Federal Register / Vol. 74, No. 9 / Wednesday, January 14, 2009 / Proposed Rules 1971 

regulations provided in 7 CFR parts 11 

and 614. 

(b) Before a person may seek judicial 

review of any administrative action 

concerning eligibility for program 

participation under this part, the person 

must exhaust all administrative appeal 

procedures set forth in paragraph (a) of 

this section, and for purposes of judicial 

review, no decision shall be a final 

Agency action except a decision of the 

Chief under these procedures. 

(c) Any appraisals, market analysis, or 

supporting documentation that may be 

used by NRCS in determining property 

value are considered confidential 

information, and shall only be disclosed 

as determined at the sole discretion of 

NRCS in accordance with applicable 

law. 

(d) Enforcement actions undertaken 

by NRCS in furtherance of its federally 

held property rights are under the 

jurisdiction of the Federal District Court 

and are not subject to review under 

administrative appeal regulations. 

§ 625.20 Scheme and device. 

(a) If it is determined by NRCS that a 

person has employed a scheme or 

device to defeat the purposes of this 

part, any part of any program payment 

otherwise due or paid such person 

during the applicable period may be 

withheld or be required to be refunded 

with interest thereon, as determined 

appropriate by NRCS. 

(b) A scheme or device includes, but 

is not limited to, coercion, fraud, 

misrepresentation, depriving any other 

person of payments for 10-year cost 

share agreements, contracts, or 

easements for the purpose of obtaining 

a payment to which a person would 

otherwise not be entitled. 

(c) A person who succeeds to the 

responsibilities under this part shall 

report in writing to NRCS any interest 

of any kind in enrolled land that is held 

by a predecessor or any lender. A failure 

of full disclosure will be considered a 

scheme or device under this section. 

Arlen L. Lancaster, 

Vice President, Commodity Credit 

Corporation and Chief, Natural Resources 

Conservation Service. 

[FR Doc. E9–506 Filed 1–13–09; 8:45 am] 

BILLING CODE 3410–16–P 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 985 

[Docket Nos. AMS–FV–08–0104; FV09–985– 

1 PR] 

Marketing Order Regulating the 

Handling of Spearmint Oil Produced in 

the Far West; Salable Quantities and 

Allotment Percentages for the 2009– 

2010 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 2009–2010 marketing year, 

which begins on June 1, 2009. This rule 

invites comments on the establishment 

of salable quantities and allotment 

percentages for Class 1 (Scotch) 

spearmint oil of 842,171 pounds and 42 

percent, respectively, and for Class 3 

(Native) spearmint oil of 1,196,109 

pounds and 53 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 

March 16, 2009. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this proposal. Comments 

must be sent to the Docket Clerk, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 1400 Independence 

Avenue, SW., STOP 0237, Washington, 

DC 20250–0237; Fax: (202) 720–8938; or 

Internet: http://www.regulations.gov. All 

comments should reference the 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, or 

can be viewed at: http:// 

www.regulations.gov. All comments 

submitted in response to this rule will 

be included in the record and will be 

made available to the public. Please be 

advised that the identity of the 

individuals or entities submitting the 

comments will be made public on the 

Internet at the address provided above. 

FOR FURTHER INFORMATION CONTACT: 

Susan M. Coleman, Marketing Specialist 

or 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: 

Sue.Coleman@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 2009– 

2010 marketing year, which begins on 

June 1, 2009. 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 


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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 full 

eight-member Committee met on 

October 15, 2008, and recommended 

salable quantities and allotment 

percentages for both classes of oil for the 

2009–2010 marketing year. The 

Committee in a vote with six members 

in favor and two members opposed, 

recommended the establishment of a 

salable quantity and allotment 

percentage for Scotch spearmint oil of 

842,171 pounds and 42 percent, 

respectively. For Native spearmint oil, 

the Committee unanimously 

recommended the establishment of a 

salable quantity and allotment 

percentage of 1,196,109 pounds and 53 

percent, respectively. 

This rule would limit the amount of 

spearmint oil that handlers may 

purchase from, or handle for, producers 

during the 2009–2010 marketing year, 

which begins on June 1, 2009. 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. 

However, production in the Midwest 

states has gone from 200,000 pounds in 

2003, down to an estimated 25,000 

pounds in 2008. This has increased the 

percentage of annual U.S. sales of 

Scotch spearmint oil in the production 

area covered by the marketing order to 

approximately 85 percent. 

When the order became effective in 

1980, the Far West had 72 percent of the 

world’s sales of Scotch spearmint oil. 

While the Far West is still the leading 

producer of Scotch spearmint oil, its 

share of world sales is now estimated to 

be about 45 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 15, 2008, meeting, indicated 

that the 2008–2009 producer price for 

Scotch oil ranges from a low of $12.00 

per pound to a high of $14.00 per 

pound. Although there is currently 

some forward contracting being done 

within this same price range, producers 

are generally wary of locking in a price 

because of the significant increases in 

their cost of production. The $12.00 to 

$14.00 producer price is generally less 

than the cost of production for most 

producers as indicated in a study from 

the Washington State University 

Cooperative Extension Service (WSU). 

In 2001, this study estimated production 

costs to be between $13.50 and $15.00 

per pound. However, recent cost 

comparisons by the Committee indicate 

that the major costs of nitrogen, 

phosphate, sulfur, potash, herbicide, 

fuel, and rootstock have increased 

almost 120% since 2001. 

Low producer returns have 

contributed to an overall reduction in 

acreage planted to Scotch spearmint in 

recent years. When the order became 

effective in 1980, the Far West region 

had 9,702 acres of Scotch spearmint. 

The Committee estimates that 2008– 

2009 Scotch spearmint acreage is about 

7,435 acres. Based on this amount, the 

Committee estimates that Scotch 

spearmint oil production for the 2008– 

2009 marketing season will be about 

841,427 pounds. 

The Committee recommended the 

2009–2010 Scotch spearmint oil salable 

quantity of 842,171 pounds and 

allotment percentage of 42 percent 

utilizing sales estimates for 2009–2010 

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 

850,000 pounds of Scotch spearmint oil, 

on average, may be sold during the 

2009–2010 marketing year. When 

considered in conjunction with the 

estimated carry-in of 124,735 pounds of 

oil on June 1, 2009, the recommended 

salable quantity of 842,171 pounds 

results in a total available supply of 

Scotch spearmint oil next year of about 

966,906 pounds. 

The recommendation for the 2009– 

2010 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. 

Native spearmint oil producers are 

facing market conditions similar to 

those affecting the Scotch spearmint oil 

market. Over 90 percent of the U.S. 

production of Native spearmint is 

produced within the Far West 

production area. Very little pure Native 

spearmint oil is produced outside of 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 Committee, as well as 

spearmint oil producers and handlers 

attending the October 15, 2008, meeting, 

estimate that the 2008–2009 Native oil 

producer price ranges between $11.50 

per pound and $13.00 per pound. As 

with Scotch oil, there is some forward 

contracting of Native spearmint oil 

within this price range. The Committee 

is hopeful that this price range will be 

sufficient to stimulate additional 

increases in acreage in 2009, although 

the magnitude of the increases will 

likely be tempered by substantial 

increases in production costs and the 

availability of attractively priced 

alternative crops. The WSU study 

referenced earlier indicates that the cost 

of producing Native spearmint oil has 

ranged from $10.26 to $10.92 per 

pound. However, as stated earlier, this 

study was completed in 2001 and recent 

cost comparisons by the Committee 

indicate that the major costs of nitrogen, 

phosphate, sulfur, potash, herbicide, 

fuel, and rootstock have increased 

almost 120% since 2001. 

As with Scotch, however, the 

relatively 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 about 8,513 acres of Native 

spearmint were planted for the 2008– 

2009 season. Based on the reduced 

Native spearmint acreage, the 

Committee estimates that production for 

the 2008–2009 marketing season will be 

about 1,203,754 pounds. 

The Committee’s recommendation for 

the 2009–2010 Native spearmint oil 

salable quantity of 1,196,109 pounds 

and allotment percentage of 53 percent 

utilized sales estimates provided by 

several of the industry’s handlers, as 

well as historical and current Native 


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spearmint oil sales levels. The 

Committee is estimating that about 

1,250,000 pounds of Native spearmint 

oil may be sold during the 2009–2010 

marketing year (trade demand). When 

considered in conjunction with the 

estimated carry-in of 51,363 pounds of 

oil on June 1, 2009, the recommended 

salable quantity of 1,196,109 pounds 

results in a total 2009–2010 available 

supply of Native spearmint oil of about 

1,247,472 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 2007, have generally 

stabilized at an average price of $12.69 

per pound for Scotch spearmint oil and 

$9.97 per pound for Native spearmint 

oil. 

The Committee based its 

recommendation for the proposed 

salable quantity and allotment 

percentage for each class of spearmint 

oil for the 2009–2010 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, 

2009—124,735 pounds. This figure is 

the difference between the revised 

2008–2009 marketing year total 

available supply of 974,735 pounds and 

the estimated 2008–2009 marketing year 

trade demand of 850,000 pounds. 

(B) Estimated trade demand for the 

2009–2010 marketing year—850,000 

pounds. This figure is based on input 

from producers at six Scotch spearmint 

oil production area meetings held in late 

September and early October 2008, as 

well as estimates provided by handlers 

and other meeting participants at the 

October 15, 2008, meeting. The average 

estimated trade demand provided at the 

six production area meetings is 852,447 

pounds, whereas the estimated handler 

trade demand ranged from 800,000 to 

1,000,000 pounds. The average of sales 

over the last three years is 831,342 

pounds. 

(C) Salable quantity required in the 

2009–2010 marketing year production— 

725,265 pounds. This figure is the 

difference between the estimated 2009– 

2010 marketing year trade demand 

(850,000 pounds) and the estimated 

carry-in on June 1, 2009 (124,735 

pounds). 

(D) Total estimated allotment base for 

the 2009–2010 marketing year— 

2,005,168 pounds. This figure 

represents a one percent increase over 

the revised 2008–2009 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— 

36.2 percent. This percentage is 

computed by dividing the required 

salable quantity by the total estimated 

allotment base. 

(F) Recommended allotment 

percentage—42 percent. This 

recommendation is based on the 

Committee’s determination that the 

computed 36.2 percent would not 

adequately supply the potential 2009– 

2010 market. 

(G) The Committee’s recommended 

salable quantity—842,171 pounds. This 

figure is the product of the 

recommended allotment percentage and 

the total estimated allotment base. 

(H) Estimated available supply for the 

2009–2010 marketing year—966,906 

pounds. This figure is the sum of the 

2009–2010 recommended salable 

quantity (842,171 pounds) and the 

estimated carry-in on June 1, 2009 

(124,735 pounds). 

(2) Class 3 (Native) Spearmint Oil 

(A) Estimated carry-in on June 1, 

2009—51,363 pounds. This figure is the 

difference between the revised 2008– 

2009 marketing year total available 

supply of 1,301,363 pounds and the 

estimated 2008–2009 marketing year 

trade demand of 1,250,000 pounds. 

(B) Estimated trade demand for the 

2009–2010 marketing year—1,250,000 

pounds. This figure is based on input 

from producers at the six Native 

spearmint oil production area meetings 

held in late September and early 

October 2008, as well as estimates 

provided by handlers and other meeting 

participants at the October 15, 2008 

meeting. The average estimated trade 

demand provided at the six production 

area meetings was 1,237,945 pounds, 

whereas the handler estimate ranged 

from 1,250,000 pounds to 1,300,000 

pounds. 

(C) Salable quantity required from the 

2009–2010 marketing year production— 

1,198,637 pounds. This figure is the 

difference between the estimated 2009– 

2010 marketing year trade demand 

(1,250,000 pounds) and the estimated 

carry-in on June 1, 2009 (51,363 

pounds). 

(D) Total estimated allotment base for 

the 2009–2010 marketing year— 

2,256,810 pounds. This figure 

represents a one percent increase over 

the revised 2008–2009 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— 

53.1 percent. This percentage is 

computed by dividing the required 

salable quantity (1,198,637) by the total 

estimated allotment base (2,256,810). 

(F) Recommended allotment 

percentage—53 percent. This is the 

Committee’s recommendation based on 

the computed allotment percentage 

(53.1 percent), the average of the 

computed allotment percentage figures 

from the six production area meetings 

(52.5 percent), and input from 

producers and handlers at the October 

15, 2008, meeting. 

(G) The Committee’s recommended 

salable quantity—1,196,109 pounds. 

This figure is the product of the 

recommended allotment percentage (53 

percent) and the total estimated 

allotment base (2,256,810). 

(H) Estimated available supply for the 

2009–2010 marketing year—1,247,474 

pounds. This figure is the sum of the 

2009–2010 recommended salable 

quantity (1,196,109 pounds) and the 

estimated carry-in on June 1, 2009 

(51,363 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 

842,171 pounds and 42 percent, and 

1,196,109 pounds and 53 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 2009–2010 


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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 2009–2010 marketing year 

may transfer such excess spearmint oil 

to a producer with spearmint oil 

production less than their annual 

allotment or put it into the reserve pool 

until November 1, 2009. 

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 

2009–2010 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 2009–2010 

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 2009–2010 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 

through group action of essentially 

small entities acting on their own 

behalf. 

There are eight spearmint oil handlers 

subject to regulation under the order, 

and approximately 55 producers of 

Scotch spearmint oil and approximately 

94 producers of Native spearmint oil in 

the regulated production area. Small 

agricultural service firms are defined by 

the Small Business Administration 

(SBA) (13 CFR 121.201) as those having 

annual receipts of less than $7,000,000, 

and small agricultural producers are 

defined as those having annual receipts 

of less than $750,000. 

Based on the SBA’s definition of 

small entities, the Committee estimates 

that 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 

18 of the 55 Scotch spearmint oil 

producers and 24 of the 94 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 2009–2010 

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 


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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 2007 

was about 0.23. 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 50 percent of the 28-year 

average (1.85 million pounds from 1980 

through 2007) and the largest crop was 

approximately 166 percent of the 28- 

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 increase in production 

costs. While prices have been relatively 

steady, the cost of production has 

dramatically increased which has 

caused a hesitation by producers to 

plant. Producers are also enticed by the 

prices of alternative crops and their 

lower cost of production. 

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. 

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 2009–2010 marketing 

year for both classes of oil at 2,100,000 

pounds, and that the expected 

combined carry-in will be 176,098 

pounds. This results in a combined 

required salable quantity of 1,923,902 

pounds. Therefore, with volume control, 

sales by producers for the 2009–2010 

marketing year would be limited to 

2,038,280 pounds (the recommended 

salable quantity for both classes of 

spearmint oil). 

The recommended salable 

percentages, upon which 2009–2010 

producer allotments are based, are 42 

percent for Scotch and 53 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 

surplus situation for the spearmint oil 

market that would exist without volume 

controls in 2009–2010 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 842,171 pounds and 42 

percent would be the most effective 

salable quantity and allotment 

percentage, respectively, for the 2009– 

2010 marketing year. 

The Committee also considered 

various alternative levels of volume 

control for Native spearmint oil. After 


sroberts on PROD1PC70 with PROPOSALS
1976 Federal Register / Vol. 74, No. 9 / Wednesday, January 14, 2009 / Proposed Rules 

considerable discussion the Committee 

unanimously determined that 1,196,109 

pounds and 53 percent would be the 

most effective salable quantity and 

allotment percentage, respectively, for 

the 2009–2010 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 2009–2010 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 2007 of $12.77 per pound 

for Scotch spearmint oil and $9.98 per 

pound for Native spearmint oil. 

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 

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. 0581–0178, Vegetable 

and Specialty Crops. 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. 

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 15, 2008, 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 comments on this 

proposed rule, including 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/ 

AMSv1.0/

ams.fetchTemplateData.do?template=

TemplateN&page=

MarketingOrdersSmallBusinessGuide. 

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 60-day comment period is provided 

to allow interested persons the 

opportunity to respond to this proposal. 

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 § 985.228 is added to read 

as follows: 

Note: This section will not appear in the 

Code of Federal Regulations. 

§ 985.228 Salable quantities and allotment 

percentages—2009–2010 marketing year. 

The salable quantity and allotment 

percentage for each class of spearmint 

oil during the marketing year beginning 

on June 1, 2009, shall be as follows: 

(a) Class 1 (Scotch) oil—a salable 

quantity of 842,171 pounds and an 

allotment percentage of 42 percent. 

(b) Class 3 (Native) oil—a salable 

quantity of 1,196,109 pounds and an 

allotment percentage of 53 percent. 

Dated: January 8, 2009. 

James E. Link, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E9–604 Filed 1–13–09; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 1000 and 1033 

[AMS–DA–08–0049; AO–166–A77; Docket 

No. DA–08–06] 

Milk in the Mideast Marketing Area; 

Recommended Decision and 

Opportunity To File Written Exceptions 

on Proposed Amendments to Tentative 

Marketing Agreement and Order 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule; recommended 

decision. 

SUMMARY: This decision recommends 

adoption of a proposal to adjust Class I 

prices in certain counties of the Mideast 

Federal milk marketing order. Class I 

prices are recommended to be 

unchanged in 193 counties within the 

marketing area and to be increased by 

up to $0.20 per hundredweight in 110 

counties in the southern portion of the 

marketing area. The original hearing 

proposal to adjust Class I prices is 

recommended for adoption, except it is 

modified to recommend a $0.20 increase 

in the Class I price at Charleston, West 

Virginia. 


sroberts on PROD1PC70 with PROPOSALS