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[Federal Register Volume 77, Number 249 (Friday, December 28, 2012)]
[Rules and Regulations]
[Pages 76341-76346]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-31102]

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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 77, No. 249 / Friday, December 28, 2012 / 
Rules and Regulations

[[Page 76341]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Doc. Nos. AMS-FV-11-0088; FV12-985-1A IR]

Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Revision of the Salable Quantity and Allotment 
Percentage for Class 1 (Scotch) and Class 3 (Native) Spearmint Oil for 
the 2012-2013 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim rule with request for comments.

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

SUMMARY: This rule revises the quantity of Class 1 (Scotch) and Class 3 
(Native) spearmint oil that handlers may purchase from, or handle on 
behalf of, producers during the 2012-2013 marketing year under the Far 
West spearmint oil marketing order. This rule increases the Scotch 
spearmint oil salable quantity from 782,413 pounds to 2,622,115 pounds, 
and the allotment percentage from 38 percent to 128 percent. In 
addition, this rule increases the Native spearmint oil salable quantity 
from 1,162,473 pounds to 1,348,270 pounds, and the allotment percentage 
from 50 percent to 58 percent. The marketing order regulates the 
handling of spearmint oil produced in the Far West and is administered 
locally by the Spearmint Oil Administrative Committee (Committee). The 
Committee recommended this rule for the purpose of maintaining orderly 
marketing conditions in the Far West spearmint oil market.

DATES: Effective June 1, 2012, through May 31, 2013; comments received 
by February 26, 2013 will be considered prior to issuance of a final 
rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order and Agreement Division, Fruit and Vegetable Program, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number 
and the date and page number of this issue of the Federal Register and 
will be made available for public inspection in the Office of the 
Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent, Marketing Specialist 
or Gary Olson, Regional Director, Northwest Marketing Field Office, 
Marketing Order and Agreement Division, Fruit and Vegetable Program, 
AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or Email: 
Barry.Broadbent@ams.usda.gov or GaryD.Olson@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Laurel May, Marketing Order and Agreement 
Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence 
Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-
2491, Fax: (202) 720-8938, or Email: Laurel.May@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 985 (7 CFR part 985), as amended, regulating the handling of 
spearmint oil produced in the Far West (Washington, Idaho, Oregon, and 
designated parts of Nevada and Utah), hereinafter referred to as the 
``order.'' The order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the provisions of the marketing order now in 
effect, salable quantities and allotment percentages may be established 
for classes of spearmint oil produced in the Far West. This rule 
increases the quantity of Scotch and Native spearmint oil produced in 
the Far West that handlers may purchase from, or handle on behalf of, 
producers during the 2012-2013 marketing year, which began on June 1, 
2012, and ends on May 31, 2013.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule revises the quantity of Scotch and Native spearmint oil 
that handlers may purchase from, or handle on behalf of, producers 
during the 2012-2013 marketing year under the Far West spearmint oil 
marketing order. This rule increases the Scotch spearmint oil salable 
quantity from 782,413 pounds to 2,622,115 pounds, and the allotment 
percentage from 38 percent to 128 percent. In addition, this rule 
increases the Native spearmint oil salable quantity from 1,162,473 
pounds to 1,348,270 pounds, and the allotment percentage from 50 
percent to 58 percent.
    Under the volume regulation provisions of the order, the Committee 
meets each year to adopt a marketing policy for the ensuing year. When 
the Committee's marketing policy considerations indicate a need for 
limiting the quantity of spearmint oil available to the market to 
establish or maintain orderly marketing conditions, the Committee 
submits a recommendation to the Secretary for volume regulation.

[[Page 76342]]

    Volume regulation under the order is effectuated through the 
establishment of a salable quantity and allotment percentage applicable 
to each class of spearmint oil handled in the production area during a 
marketing year. The salable quantity is the total quantity of each 
class of oil that handlers may purchase from, or handle on behalf of, 
producers during a given marketing year. The allotment percentage for 
each class of oil is derived by dividing the salable quantity by the 
total industry allotment base for that same class of oil. The total 
industry allotment base is the aggregate of all allotment base held 
individually by producers. Producer allotment base is the quantity of 
each class of spearmint oil that the Committee has determined is 
representative of a producer's spearmint oil production. Each producer 
is allotted a pro rata share of the total salable quantity of each 
class of spearmint oil each marketing year. Each producer's annual 
allotment is determined by applying the allotment percentage to the 
producer's individual allotment base for each applicable class of 
spearmint oil.
    Salable oil held over and carried into the ensuing marketing year 
is accounted for by the Committee as salable carry-in when it considers 
its marketing policy. Producers who produce spearmint oil in excess of 
their annual allotment must identify such excess oil to the Committee. 
After identification, excess oil must be either transferred to another 
producer to fill a deficiency in that producer's annual allotment or be 
held in reserve for future sale in accordance with the provisions of 
the order. Transfers of oil between producers to fill deficiencies must 
be completed prior to October 31 of each marketing year. Section 
985.56(b) specifies that before November 1, or such other date as the 
Committee, with the approval of the Secretary, may establish, excess 
oil, not used to fill another producer's deficiency, shall be delivered 
to the Committee or its designees for storage. Section 985.57(a) 
provides that on November 1, or such other date as the Committee, with 
the approval of the Secretary may establish, the Committee shall pool 
identified excess oil as reserve oil in such manner as to accurately 
account for its receipt, storage, and disposition.
    The full Committee met on October 12, 2011, to consider its 
marketing policy for the ensuing year. At that meeting, the Committee 
determined that marketing conditions indicated a need for volume 
regulation of both classes of spearmint oil for the 2012-2013 marketing 
year. The Committee recommended salable quantities of 782,413 pounds 
and 1,162,473 pounds, and allotment percentages of 38 percent and 50 
percent, respectively, for Scotch and Native spearmint oil. A proposed 
rule to that effect was published in the Federal Register on March 5, 
2012 (77 FR 13019). Comments on the proposed rule were solicited from 
interested persons until April 4, 2012. No comments were received. 
Subsequently, a final rule establishing the salable quantities and 
allotment percentages for Scotch and Native spearmint oil for the 2012-
2013 marketing year was published in the Federal Register on June 5, 
2012 (77 FR 33076).
    Pursuant to authority contained in Sec. Sec.  985.50, 985.51, and 
985.52 of the order, the full eight member Committee met again on 
October 17, 2012, to consider pertinent market information on the 
current supply, demand, and price of spearmint oil. The Committee, in 
two separate motions, recommended that the 2012-2013 marketing year 
Scotch and Native spearmint oil allotment percentages be increased by 
90 percent and 8 percent, respectively. The motion to increase the 
allotment percentage for Scotch was unanimous, and the motion to 
increase the allotment percentage for Native passed with six members in 
favor and two members opposed. The members opposed to the motion agreed 
that an increase was necessary for the industry to respond to 
increasing demand, but based their votes on the opinion that an 8 
percent increase was not high enough to adequately respond to the 
current marketing environment.
    Thus, taking into consideration the following discussion, this rule 
increases the 2012-2013 marketing year salable quantities and allotment 
percentages for Scotch and Native spearmint oil to 2,622,115 pounds and 
128 percent, and 1,348,270 pounds and 58 percent, respectively.
    The total industry allotment base for Scotch spearmint oil for the 
2012-2013 marketing year was estimated by the Committee at the October 
12, 2011, meeting at 2,058,981 pounds. This was later revised at the 
beginning of the 2012-2013 marketing year to 2,048,527 pounds to 
reflect the loss of 10,454 pounds of base due to non-production of some 
producers' total annual allotments during the 2011-2012 marketing year.
    Section 985.53(e) of the order requires that producers make a bona 
fide effort to produce their entire respective allotment base each 
year. Failure to do so results in a reduction in the producer's 
allotment base equivalent to such unproduced portion. The 10,454 pound 
reduction in allotment base for Scotch spearmint oil reflects the total 
base surrendered by all producers due to the non-production of those 
producers' total annual allotments during the 2011-2012 marketing year.
    When the revised total Scotch allotment base of 2,048,527 pounds is 
applied to the originally established allotment percentage of 38 
percent, the initially established 2012-2013 marketing year salable 
quantity of 782,413 pounds is effectively modified to 778,440 pounds.
    The same situation applies to Native spearmint oil. The Committee 
estimated at the October 12, 2011, meeting that the total industry 
allotment base for Native spearmint oil for the 2012-2013 marketing 
year was 2,324,945 pounds. That number was later revised at the 
beginning of the 2012-2013 marketing year to 2,324,604 pounds to 
reflect the bona fide effort reduction of 341 pounds. Just as with 
Scotch spearmint oil, the 341 pound reduction in Native allotment base 
reflects the total base surrendered by all producers due to the non-
production of such producers' total annual allotments during the 2011-
2012 marketing year.
    When the revised total Native allotment base of 2,324,604 pounds is 
applied to the originally established allotment percentage of 50 
percent, the initially established 2012-2013 marketing year Native 
salable quantity of 1,162,473 pounds is effectively modified to 
1,162,302 pounds.
    This rule makes additional amounts of Scotch and Native spearmint 
oil available to the market by increasing the salable quantity and 
allotment percentage of each class of oil. Such additional oil may come 
from spearmint oil produced in the current marketing year or by 
releasing oil held in the reserve pool. As of May 31, 2012, the Scotch 
reserve pool contained 215,350 pounds of spearmint oil and the Native 
reserve pool contained 451,302 pounds of spearmint oil.
    The 90 percent increase in the Scotch spearmint oil allotment 
percentage established by this rule will result in a 2012-2013 
marketing year salable quantity of 2,622,115 pounds. Likewise, the 8 
percent increase in the Native spearmint oil allotment percentage 
established by this rule will result in a 2012-2013 marketing year 
salable quantity of 1,348,270 pounds. Theoretically, this reflects an 
additional 1,843,665 pounds of Scotch spearmint oil and 185,968 pounds 
of Native spearmint oil being made available to the market by this 
rule. However, due to the limited amount of spearmint oil held in 
reserve by individual producers, the Committee expects that only an

[[Page 76343]]

additional 197,350 pounds of Scotch spearmint oil and 120,254 pounds of 
Native spearmint oil will be available to the spearmint oil market as a 
result of this rule.
    The following is a detailed discussion of the Committee 
recommendations:

Scotch Spearmint Oil Recommendation

    The 2012-2013 marketing year began on June 1, 2012, with an 
estimated carry-in of 149,740 pounds of salable Scotch spearmint oil. 
When the estimated carry-in is added to the revised 2012-2013 salable 
quantity of 778,440 pounds, the result is a theoretical total available 
supply of Scotch spearmint oil for the 2012-2013 marketing year of 
928,180 pounds. However, the Committee estimates that Scotch spearmint 
oil producers do not have sufficient production to fill approximately 
138,960 pounds of their respective 2012-2013 marketing year annual 
allotment. In addition, as the October 31 transfer deadline has passed, 
the anticipated deficiency experienced by some producers can no longer 
be filled from another producer's excess oil. As such, the Committee 
estimates that the total actual supply of Scotch spearmint oil 
available to the market prior to the issuance of this rule is 789,220 
pounds, not the 928,180 pounds as previously calculated. Of this 
amount, the Committee estimates that 727,993 pounds of Scotch spearmint 
oil have already been sold or committed to be sold as of the October 
17, 2012, meeting date. This leaves just 61,227 pounds of uncommitted 
salable Scotch spearmint oil available for sale for the remainder of 
the 2012-2013 marketing year. The Committee believes that maintaining 
such a small amount of salable Scotch spearmint oil would be 
detrimental to the industry.
    In making the recommendation to increase the available supply of 
Scotch spearmint oil, the Committee considered all currently available 
information on price, supply, and demand. The Committee also considered 
reports and other information from handlers and producers in attendance 
at the meeting and reports presented by the Committee manager that were 
provided by handlers and producers who were not in attendance.
    Increasing the 2012-2013 marketing year Scotch spearmint oil 
allotment percentage by 90 percent will increase the salable quantity 
by 1,843,674 pounds, to a total of 2,622,115 pounds. However, as 
mentioned previously, the net effect of the increase will be much less 
than the calculated increase due to the amount of actual oil individual 
producers have available from the unused portion of their annual 
allotment and from their reserve inventory. This action will make an 
estimated additional 197,350 pounds available to the market, which is 
the estimated total amount of Scotch spearmint oil held in reserve by 
producers as of the October 17, 2012, meeting. That amount, combined 
with the 61,227 pounds of salable Scotch spearmint oil currently 
available, will make a total of 258,577 pounds available to the market 
and bring the total available supply of Scotch spearmint oil for the 
marketing year to 986,570 pounds. The Committee expects that this 
action will completely deplete reserve stocks of Scotch spearmint oil 
during the course of the 2012-2013 marketing year.
    When the original 2012-2013 marketing policy statement was drafted, 
handlers estimated the demand for Scotch spearmint oil for the 2012-
2013 marketing year at 825,000 pounds. Thus, the Committee's 
recommendation for the establishment of the Scotch spearmint oil 
salable quantity and allotment percentage for the 2012-2013 marketing 
year was based on these estimates and did not anticipate the increase 
in demand for Scotch spearmint oil that the market is currently 
experiencing. The Committee believes that the supply of Scotch 
spearmint oil available to the market, without an increase in the 
salable quantity, would be insufficient to satisfy the current level of 
demand for oil at reasonable price levels. It is the opinion of the 
Committee and the spearmint oil industry that this action is essential 
to ensuring an adequate supply of Scotch spearmint oil to the market.
    As previously stated, this action will make all of the Scotch 
spearmint oil held by the industry available for marketing, including 
the entire pool of reserve oil. Accordingly, to achieve the desired net 
effect under the current supply conditions in the industry, the salable 
quantity and allotment percentage established under the volume 
regulation provisions of the order must be set at the established high 
levels.
    The Committee records show that not every producer holds Scotch 
spearmint oil in reserve. Conversely, a few producers hold a large 
quantity of oil in reserve relative to their allotment base. Given the 
process by which volume regulation is effectuated under the order, 
those producers with large amounts of reserve oil are only able to 
market their entire inventory of reserve oil when the allotment 
percentage is set very high. Likewise, producers that do not hold 
Scotch spearmint oil in reserve do not have oil inventory to market, 
regardless of the level of increase. As such, the Committee expects 
that establishing a high salable quantity and allotment percentage for 
Scotch spearmint oil will translate into a large amount of the 
increased salable quantity going unmarketed, as many producers have 
little or no reserve oil available to sell.
    As an example, assume Producer A has 2,000 pounds of Scotch 
spearmint oil allotment base. In addition, assume that during the 2012-
2013 marketing year Producer A produced 760 pounds of Scotch spearmint 
oil and currently holds 1,800 pounds in reserve from production in 
prior years. Given that the initial 2012-2013 marketing year allotment 
percentage was established at 38 percent, Producer A would be able to 
use all 760 pounds of the current year production (38 percent x 2,000 
pounds). Without an increase in the allotment percentage, however, the 
producer would not be able to use any reserve oil. For Producer A to 
use all 1,800 pounds of the producer's reserve oil, the allotment 
percentage would need to be increased by 90 percent, to a total of 128 
percent (90 percent x 2,000 pounds = 1,800 pounds). An increase in the 
allotment percentage of anything less than 90 percent would fail to 
release all of the Scotch spearmint oil he holds in reserve.
    In contrast, assume that another producer, Producer B, likewise has 
2,000 pounds of Scotch spearmint oil allotment base and produced 760 
pounds of Scotch spearmint oil during the 2012-2013 marketing year. 
Unlike Producer A, however, Producer B has no oil held in reserve. As 
in the first case, Producer B would be able to use all of the 
producer's current year production under the initial allotment 
percentage of 38 percent. However, a subsequent increase in the 
allotment percentage of 90 percent would have no impact on Producer B, 
as there is no reserve oil for the producer to use. As a result, the 
theoretical 1,800 pounds of additional annual allotment allocated to 
Producer B after a 90 percent increase in the allotment percentage 
would go unfilled.
    As mentioned previously, the Committee estimated at the October 17 
meeting that producers hold just 197,350 pounds of Scotch spearmint oil 
in reserve. The Committee estimates that a 90 percent increase in the 
allotment percentage is required to release the entire Scotch spearmint 
oil reserve pool to the market. The Committee acknowledges that the 
high allotment percentage will create a large theoretical salable 
quantity for which no

[[Page 76344]]

Scotch spearmint oil actually exists. Accordingly, the Committee 
expects that a large portion of the recommended 1,843,674 pound 
increase in salable quantity will go unfilled.
    The Committee's stated intent in the use of marketing order volume 
control regulation for Scotch spearmint oil is to keep adequate 
supplies available to meet market needs and establish orderly marketing 
conditions. With that in mind, the Committee developed its 
recommendation for increasing the Scotch spearmint oil salable quantity 
and allotment percentage for the 2012-2013 marketing year based on the 
information discussed above, as well as the summary data outlined 
below.
    (A) Estimated 2012-2013 Scotch Allotment Base--2,058,981 pounds. 
This is the estimate on which the original 2012-2013 salable quantity 
and allotment percentage was based.
    (B) Revised 2012-2013 Scotch Allotment Base--2,048,527 pounds. This 
is 10,454 pounds less than the estimated allotment base of 2,058,981 
pounds. The difference is the result of some producers failing to 
produce all of their 2011-2012 allotment.
    (C) Original 2012-2013 Scotch Allotment Percentage--38 percent. 
This was unanimously recommended by the Committee on October 12, 2011.
    (D) Original 2012-2013 Scotch Salable Quantity--782,413 pounds. 
This figure is 38 percent of the estimated 2012-2013 allotment base of 
2,058,981 pounds.
    (E) Adjusted 2012-2013 Scotch Salable Quantity--778,440 pounds. 
This figure reflects the salable quantity actually available at the 
beginning of the 2012-2013 marketing year. This quantity is derived by 
applying the 38 percent allotment percentage to the revised allotment 
base of 2,048,527.
    (F) Current Revision to the 2012-2013 Scotch Salable Quantity and 
Allotment Percentage:
    (1) Increase in Scotch Allotment Percentage--90 percent. The 
Committee recommended a 90 percent increase at its October 17, 2012, 
meeting.
    (2) 2012-2013 Scotch Allotment Percentage--128 percent. This figure 
is derived by adding the increase of 90 percent to the original 2012-
2013 allotment percentage of 38 percent.
    (3) Calculated Revised 2012-2013 Scotch Salable Quantity--2,622,115 
pounds. This figure is 128 percent of the revised 2012-2013 allotment 
base of 2,048,527 pounds.
    (4) Computed Increase in the 2012-2013 Scotch Salable Quantity--
1,843,674 pounds. This figure is 90 percent of the revised 2012-2013 
allotment base of 2,048,527 pounds.
    (5) Expected Actual Increase in the 2012-2013 Scotch Spearmint Oil 
Available to the Market--197,350 pounds. This figure is based on the 
Committee's calculation of oil actually held by producers that may 
enter the market as a result of this rule.

Native Spearmint Oil Recommendation

    The 2012-2013 marketing year for Native spearmint oil began on June 
1, 2012, with an estimated carry-in of 135,855 pounds of salable oil. 
When the estimated carry-in is added to the revised 2012-2013 salable 
quantity of 1,162,302 pounds, the result is a total available supply of 
Native spearmint oil for the 2012-2013 marketing year of 1,298,157 
pounds. Of this amount, the Committee estimates that 1,185,965 pounds 
of Native spearmint oil have already been sold or are committed to be 
sold as of the October 17, 2012, meeting date. This leaves just 112,192 
pounds available for sale for the remainder of the 2012-2013 marketing 
year. The Committee believes that this is a relatively small amount of 
salable oil and maintaining available stocks at this level at this 
point in the marketing year would be detrimental to the industry. As a 
result, the Committee initiated this rulemaking action.
    In making this recommendation to increase the available supply of 
Native spearmint oil, the Committee considered all available 
information on price, supply, and demand. The Committee also considered 
reports and other information from handlers and producers in attendance 
at the meeting and reports presented by the Committee manager that were 
provided by handlers and producers who were not in attendance.
    Increasing the 2012-2013 Native spearmint oil allotment percentage 
by 8 percent will increase the salable quantity by 185,968 pounds, to a 
total of 1,348,270 pounds. However, the net effect of the increase will 
be less than the calculated increase due to the amount of actual oil 
producers have available from the unused portion of their annual 
allotment or in reserve. The Committee estimates that this action will 
make an additional 120,254 pounds available to the market. This amount, 
combined with the 112,192 pounds of salable Native spearmint oil 
currently available, will make a total of 232,446 pounds available to 
the market and bring the total available supply of Native spearmint oil 
for the marketing year to 1,418,411 pounds.
    When the original 2012-2013 marketing policy statement was drafted, 
handlers estimated the demand for Native spearmint oil for the 2012-
2013 marketing year at 1,300,000 pounds. Thus, the Committee's 
recommendation for the establishment of the Native spearmint oil 
salable quantity and allotment percentage for the 2012-2013 marketing 
year was based on these estimates and did not anticipate the increase 
in demand for Native spearmint oil that the market is currently 
experiencing. The Committee believes that the supply of Native 
spearmint oil available to the market, without an increase in the 
salable quantity, will be insufficient to satisfy the current demand 
for oil at reasonable price levels. It is the opinion of the Committee 
and the spearmint oil industry that this action is essential to 
ensuring an adequate supply of Native spearmint oil to the market.
    As previously stated, this action will make an additional 120,254 
pounds of Native spearmint oil available to the market. Similar to the 
situation with Scotch spearmint oil, the salable quantity and allotment 
percentage has to be set relatively high to create the net effect 
desired. According to the Committee's calculations, the Native 
spearmint oil salable quantity and allotment percentage need to be 
increased 8 percent and 185,968 pounds, respectively, to release all of 
the 120,254 pounds that the Committee believes is necessary to 
adequately supply the market. The discrepancy between the calculated 
185,968 pound increase in the salable quantity and the expected actual 
120,254 pound increase in the amount of Native spearmint oil made 
available to the market is attributed to salable quantity being 
allocated to producers that do not have Native spearmint oil available 
to market. Accordingly, the Committee expects that 65,714 pounds of the 
recommended increase in the Native spearmint oil salable quantity will 
go unfilled.
    The Committee's stated intent in the use of marketing order volume 
control regulation for Native spearmint oil is to keep adequate 
supplies available to meet market needs and establish orderly marketing 
conditions. As such, the Committee developed its recommendation for 
increasing the Native spearmint oil salable quantity and allotment 
percentage for the 2012-2013 marketing year based on the information 
discussed above, as well as the summary data outlined below.
    (A) Estimated 2012-2013 Native Allotment Base--2,324,945 pounds. 
This is the estimate on which the original 2012-2013 Native spearmint 
oil salable quantity and allotment percentage was based.
    (B) Revised 2012-2013 Native Allotment Base--2,324,604 pounds.

[[Page 76345]]

This is 341 pounds less than the estimated allotment base of 2,324,945 
pounds. The difference is the result of some producers failing to 
produce all of their 2011-2012 allotment.
    (C) Original 2012-2013 Native Allotment Percentage--50 percent. 
This percentage was recommended by the Committee at its October 12, 
2011, meeting.
    (D) Original 2012-2013 Native Salable Quantity--1,162,473 pounds. 
This figure is 50 percent of the estimated 2012-2013 allotment base of 
2,324,945.
    (E) Adjusted 2012-2013 Native Salable Quantity--1,162,302 pounds. 
This figure reflects the salable quantity actually available at the 
beginning of the 2012-2013 marketing year. This quantity is derived by 
applying the 50 percent allotment percentage to the revised allotment 
base of 2,324,604.
    (F) Current Revision to the 2012-2013 Native Salable Quantity and 
Allotment Percentage:
    (1) Increase in Native Allotment Percentage--8 percent. The 
Committee recommended an 8 percent increase at its October 17, 2012, 
meeting.
    (2) 2012-2013 Native Allotment Percentage--58 percent. This figure 
is derived by adding the increase of 8 percent to the original 2012-
2013 allotment percentage of 50 percent.
    (3) Calculated Revised 2012-2013 Native Salable Quantity--1,162,302 
pounds. This figure is 58 percent of the revised 2012-2013 allotment 
base of 2,324,604 pounds.
    (4) Computed Increase in the 2012-2013 Native Salable Quantity--
185,968 pounds. This figure is 8 percent of the revised 2012-2013 
allotment base of 2,324,604 pounds.
    (5) Expected Actual Increase in the 2012-2013 Native Spearmint Oil 
Available to the Market--120,254 pounds. This figure is based on the 
Committee's calculation of oil actually held by producers that may 
enter the market as a result of this rule.
    Based on its analysis of available information, USDA has determined 
that the salable quantity and allotment percentage for Scotch spearmint 
oil for the 2012-2013 marketing year should be increased to 2,622,115 
pounds and 128 percent, respectively. In addition, USDA has determined 
that the salable quantity and allotment percentage for Native spearmint 
oil for the 2012-2013 marketing year should be increased to 1,348,270 
pounds and 58 percent, respectively.
    This rule relaxes the regulation of Scotch and Native spearmint oil 
and will allow producers to meet market demand while improving producer 
returns. In conjunction with the issuance of this rule, the Committee's 
revised marketing policy statement for the 2012-2013 marketing year has 
been reviewed by USDA. The Committee's marketing policy statement, a 
requirement whenever the Committee recommends implementing volume 
regulations or recommends revisions to existing volume regulations, 
meets the intent of Sec.  985.50 of the order. During its discussion of 
revising the 2012-2013 salable quantities and allotment percentages, 
the Committee considered: (1) The estimated quantity of salable oil of 
each class held by producers and handlers; (2) the estimated demand for 
each class of oil; (3) prospective production of each class of oil; (4) 
total of allotment bases of each class of oil for the current marketing 
year and the estimated total of allotment bases of each class for the 
ensuing marketing year; (5) the quantity of reserve oil, by class, in 
storage; (6) producer prices of oil, including prices for each class of 
oil; and (7) general market conditions for each class of oil, including 
whether the estimated season average price to producers is likely to 
exceed parity. Conformity with USDA's ``Guidelines for Fruit, 
Vegetable, and Specialty Crop Marketing Orders'' has also been reviewed 
and confirmed.
    The increases in the Scotch and Native spearmint oil salable 
quantity and allotment percentage allow for anticipated market needs 
for both classes of oil. In determining anticipated market needs, 
consideration by the Committee was given to historical sales and 
changes and trends in production and demand.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the 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 8 spearmint oil handlers subject to regulation under the 
order, and approximately 32 producers of Scotch spearmint oil and 
approximately 88 producers of Native spearmint oil in the regulated 
production area. Small agricultural service firms are defined by the 
Small Business Administration (SBA) (13 CFR 121.201) as those having 
annual receipts of less than $7,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000.
    Based on the SBA's definition of small entities, the Committee 
estimates that two of the eight handlers regulated by the order could 
be considered small entities. Most of the handlers are large 
corporations involved in the international trading of essential oils 
and the products of essential oils. In addition, the Committee 
estimates that 8 of the 32 Scotch spearmint oil producers and 22 of the 
88 Native spearmint oil producers could be classified as small entities 
under the SBA definition. Thus, a majority of handlers and producers of 
Far West spearmint oil may not be classified as small entities.
    The use of volume control regulation allows the industry to fully 
supply spearmint oil markets while avoiding the negative consequences 
of over-supplying these markets. Without volume control, the spearmint 
oil market would likely fluctuate widely. Periods of oversupply could 
result in low producer prices and a large volume of oil stored and 
carried over to future crop years. Periods of undersupply could lead to 
excessive price spikes and could drive end users to source flavoring 
needs from other markets, potentially causing long-term economic damage 
to the domestic spearmint oil industry. The marketing order's volume 
control provisions have been successfully implemented in the domestic 
spearmint oil industry since 1980 and provide benefits for producers, 
handlers, manufacturers, and consumers.
    This rule increases the quantity of Scotch and Native spearmint oil 
that handlers may purchase from, or handle on behalf of, producers 
during the 2012-2013 marketing year, which ends on May 31, 2013. The 
2012-2013 Scotch and Native spearmint oil salable quantities were 
initially established at 782,413 pounds and 1,162,473 pounds, 
respectively, through publication in the Federal Register on June 5, 
2012 (77 FR 33076). This rule increases the Scotch spearmint oil 
salable quantity to 2,622,115 pounds and the allotment percentage from 
38 percent to 128 percent. Additionally, this rule increases the Native 
spearmint oil salable quantity to 1,348,270 pounds and the allotment 
percentage from 50 percent to 58 percent.
    Based on the information and projections available at the October 
17, 2012, meeting, the Committee considered a number of alternatives to

[[Page 76346]]

this increase. The Committee not only considered leaving the salable 
quantity and allotment percentage unchanged, but also considered other 
potential levels of increase. The Committee reached its recommendation 
to increase the salable quantity and allotment percentage for both 
Scotch and Native spearmint oil after careful consideration of all 
available information and input from all interested industry 
participants, and believes that the levels recommended will achieve the 
objectives sought. Without the increase, the Committee believes the 
industry would not be able to satisfactorily meet market demand.
    In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178, Vegetable and Specialty Crop Marketing 
Orders. No changes in those requirements as a result of this action are 
necessary. Should any changes become necessary, they would be submitted 
to OMB for approval.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large spearmint oil handlers. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this rule.
    Further, the Committee's meeting was widely publicized throughout 
the spearmint oil industry and all interested persons were invited to 
attend the meeting and participate in Committee deliberations. Like all 
Committee meetings, the October 17, 2012, meeting was a public meeting 
and all entities, both large and small, were able to express their 
views on this issue. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions about 
the compliance guide should be sent to Laurel May at the previously 
mentioned address in the FOR FURTHER INFORMATION CONTACT section.
    This rule invites comments on a change to the salable quantity and 
allotment percentage for both Scotch and Native spearmint oil for the 
2012-2013 marketing year. Any comments received will be considered 
prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim rule, as hereinafter set forth, will tend to effectuate 
the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule increases the quantity of Scotch and Native 
spearmint oil that may be marketed during the marketing year, which 
ends on May 31, 2013; (2) the current quantity of Scotch and Native 
spearmint oil may be inadequate to meet demand for the 2012-2013 
marketing year, thus making the additional oil available as soon as is 
practicable will be beneficial to both handlers and producers; (3) the 
Committee recommended these changes at a public meeting and interested 
parties had an opportunity to provide input; and (4) this rule provides 
a 60-day comment period and any comments received will be considered 
prior to finalization of this rule.

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. In Sec.  985.231, paragraphs (a) and (b) are revised to read as 
follows:

    Note: This section will not appear in the annual Code of Federal 
Regulations.

Sec.  985.231  Salable quantities and allotment percentages--2012-2013 
marketing year.

* * * * *
    (a) Class 1 (Scotch) oil--a salable quantity of 2,622,115 pounds 
and an allotment percentage of 128 percent.
    (b) Class 3 (Native) oil--a salable quantity of 1,348,270 pounds 
and an allotment percentage of 58 percent.

    Dated: December 20, 2012.
David R. Shipman,
Administrator, Agricultural Marketing Service.
[FR Doc. 2012-31102 Filed 12-27-12; 8:45 am]
BILLING CODE 3410-02-P
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