[Federal Register Volume 85, Number 133 (Friday, July 10, 2020)]
[Rules and Regulations]
[Pages 41325-41328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13614]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Doc. No. AMS-SC-20-0029; SC20-985-2 FR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule implements a recommendation from the Far West 
Spearmint Oil Administrative Committee (Committee) to increase the 
assessment rate established for the 2020-2021 and subsequent marketing 
years. The assessment rate will remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Effective August 10, 2020.

FOR FURTHER INFORMATION CONTACT: Joshua Wilde, Marketing Specialist, or 
Gary Olson, Regional Director, Northwest Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA; Telephone: (503) 326-2055, 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, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final rule is issued under Marketing Order No. 
985, as amended (7 CFR part 985), regulating the handling of spearmint 
oil produced in the Far West. 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 production area, and a public 
member.
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 13563 and 13175. This final rule 
falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this 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, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2017).
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the Order now in effect, Far West spearmint oil 
handlers are subject to assessments. Funds to administer the Order are 
obtained from such assessments. The assessment rate will be applicable 
to all assessable spearmint oil for the 2020-2021 marketing year, and 
continue until amended, suspended, or terminated.
    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. Such 
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

[[Page 41326]]

review USDA's ruling on the petition, provided an action is filed no 
later than 20 days after the date of the entry of the ruling.
    This final rule increases the assessment rate from $0.10 per pound, 
the rate that was established for the 2019-2020 marketing year, to 
$0.14 per pound of Far West spearmint oil handled for the 2020-2021 and 
subsequent marketing years.
    The Order provides authority for the Committee, with the approval 
of USDA, to formulate an annual budget of expenses and collect 
assessments from handlers to administer the program. The members are 
familiar with the Committee's needs and with the costs of goods and 
services in their local area and are in a position to formulate an 
appropriate budget and assessment rate. The assessment rate is 
formulated and discussed in a public meeting. Thus, all directly 
affected persons have an opportunity to participate and provide input.
    For the 2019-2020 and subsequent marketing years, the Committee 
recommended, and USDA approved, an assessment rate of $0.10 per pound 
of Far West spearmint oil handled. That assessment rate would continue 
in effect from marketing year to marketing year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Committee or other information available to USDA.
    The Committee met on February 26, 2020, and unanimously recommended 
expenditures of $214,825 and an assessment rate of $0.14 per pound of 
Far West spearmint oil handled for the 2020-2021 and subsequent 
marketing years. In comparison, the previous year's budgeted 
expenditures were $272,850. The assessment rate of $0.14 is $0.04 
higher than the $0.10 rate currently in effect. The Committee 
recommended the assessment rate increase because expenditures have 
exceeded assessment revenue in the previous six marketing years and 
financial reserves have been reduced to approximately $87,468. The 
Committee believes that drawing from reserves to fund operations is not 
a sustainable strategy and that the previous assessment increase from 
$0.09 to $0.10 per pound of spearmint oil handled, effective for the 
2019-2020 and subsequent marketing years, was not sufficient to offset 
declining sales volume and increasing costs. The Committee projects 
expenses to exceed income by $63,525 if the assessment rate is left 
unchanged for the 2020-2021 marketing year. The Committee believes that 
the $0.14 per pound assessment rate will allow the Committee to 
adequately balance budgeted expenses with projected income for the 
2020-2021 and subsequent marketing years.
    The major expenditures recommended by the Committee for the 2020-
2021 marketing year include $169,000 for contracted administration by 
Ag Association Management, Inc., $26,025 for administrative expenses, 
$8,800 for Committee expenses, $6,500 for software/website maintenance, 
and $4,500 for market research and development projects. In comparison, 
major expenses for the 2019-2020 marketing year included $169,000 for 
contracted administration, $30,850 for administrative expenses, $15,000 
for Committee expenses, $6,500 for software/website maintenance, and 
$13,000 for market research and development projects.
    The Committee derived the recommended assessment rate by 
considering anticipated expenses, expected spearmint oil sales, and the 
amount of funds available in the authorized reserve. Income derived 
from handler assessments, calculated at $210,000 (1,500,000 pounds of 
spearmint oil x $0.14 per pound assessment rate), along with $1,300 in 
other income and $3,525 from reserve funds, will be sufficient to cover 
budgeted expenses of $214,825. Funds in the reserve (estimated to be 
$87,468 at the beginning of the 2020-2021 marketing year) will be kept 
within the maximum permitted by Sec.  985.42(a) of the Order and will 
not exceed approximately one marketing year's operational expenses.
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by USDA 
upon recommendation and information submitted by the Committee or other 
available information.
    Although this assessment rate will be in effect for an indefinite 
period, the Committee will continue to meet prior to or during each 
marketing year to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Committee meetings are available from the Committee or USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA will evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's 2020-2021 marketing year 
budget, and those for subsequent marketing years, will be reviewed and, 
as appropriate, approved by USDA.

Final 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 final rule 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 
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 approximately 41 producers and 94 producers of Scotch and 
Native spearmint oil, respectively, in the regulated area and 
approximately 8 spearmint oil handlers subject to regulation under the 
Order. Small agricultural producers are defined by the Small Business 
Administration (SBA) as those having annual receipts of less than 
$1,000,000, and small agricultural service firms have been defined as 
those whose annual receipts are less than $30,000,000 (13 CFR 121.201).
    The Committee reported that recent producer prices for spearmint 
oil range from $14.00 to $17.50 per pound. The National Agricultural 
Statistics Service (NASS) reported that the 2018 U.S. season average 
spearmint oil producer price per pound was $16.80. Multiplying $16.80 
per pound by 2018-2019 marketing year spearmint oil utilization of 
1,963,028 million pounds yields a crop value estimate of about $33.0 
million. Total 2018-2019 marketing year spearmint oil utilization, 
reported by the Committee, was 717,952 pounds and 1,245,076 pounds for 
Scotch and Native spearmint oil, respectively.
    Given the reporting requirements for the volume regulation 
provisions of the Order, the Committee maintains accurate records of 
each producer's production and sales. Using the $16.80 average 
spearmint oil price, and Committee production data for each producer, 
the Committee estimates that 38 of the 41 Scotch spearmint oil 
producers and 89 of the 94 Native spearmint oil producers could be 
classified as small entities under the SBA definition.
    There is no third party or governmental entity that collects and

[[Page 41327]]

reports spearmint oil prices received by spearmint oil handlers. 
However, the Committee estimates an average spearmint oil handling 
markup at approximately 20 percent of the price received by producers. 
Multiplying 1.20 by the 2018 producer price of $16.80 yields a handler 
free on board (FOB) price estimate of $20.16 per pound.
    Multiplying this estimated handler FOB price by spearmint oil 
utilization of 1,963,028 pounds results in an estimated handler-level 
spearmint oil value of $39.6 million. Dividing this figure by the 
number of handlers (8) yields estimated average annual handler receipts 
of about $5.0 million, which is well below the SBA threshold for small 
agricultural service firms.
    Furthermore, using confidential data on pounds handled by each 
handler, and the abovementioned estimated handler price per pound, the 
Committee reported that it is not likely that any of the eight handlers 
had a 2018-2019 marketing year spearmint oil sales value that exceeded 
the $30 million SBA threshold.
    Therefore, many of the Far West spearmint oil producers may be 
classified as small entities and all of the Far West spearmint oil 
handlers may be classified as small entities.
    This final rule increases the assessment rate collected from 
handlers for the 2020-2021 and subsequent marketing years from $0.10 to 
$0.14 per pound of spearmint oil handled. The Committee unanimously 
recommended 2020-2021 expenditures of $214,825 and an assessment rate 
of $0.14 per pound of spearmint oil. The $0.14 per pound assessment 
rate is $0.04 higher than the rate previously in effect.
    The Committee estimates that the industry will handle 1,500,000 
pounds of spearmint oil during the 2020-2021 marketing year. Thus, the 
$0.14 per pound rate should provide $210,000 in assessment income. The 
Committee anticipates that income derived from handler assessments, 
along with $1,300 of other income and $3,525 from its reserve fund, 
will fully fund all budgeted expenses for the 2020-2021 marketing year. 
Furthermore, the Committee expects that assessment revenue will 
completely cover budgeted expenses for the 2021-2022 and subsequent 
marketing years.
    The major expenditures recommended by the Committee for the 2020-
2021 marketing year include $169,000 for contracted administration by 
Ag Association Management, Inc., $26,025 for administrative expenses, 
$8,800 for Committee expenses, $6,500 for software/website maintenance, 
and $4,500 for market research and development projects. Budgeted 
expenses for these items in the 2019-2020 marketing year were $169,000, 
$30,850, $15,000, $6,500, and $13,000, respectively.
    The Committee recommended the assessment rate increase because 
expenditures have exceeded assessment revenue in the previous six 
marketing years and financial reserves have been reduced to 
approximately $87,468. The Committee believes that drawing from 
reserves to fund operations is not a sustainable strategy and that the 
previous assessment increase from $0.09 to $0.10 per pound of Far West 
spearmint oil handled was not sufficient to offset declining sales 
volume. The Committee projected expenses to exceed income by $63,525 if 
the assessment rate was left unchanged for the 2020-2021 marketing 
year. Increasing the continuing assessment rate will allow the 
Committee to adequately balance budgeted expenses with projected income 
for the 2020-2021 and subsequent marketing years.
    Prior to arriving at this budget and assessment rate, the Committee 
discussed various alternatives, including maintaining the current 
assessment rate of $0.10 per pound and increasing the assessment rate 
to a different amount. However, leaving the assessment rate unchanged 
would have required the Committee to deplete its financial reserve to a 
fiscally unsustainable level. Based on estimated shipments, the 
established assessment rate of $0.14 per pound of spearmint oil should 
provide $210,000 in assessment income. The Committee determined 
assessment revenue will be adequate to cover most of the budgeted 
expenditures for the 2020-2021 marketing year and all of the 
Committee's budgeted expenditures for subsequent marketing years. Any 
excess funds will be used to replenish the Committee's monetary reserve 
in the future. Reserve funds will be kept within the amount authorized 
in the Order.
    A review of historical information and preliminary information 
pertaining to the upcoming marketing year indicates that the average 
producer price for the 2020-2021 season is expected to be approximately 
$15.90-17.40 per pound of spearmint oil. Therefore, estimated 
assessment revenue for the 2020-2021 marketing year as a percentage of 
total producer revenue will be between 0.80 and 0.88 percent ($0.14 
divided by $17.40 and $15.90, respectively).
    This action increases the assessment obligation imposed on 
handlers. Assessments are applied uniformly on all handlers, and some 
of the costs may be passed on to producers. However, these costs are 
expected to be offset by the benefits derived by the operation of the 
Order.
    The Committee's meetings are widely publicized throughout the Far 
West spearmint oil industry. All interested persons were invited to 
attend the meetings and participate in Committee deliberations on all 
issues. Like all Committee meetings, the February 26, 2020, meeting was 
a public meeting and all entities, both large and small, were able to 
express views on this issue. Interested persons were invited to submit 
comments on this rule, including the regulatory and information 
collection impacts of this action on small businesses.
    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 Vegetable and 
Specialty Crops. No changes in those requirements will be necessary as 
a result of this action. Should any changes become necessary, they will 
be submitted to OMB for approval.
    This final rule will not impose any additional reporting or 
recordkeeping requirements on either small or large Far West 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. As noted in the 
initial regulatory flexibility analysis, USDA has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
final rule.
    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.
    A proposed rule concerning this action was published in the Federal 
Register on April 27, 2020 (85 FR 23243). Copies of the proposed rule 
were provided to all Far West spearmint oil handlers. The proposal was 
also made available through the internet by USDA and the Office of the 
Federal Register. A 30-day comment period ending May 27, 2020, was 
provided for interested persons to respond to the proposal. No comments 
were received. Accordingly, no changes will be 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: 
https://www.ams.usda.gov/rules-regulations/

[[Page 41328]]

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.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule 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

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

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


0
2. Revise Sec.  985.141 to read as follows:


Sec.  985.141  Assessment rate.

    On and after June 1, 2020, an assessment rate of $0.14 per pound is 
established for Far West spearmint oil. Unexpended funds may be carried 
over as a reserve.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-13614 Filed 7-9-20; 8:45 am]
BILLING CODE 3410-02-P