This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

2639 

Vol. 71, No. 13 

Monday, January 22, 2007 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 985 

[Docket Nos. AMS–FV–06–0188; FV07–985– 

1 PR] 

Marketing Order Regulating the 

Handling of Spearmint Oil Produced in 

the Far West; Salable Quantities and 

Allotment Percentages for the 2007– 

2008 Marketing Year 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: This rule would establish the 

quantity of spearmint oil produced in 

the Far West, by class that handlers may 

purchase from, or handle for, producers 

during the 2007–2008 marketing year, 

which begins on June 1, 2007. This rule 

invites comments on the establishment 

of salable quantities and allotment 

percentages for Class 1 (Scotch) 

spearmint oil of 886,667 pounds and 45 

percent, respectively, and for Class 3 

(Native) spearmint oil of 1,062,336 

pounds and 48 percent, respectively. 

The Spearmint Oil Administrative 

Committee (Committee), the agency 

responsible for local administration of 

the marketing order for spearmint oil 

produced in the Far West, 

recommended these limitations for the 

purpose of avoiding extreme 

fluctuations in supplies and prices to 

help maintain stability in the spearmint 

oil market. 

DATES: Comments must be received by 

February 21, 2007. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this rule. 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; E-mail: 

moab.docketclerk@usda.gov; or Internet: 

http://www.regulations.gov. All 

comments should reference the docket 

number and the date and page number 

of this issue of the Federal Register and 

will be available for public inspection in 

the Office of the Docket Clerk during 

regular business hours, or can be viewed 

at: http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Susan M. Hiller, Marketing Specialist 

and Gary D. 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: 

Susan.Hiller@usda.gov or 

GaryD.Olson@usda.gov. 

Small businesses may request 

information on complying with this 

regulation by contacting Jay Guerber, 

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: 

Jay.Guerber@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.’’ This 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 marketing order now 

in effect, salable quantities and 

allotment percentages may be 

established for classes of spearmint oil 

produced in the Far West. This 

proposed rule would establish the 

quantity of spearmint oil produced in 

the Far West, by class, which may be 

purchased from or handled for 

producers by handlers during the 2007– 

2008 marketing year, which begins on 

June 1, 2007. This rule will not preempt 

any State or local laws, regulations, or 

policies, unless they present an 

irreconcilable conflict with this rule. 

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. 

Pursuant to authority in §§ 985.50, 

985.51, and 985.52 of the order, the 

Committee, with all eight members 

present, met on October 4, 2006, and 

recommended salable quantities and 

allotment percentages for both classes of 

oil for the 2007–2008 marketing year. 

The Committee unanimously 

recommended the establishment of a 

salable quantity and allotment 

percentage for Scotch spearmint oil of 

886,667 pounds and 45 percent, 

respectively. For Native spearmint oil, 

the Committee unanimously 

recommended the establishment of a 

salable quantity and allotment 

percentage of 1,062,336 pounds and 48 

percent, respectively. 

This rule would limit the amount of 

spearmint oil that handlers may 

purchase from, or handle for, producers 

during the 2007–2008 marketing year, 

which begins on June 1, 2007. Salable 

quantities and allotment percentages 

have been placed into effect each season 

since the order’s inception in 1980. 

The U.S. production of Scotch 

spearmint oil is concentrated in the Far 

West, which includes Washington, 

Idaho, and Oregon and a portion of 

Nevada and Utah. Scotch spearmint oil 

is also produced in the Midwest states 

of Indiana, Michigan, and Wisconsin, as 

well as in the States of Montana, South 

Dakota, North Dakota, and Minnesota. 

The production area covered by the 

marketing order currently accounts for 

approximately 71 percent of the annual 

U.S. sales of Scotch spearmint oil. 

When the order became effective in 

1980, the Far West had 72 percent of the 

world’s sales of Scotch spearmint oil. 


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2640 Federal Register / Vol. 71, No. 13 / Monday, January 22, 2007 / Proposed Rules 

While the Far West is still the leading 

producer of Scotch spearmint oil, its 

share of world sales is now estimated to 

be about 43 percent. This loss in world 

sales for the Far West region is directly 

attributed to the increase in global 

production. Other factors that have 

played a significant role include the 

overall quality of the imported oil and 

technological advances that allow for 

more blending of lower quality oils. 

Such factors have provided the 

Committee with challenges in 

accurately predicting trade demand for 

Scotch oil. This, in turn, has made it 

difficult to balance available supplies 

with demand and to achieve the 

Committee’s overall goal of stabilizing 

producer and market prices. 

The marketing order has continued to 

contribute to price and general market 

stabilization for Far West producers. 

The Committee, as well as spearmint oil 

producers and handlers attending the 

October 4, 2006, meeting, estimated that 

the 2006–2007 producer price of Scotch 

oil would be $13.00 to $14.00 per 

pound. However, there is very little 

forward contracting being done at the 

present time. This producer price is 

approaching the cost of production for 

most producers as indicated in a study 

from the Washington State University 

Cooperative Extension Service (WSU), 

which estimates production costs to be 

between $13.50 and $15.00 per pound. 

However, this study was completed in 

2001 and fuel costs alone have doubled 

in price. 

This low level of producer returns has 

caused an overall reduction in acreage. 

When the order became effective in 

1980, the Far West region had 9,702 

acres of Scotch spearmint. The 

Committee estimates that the 2005–2006 

acreage of Scotch spearmint was about 

6,132 acres. Based on the reduced 

Scotch spearmint acreage, the 

Committee estimates that production for 

the 2005–2006 marketing season will be 

about 764,420 pounds. 

The Committee recommended the 

2007–2008 Scotch spearmint oil salable 

quantity (886,667 pounds) and 

allotment percentage (45 percent) 

utilizing sales estimates for 2007–2008 

Scotch spearmint oil as provided by 

several of the industry’s handlers, as 

well as historical and current Scotch 

spearmint oil sales levels. The 

Committee is estimating that about 

875,000 pounds of Scotch spearmint oil, 

on average, may be sold during the 

2007–2008 marketing year. When 

considered in conjunction with the 

estimated carry-in of 18,029 pounds of 

oil on June 1, 2007, the recommended 

salable quantity of 886,667 pounds 

results in a total available supply of 

Scotch spearmint oil next year of about 

904,696 pounds. 

The recommendation for the 2007–

2008 Scotch spearmint oil volume 

regulation is consistent with the 

Committee’s stated intent of keeping 

adequate supplies available at all times, 

while attempting to stabilize prices at a 

level adequate to sustain the producers. 

Furthermore, the recommendation takes 

into consideration the industry’s desire 

to compete with less expensive oil 

produced outside the regulated area. 

Although Native spearmint oil 

producers are facing market conditions 

similar to those affecting the Scotch 

spearmint oil market, the market share 

is quite different. Over 90 percent of the 

U.S. production of Native spearmint is 

produced within the Far West 

production area. Also, most of the 

world’s supply of Native spearmint is 

produced in the United States. 

The supply and demand 

characteristics of the current Native 

spearmint oil market, combined with 

the stabilizing impact of the marketing 

order, have kept the price relatively 

steady. The average price for the five 

year period ending in 2005 is $9.38, 

which is $0.34 lower than the average 

price for the ten year period (1996–

2005) of $9.72. The Committee 

considers these levels too low for the 

majority of producers to maintain 

viability. The WSU study referenced 

earlier indicates that the cost of 

producing Native spearmint oil ranges 

from $10.26 to $10.92 per pound. 

Similar to Scotch, the low level of 

producer returns has also caused an 

overall reduction in Native spearmint 

acreage. When the order became 

effective in 1980, the Far West region 

had 12,153 acres of Native spearmint. 

The Committee estimates that the 2005–

2006 acreage of Native spearmint was 

about 7,528 acres. Based on the reduced 

Native spearmint acreage, the 

Committee estimates that production for 

the 2005–2006 marketing season will be 

about 1,004,900 pounds. 

The Committee recommended the 

2007–2008 Native spearmint oil salable 

quantity (1,062,336 pounds) and 

allotment percentage (48 percent) 

utilizing sales estimates for 2007–2008 

Native oil as provided by several of the 

industry’s handlers, as well as historical 

and current Native spearmint oil sales 

levels. The Committee is estimating that 

about 1,141,667 pounds of Native 

spearmint oil, on average, may be sold 

during the 2007–2008 marketing year. 

When considered in conjunction with 

the estimated carry-in of 119,057 

pounds of oil on June 1, 2007, the 

recommended salable quantity of 

1,062,336 pounds results in a total 

available supply of Native spearmint oil 

next year of about 1,181,393 pounds. 

The Committee’s method of 

calculating the Native spearmint oil 

salable quantity and allotment 

percentage continues to primarily 

utilize information on price and 

available supply as they are affected by 

the estimated trade demand. The 

Committee’s stated intent is to make 

adequate supplies available to meet 

market needs and improve producer 

prices. 

The Committee believes that the order 

has contributed extensively to the 

stabilization of producer prices, which 

prior to 1980 experienced wide 

fluctuations from year to year. 

According to the National Agricultural 

Statistics Service, for example, the 

average price paid for both classes of 

spearmint oil ranged from $4.00 per 

pound to $11.10 per pound during the 

period between 1968 and 1980. Prices 

since the order’s inception, the period 

from 1980 to 2005, have generally 

stabilized at an average price of $9.84 

per pound for Native spearmint oil and 

$12.72 per pound for Scotch spearmint 

oil. 

The Committee based its 

recommendation for the proposed 

salable quantity and allotment 

percentage for each class of spearmint 

oil for the 2007–2008 marketing year on 

the information discussed above, as well 

as the data outlined below. 

(1) Class 1 (Scotch) Spearmint Oil 

(A) Estimated carry-in on June 1, 

2007—18,029 pounds. This figure is the 

difference between the revised 2006–

2007 marketing year total available 

supply of 818,029 pounds and the 

estimated 2006–2007 marketing year 

trade demand of 800,000 pounds. 

(B) Estimated trade demand for the 

2007–2008 marketing year—875,000 

pounds. This figure is based on input 

from producers at five Scotch spearmint 

oil production area meetings held in 

September 2006, as well as estimates 

provided by handlers and other meeting 

participants at the October 4, 2006, 

meeting. The average estimated trade 

demand provided at the five production 

area meetings was 880,000 pounds, 

whereas the estimated handler trade 

demand ranged from 850,000 to 900,000 

pounds. The average of sales over the 

last five years was 754,269 pounds. 

(C) Salable quantity required from the 

2007–2008 marketing year production—

856,971 pounds. This figure is the 

difference between the estimated 2007–

2008 marketing year trade demand 

(875,000 pounds) and the estimated 

carry-in on June 1, 2007 (18,029 

pounds). 


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(D) Total estimated allotment base for 

the 2007–2008 marketing year—

1,970,370 pounds. This figure 

represents a one percent increase over 

the revised 2006–2007 total allotment 

base. This figure is generally revised 

each year on June 1 due to producer 

base being lost due to the bona fide 

effort production provisions of 

§ 985.53(e). The revision is usually 

minimal. 

(E) Computed allotment percentage—

43.5 percent. This percentage is 

computed by dividing the required 

salable quantity by the total estimated 

allotment base. 

(F) Recommended allotment 

percentage—45 percent. This 

recommendation is based on the 

Committee’s determination that the 

computed 43.5 percent would not 

adequately supply the potential 2007–

2008 market. 

(G) The Committee’s recommended 

salable quantity—886,667 pounds. This 

figure is the product of the 

recommended allotment percentage and 

the total estimated allotment base. 

(H) Estimated available supply for the 

2007–2008 marketing year—904,696 

pounds. This figure is the sum of the 

2007–2008 recommended salable 

quantity (886,667 pounds) and the 

estimated carry-in on June 1, 2007 

(18,029 pounds). 

(2) Class 3 (Native) Spearmint Oil 

(A) Estimated carry-in on June 1, 

2007—119,057 pounds. The 

Committee’s estimated carry-in reflects 

anticipated increases to the salable 

quantity and allotment percentage that 

may be needed to meet demand in 

2006–2007. 

(B) Estimated trade demand for the 

2007–2008 marketing year—1,141,667 

pounds. This figure is based on input 

from producers at the six Native 

spearmint oil production area meetings 

held in September 2006, as well as 

estimates provided by handlers and 

other meeting participants at the 

October 4, 2006, meeting. The average 

estimated trade demand provided at the 

six production area meetings was 

1,141,667 pounds, whereas the average 

handler estimate was 1,183,000 pounds. 

(C) Salable quantity required from the 

2007–2008 marketing year production—

1,022,610 pounds. This figure is the 

difference between the estimated 2007–

2008 marketing year trade demand 

(1,141,667 pounds) and the estimated 

carry-in on June 1, 2007 (119,057 

pounds). 

(D) Total estimated allotment base for 

the 2007–2008 marketing year—

2,213,200 pounds. This figure 

represents a one percent increase over 

the revised 2006–2007 total allotment 

base. This figure is generally revised 

each year on June 1 due to producer 

base being lost due to the bona fide 

effort production provisions of 

§ 985.53(e). The revision is usually 

minimal. 

(E) Computed allotment percentage—

46.2 percent. This percentage is 

computed by dividing the required 

salable quantity by the total estimated 

allotment base. 

(F) Recommended allotment 

percentage—48 percent. This is the 

Committee’s recommendation based on 

the computed allotment percentage, the 

average of the computed allotment 

percentage figures from the six 

production area meetings (46.4 percent), 

and input from producers and handlers 

at the October 4, 2006, meeting. 

(G) The Committee’s recommended 

salable quantity—1,062,336 pounds. 

This figure is the product of the 

recommended allotment percentage and 

the total estimated allotment base. 

(H) Estimated available supply for the 

2007–2008 marketing year—1,181,393 

pounds. This figure is the sum of the 

2007–2008 recommended salable 

quantity (1,062,336 pounds) and the 

estimated carry-in on June 1, 2007 

(119,057 pounds). 

The salable quantity is the total 

quantity of each class of spearmint oil, 

which handlers may purchase from, or 

handle on behalf of producers during a 

marketing year. Each producer is 

allotted a share of the salable quantity 

by applying the allotment percentage to 

the producer’s allotment base for the 

applicable class of spearmint oil. 

The Committee’s recommended 

Scotch and Native spearmint oil salable 

quantities and allotment percentages of 

886,667 pounds and 45 percent, and 

1,062,336 pounds and 48 percent, 

respectively, are based on the 

Committee’s goal of maintaining market 

stability by avoiding extreme 

fluctuations in supplies and prices, and 

the anticipated supply and trade 

demand during the 2007–2008 

marketing year. The proposed salable 

quantities are not expected to cause a 

shortage of spearmint oil supplies. Any 

unanticipated or additional market 

demand for spearmint oil, which may 

develop during the marketing year, can 

be satisfied by an increase in the salable 

quantities. Both Scotch and Native 

spearmint oil producers who produce 

more than their annual allotments 

during the 2007–2008 marketing year 

may transfer such excess spearmint oil 

to a producer with spearmint oil 

production less than his or her annual 

allotment or put it into the reserve pool 

until November 1, 2007. 

This proposed regulation, if adopted, 

would be similar to regulations issued 

in prior seasons. Costs to producers and 

handlers resulting from this rule are 

expected to be offset by the benefits 

derived from a stable market and 

improved returns. In conjunction with 

the issuance of this proposed rule, 

USDA has reviewed the Committee’s 

marketing policy statement for the 

2007–2008 marketing year. The 

Committee’s marketing policy 

statement, a requirement whenever the 

Committee recommends volume 

regulations, fully meets the intent of 

§ 985.50 of the order. During its 

discussion of potential 2007–2008 

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) 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. 

Conformity with the USDA’s 

‘‘Guidelines for Fruit, Vegetable, and 

Specialty Crop Marketing Orders’’ has 

also been reviewed and confirmed. 

The establishment of these salable 

quantities and allotment percentages 

would allow for anticipated market 

needs. In determining anticipated 

market needs, consideration by the 

Committee was given to historical sales, 

as well as changes and trends in 

production and demand. This rule also 

provides producers with information on 

the amount of spearmint oil that should 

be produced for the 2007–2008 season 

in order to meet anticipated market 

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 rule on small entities. Accordingly, 

AMS has prepared this initial regulatory 

flexibility analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

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 


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2642 Federal Register / Vol. 71, No. 13 / Monday, January 22, 2007 / Proposed Rules 

through group action of essentially 

small entities acting on their own 

behalf. Thus, both statutes have small 

entity orientation and compatibility. 

There are eight spearmint oil handlers 

subject to regulation under the order, 

and approximately 58 producers of 

Scotch spearmint oil and approximately 

90 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 $6,500,000, 

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 2 of the 8 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 58 Scotch spearmint oil 

producers and 21 of the 90 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 from market 

fluctuations. Such small producers 

generally need to market their entire 

annual allotment 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, 

the volume control feature of this order 

has small entity orientation. 

This proposed rule would establish 

the quantity of spearmint oil produced 

in the Far West, by class, that handlers 

may purchase from, or handle for, 

producers during the 2007–2008 

marketing year. The Committee 

recommended this rule to help maintain 

stability in the spearmint oil market by 

avoiding extreme fluctuations in 

supplies and prices. Establishing 

quantities to be purchased or handled 

during the marketing year through 

volume regulations allows producers to 

plan their spearmint planting and 

harvesting to meet expected market 

needs. The provisions of §§ 985.50, 

985.51, and 985.52 of the order 

authorize this rule. 

Instability in the spearmint oil subsector of the mint industry is much 

more likely to originate on the supply 

side than the demand side. Fluctuations 

in yield and acreage planted from 

season-to-season tend to be larger than 

fluctuations in the amount purchased by 

buyers. Demand for spearmint oil tends 

to be relatively stable from year-to-year. 

The demand for spearmint oil is 

expected to grow slowly for the 

foreseeable future because the demand 

for consumer products that use 

spearmint oil will likely expand slowly, 

in line with population growth. 

Demand for spearmint oil at the farm 

level is derived from retail demand for 

spearmint-flavored products such as 

chewing gum, toothpaste, and 

mouthwash. The manufacturers of these 

products are by far the largest users of 

mint oil. However, spearmint flavoring 

is generally a very minor component of 

the products in which it is used, so 

changes in the raw product price have 

no impact on retail prices for those 

goods. 

Spearmint oil production tends to be 

cyclical. Years of large production, with 

demand remaining reasonably stable, 

have led to periods in which large 

producer stocks of unsold spearmint oil 

have depressed producer prices for a 

number of years. Shortages and high 

prices may follow in subsequent years, 

as producers respond to price signals by 

cutting back production. 

The significant variability is 

illustrated by the fact that the coefficient 

of variation (a standard measure of 

variability; ‘‘CV’’) of Far West spearmint 

oil production from 1980 through 2003 

was about 0.24. The CV for spearmint 

oil grower prices was about 0.14, well 

below the CV for production. This 

provides an indication of the price 

stabilizing impact of the marketing 

order. 

Production in the shortest marketing 

year was about 49 percent of the 26-year 

average (1.842 million pounds from 

1980 through 2005) and the largest crop 

was approximately 167 percent of the 

26-year average. A key consequence is 

that in years of oversupply and low 

prices the season average producer price 

of spearmint oil is below the average 

cost of production (as measured by the 

Washington State University 

Cooperative Extension Service.) 

The wide fluctuations in supply and 

prices that result from this cycle, which 

was even more pronounced before the 

creation of the marketing order, can 

create liquidity problems for some 

producers. The marketing order was 

designed to reduce the price impacts of 

the cyclical swings in production. 

However, producers have been less able 

to weather these cycles in recent years 

because of the decline in prices of many 

of the alternative crops they grow. As 

noted earlier, almost all spearmint oil 

producers diversify by growing other 

crops. 

In an effort to stabilize prices, the 

spearmint oil industry uses the volume 

control mechanisms authorized under 

the order. This authority allows the 

Committee to recommend a salable 

quantity and allotment percentage for 

each class of oil for the upcoming 

marketing year. The salable quantity for 

each class of oil is the total volume of 

oil that producers may sell during the 

marketing year. The allotment 

percentage for each class of spearmint 

oil is derived by dividing the salable 

quantity by the total allotment base. 

Each producer is then issued an 

annual allotment certificate, in pounds, 

for the applicable class of oil, which is 

calculated by multiplying the 

producer’s allotment base by the 

applicable allotment percentage. This is 

the amount of oil for the applicable 

class that the producer can sell. 

By November 1 of each year, the 

Committee identifies any oil that 

individual producers have produced 

above the volume specified on their 

annual allotment certificates. This 

excess oil is placed in a reserve pool 

administered by the Committee. 


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There is a reserve pool for each class 

of oil that may not be sold during the 

current marketing year unless USDA 

approves a Committee recommendation 

to make a portion of the pool available. 

However, limited quantities of reserve 

oil are typically sold to fill deficiencies. 

A deficiency occurs when on-farm 

production is less than a producer’s 

allotment. In that case, a producer’s own 

reserve oil can be sold to fill that 

deficiency. Excess production (higher 

than the producer’s allotment) can be 

sold to fill other producers’ deficiencies. 

All of this needs to take place by 

November 1. 

In any given year, the total available 

supply of spearmint oil is composed of 

current production plus carry-over 

stocks from the previous crop. The 

Committee seeks to maintain market 

stability by balancing supply and 

demand, and to close the marketing year 

with an appropriate level of carryout. If 

the industry has production in excess of 

the salable quantity, then the reserve 

pool absorbs the surplus quantity of 

spearmint oil, which goes unsold during 

that year, unless the oil is needed for 

unanticipated sales. 

Under its provisions, the order may 

attempt to stabilize prices by (1) 

Limiting supply and establishing 

reserves in high production years, thus 

minimizing the price-depressing effect 

that excess producer stocks have on 

unsold spearmint oil, and (2) ensuring 

that stocks are available in short supply 

years when prices would otherwise 

increase dramatically. The reserve pool 

stocks grown in large production years 

are drawn down in short crop years. 

An econometric model was used to 

assess the impact that volume control 

has on the prices producers receive for 

their commodity. Without volume 

control, spearmint oil markets would 

likely be over-supplied, resulting in low 

producer prices and a large volume of 

oil stored and carried over to the next 

crop year. The model estimates how 

much lower producer prices would 

likely be in the absence of volume 

controls. 

The Committee estimated the trade 

demand for the 2007–2008 marketing 

year for both classes of oil at 2,016,667 

pounds, and that the expected 

combined carry-in will be 137,086 

pounds. This results in a combined 

salable quantity needed of 1,879,581 

pounds. Therefore, with volume control, 

sales by producers for the 2007–2008 

marketing year would be limited to 

1,949,003 pounds (the recommended 

salable quantity for both classes of 

spearmint oil). 

The recommended salable 

percentages, upon which 2007–2008 

producer allotments are based, are 45 

percent for Scotch and 48 percent for 

Native. Without volume controls, 

producers would not be limited to these 

allotment levels, and could produce and 

sell additional spearmint. The 

econometric model estimated a $1.40 

decline in the season average producer 

price per pound (from both classes of 

spearmint oil) resulting from the higher 

quantities that would be produced and 

marketed without volume control. The 

Far West producer price for both classes 

of spearmint oil was $10.20 for 2005, 

which is below the average of $10.83 for 

the period of 1980 through 2005, based 

on National Agricultural Statistics 

Service data. The surplus situation for 

the spearmint oil market that would 

exist without volume controls in 2007–

2008 also would likely dampen 

prospects for improved producer prices 

in future years because of the buildup 

in stocks. 

The use of volume controls allows the 

industry to fully supply spearmint oil 

markets while avoiding the negative 

consequences of over-supplying these 

markets. The use of volume controls 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 discussed and 

rejected the idea of recommending that 

there not be any volume regulation for 

both classes of spearmint oil because of 

the severe price-depressing effects that 

would occur without volume control. 

The Committee considered various 

alternative levels of volume control for 

Scotch spearmint oil, including 

increasing the percentage to a less 

restrictive level, or decreasing the 

percentage. After considerable 

discussion the Committee unanimously 

determined that 886,667 pounds and 45 

percent would be the most effective 

salable quantity and allotment 

percentage, respectively, for the 2007–

2008 marketing year. 

The Committee also considered 

various alternative levels of volume 

control for Native spearmint oil. After 

considerable discussion the Committee 

unanimously determined that 1,062,336 

pounds and 48 percent would be the 

most effective salable quantity and 

allotment percentage, respectively, for 

the 2007–2008 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 quantity and 

allotment percentage levels 

recommended would achieve the 

objectives sought. 

Without any regulations in effect, the 

Committee believes the industry would 

return to the pronounced cyclical price 

patterns that occurred prior to the order, 

and that prices in 2007–2008 would 

decline substantially below current 

levels. 

As stated earlier, the Committee 

believes that the order has contributed 

extensively to the stabilization of 

producer prices, which prior to 1980 

experienced wide fluctuations from 

year-to-year. National Agricultural 

Statistics Service records show that the 

average price paid for both classes of 

spearmint oil ranged from $4.00 per 

pound to $11.10 per pound during the 

period between 1968 and 1980. Prices 

have been consistently more stable since 

the marketing order’s inception in 1980, 

with an average price for the period 

from 1980 to 2005 of $12.72 per pound 

for Scotch spearmint oil and $9.84 per 

pound for Native spearmint oil. 

During the period of 1998 through 

2005, however, large production and 

carry-in inventories have contributed to 

prices below the 26-year average, 

despite the Committee’s efforts to 

balance available supplies with 

demand. Prices have ranged from $8.00 

to $11.00 per pound for Scotch 

spearmint oil and between $9.10 and 

$10.00 per pound for Native spearmint 

oil. The 2005 Native price exceeded the 

26-year average by $0.16. Producers 

stated, however, that fuel cost increases 

more than offset the price increase. 

According to the Committee, the 

recommended salable quantities and 

allotment percentages are expected to 

achieve the goals of market and price 

stability. 

As previously stated, annual salable 

quantities and allotment percentages 

have been issued for both classes of 

spearmint oil since the order’s 

inception. Reporting and recordkeeping 


rmajette on PROD1PC67 with PROPOSALS
2644 Federal Register / Vol. 71, No. 13 / Monday, January 22, 2007 / Proposed Rules 

requirements have remained the same 

for each year of regulation. These 

requirements have been approved by the 

Office of Management and Budget under 

OMB Control No. 0581–0065. 

Accordingly, this rule would not impose 

any additional reporting or 

recordkeeping requirements on either 

small or large spearmint oil producers 

and 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. 

The 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. 

USDA has not identified any relevant 

Federal rules that duplicate, overlap, or 

conflict with this rule. 

In addition, the Committee’s meeting 

was widely publicized throughout the 

spearmint oil industry and all interested 

persons were invited to attend the 

meeting and participate in Committee 

deliberations on all issues. Like all 

Committee meetings, the October 4, 

2006, meeting was a public meeting and 

all entities, both large and small, were 

able to express 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/ 

fv/moab.html. Any questions about the 

compliance guide should be sent to Jay 

Guerber at the previously mentioned 

address in the FOR FURTHER INFORMATION

CONTACT section. 

A 30-day comment period is provided 

to allow interested persons the 

opportunity to respond to this proposal. 

This comment period is deemed 

appropriate so that a final determination 

can be made prior to June 1, 2007, the 

beginning of the 2007–2008 marketing 

year. All written comments timely 

received will be considered before a 

final determination is made on this 

matter. 

List of Subjects in 7 CFR Part 985 

Marketing agreements, Oils and fats, 

Reporting and recordkeeping 

requirements, Spearmint oil. 

For the reasons set forth in the 

preamble, 7 CFR Part 985 is proposed to 

be amended as follows: 

PART 985—MARKETING ORDER 

REGULATING THE HANDLING OF 

SPEARMINT OIL PRODUCED IN THE 

FAR WEST 

1. The authority citation for 7 CFR 

part 985 continues to read as follows: 

Authority: 7 U.S.C. 601–674. 

2. A new § 985.226 is added to read 

as follows: 

[Note: This section will not appear in the 

Code of Federal Regulations.] 

§ 985.226 Salable quantities and allotment 

percentages—2007–2008 marketing year. 

The salable quantity and allotment 

percentage for each class of spearmint 

oil during the marketing year beginning 

on June 1, 2007, shall be as follows: 

(a) Class 1 (Scotch) oil—a salable 

quantity of 886,667 pounds and an 

allotment percentage of 45 percent. 

(b) Class 3 (Native) oil—a salable 

quantity of 1,062,336 pounds and an 

allotment percentage of 48 percent. 

Dated: January 16, 2007. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E7–764 Filed 1–19–07; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 239 and 252 

RIN 0750–AF52 

Defense Federal Acquisition 

Regulation Supplement; Information 

Assurance Contractor Training and 

Certification (DFARS Case 2006–D023) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

address training requirements that apply 

to contractor personnel who perform 

information assurance functions for 

DoD. The rule provides that contractor 

personnel accessing information 

systems must meet applicable training 

and certification requirements. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before 

March 23, 2007, to be considered in the 

formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2006–D023, 

using any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: dfars@osd.mil. Include 

DFARS Case 2006–D023 in the subject 

line of the message. 

• Fax: (703) 602–0350. 

• Mail: Defense Acquisition 

Regulations System, Attn: Ms. Felisha 

Hitt, OUSD(AT&L)DPAP(DARS), IMD 

3C132, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

• Hand Delivery/Courier: Defense 

Acquisition Regulations System, Crystal 

Square 4, Suite 200A, 241 18th Street, 

Arlington, VA 22202–3402. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Felisha Hitt, (703) 602–0310. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This proposed rule implements 

requirements of the Federal Information 

Security Management Act of 2002 (44 

U.S.C. 3541); DoD Directive 8570.1, 

Information Assurance Training, 

Certification, and Workforce 

Management; and DoD Manual 8570.01–

M, Information Assurance Workforce 

Improvement Program. The rule 

contains a clause for use in contracts 

involving contractor performance of 

information assurance functions. The 

clause requires the contractor to ensure 

that personnel accessing information 

systems are properly trained and 

certified. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

DoD has prepared an initial regulatory 

flexibility analysis consistent with 5 

U.S.C. 603. The analysis is summarized 

as follows: 

DoD is proposing amendments to the 

DFARS to implement DoD Directive 

8570.1, Information Assurance Training, 

Certification, and Workforce 

Management, and DoD Manual 8570.01–

M, Information Assurance Workforce 

Improvement Program, with regard to 

DoD contractor personnel. The DoD 

directive and manual are based on the 

provisions of the Federal Information 

Security Management Act of 2002, 

which requires proper training and 

oversight of personnel with information 

security responsibilities. The objective 


rmajette on PROD1PC67 with PROPOSALS