[Federal Register Volume 87, Number 30 (Monday, February 14, 2022)]
[Proposed Rules]
[Pages 8211-8217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03092]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 87, No. 30 / Monday, February 14, 2022 / 
Proposed Rules  

[[Page 8211]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Doc. No. AMS-SC-21-0086; SC22-985-1 PR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Salable Quantities and Allotment Percentages for the 
2022-2023 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 
establish salable quantities and allotment percentages for Class 1 
(Scotch) and Class 3 (Native) spearmint oil produced in Washington, 
Idaho, Oregon, and designated parts of Nevada and Utah (the Far West) 
for the 2022-2023 marketing year.

DATES: Comments must be received by April 15, 2022.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be submitted via the internet 
at: http://www.regulations.gov. All comments should reference the 
document number and the date and page number of this issue of the 
Federal Register. All comments submitted in response to this proposed 
rule will be included in the record and 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: Joshua R. Wilde, Marketing Specialist, 
or Gary Olson, Regional Director, Northwest Marketing Field Office, 
Market Development Division, Specialty Crops Program, AMS, USDA; 
Telephone: (503) 326-2724, or Email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This proposed 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 amends 
Marketing Order No. 985 (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 area of production, and 
a public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 12866 and 13563. Executive Orders 
12866 and 13563 direct agencies to assess the costs and benefits of 
regulatory alternatives and, if regulation is necessary, to select a 
regulatory approach likely to maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity).
    Executive Order 13563 is supplemental to and reaffirms the 
principles, structures, and definitions of Executive Order 12866. It 
emphasizes the importance of seeking the views of those who are likely 
to be affected by proposed regulation, providing an opportunity for 
public comment, and basing regulatory actions on a consideration of 
objective scientific, technical, and economic data.
    This proposed action falls within a category of regulatory actions 
that the Office of Management and Budget (OMB) exempted from Executive 
Order 12866 review.
    This proposed rule has been reviewed in accordance with Executive 
Order 13175, Consultation and Coordination with Indian Tribal 
Governments, which requires agencies to consider whether their 
rulemaking actions would have tribal implications. Agricultural 
Marketing Service (AMS) has determined that this proposed rule is 
unlikely to have substantial direct effects on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect. Under 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 establish 
quantities and allotment percentages for Scotch and Native spearmint 
oil for the 2022-2023 marketing year, which begins on June 1, 2022.
    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 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.
    Pursuant to the requirements in Sec.  985.50 of the Order, the 
Committee meets each year to consider supply and demand of spearmint 
oil and to adopt a marketing policy for the ensuing marketing year. In 
determining such marketing policy, the Committee considers several 
factors, including, but not limited to, the current and projected 
supply of oil, estimated future demand, production costs, and producer 
prices for both classes of spearmint oil. Input from spearmint oil 
handlers and producers are considered as well.

[[Page 8212]]

    Pursuant to the provisions in Sec.  985.51, when the Committee's 
marketing policy considerations indicate a need to establish or to 
maintain stable market conditions through volume regulation, the 
Committee subsequently recommends to USDA the establishment of a 
salable quantity and allotment percentage for such class or classes of 
oil for the upcoming marketing year. Recommendations for volume control 
are intended to ensure market requirements for Far Wear spearmint oil 
are satisfied and orderly marketing conditions are maintained.
    Section 985.12 defines salable quantity as the total quantity of 
each class of oil (Scotch or Native) which handlers may purchase from, 
or handle on behalf of, producers during a given marketing year. A 
producer's allotment base is their calculated share of the spearmint 
oil market based on a statistical representation of past spearmint oil 
production, with accommodation for reasonable, normal adjustments to 
such base as prescribed by the Committee and approved by USDA. Each 
producer's annual allotment of salable spearmint oil is calculated by 
multiplying their respective allotment base for each class of spearmint 
oil by the allotment percentage for that class of spearmint oil. The 
allotment percentage is the percentage used to calculate each 
producer's prorated share of the salable quantity and is derived by 
dividing the salable quantity for each class of spearmint oil by the 
total of all producers' allotment base for the same class of oil. The 
total allotment base is revised each year on June 1 to account for 
producer base being lost as a result of the ``bona fide effort'' 
production provision of Sec.  985.53(e) and additional base made 
available pursuant to the provisions of Sec.  985.153.
    Salable quantities and allotment percentages are established at 
levels intended to fulfill market requirements and to maintain orderly 
marketing conditions. Committee recommendations for volume control are 
made in advance of the upcoming marketing year in which the regulations 
are to be effective, thereby allowing producers ample time to adjust 
their production decisions accordingly.
    The Committee met on October 13, 2021, to consider its marketing 
policy for the 2022-2023 marketing year. At that meeting, the Committee 
determined that, based on the current market and supply conditions, 
volume regulation for both classes of oil would be necessary. The 
Committee unanimously recommended a salable quantity and allotment 
percentage for Scotch spearmint oil of 832,546 pounds and 37 percent 
and a salable quantity and allotment percentage for Native spearmint 
oil of 1,101,269 pounds and 43 percent.
    This proposed action would establish the amount of Scotch and 
Native spearmint oil that handlers may purchase from, or handle on 
behalf of, producers during the 2022-2023 marketing year, which begins 
on June 1, 2022. Salable quantities and allotment percentages have been 
placed into effect each season since the Order's inception in 1980.

Scotch Spearmint Oil

    The Committee recommended a Scotch spearmint oil salable quantity 
of 832,546 pounds and an allotment percentage of 37 percent for the 
2022-2023 marketing year. The proposed 2022-2023 marketing year salable 
quantity of 832,546 pounds is 14,138 pounds less than the 2021-2022 
marketing year salable quantity of 846,684 pounds. The allotment 
percentage, recommended at 37 percent for the 2022-2023 marketing year, 
is one percent less than the percentage in effect the previous year. 
The total allotment base for the coming marketing year is estimated to 
be 2,250,124 pounds. This figure represents a one-percent increase over 
the revised 2021-2022 marketing year total allotment base of 2,227,846 
pounds. The salable quantity (832,546 pounds) is the product of total 
allotment base (2,250,124 pounds) times the allotment percentage (37 
percent).
    The Committee considered several factors in making its 
recommendation, including the current and projected future supply, 
estimated future demand, production costs, and producer prices. The 
Committee's recommendation also accounts for the established acreage of 
Scotch spearmint, consumer demand, existing carry-in, reserve pool 
volume, and increased production in competing markets.
    According to the Committee, as costs of production have increased 
and spearmint oil prices have decreased, many producers have forgone 
new plantings of Scotch spearmint. This has resulted in a significant 
decline in production of Scotch spearmint oil in recent years. 
Production has decreased from 1,113,346 pounds produced in 2016 to an 
estimated 556,559 pounds of Scotch spearmint production in 2021.
    Industry reports indicate that trade demand for Far West Scotch 
spearmint oil has diminished over the past five years as international 
markets for spearmint-flavored products have slowed. Sales of Far West 
Scotch spearmint oil have declined from 1,060,232 pounds during the 
2014-2015 marketing year to 717,952 pounds in 2018-2019, and further to 
488,484 pounds in 2020-2021, the last full year of available data. In 
addition to declining spearmint oil demand, increasing production of 
Scotch spearmint oil in competing markets, most notably by Canadian 
producers, has put additional downward pressure on the Far West Scotch 
spearmint oil market.
    Given the anticipated market conditions for the coming year, the 
Committee estimates that Scotch spearmint oil trade demand for the 
2022-2023 marketing year trade will be 650,000 pounds, which is 25,000 
pounds higher than the prior year estimate and right in line with the 
5-year moving sales average of 650,033 pounds. Should the proposed 
volume regulation levels prove insufficient to adequately supply the 
market, the Committee has the authority to recommend intra-seasonal 
increases, as it has in previous marketing years.
    The Committee calculated the minimum salable quantity of Scotch 
spearmint oil that would be required during the 2022-2023 marketing 
year (311,105 pounds) by subtracting the estimated salable carry-in on 
June 1, 2022, (338,895 pounds) from the estimated trade demand (650,000 
pounds). This minimum salable quantity represents the estimated minimum 
amount of Scotch spearmint oil that would be needed to satisfy 
estimated trade demand for the coming year. To ensure that the market 
would be fully supplied, the Committee recommended a 2022-2023 
marketing year salable quantity of 832,546 pounds. The recommended 
salable quantity, combined with an estimated 338,895 pounds of salable 
carry-in from the previous year, would yield a total available supply 
of 1,171,441 pounds of Scotch spearmint oil for the 2022-2023 marketing 
year. With the recommended salable quantity and current market 
environment, the Committee estimates that as much as 521,441 pounds of 
salable Scotch spearmint oil could be carried into the 2022-2023 
marketing year.
    Salable carry-in is the primary measure of excess spearmint oil 
supply under the Order, as it represents overproduction in prior years 
that is currently available to the market without restriction. Under 
volume regulation, spearmint oil that is designated as salable 
continues to be available to the market until it is sold and may be 
marketed at any time at the discretion of the owner.

[[Page 8213]]

    The Committee estimates that there will be 338,895 pounds of 
salable carry-in of Scotch spearmint oil on June 1, 2022. If current 
market conditions are maintained and the Committee's projections are 
correct, salable carry-in would increase to 521,441 pounds at the 
beginning of the 2022-2023 marketing year. This level would be above 
the quantity that the Committee generally considers favorable (150,000 
pounds). However, the Committee believes that, given the current 
economic conditions in the Scotch spearmint oil industry, some Scotch 
spearmint oil producers may not produce enough oil in the 2022-2023 
marketing year to fill all of their annual allotment. The Committee 
estimates that as much as 280,671 pounds of 2021-2022 marketing year 
annual allotment may not be filled by producers. While the Committee 
has not projected unused base allotment for the upcoming 2022-2023 
marketing year, it anticipates that the actual quantity of Scotch 
spearmint oil carried into the following marketing year will be less 
than the quantity calculated above (521,441 pounds).
    Spearmint oil held in reserve is oil that has been produced in 
excess of a producer's annual allotment, either in the current 
marketing year or in prior years. After December 1 of each marketing 
year, reserve pool oil is not available to the market in the current 
marketing year without an increase in the salable quantity and 
allotment percentage. However, reserve oil may be released for limited 
market development projects with approval of the Secretary. Oil held in 
the reserve pool is another indicator of excess supply. Scotch 
spearmint oil held in the reserve pool was 72,361 pounds as of May 31, 
2021, up from 67,645 pounds as of May 31, 2020. This quantity of 
reserve pool oil should be an adequate buffer to supply the market, if 
necessary, should the industry experience an unexpected increase in 
demand.
    The Committee recommended an allotment percentage of 37 percent for 
the 2022-2023 marketing year for Scotch spearmint oil. During its 
October 13, 2021, meeting, the Committee calculated an initial 
allotment percentage by dividing the minimum required salable quantity 
(311,105 pounds) by the total estimated allotment base (2,250,124 
pounds), resulting in 13.8 percent. However, producers and handlers at 
the meeting indicated that the computed percentage (13.8 percent) might 
not adequately supply potential 2022-2023 Scotch spearmint oil market 
demand and may also result in a less than desirable carry-in for the 
subsequent marketing year. After deliberation, the Committee 
recommended an allotment percentage of 37 percent. The total estimated 
allotment base (2,250,124 pounds) for the 2022-2023 marketing year, 
multiplied by the recommended salable allotment percentage (37 
percent), yields 832,546 pounds, which is the recommended salable 
quantity for the 2022-2023 marketing year.
    The 2022-2023 marketing year computational data for the Committee's 
recommendations is detailed below.
    (A) Estimated carry-in of Scotch spearmint oil on June 1, 2022: 
338,895 pounds. This figure is the difference between the 2021-2022 
marketing year total available supply of 963,895 pounds and the revised 
2021-2022 marketing year estimated trade demand of 625,000 pounds.
    (B) Estimated trade demand of Scotch spearmint oil for the 2022-
2023 marketing year: 650,000 pounds. This figure was established at the 
Committee meeting held on October 13, 2021.
    (C) Salable quantity of Scotch spearmint oil required from the 
2022-2023 marketing year production: 311,105 pounds. This figure is the 
difference between the estimated 2022-2023 marketing year trade demand 
(650,000 pounds) and the estimated carry-in on June 1, 2021 (338,895 
pounds). This salable quantity represents the minimum amount of Scotch 
spearmint oil that would be needed to satisfy estimated demand for the 
coming year.
    (D) Total estimated Scotch spearmint oil allotment base of for the 
2022-2023 marketing year: 2,250,124 pounds. This figure represents a 
one-percent increase over the 2021-2022 total actual allotment base of 
2,227,846 pounds, as prescribed by Sec.  985.53(d). The one-percent 
increase equals 22,278 pounds. This total estimated allotment base is 
revised each year on June 1 in accordance with Sec.  985.53(e).
    (E) Computed Scotch spearmint oil allotment percentage for the 
2022-2023 marketing year: 13.8 percent. This percentage is computed by 
dividing the minimum required salable quantity (311,105 pounds) by the 
total estimated allotment base (2,250,124 pounds).
    (F) Recommended Scotch spearmint oil allotment percentage for the 
2022-2023 marketing year: 37 percent. This is the Committee's 
recommendation and is based on the computed allotment percentage (13.8 
percent) and input from producers and handlers at the October 13, 2021, 
meeting. The recommended 37 percent allotment percentage reflects the 
Committee's belief that the computed percentage (13.8 percent) may not 
adequately supply the anticipated 2022-2023 marketing year Scotch 
spearmint oil market demand.
    (G) Recommended Scotch spearmint oil salable quantity for the 2022-
2023 marketing year: 832,546 pounds. This figure is the product of the 
recommended salable allotment percentage (37 percent) and the total 
estimated allotment base (2,250,124 pounds) for the 2022-2023 marketing 
year.
    (H) Estimated total available supply of Scotch spearmint oil for 
the 2022-2023 marketing year: 1,171,441 pounds. This figure is the sum 
of the 2022-2023 marketing year recommended salable quantity (832,546 
pounds) and the estimated carry-in on June 1, 2021 (338,895 pounds).
    For the reasons stated above, the Committee believes that the 
recommended salable quantity and allotment percentage would adequately 
satisfy trade demand, would result in a reasonable carry-in for the 
following year, and would contribute to the orderly marketing of Scotch 
spearmint oil.

Native Spearmint Oil

    The Committee recommended a Native spearmint oil salable quantity 
of 1,101,269 pounds and an allotment percentage of 43 percent for the 
2022-2023 marketing year. These figures are, respectively, 162,872 
pounds and 6 percentage points higher than the levels established for 
the 2021-2022 marketing year. The Committee utilized handlers' 
estimated trade demand of Native spearmint oil for the coming year, 
historical and current Native spearmint oil production, inventory 
statistics, and international market data obtained from consultants for 
the spearmint oil industry to arrive at these recommendations.
    The Committee anticipates that 2021 Native spearmint oil production 
will total 985,797 pounds, down substantially from the previous year's 
production of 1,181,230 pounds. Committee records indicate that 
spearmint producing acres in the Far West have declined from a recent 
high of 9,013 acres in 2019 to an estimated 6,275 acres of Native 
spearmint production 2021.
    However, sales of Native spearmint oil recovered from a 10-year low 
of 1,076,906 pounds in the 2019-2020 marketing year to 1,332,260 pounds 
in 2020-2021, the last full year of reported sales. The Committee 
estimates that trade demand for Native spearmint oil will be 1,200,000 
pounds for the 2022-2023 marketing year, which is

[[Page 8214]]

somewhat less than the 5-year sales average of 1,301,490 pounds.
    The Committee expects that 284,357 pounds of salable Native 
spearmint oil from prior years will be carried into the 2022-2023 
marketing year. This amount is down from the 412,095 pounds of salable 
oil carried into the 2021-2022 marketing year, but still above the 
level that the Committee generally considers favorable.
    Further, the Committee estimates that there will be 1,272,854 
pounds of Native spearmint oil in the reserve pool at the beginning of 
the 2022-2023 marketing year. This figure is 73,062 pounds higher than 
the quantity of reserve pool oil held by producers on June 1, 2021, and 
well above the level that the Committee believes is optimal. Generally, 
reserve pool oil has been steadily increasing over the past several 
marketing years, climbing from 996,050 pounds of reserve oil since the 
start of the 2016-2017 marketing year.
    The Committee expects end users of Native spearmint oil to continue 
to rely on Far West production as their primary source of high-quality 
Native spearmint oil. Overseas production of Native spearmint has 
declined in recent years. As a result, U.S. exports of Native spearmint 
oil have been steadily increasing since 2018. However, increased 
domestic production of Native spearmint from regions outside of the Far 
West production area has created additional domestic competition for 
market share. For instance, there were fewer than 2,000 acres of Native 
spearmint production in the U.S. Midwest region in 2016, which compares 
to over 10,000 acres of Native spearmint oil production in the Far 
West. However, 2021 estimates show that Far West acreage has declined 
to approximately 6,275 acres, compared to acreage increasing to around 
5,000 acres in the Midwest. This situation has contributed to declining 
trade demand for Far West Native spearmint oil and led to downward 
pressure on producer prices.
    The Committee chose to be cautiously optimistic in the 
establishment of its trade demand estimate for the 2022-2023 marketing 
year to ensure that the market would be adequately supplied. At the 
October 13, 2021, meeting, the Committee estimated the 2022-2023 
marketing year Native spearmint oil trade demand to be 1,200,000 
pounds. This figure is based on input provided by producers at nine 
production area meetings held in early October 2021, as well as 
estimates provided by handlers and other meeting participants. This 
figure represents an increase of 134,000 pounds from the previous 
year's revised trade demand estimate. The average estimated trade 
demand for Native spearmint oil derived from the area producer meetings 
was 1,173,333 pounds, whereas the handlers' estimates ranged from 
950,000 to 1,300,000 pounds. The average of Native spearmint oil sales 
over the last three years was 1,301,490 pounds. The quantity marketed 
over the most recent full marketing year, 2020-2021, was 1,332,260 
pounds.
    The estimated June 1, 2022, carry-in of 284,357 pounds of Native 
spearmint oil, plus the recommended 2022-2023 marketing year salable 
quantity of 1,101,269 pounds, would result in an estimated total 
available supply of 1,385,626 pounds of Native spearmint oil during the 
2022-2023 marketing year. With the corresponding estimated trade demand 
of 1,200,000 pounds, the Committee projects that 185,626 pounds of oil 
will be carried into the 2023-2024 marketing year. This would result in 
a year-over-year decrease of 98,731 pounds. The Committee estimates 
that there will be 1,272,854 pounds of Native spearmint oil held in the 
reserve pool at the beginning of the 2022-2023 marketing year. Should 
the industry experience an unexpected increase in trade demand, oil in 
the Native spearmint oil reserve pool could be released through an 
intra-seasonal increase to satisfy that demand.
    The Committee recommended an allotment percentage of 43 percent for 
the 2022-2023 marketing year. During its October 13, 2021, meeting, the 
Committee calculated an initial allotment percentage of 35.8 percent by 
dividing the minimum required salable quantity to satisfy estimated 
trade demand (915,643 pounds) by the total allotment base (2,561,090 
pounds). However, producers and handlers at the meeting expressed that 
the computed percentage of 35.8 percent may not adequately supply the 
potential 2022-2023 marketing year Native spearmint oil market demand 
or result in adequate carry-in for the subsequent marketing year. After 
deliberation, the Committee increased the recommended allotment 
percentage to 43 percent. The total estimated allotment base (2,561,090 
pounds) for the 2022-2023 marketing year multiplied by the recommended 
salable allotment percentage (43 percent) yields 1,101,269 pounds, the 
recommended salable quantity for the year.
    The 2022-2023 marketing year computational data for the Committee's 
recommendations is further outlined below.
    (A) Estimated carry-in of Native spearmint oil on June 1, 2022: 
284,357 pounds. This figure is the difference between the 2021-2022 
marketing year total available supply of 1,350,357 pounds and the 
revised 2021-2022 marketing year estimated trade demand of 1,066,000 
pounds.
    (B) Estimated trade demand of Native spearmint oil for the 2022-
2023 marketing year: 1,200,000 pounds. This estimate was established by 
the Committee at the October 13, 2021 meeting.
    (C) Salable quantity of Native spearmint oil required from the 
2022-2023 marketing year production: 915,643 pounds. This figure is the 
difference between the 2022-2023 marketing year estimated trade demand 
(1,200,000 pounds) and the estimated carry-in on June 1, 2022 (284,357 
pounds). This is the minimum amount of Native spearmint oil that the 
Committee believes would be required to meet the anticipated 2022-2023 
marketing year trade demand.
    (D) Total estimated allotment base of Native spearmint oil for the 
2022-2023 marketing year: 2,561,090 pounds. This figure represents a 
one-percent increase over the 2021-2022 total actual allotment base of 
2,535,733 pounds as prescribed in Sec.  985.53(d). The one-percent 
increase equals 25,357 pounds of oil. This estimate is revised each 
year on June 1, to adjust for the bona fide effort production 
provisions of Sec.  985.53(e).
    (E) Computed Native spearmint oil allotment percentage for the 
2022-2023 marketing year: 35.8 percent. This percentage is calculated 
by dividing the required salable quantity (915,643 pounds) by the total 
estimated allotment base (2,561,090 pounds) for the 2022-2023 marketing 
year.
    (F) Recommended Native spearmint oil allotment percentage for the 
2022-2023 marketing year: 43 percent. This is the Committee's 
recommendation based on the computed allotment percentage (35.8 
percent) and input from producers and handlers at the October 13, 2021 
meeting. The recommended 43 percent allotment percentage is also based 
on the Committee's belief that the computed percentage (35.8 percent) 
may not adequately supply the potential market for Native spearmint oil 
in the 2022-2023 marketing year or allow for salable Native spearmint 
oil to be carried into the beginning of the 2023-2024 marketing year.
    (G) Recommended Native spearmint oil 2022-2023 marketing year 
salable quantity: 1,101,269 pounds. This figure is the product of the 
recommended allotment percentage (43 percent) and the total estimated 
allotment base (2,561,090 pounds).

[[Page 8215]]

    (H) Estimated available supply of Native spearmint oil for the 
2022-2023 marketing year: 1,385,626 pounds. This figure is the sum of 
the 2022-2023 recommended salable quantity (1,101,269 pounds) and the 
estimated carry-in on June 1, 2022 (284,357 pounds). This amount could 
be increased, as needed, through an intra-seasonal increase in the 
salable quantity and allotment percentage.
    The Committee's recommended Scotch and Native spearmint oil salable 
quantities and allotment percentages of 832,546 pounds and 37 percent, 
and 1,101,269 pounds and 43 percent, respectively, would match the 
available supply of each class of spearmint oil to the estimated demand 
of each, thus avoiding extreme fluctuations in inventories and prices. 
This proposed rule is similar to regulations issued in prior seasons.
    The salable quantities in this proposed rule are not expected to 
cause a shortage of either class of spearmint oil. Any unanticipated or 
additional market demand for either class of spearmint oil which may 
develop during the marketing year could be satisfied by an intra-
seasonal increase in the salable quantity and corresponding allotment 
percentage. The Order contains a provision in Sec.  985.51 for intra-
seasonal increases to allow the Committee the flexibility to respond 
quickly to changing market conditions.
    Under volume regulation, producers who produce more than their 
annual allotments during the marketing year may transfer such excess 
spearmint oil to producers who have produced less than their annual 
allotment. In addition, on December 1 of each year, producers who have 
not transferred their excess spearmint oil to other producers must 
place their excess spearmint oil production into the reserve pool to be 
released in the future, in accordance with market needs and under the 
Committee's direction.
    In conjunction with the issuance of this proposed rule, USDA has 
reviewed the Committee's marketing policy statement for the 2022-2023 
marketing year. The Committee's marketing policy statement, a 
requirement whenever the Committee recommends volume regulation, meets 
the requirements of Sec. Sec.  985.50 and 985.51.
    The establishment of the proposed salable quantities and allotment 
percentages would allow for anticipated market needs. In determining 
anticipated market needs, the Committee considered historical sales, as 
well as changes and trends in production and demand. This proposal 
would also provide producers with information regarding the amount of 
spearmint oil that should be produced for the 2022-2023 season to meet 
anticipated market demand.

Initial Regulatory Flexibility Act

    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 proposed rule 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 approximately 39 producers of Scotch spearmint oil and 93 
producers of Native spearmint oil operating within the regulated 
production area. In addition, there are approximately 9 spearmint oil 
handlers (both Scotch and Native spearmint) subject to regulation under 
the Order. Small agricultural service firms are defined by the Small 
Business Administration (SBA) as those having annual receipts of less 
than $30,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $1,000,000 (13 CFR 121.201).
    The Committee reported that recent producer prices for spearmint 
oil have ranged from $14.00 to $17.00 per pound. The National 
Agricultural Statistics Service (NASS) reported that the 2020 U.S. 
season average spearmint oil producer price per pound was $16.90. 
Spearmint oil utilization for the 2020-2021 marketing year, as reported 
by the Committee, was 488,484 pounds and 1,332,260 pounds for Scotch 
and Native spearmint oil, respectively, for a total of 1,820,744 
pounds. Multiplying $16.90 per pound by 2020-2021 marketing year 
spearmint oil utilization of 1,820,744 pounds yields a crop value 
estimate of about $30.77 million.
    Given the accounting requirements for the volume regulation 
provisions of the Order, the Committee maintains accurate records of 
each producer's production and sales. Using the $16.90 average 
spearmint oil price, and Committee production data for each producer, 
the Committee estimates that 37 of the 39 Scotch spearmint oil 
producers and 92 of the 93 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 
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. 
Twenty percent of the 2020 producer price ($16.90) is $3.38 which 
results in a handler f.o.b. price per pound estimate of $20.28 ($16.90 
+ $3.38).
    Multiplying this estimated handler f.o.b. price by the 2020-2021 
marketing year total spearmint oil utilization of 1,820,744 pounds 
results in an estimated handler-level spearmint oil value of $36.92 
million. Dividing this figure by the number of handlers (9) yields 
estimated average annual handler receipts of about $4.1 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 nine handlers 
had 2020-2021 marketing year spearmint oil sales that exceeded the $30 
million SBA threshold.
    Therefore, in view of the foregoing, the majority of producers of 
spearmint oil may be classified as small entities, and all of the 
handlers of spearmint oil may be classified as small entities.
    This proposed rule would establish the quantity of spearmint oil 
produced in the Far West, by class, which handlers may purchase from, 
or handle on behalf of, producers during the 2022-2023 marketing year. 
The Committee recommended this proposed action to help maintain 
stability in the spearmint oil market by matching supply to estimated 
demand, thereby avoiding extreme fluctuations in supplies and prices. 
Establishing quantities that may be purchased or handled during the 
marketing year through volume regulation allows producers to coordinate 
their spearmint oil production with the expected market demand. 
Authority for this proposal is provided in Sec. Sec.  985.50, 985.51, 
and 985.52 of the Order.
    The Committee estimates the total trade demand for the 2022-2023 
marketing year for both classes of oil at 1,850,000 pounds. In 
addition, the Committee expects that the combined salable carry-in for 
both classes of spearmint oil will be 623,252 pounds. As such, the 
combined required salable quantity for the 2022-2023 marketing year is 
estimated to be 1,226,748 pounds

[[Page 8216]]

(1,850,000 pounds trade demand less 623,252 pounds carry-in). Under 
volume regulation, total sales of spearmint oil by producers for the 
2022-2023 marketing year would be held to 2,557,067 pounds (the 
recommended salable quantity for both classes of spearmint oil of 
1,933,815 pounds plus 623,252 of carry-in).
    This total available supply of 2,557,067 pounds should be more than 
adequate to supply the 1,850,000 pounds of anticipated total trade 
demand for spearmint oil. In addition, as of May 31, 2021, the total 
reserve pool for both classes of spearmint oil stood at 1,272,153 
pounds. That quantity is expected to remain relatively unchanged over 
the course of the 2021-2022 marketing year, with current Committee 
reserve pool estimates totaling 1,336,471 pounds. Should trade demand 
increase unexpectedly during the 2022-2023 marketing year, reserve pool 
spearmint oil could be released into the market to supply that increase 
in demand.
    The recommended allotment percentages, upon which 2022-2023 
marketing year annual allotments are based, are 37 percent for Scotch 
spearmint oil and 43 percent for Native spearmint oil. Without volume 
regulation, producers would not be held to these allotment levels, and 
could sell unrestricted quantities of spearmint oil.
    The USDA econometric model used to evaluate the Far West spearmint 
oil market estimated that the season average producer price per pound 
(from both classes of spearmint oil) would decline about $2.70 per 
pound without volume regulation. The surplus situation for the 
spearmint oil market that would exist without volume regulation in the 
2022-2023 marketing year also would likely dampen prospects for 
improved producer prices in future years because of the excessive 
buildup in stocks.
    In addition, spearmint oil prices would likely fluctuate with 
greater amplitude in the absence of volume regulation. The coefficient 
of variation, or CV (a standard measure of variability), of Far West 
spearmint oil producer prices for the period 1980-2020 (the years in 
which the Order has been in effect), is 24 percent, compared to 49 
percent for the 20-year period (1960-1979) immediately prior to the 
establishment of the Order. Since higher CV values correspond to 
greater variability, this is an indicator of the price stabilizing 
impact of the Order.
    The use of volume regulation allows the industry to fully supply 
spearmint oil markets while avoiding the negative consequences of over-
supplying these markets. The use of volume regulation is believed to 
have little or no effect on consumer prices of products containing 
spearmint oil and would not result in fewer retail sales of such 
products.
    The Committee discussed alternatives to the recommendations 
contained in this rule for both classes of spearmint oil. The Committee 
rejected the idea of not regulating volume for either class of 
spearmint oil because of the severe, price-depressing effects that 
would likely occur without volume regulation. The Committee also 
discussed and considered salable quantities and allotment percentages 
that were above and below the levels that were eventually recommended 
for both classes of spearmint oil. Ultimately, the action recommended 
by the Committee was to slightly reduce the allotment percentage and 
salable quantity for Scotch spearmint oil and to increase the salable 
quantity and allotment percentage for Native spearmint oil from the 
levels established for the 2021-2022 marketing year.
    As noted earlier, the Committee's recommendation to establish 
salable quantities and allotment percentages for both classes of 
spearmint oil was made after careful consideration of all available 
information including: (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) the prospective production of each class of oil; 
(4) the 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.
    Based on its review, the Committee believes that the salable 
quantities and allotment percentages recommended would achieve the 
objectives sought. The Committee also believes that, should there be no 
volume regulation in effect for the upcoming marketing year, the Far 
West spearmint oil industry would return to the pronounced cyclical 
price patterns that occurred prior to the promulgation of the Order. As 
previously stated, annual salable quantities and allotment percentages 
have been issued for both classes of spearmint oil since the Order's 
inception. The salable quantities and allotment percentages proposed 
herein are expected to facilitate the goal of maintaining orderly 
marketing conditions for Far West spearmint oil for the 2022-2023 and 
future marketing years.
    Costs to producers and handlers, large and small, resulting from 
this proposal are expected to be offset by the benefits derived from a 
more stable market and increased returns. The benefits of this rule are 
expected to be equally available to all producers and handlers 
regardless of their size.
    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 are necessary in those requirements as 
a result of this proposed action. Should any changes become necessary, 
they would be submitted to OMB for approval.
    This proposed rule would establish the salable quantities and 
allotment percentages for Scotch spearmint oil and Native spearmint oil 
produced in the Far West during the 2022-2023 marketing year. 
Accordingly, this proposal would not impose any additional reporting or 
recordkeeping requirements on either small or large spearmint oil 
producers or 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 proposed 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.
    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 on all 
issues. Like all Committee meetings, the October 13, 2021, meeting was 
a public meeting and all entities, both large and small, were able to 
express views on this issue. Interested persons are invited to submit 
comments on this proposed rule, including the regulatory and 
informational impacts of this proposed 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

[[Page 8217]]

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 recommendations submitted by the Council and other 
available information, USDA has determined that this proposed rule is 
consistent with and will effectuate the purposes of the Act.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered 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.

    For the reasons set forth in the preamble, the Agriculture 
Marketing Services proposes to amend 7 CFR part 985 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. Add Sec.  985.237 to read as follows:


Sec.  985.237  Salable quantities and allotment percentages--2022-2023 
marketing year.

    The salable quantity and allotment percentage for each class of 
spearmint oil during the marketing year beginning on June 1, 2022, 
shall be as follows:
    (a) Class 1 (Scotch) oil--a salable quantity of 832,546 pounds and 
an allotment percentage of 37 percent.
    (b) Class 3 (Native) oil--a salable quantity of 1,101,269 pounds 
and an allotment percentage of 43 percent.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-03092 Filed 2-11-22; 8:45 am]
BILLING CODE P