[Federal Register Volume 62, Number 6 (Thursday, January 9, 1997)]
[Rules and Regulations]
[Pages 1246-1249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-450]


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


DEPARTMENT OF AGRICULTURE
7 CFR Part 985

[FV96-985-3 IFR]


Spearmint Oil Produced in the Far West; Revision of the Salable 
Quantity and Allotment Percentage for Class 3 (Native) Spearmint Oil 
for the 1996-97 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This interim final rule increases the quantity of Class 3 
(Native) spearmint oil produced in the Far West that handlers may 
purchase from, or handle for, producers during the 1996-97 marketing 
year. This rule was recommended by the Spearmint Oil Administrative 
Committee (Committee), the agency responsible for local administration 
of the marketing order for spearmint oil produced in the Far West. The 
Committee recommended this rule to avoid extreme fluctuations in 
supplies and prices and thus help to maintain stability in the Far West 
spearmint oil market.

DATES: Effective on January 9, 1997 through May 31, 1997; comments 
received by February 10, 1997 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 in triplicate to the Docket 
Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525, South 
Building, P.O. Box 96456, Washington, DC 20090-6456; Fax: (202) 720-
5698. All comments should reference the docket 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.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369, 
Portland, Oregon 97204-2807; telephone: (503) 326-2043; Fax: (503) 326-
7440; or Caroline C. Thorpe, Marketing Order Administration Branch, 
Fruit and Vegetable Division, AMS, USDA, room 2525, South Building, 
P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 720-8139; 
Fax: (202) 720-5698. Small businesses may request information on 
compliance with this regulation by contacting: Jay Guerber, Marketing 
Order Administration Branch, Fruit and Vegetable Division, AMS, USDA, 
P.O. Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 
720-2491; Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 985 (7 CFR part 985), 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 (Department) 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 may be purchased from or handled for producers by handlers during 
the 1996-97 marketing year, which ends on May 31, 1997. 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 the Secretary 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 the Secretary 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 the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.
    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. The U.S. production of spearmint oil 
is concentrated in the Far West, primarily Washington, Idaho, and 
Oregon (part of the area covered by the order). Spearmint oil is also 
produced in the Midwest. The production area covered by the order 
normally accounts for approximately 75 percent of the annual U.S. 
production of spearmint oil.
    This rule increases the quantity of Native spearmint oil that 
handlers may purchase from, or handle for, producers during the 1996-97 
marketing year, which ends on May 31, 1997. This rule increases the 
salable quantity from 1,074,902 pounds to 1,213,692 pounds and the 
allotment percentage from 54 percent to 61 percent for Native spearmint 
oil for the 1996-97 marketing year.
    The salable quantity is the total quantity of each class of oil 
that handlers may purchase from, or handle for, producers during a 
marketing year. The salable quantity calculated by the Committee is 
based on the estimated trade demand. 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 initial salable quantity and allotment percentages for Scotch 
and Native spearmint oils for the 1996-97 marketing year were 
recommended by the Committee at its September 26, 1995, meeting. The 
Committee recommended salable quantities of 989,303 pounds and 
1,074,902 pounds, and allotment percentages of 55 percent and 54 
percent, respectively, for Scotch and Native spearmint oils. A proposed 
rule was published in the January 24, 1996, issue of the Federal 
Register (61

[[Page 1247]]

FR 1855). Comments on the proposed rule were solicited from interested 
persons until February 23, 1996. No comments were received. 
Accordingly, based upon analysis of available information, a final rule 
establishing the salable quantities and allotment percentages for 
Scotch and Native spearmint oils for the 1996-97 marketing year was 
published in the March 20, 1996, issue of the Federal Register (61 FR 
11291).
    Pursuant to authority contained in sections 985.50, 985.51, and 
985.52 of the order, at its November 14, 1996, meeting, the Committee 
unanimously recommended that the allotment percentage for Native 
spearmint oil for the 1996-97 marketing year be increased by 7 percent 
from 54 percent to 61 percent. The 1996-97 marketing year salable 
quantity of 1,074,902 pounds will therefore be increased to 1,213,692 
pounds.
    However, some Native spearmint oil producers did not produce all of 
their individual salable quantities for the 1996-97 marketing year, or 
fill their deficiencies from the prior year's production. The marketing 
order authorizes such producers to have their deficiencies filled by 
other producers who have production in excess of their salable 
quantities. This is optional for producers, but must be done before 
November 1 of each marketing year.
    The original total industry allotment base for Native spearmint oil 
for 1996-97 was established at 1,990,559 pounds and was revised to 
1,989,659 pounds to reflect loss of base due to non-production of 
producer's total annual allotments. This adjustment resulted in a 900 
pound loss of total industry base, which is reflected in the 
calculations for the revised salable quantity.
    This interim final rule makes an additional amount of Native 
spearmint oil available by increasing the salable quantity which 
releases oil from the reserve pool. Only producers with Native 
spearmint oil in the reserve pool will be able to use this increase in 
the salable quantity. Prior to November 1, 1996, producers without 
reserve pool oil or producers with an insufficient supply of reserve 
oil could have deficiencies in meeting their salable quantities filled 
by producers having excess Native spearmint oil. If all producers could 
use their salable quantity, this 7 percent increase in the allotment 
percentage would have made an additional 135,276 pounds of Native 
spearmint oil available (1,989,659  x  7 percent). However, Native 
spearmint oil producers having 25,546 pounds of Native spearmint oil 
will not be able to use their reserve pool deficiencies this marketing 
year. Deficiencies usually exist because of unplanned problems that may 
reduce spearmint production. Thus, rather than 135,276 additional 
pounds being made available, this action makes 113,730 additional 
pounds of Native spearmint oil available to the market.
    The following table summarizes the Committee recommendation:

                   Native Spearmint Oil Recommendation                  
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
(a) Actual Carry In on June 1,     45,632 pounds.                       
 1996.                                                                  
(b) 1995-96 Salable Quantity.....  1,074,902 pounds.                    
(c) 1995-96 Available Supply.....  1,120,534 pounds (a + b).            
(d) Total Sales as of November     1,036,058 pounds.                    
 14, 1996.                                                              
(e) Calculated Available Supply    84,476 pounds ((c-d).                
 as of November 14, 1996.                                               
(f) Reserve Deficiency Affecting   25,546 pounds.                       
 Salable Quantity.                                                      
(g) Revised Total Allotment Base.  1,989,659 pounds.                    
(h) Recommended Allotment          61 percent.                          
 Percentage as of November 14,                                          
 1996.                                                                  
(i) Calculated Revised Salable     1,213,692 pounds (g x h).            
 Quantity.                                                              
(j) Actual Oil Available as        1,188,146 pounds (i-f).              
 Salable Quantity.                                                      
------------------------------------------------------------------------

    In making this latest recommendation, the Committee considered all 
available information on supply and demand. The 1996-97 marketing year 
began on June 1, 1996. Handlers have indicated that with this action, 
the available supply of both Scotch and Native spearmint oils appears 
adequate to meet anticipated demand through May 31, 1997. Without the 
increase, the Committee believes the industry would not be able to meet 
market needs. As of November 14, 1996, 84,476 pounds of Native 
spearmint oil was available for market. Demand for Native spearmint oil 
from December 1 to May 31 over the past five years has ranged from a 
high of 245,661 pounds in 1991-92 to a low of 92,658 pounds in 1992-93. 
The five year average is 157,531 pounds. Therefore, based on past 
history the industry would be unlikely to meet market demand without 
this change. When the Committee made its initial recommendation for the 
establishment of the Native spearmint oil salable quantity and 
allotment percentage for the 1996-97 marketing year, it had anticipated 
that the year would end with an ample available supply. This revision 
adds 113,730 pounds of Native spearmint oil to the amount available for 
market during the remainder of the 1996-97 marketing year.
    The Department, based on its analysis of available information, has 
determined that an allotment percentage of 61 percent should be 
established for Native spearmint oil for the 1996-97 marketing year. 
This percentage will provide an increased salable quantity of 1,213,692 
and a new allotment percentage from 54 percent to 61 percent for Native 
spearmint oil for the 1996-97 marketing year.
    This rule relaxes the regulation of Native spearmint oil and will 
allow growers to meet market needs and improved returns. In conjunction 
with the issuance of this rule, the Department has reviewed the 
Committee's revised marketing policy statement for the 1996-97 
marketing year. The Committee's marketing policy statement has been 
reviewed under the provisions as set forth in 7 CFR Sec. 985.50 and 
with other USDA guidelines.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), 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 rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are 8 spearmint oil handlers subject to regulation under the 
marketing order and approximately 250 producers of spearmint oil in the 
regulated production area. Of the 250 producers, approximately 135 
producers hold Class 1 (Scotch) oil allotment base, and approximately 
115 producers hold

[[Page 1248]]

Class 3 (Native) oil allotment base. Small agricultural service firms 
are defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers have been defined as those whose annual receipts 
are less than $500,000.
    This interim final rule increases the quantity of Native spearmint 
oil produced in the Far West that handlers may purchase from, or handle 
for, producers during the 1996-97 marketing year. This rule was 
recommended by the Committee, the agency responsible for local 
administration of the marketing order for spearmint oil produced in the 
Far West. Pursuant to authority contained in sections 985.50, 985.51, 
and 985.52 of the order, at its November 14, 1996, meeting, the 
Committee unanimously recommended that the allotment percentage for 
Native spearmint oil for the 1996-97 marketing year be increased by 7 
percent from 54 percent to 61 percent. The 1996-97 marketing year 
salable quantity of 1,074,902 pounds will therefore be increased to 
1,213,692 pounds. The Committee recommended this rule to avoid extreme 
fluctuations in supplies and prices and thus help to maintain stability 
in the Far West spearmint oil market.
    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. Crop rotation is an essential cultural 
practice in the production of spearmint for weed, insect, and disease 
control. A normal spearmint producing operation would have enough 
acreage for rotation such that the total acreage required to produce 
the crop would be about one-third spearmint and two-thirds rotational 
crops. An average spearmint producing farm would thus have to have 
considerably more acreage than would be planted to spearmint during any 
given season. To remain economically viable with the added costs 
associated with spearmint production, most spearmint producing farms 
would fall into the category of large businesses.
    Based on the Small Business Administration's definition of small 
entities, the Committee estimates that none of the eight handlers 
regulated by the order would be considered small entities as all are 
national and multinational corporations involved in the buying and 
selling of essential oils and the products of such essential oils. The 
Committee also estimates that 20 of the 135 Scotch spearmint oil 
producers and 10 of the 115 Native spearmint oil producers would be 
classified as small entities. This is based on production information 
gathered from assessments. Thus, a majority of handlers and producers 
of Far West spearmint oil may not be classified as small entities.
    Small spearmint oil producers represent a minority of farming 
operations and are more vulnerable to market fluctuations. Such small 
farmers generally need to market their entire annual crop and do not 
have the resources 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 of stronger 
incomes from alternate crops which could support the operation for a 
period of time. Despite the advantage of larger producers, increasing 
the Native salable quantity and allotment percentage will help both 
large and small producers by improving returns. In addition, this 
change may potentially benefit the small producer more than large 
producers. This is because the change ensures that small producers are 
more likely to maintain a profitable cash flow and meet annual 
expenses.
    Alternatives to this rule included not to increase the available 
supply of Native spearmint oil, which could potentially hurt small 
producers. The Committee reached its recommendation to increase the 
salable quantity and allotment percentage for Native class oil after 
careful consideration of all available information, and believes that 
the level recommended will achieve the objectives sought. Without the 
increase, the Committee believes the industry would not be able to meet 
market needs. As of November 14, 1996, 84,476 pounds of Native 
spearmint oil was available for market. Demand for Native spearmint oil 
from December 1 to May 31 over the past five years has ranged from a 
high of 245,661 pounds in 1991-92 to a low of 92,658 pounds in 1992-93. 
The five year average is 157,531 pounds. Therefore, based on past 
history the industry would be unlikely to meet market demand without 
this change.
    Annual salable quantities and allotment percentages have been 
issued for both classes of spearmint oil since the order's inception. 
Reporting and recordkeeping requirements have remained the same for 
each year of regulation. Accordingly, this action will not impose any 
additional reporting or recordkeeping requirements on either small or 
large spearmint oil producers and handlers. All reports and forms 
associated with this program are reviewed periodically in order to 
avoid unnecessary and duplicitous information collection by industry 
and public sector agencies. The Department has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
rule.
    Finally, the Committee's meeting was widely publicized throughout 
the spearmint oil industry and all interested persons were invited to 
attend and participate on all issues. Interested persons are also 
invited to submit information on the regulatory and informational 
impacts of this action on small businesses.
    After consideration of all relevant matter presented, including 
that contained in the prior proposed and final rules in connection with 
the establishment of the salable quantities and allotment percentages 
for Scotch and Native spearmint oils for the 1996-97 marketing year, 
the Committee's recommendation and other available information, it is 
found that to revise section 985.215 (61 FR 11291) to change the 
salable quantity and allotment percentage for Native spearmint oil, 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 began on June 1, 
1996; (2) The quantity of Native spearmint planted for the 1997-98 
marketing year may be affected, thus handlers and producers should be 
apprised as soon as possible of the salable quantity and allotment 
percentage of Native spearmint oil contained in this interim final 
rule; (3) the Committee unanimously recommended this change at a public 
meeting and interested parties had an opportunity to provide input; and 
(4) This rule provides a 30-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:

[[Page 1249]]

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. Section 985.215 is amended by revising paragraph (b) to read as 
follows:

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


Sec. 985.215  Salable quantities and allotment percentages 1996-97 
marketing year.

* * * * *
    (b)Class 3 (Native) oil--a salable quantity of 1,213,692 pounds and 
an allotment percentage of 61 percent.

    Dated: January 3, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-450 Filed 1-8-97; 8:45 am]
BILLING CODE 3410-02-P