing year Native spearmint oil salable quantity from 
1,307,947 pounds to 1,357,315 pounds and the allotment percentage from 
53 percent to 55 percent. The vote to recommend to the Secretary to 
increase the salable quantity and allotment percentage passed 
unanimously.
    This proposal would make additional amounts of Native spearmint oil

[[Page 50529]]

available to the market by increasing the salable quantity and 
allotment percentage previously established under the Order for the 
2018-2019 marketing year. This proposed rule would increase the Native 
spearmint oil salable quantity by 49,368 pounds, to 1,357,315 pounds, 
and would raise the allotment percentage 2 percentage points, to 55 
percent. The additional oil could come from 2018-2019 marketing year 
production or from releasing Native spearmint oil held by producers in 
the reserve pool. As of May 31, 2018, the Committee records show that 
the reserve pool for Native spearmint oil contained 1,020,583 pounds of 
oil, an amount it considers excessive relative to market conditions.
    At the July 18, 2018, meeting, the Committee staff reported that 
estimated demand for Native spearmint oil for the 2018-2019 marketing 
year is greater than previously anticipated. The Committee initially 
estimated the trade demand for Native spearmint oil for the 2018-2019 
marketing year to be 1,306,625. At the July 2018 meeting, the Committee 
revised the expected trade demand for the 2018-2019 marketing year from 
1,306,625 pounds to 1,400,000 pounds. If realized, trade demand would 
be 43,991 pounds above the quantity of Native spearmint oil available 
under the volume control levels now in effect (the Committee estimates 
1,356,009 pounds currently available minus the 1,400,000 pounds 
estimated trade demand, equals a deficit of 43,991 pounds). Without 
increasing the salable quantity and allotment percentage, the market 
for Native spearmint oil may be shorted. The increased quantity of 
Native spearmint oil (49,368 pounds) that would be made available to 
the market as a result of this rulemaking would ensure that market 
demand is fully satisfied in the current year and that there would be 
approximately 5,377 pounds of Native spearmint oil salable inventory 
available to carry-over for the start of the 2019-2020 marketing year, 
which begins on June 1, 2019.
    In making the recommendation to increase the salable quantity and 
allotment percentage of Native spearmint oil, the Committee considered 
all currently available information on the price, supply, and demand of 
Native spearmint oil. The Committee also considered reports and other 
information from handlers and producers in attendance at the meeting.
    This proposal would increase the 2018-2019 marketing year Native 
spearmint oil salable quantity by 49,368 pounds to a total of 1,357,315 
pounds. Actual sales of Native spearmint oil for the 2017-2018 
marketing year totaled 1,565,515 pounds. The 5-year average of Native 
spearmint oil sales is 1,365,377 pounds.
    The Committee estimates that this action would result in 5,377 
pounds of salable Native spearmint oil being carried into the 2019-2020 
marketing year which begins June 1, 2019. While 5,377 pounds is a 
relatively low quantity of salable Native spearmint oil to begin the 
marketing year, reserve pool oil could be released into the market 
under a future relaxation of the volume regulation should it be 
necessary to adequately supply the market prior to the beginning of the 
2019-2020 marketing year. The Committee estimates that a total of 
1,082,257 pounds of Native spearmint oil (1,020,583 currently in 
reserve and an estimated 61,674 pounds of excess oil produced during 
the 2018-2019 marketing year) would be available from the reserve pool, 
if needed.
    As mentioned previously, when the 2018-2019 marketing policy 
statement was drafted, handlers estimated the demand for Native 
spearmint oil for the 2018-2019 marketing year to be 1,306,625 pounds. 
The Committee's initial recommendation for the establishment of the 
Native spearmint oil salable quantity and allotment percentage for the 
2018-2019 marketing year was based on that estimate. The Committee did 
not anticipate the level of demand that the Native spearmint oil market 
is currently experiencing and did not account for it when the marketing 
policy for the 2018-19 marketing year was adopted.
    At the July 18, 2018, meeting, the Committee revised its estimate 
of the current trade demand to 1,400,000 pounds. The Committee now 
believes that the supply of Native spearmint oil available to the 
market under the established salable quantity and allotment percentage 
would be insufficient to satisfy the current level of demand for oil at 
reasonable price levels. The Committee further believes that the 
increase in the salable quantity and allotment percentage proposed in 
this action is vital to ensuring an adequate supply of Native spearmint 
oil is available to the market moving forward.
    The Committee's stated intent in the use of the Order's volume 
control regulation is to keep adequate supplies available to meet 
market needs and to maintain orderly marketing conditions. With that in 
mind, the Committee developed its recommendation for increasing the 
Native spearmint oil salable quantity and allotment percentage for the 
2018-2019 marketing year based on the information discussed above, as 
well as the summary data outlined below.
    (A) Initial estimated 2018-2019 Native allotment base--2,467,825 
pounds. This is the allotment base estimate upon which the original 
2018-2019 salable quantity and allotment percentage was based.
    (B) Revised 2018-2019 Native allotment base--2,467,845 pounds. This 
is 20 pounds more than the initial estimated allotment base of 
2,467,825 pounds. The difference is the result of annual adjustments 
made to the allotment base at the beginning of the marketing year in 
accordance with the provisions of the Order.
    (C) Initial 2018-2019 Native allotment percentage--53 percent. This 
was unanimously recommended by the Committee on October 25, 2017.
    (D) Initial 2018-2019 Native salable quantity--1,307,947 pounds. 
This figure is 53 percent of the original estimated 2018-2019 allotment 
base of 2,467,825 pounds.
    (E) Adjusted initial 2018-2019 Native salable quantity--1,307,958 
pounds. This figure reflects the salable quantity actually available at 
the beginning of the 2018-2019 marketing year. This quantity is derived 
by applying the initial 53 percent allotment percentage to the revised 
allotment base of 2,467,845.
    (F) Proposed revision to the 2018-2019 Native salable quantity and 
allotment percentage:
    (1) Proposed increase in the Native allotment percentage--2 
percent. The Committee recommended an increase of 2 percentage points 
over the initial Native allotment percentage.
    (2) Proposed revised 2018-2019 Native allotment percentage--55 
percent. This number was derived by adding the increase of 2 percentage 
points to the initially established 2018-2019 allotment percentage of 
53 percent.
    (3) Proposed revised 2018-2019 Native salable quantity--1,357,315 
pounds. This amount is 55 percent of the revised 2018-2019 allotment 
base of 2,467,845 pounds.
    (4) Computed increase in the 2018-2019 Native salable quantity as a 
result of the proposed revision--49,368 pounds. This figure represents 
the difference between the current salable quantity of 1,307,947 pounds 
and the proposed salable quantity of 1,357,315 pounds.
    Scotch spearmint oil is also regulated by the Order. As mentioned 
previously, a salable quantity and allotment percentage for Scotch 
spearmint oil for the 2018-19 marketing year was established in a final 
rule published in

[[Page 50530]]

the Federal Register on July 24, 2018 (83 FR 34935). At the July 18, 
2018, meeting, the Committee considered the projected production, 
inventory, and marketing conditions for Scotch spearmint oil for the 
2018-2019 marketing year. After receiving reports from the Committee 
staff and comments from the industry, the consensus of the Committee 
was that the established salable quantity and allotment percentage for 
Scotch spearmint oil was appropriate for the current market conditions. 
Therefore, the Committee took no further action with regard to Scotch 
spearmint oil for the 2018-2019 marketing year.
    This proposed rule would relax the regulation of Native spearmint 
oil and would allow producers to meet market demand while improving 
producer returns. In conjunction with the issuance of this proposed 
rule, the Committee's revised marketing policy statement for the 2018-
2019 marketing year has been reviewed by USDA.
    The proposed increase in the Native spearmint oil salable quantity 
and allotment percentage would account for the anticipated market needs 
for that class of oil. In determining anticipated market needs, the 
Committee considered changes and trends in historical sales, 
production, and demand.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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 
businesses 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.
    There are eight spearmint oil handlers subject to regulation under 
the Order, and approximately 43 producers of Scotch spearmint oil and 
approximately 95 producers of Native spearmint oil in the regulated 
production area. Small agricultural service firms are defined by the 
Small Business Administration (SBA) as those having annual receipts of 
less than $7,500,000, and small agricultural producers are defined as 
those having annual receipts of less than $750,000 (13 CFR 121.201).
    Based on the SBA's definition of small entities, the Committee 
estimates that only two of the eight 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 12 of the 43 Scotch spearmint oil producers and 31 of 
the 95 Native spearmint oil producers could be classified as small 
entities under the SBA definition. Thus, the majority of handlers and 
producers of Far West spearmint oil may not be classified as small 
entities.
    The use of volume control regulation allows the spearmint oil 
industry to fully supply spearmint oil markets while avoiding the 
negative consequences of over-supplying these markets. Without volume 
control regulation, the supply and price of spearmint oil would likely 
fluctuate widely. Periods of oversupply could result in low producer 
prices and a large volume of oil stored and carried over to future crop 
years. Periods of undersupply could lead to excessive price spikes and 
drive end users to source flavoring needs from other markets, 
potentially causing long-term economic damage to the domestic spearmint 
oil industry. The Order's volume control provisions have been 
successfully implemented in the domestic spearmint oil industry since 
1980 and provide benefits for producers, handlers, manufacturers, and 
consumers.
    This proposed rule would increase the quantity of Native spearmint 
oil that handlers may purchase from, or handle on behalf of, producers 
during the 2018-2019 marketing year, which ends May 31, 2019. The 2018-
2019 marketing year Native spearmint oil salable quantity was initially 
established at 1,307,947 pounds and the allotment percentage initially 
set at 53 percent. This proposed rule would increase the Native 
spearmint oil salable quantity to 1,357,315 pounds and the allotment 
percentage to 55 percent.
    Based on the information and projections available at the July 18, 
2018, meeting, the Committee considered several alternatives to this 
increase. The Committee considered leaving the salable quantity and 
allotment percentage unchanged and also considered other potential 
levels of increase. 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 input from all interested industry participants because it believes 
that the levels recommended would achieve the desired objectives. 
Without the increase, the Committee believes the industry would not be 
able to satisfactorily meet market demand.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0178, Specialty 
Crops. No changes are necessary in those requirements as a result of 
this action. Should any changes become necessary, they would be 
submitted to OMB for approval.
    This proposed rule would relax the volume regulation requirements 
established under the Order for the 2018-19 marketing year. 
Accordingly, this action would 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.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this action.
    In addition, the Committee's July 18, 2018, meeting was widely 
publicized throughout the Far West spearmint oil industry, and all 
interested persons were invited to attend the meeting and participate 
in Committee deliberations on all issues. The meeting was public, and 
all entities, both large and small, were able to express views on this 
issue. Finally, interested persons are invited to submit comments on 
this proposed rule, including the regulatory and information collection 
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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered

[[Page 50531]]

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

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

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

0
2. In Sec.  985.233, revise the section heading and paragraph (b) to 
read as follows:


Sec.  985.233   Salable quantities and allotment percentages--2018-2019 
marketing year.

* * * * *
    (b) Class 3 (Native) oil--a salable quantity of 1,357,315 pounds 
and an allotment percentage of 55 percent.

    Dated: October 3, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-21844 Filed 10-5-18; 8:45 am]
 BILLING CODE 3410-02-P