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[Federal Register Volume 76, Number 16 (Tuesday, January 25, 2011)]
[Rules and Regulations]
[Pages 4204-4207]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1429]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket Nos. AMS-FV-09-0082; FV10-985-1A IR]

Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Revision of the Salable Quantity and Allotment 
Percentage for Class 3 (Native) Spearmint Oil for the 2010-2011 
Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: This rule revises the quantity of Class 3 (Native) spearmint 
oil that handlers may purchase from, or handle on behalf of, producers 
during the 2010-2011 marketing year. This rule increases the Native 
spearmint oil salable quantity from 980,220 pounds to 1,118,639 pounds, 
and the allotment percentage from 43 percent to 50 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 unanimously 
recommended this rule for the purpose of avoiding extreme fluctuations 
in supplies and prices and to help maintain stability in the Far West 
spearmint oil market.

DATES: Effective June 1, 2010, through May 31, 2011; comments received 
by March 28, 2011 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
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 Manager, Northwest Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or E-mail: 
Barry.Broadbent@ams.usda.gov or GaryD.Olson@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Antoinette Carter, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 
Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or E-mail: 
Antoinette.Carter@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 Native spearmint oil produced in the Far West 
that handlers may purchase from, or handle on behalf of, producers 
during the 2010-2011 marketing year, which ends on May 31, 2011.
    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

[[Page 4205]]

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.
    The original salable quantity and allotment percentages for Scotch 
and Native spearmint oil for the 2010-2011 marketing year were 
recommended by the Committee at its October 14, 2009, meeting. The 
Committee recommended salable quantities of 566,962 pounds and 980,265 
pounds, and allotment percentages of 28 percent and 43 percent, 
respectively, for Scotch and Native spearmint oil. A proposed rule was 
published in the Federal Register on March 22, 2010 (75 FR 13445). 
Comments on the proposed rule were solicited from interested persons 
until April 6, 2010. No comments were received. Subsequently, a final 
rule establishing the salable quantities and allotment percentages for 
Scotch and Native spearmint oil for the 2010-2011 marketing year was 
published in the Federal Register on May 18, 2010 (75 FR 27631).
    This rule revises the quantity of Native spearmint oil that 
handlers may purchase from, or handle on behalf of, producers during 
the 2010-2011 marketing year, which ends on May 31, 2011. Pursuant to 
authority contained in Sec. Sec.  985.50, 985.51, and 985.52 of the 
order, the full eight member Committee met on November 19, 2010, to 
consider pertinent market information on the current supply, demand, 
and price of spearmint oil. In a vote with seven members in favor and 
one member opposed, the Committee recommended that the 2010-2011 Native 
spearmint oil allotment percentage be increased by 7 percent, from 43 
percent to 50 percent. The Committee member that voted against the 
increase did so without further explanation.
    Thus, taking into consideration the following discussion on 
adjustments to the Native spearmint oil salable quantities, this rule 
increases the 2010-2011 marketing year salable quantities and allotment 
percentages for Native spearmint oil to 1,118,639 pounds and 50 
percent.
    The salable quantity is the total quantity of each class of oil 
that handlers may purchase from, or handle for, producers during the 
marketing year. The total salable quantity is divided by the total 
industry allotment base to determine an allotment percentage. Each 
producer is allotted a share of the salable quantity by applying the 
allotment percentage to the producer's individual allotment base for 
the applicable class of spearmint oil.
    The total industry allotment base for Native spearmint oil for the 
2010-2011 marketing year was estimated by the Committee at the October 
14, 2009, meeting at 2,279,687 pounds. This number was later revised at 
the beginning of the 2010-2011 marketing year to 2,279,439 pounds to 
reflect a 2009-2010 marketing year reduction of 248 pounds. Section 
985.53(e) of the order requires that producers make a bona fide effort 
to produce all of their 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 248 pound reduction in 
allotment base reflects the total base surrendered by all producers due 
to the non-production of those producers' total annual allotments 
during the 2009-2010 marketing year.
    When the revised total allotment base of 2,279,439 pounds is 
applied to the originally established allotment percentage of 43 
percent, the initially established 2010-2011 marketing year salable 
quantity of 980,265 pounds is effectively modified to 980,220 pounds.
    By increasing the salable quantity and allotment percentage, this 
rule makes an additional amount of Native spearmint oil available by 
releasing oil from the reserve pool. As of May 31, 2010, the Committee 
estimated the reserve pool to be 506,725 pounds.
    When the allotment percentage increase established by this rule is 
applied to each individual producer, that producer may take up to an 
amount equal to such allotment from their reserve for this respective 
class of oil. Producers that do not have excess oil in reserve on 
November 1, 2010, equal to or greater than that individual's respective 
pro rata increase in the salable quantity allotment will not be able to 
exercise the full marketing rights associated with such an increase. 
Also, pursuant to Sec. Sec.  985.56 and 985.156, producers with excess 
oil are not able to transfer such excess oil to other producers to fill 
deficiencies in annual allotments after October 31 of each marketing 
year. As a result, the Committee has calculated that deficiencies in 
individual producer's oil reserves result in an industry total of 
21,081 pounds of salable quantity that will not enter the market.
    Therefore, the 7 percent increase in the salable percentage 
established by this rule would result in a total 2010-2011 marketing 
year salable quantity of 1,118,639 pounds of Native spearmint oil. This 
reflects an additional 138,419 pounds made available to the market by 
this rule.
    The following summarizes the Committee recommendations:

Native Spearmint Oil Recommendation

    (A) Estimated 2010-2011 Allotment Base--2,279,687 pounds. This is 
the estimate on which the original 2010-2011 Native spearmint oil 
salable quantity and allotment percentage was based.
    (B) Revised 2010-2011 Allotment Base--2,279,439 pounds. This is 248 
pounds less than the estimated allotment base of 2,279,687 pounds. This 
is less because some producers failed to produce all of their 2009-2010 
allotment.
    (C) Original 2010-2011 Allotment Percentage--43 percent. This was 
unanimously recommended by the Committee on October 14, 2009.
    (D) Original 2010-2011 Salable Quantity--980,265 pounds. This 
figure is 43 percent of the estimated 2010-2011 allotment base of 
2,279,687.
    (E) Adjustment to the Original 2010-2011 Salable Quantity--980,220 
pounds. This figure reflects the salable quantity initially available 
at the beginning of the 2010-2011 marketing year due to the 248 pound 
reduction in the industry allotment base to 2,279,439 pounds.
    (F) Current Revision to the 2010-2011 Salable Quantity and 
Allotment Percentage:
    (1) Increase in Allotment Percentage--7 percent. The Committee 
recommended a 7 percent increase at its November 19, 2010, meeting.
    (2) 2010-2011 Allotment Percentage--50 percent. This figure is 
derived by adding the increase of 7 percent to the original 2010-2011 
allotment percentage of 43 percent.
    (3) Calculated Revised 2010-2011 Salable Quantity--1,118,639 
pounds. This figure is 50 percent of the revised 2010-2011 allotment 
base of 2,279,439 pounds, less the 21,081 pounds that are not covered 
by individual producer's reserves.
    (4) Computed Increase in the 2010-2010 Salable Quantity--138,419 
pounds. This figure is 7 percent of the revised 2010-2011 allotment 
base of 2,279,439 pounds less the 21,081 pound reserve deficiency.

[[Page 4206]]

    The 2010-2011 marketing year began on June 1, 2010, with an 
estimated carry-in of 343,517 pounds of salable Native spearmint oil. 
When the estimated carry-in is added to the revised 2010-2011 salable 
quantity of 1,118,639 pounds, the result is a total estimated available 
supply of Native spearmint oil for the 2010-2011 marketing year of 
1,462,156 pounds. Of this amount, 1,112,292 pounds of oil has already 
been sold or committed for the 2010-2011 marketing year, which leaves 
349,864 pounds available for sale.
    In making this recommendation, 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 given by the Committee manager 
from handlers and producers who were not in attendance. By increasing 
the 2010-2011 Native spearmint oil salable percentage by 7 percent, an 
estimated additional 138,419 pounds will be made available to the 
market. This amount combined with the 211,445 pounds currently 
available, will make a total of 349,864 pounds available to the market 
and bring the total available supply for the year to 1,462,156 pounds. 
The handlers are estimating that the demand for 2010-2011 year may be 
1,133,333 pounds, which would leave 328,823 pounds as a carry out at 
the end of the year.
    However, when the Committee made its original recommendation for 
the establishment of the Native spearmint oil salable quantity and 
allotment percentage for the 2010-2011 marketing year, it had 
anticipated that the year would end with an ample available supply. In 
the interim, the Native spearmint market experienced dynamic changes in 
the supply and demand of oil. The Committee believes that the current 
available supply is insufficient to satisfy current demand at 
reasonable price levels. Therefore, the industry may not be able to 
adequately meet market demand without this increase.
    Based on its analysis of available information, USDA has determined 
that the salable quantity and allotment percentage for Native spearmint 
oil for the 2010-2011 marketing year should be increased to 1,118,639 
pounds and 50 percent, respectively.
    This rule relaxes the regulation of 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 2010-2011 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 2010-2011 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 increase in the Native spearmint oil salable quantity and 
allotment percentage allows for anticipated market needs for this class 
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 38 producers of Scotch spearmint oil and 
approximately 84 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 19 of the 38 Scotch spearmint oil producers and 29 of 
the 84 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 Far West spearmint oil industry is characterized by producers 
whose farming operations generally involve more than one commodity, and 
whose income from farming operations is not exclusively dependent on 
the production of spearmint oil. A typical spearmint oil-producing 
operation has enough acreage for rotation such that the total acreage 
required to produce the crop is about one-third spearmint and two-
thirds rotational crops. Thus, the typical spearmint oil producer has 
to have considerably more acreage than is planted to spearmint during 
any given season. Crop rotation is an essential cultural practice in 
the production of spearmint oil for weed, insect, and disease control. 
To remain economically viable with the added costs associated with 
spearmint oil production, most spearmint oil-producing farms fall into 
the SBA category of large businesses.
    Small spearmint oil producers generally are not as extensively 
diversified as larger ones and as such are more at risk to market 
fluctuations. Such small producers generally need to market their 
entire annual crop and do not have the luxury of having other crops to 
cushion seasons with poor spearmint oil returns. Conversely, large 
diversified producers have the potential to endure one or more seasons 
of poor spearmint oil markets because income from alternate crops could 
support the operation for a period of time. Being reasonably assured of 
a stable price and market provides small producing entities with the 
ability to maintain proper cash flow and to meet annual expenses. Thus, 
the market and price stability provided by the order potentially 
benefit the small producer more than such provisions benefit large 
producers. Even though a majority of handlers and producers of 
spearmint oil may not be classified as small entities,

[[Page 4207]]

the volume control feature of this order has small entity orientation.
    This rule revises the quantity of Native spearmint oil that 
handlers may purchase from, or handle on behalf of, producers during 
the 2010-2011 marketing year, which ends on May 31, 2011. This rule 
increases the Native spearmint oil salable quantity from 980,220 pounds 
to 1,118,639 pounds and the allotment percentage from 43 percent to 50 
percent.
    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. Volume control is believed to have 
little or no effect on consumer prices of products containing spearmint 
oil and likely does not result in fewer retail sales of such products. 
Without volume control, producers would not be limited in the 
production and marketing of spearmint oil. Under those conditions, 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 for nearly three 
decades and provide benefits for producers, handlers, manufacturers, 
and consumers.
    Based on projections available at the meeting, the Committee 
considered a number of alternatives to 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 Native spearmint oil after careful 
consideration of all available information, 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.
    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 November 19, 2010, 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: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions 
about the compliance guide should be sent to Antoinette Carter 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 Native spearmint oil for the 2010-2011 
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 Native spearmint oil 
that may be marketed during the marketing year, which ends on May 31, 
2011; (2) the current quantity of Native spearmint oil may be 
inadequate to meet demand for the 2010-2011 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.  985.229, paragraph (b) is revised to read as follows:

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

Sec.  985.229  Salable quantities and allotment percentages--2010-2011 
marketing year.

* * * * *
    (b) Class 3 (Native) oil--a salable quantity of 1,118,639 pounds 
and an allotment percentage of 50 percent.

    Dated: January 19, 2011.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. 2011-1429 Filed 1-24-11; 8:45 am]
BILLING CODE 3410-02-P
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