[Federal Register Volume 63, Number 82 (Wednesday, April 29, 1998)]
[Rules and Regulations]
[Pages 23371-23374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11446]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 63, No. 82 / Wednesday, April 29, 1998 / 
Rules and Regulations

[[Page 23371]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[FV98-985-2 IFR]


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 1997-98 Marketing 
Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This 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 1997-98 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 April 30, 1998, through May 31, 1998; comments 
received by May 19, 1998, will be considered prior to issuance of a 
final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, Fruit 
and Vegetable Programs, AMS, USDA, room 2525, South Building, P.O. Box 
96456, Washington, DC 20090-6456; Fax: (202) 205-6632. 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 Programs, AMS, USDA, 1220 SW Third Avenue, room 369, 
Portland, Oregon 97204-2807; telephone: (503) 326-2724; Fax: (503) 326-
7440; or Anne M. Dec, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, room 2525, South Building, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491; Fax: (202) 
205-6632. Small businesses may request information on compliance with 
this regulation by contacting: Jay Guerber, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525, South Building, P.O. Box 96456, Washington, DC 20090-6456; 
telephone (202) 720-2491; Fax: (202) 205-6632.

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 1997-98 marketing year, which ends on May 31, 1998. 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 1997-98 
marketing year, which ends on May 31, 1998. This rule increases the 
salable quantity from 1,125,351 pounds to 1,185,550 pounds and the 
allotment percentage from 56 percent to 59 percent for Native spearmint 
oil for the 1997-98 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.

[[Page 23372]]

    The initial salable quantity and allotment percentages for Scotch 
and Native spearmint oils for the 1997-98 marketing year were 
recommended by the Committee at its October 2, 1996, meeting. The 
Committee recommended salable quantities of 996,522 pounds and 
1,125,351 pounds, and allotment percentages of 55 percent and 56 
percent, respectively, for Scotch and Native spearmint oils. A proposed 
rule was published in the January 7, 1997, issue of the Federal 
Register (62 FR 942). A final rule establishing the salable quantities 
and allotment percentages for Scotch and Native spearmint oils for the 
1997-98 marketing year was published in the July 9, 1997, issue of the 
Federal Register (62 FR 36646).
    Pursuant to authority contained in Secs. 985.50, 985.51, and 985.52 
of the order, at its February 25, 1998, meeting, the Committee 
unanimously recommended that the allotment percentage for Native 
spearmint oil for the 1997-98 marketing year be increased by 3 percent 
from 56 percent to 59 percent. Taking into consideration the following 
discussion on adjustments to the Native spearmint oil salable quantity, 
the 1997-98 marketing year salable quantity of 1,125,351 pounds will 
therefore be increased to 1,185,550 pounds.
    The original total industry allotment base for Native spearmint oil 
for the 1997-98 marketing year was established at 2,009,556 pounds and 
was revised during the year to 2,006,630 pounds to reflect loss of 
2,926 pounds of base due to non-production of some producers' total 
annual allotments. When the revised total allotment base of 2,006,630 
pounds is applied to the originally established allotment percentage of 
56, the 1997-98 marketing year salable quantity of 1,125,351 pounds is 
effectively modified to 1,123,713 pounds.
    Further, Sec. 985.56(a) of the order authorizes producers who have 
produced more than their salable quantity of spearmint oil during a 
marketing year to transfer such excess to producers who have produced 
less than their salable quantity for the same marketing year. If all 
producers having such an excess transfer their excess oil to producers 
having a deficiency, all of the annual allotment is utilized. If, on 
the other hand, this option is not utilized to its full extent, some 
annual allotment is essentially lost and the effective salable quantity 
for that year is reduced by the amount of excess oil that was not 
transferred to fill deficiencies. During the 1997-98 marketing year, 
producers who were deficient by 3,957 pounds of Native spearmint oil 
chose not to have this deficiency filled by producers having excess 
oil. This also effectively reduced the already modified 1997-98 salable 
quantity by 3,957 pounds leaving a net quantity of 1,119,756 pounds.
    By increasing the salable quantity and allotment percentage, this 
rule makes an additional amount of Native spearmint oil available by 
releasing such oil from the reserve pool. When applied to each 
individual producer, the 3 percent allotment percentage increase allows 
each producer to take up to 3 percent of their allotment base from 
their Native spearmint oil reserve. If a producer does not have any 
reserve pool oil, or has less than 3 percent of their allotment base in 
the reserve pool, the increase in allotment percentage will actually 
make less than such amount available to the market. Currently, 
producers receiving 6,201 pounds of additional allotment through this 
increase do not have any Native spearmint oil in reserve. Thus, rather 
than 60,199 additional pounds, this action effectively makes an 
additional 53,998 pounds of Native spearmint oil available to the 
market.
    The following table summarizes the Committee recommendation:
Native Spearmint Oil Recommendation
    (a) Estimated 1997-98 Allotment Base--2,009,556 pounds. This is the 
estimate that the 1997-98 Native spearmint oil salable quantity and 
allotment percentage was based on.
    (b) Revised 1997-98 Allotment Base--2,006,630 pounds. This is 2,926 
pounds less than the estimated allotment base. This base was lost 
because some producers failed to produce all of their previous year's 
allotment.
    (c) Initial 1997-98 Allotment Percentage--56 percent.
    (d) Initial 1997-98 Salable Quantity--1,125,351 pounds. This figure 
is 56 percent of 2,009,556 pounds.
    (e) Initial Adjustment to the 1997-98 Salable Quantity--1,123,713 
pounds. This figure reflects the salable quantity initially available 
after the beginning of the 1997-98 marketing year due to the 2,296 
pound reduction in the industry allotment base to 2,006,630 pounds.
    (f) Final Adjustment to the 1997-98 Salable Quantity--1,119,756 
pounds. This figure reflects the salable quantity actually available 
during the 1997-98 marketing year after the 3,957 pound deficiency was 
subtracted from the initially adjusted salable quantity of 1,123,713 
pounds.
    (g) Increase in Allotment Percentage--3 percent. This percentage 
increase was recommended by the Committee at its February 25, 1998, 
meeting.
    (h) Revised 1997-98 Allotment Percentage--59 percent. This figure 
is derived by adding the 3 percent increase to the initial 1997-98 
allotment percentage of 56 percent.
    (i) Calculated Revised 1997-98 Salable Quantity--1,185,638 pounds. 
This figure is 59 percent of the estimated 1997-98 allotment base of 
2,009,556 pounds.
    (j) Computed Increase in the 1997-98 Salable Quantity--60,287 
pounds. This is the product of the estimated 1997-98 allotment base of 
2,009,556 and the revised 1997-98 allotment percentage of 59 percent.
    (k) Effective Increase in the 1997-98 Salable Quantity--53,998 
pounds. This figure represents the amount of Native spearmint oil 
actually being made available by this action based on the adjustments 
described herein.
    In making this latest recommendation, the Committee considered all 
available information on supply and demand. The 1997-98 marketing year 
began on June 1, 1997. 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, 1998. Without the 
increase, the Committee believes the industry would not be able to meet 
market needs. As of February 25, 1998, approximately 89,000 pounds of 
Native spearmint oil was available for market. Average demand for 
Native spearmint oil from March 1 to May 31 over the past 17 years has 
been 108,029 pounds. Therefore, based on past history the industry may 
not be able to meet market demand without this increase. When the 
Committee made its initial recommendation for the establishment of the 
Native spearmint oil salable quantity and allotment percentage for the 
1997-98 marketing year, it had anticipated that the year would end with 
an ample available supply. This action has the effect of adding 53,998 
pounds of Native spearmint oil to the amount available for market, 
bringing the total available supply for the period February 25 through 
May 31, 1998, up to approximately 144,000 pounds.
    The Department, based on its analysis of available information, has 
determined that the 1997-98 salable quantity and allotment percentage 
for Native spearmint oil for the 1997-98 marketing year should be 
increased to 1,185,638 and 59 percent, respectively.
    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 Committee's revised marketing 
policy statement for the 1997-98 marketing

[[Page 23373]]

year has been reviewed by the Department. The Committee's marketing 
policy statement, a requirement whenever the Committee recommends 
implementing volume regulations or recommends revisions to existing 
volume regulations, fully meets the intent of section 985.50 of the 
order. During its discussion of revising the 1997-98 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 the Department'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.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the AMS has considered the economic impact of this action on 
small entities. Accordingly, the 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 9 spearmint oil handlers subject to regulation under the 
marketing order and approximately 200 producers of spearmint oil in the 
regulated production area. Of the 200 producers, approximately 125 
producers hold Class 1 (Scotch) spearmint oil allotment base, and 
approximately 110 producers hold Class 3 (Native) spearmint oil 
allotment base. Small agricultural service firms are defined by the 
Small Business Administration (SBA) (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.
    Based on the SBA's definition of small entities, the Committee 
estimates that two of the nine handlers regulated by the order would 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 
29 of the 124 Scotch spearmint oil producers and 14 of the 110 Native 
spearmint oil producers would 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. Crop rotation is an essential cultural 
practice in the production of spearmint oil for weed, insect, and 
disease control. A normal spearmint oil 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 oil 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 oil production, most 
spearmint oil producing farms would fall into the category of large 
businesses.
    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 increasing 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 spearmint 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 February 25, 1998, approximately 88,000 pounds 
of Native spearmint oil were available for market. Average demand for 
Native spearmint oil from March 1 to May 31 over the past 17 years has 
been 108,029 pounds. Therefore, based on past history the industry may 
not be able 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 
1997-98 marketing year, it had anticipated that the year would end with 
an ample available supply. This revision has the effect of adding 
53,998 pounds of Native spearmint oil to the amount available for 
market, bringing the total available supply for the period February 25 
through May 31, 1998, up to 144,158 pounds.
    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 duplicative 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

[[Page 23374]]

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 1997-98 marketing year, the 
Committee's recommendation and other available information, it is found 
that to revise section 985.216 (62 FR 36650) 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.
    This rule invites comments on a revision to the salable quantity 
and allotment percentage for Native spearmint oil. A 20-day comment 
period is provided. This comment period is appropriate because the 
marketing year ends on May 31, 1998. Any comments received will be 
considered prior to finalization of this rule.
    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, 
1998; (2) the quantity of Native spearmint planted for the 1998-99 
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 20-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

    1. The authority citation for 7 CFR Part 985 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Section 985.216 is amended by revising paragraph (b) to read as 
follows:

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


Sec. 985.216  Salable quantities and allotment percentages--1997-98 
marketing year.

* * * * *
    (b) Class 3 (Native) oil--a salable quantity of 1,185,550 pounds 
and an allotment percentage of 59 percent.

    Dated: April 24, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-11446 Filed 4-28-98; 8:45 am]
BILLING CODE 3410-02-P