[Federal Register Volume 87, Number 124 (Wednesday, June 29, 2022)]
[Rules and Regulations]
[Pages 38633-38639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13446]



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 Rules and Regulations
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  Federal Register / Vol. 87, No. 124 / Wednesday, June 29, 2022 / 
Rules and Regulations  

[[Page 38633]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

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


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: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule implements a recommendation from the Far West 
Spearmint Oil Administrative 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: Effective July 29, 2022.

FOR FURTHER INFORMATION CONTACT: Joshua R. Wilde, Marketing Specialist, 
or Gary Olson, Regional Director, Western Region Branch, 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 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 rule amends 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 Far West 
Spearmint Oil Administrative Committee (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 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 regulation, providing an opportunity for public 
comment, and basing regulatory actions on a consideration of objective 
scientific, technical, and economic data.
    This action falls within a category of regulatory actions that the 
Office of Management and Budget (OMB) exempted from Executive Order 
12866 review.
    This 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. The Agricultural Marketing Service 
(AMS) has determined that this 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This 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 rule establishes salable 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 no 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.
    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 AMS the establishment of a salable 
quantity and allotment percentage for such class or classes of oil in 
the forthcoming marketing year. Recommendations for volume control are 
intended to ensure that market requirements for Far West 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

[[Page 38634]]

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 AMS. 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 well 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 is 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 action establishes 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 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 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 established 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 will 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 will be needed to satisfy estimated 
trade demand for the coming year. To ensure that the market will 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, will 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. 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 will increase to 521,441 pounds at the beginning of the 2022-2023 
marketing year. This level will 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

[[Page 38635]]

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 the 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 may 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 will adequately 
satisfy trade demand, will result in a reasonable carry-in for the 
following year, and will 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 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.

[[Page 38636]]

    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 will 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, will 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 will 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 will 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).
    (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, is expected to 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 rule is similar to regulations issued in prior seasons.
    The salable quantities in this final rule are not expected to cause 
a shortage

[[Page 38637]]

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.
    AMS 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 salable quantities and allotment 
percentages in this rule are expected to 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 rule also provides producers with 
information regarding the amount of spearmint oil that should be 
produced for the 2022-2023 season to meet anticipated market demand.

Final 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 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 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 $2,250,000 (NAICS code 111998, All 
Other Miscellaneous Crop Farming) (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 all 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 of ($16.90) is $3.38 which 
results in a handler free on board (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 final rule establishes 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 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 action 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 (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 will 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

[[Page 38638]]

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 AMS 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 will 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 established in this rule will 
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 established 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 action 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 rule. Should any changes become necessary, they would 
be submitted to OMB for approval.
    This rule establishes 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 
rule does 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, AMS 
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 February 14, 2022 (87 FR 8211). Copies of the proposed rule 
were also mailed or sent via email to all Far West spearmint oil 
handlers. The proposal was made available through the internet by AMS 
and the Office of the Federal Register. A 60-day comment period ending 
April 15, 2022, was provided for interested persons to respond to the 
proposal. No comments were received during the comment period. 
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/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.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service is amending 7 CFR part 985 as follows:

[[Page 38639]]

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. 2022-13446 Filed 6-28-22; 8:45 am]
BILLING CODE P