This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

20615

Vol. 66, No. 79

Tuesday, April 24, 2001

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV–01–985–1 PR]

Marketing Order Regulating the

Handling of Spearmint Oil Produced in

the Far West; Salable Quantities and

Allotment Percentages for the 2001–

2002 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 2001–2002

marketing year, which begins on June 1,

2001. This rule invites comments on the

establishment of salable quantities and

allotment percentages for Class 1

(Scotch) spearmint oil of 900,208

pounds and 48 percent, respectively,

and for Class 3 (Native) spearmint oil of

938,944 pounds and 45 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 this rule for the

purpose of avoiding extreme

fluctuations in supplies and prices, and

thus help to maintain stability in the

spearmint oil market.

DATES: Comments must be received by

May 9, 2001.

ADDRESSES: Interested persons are

invited to submit written comments

concerning this proposed rule.

Comments must be sent to the Docket

Clerk, Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, room 2525–S, P.O. Box

96456, Washington, DC 20090–6456;

Fax: (202) 720–5698; or E-mail:

moab.docketclerk@usda.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.ams.usda.gov/fv/moab.html.

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, suite 385, Portland,

Oregon 97204; telephone: (503) 326–

2724; Fax: (503) 326–7440; or George

Kelhart, Technical Advisor, Marketing

Order Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, room

2525–S, P.O. Box 96456, Washington,

DC 20090–6456; telephone: (202) 720–

2491; Fax: (202) 720–5698.

Small businesses may request

information on complying with this

regulation by contacting Jay Guerber,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room

2525–S, Washington, DC 20090–6456;

telephone (202) 720–2491, Fax: (202)

720–5698, or E-mail:

Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This

proposal 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

(Department) is issuing this rule in

conformance with Executive Order

12866.

This proposal has been reviewed

under Executive Order 12988, Civil

Justice Reform. Under the provisions of

the 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, that may be

purchased from or handled for

producers by handlers during the 2001–

2002 marketing year, which begins on

June 1, 2001. This proposed 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.

Pursuant to authority in sections

985.50, 985.51, and 985.52 of the order,

the Committee recommended the

salable quantities and allotment

percentages for the 2001–2002

marketing year at its October 11, 2000,

meeting. The Committee unanimously

recommended the establishment of a

salable quantity and allotment

percentage for Class 1 (Scotch)

spearmint oil of 900,208 pounds and 48

percent, respectively, and a salable

quantity and allotment percentage for

Class 3 (Native) spearmint oil of 938,944

pounds and 45 percent, respectively.

This proposed rule would limit the

amount of spearmint oil that handlers

may purchase from, or handle for,

producers during the 2001–2002

marketing year, which begins on June 1,

2001. Salable quantities and allotment

percentages have been placed into effect

each season since the order’s inception

in 1980.

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

marketing order). Spearmint oil is also

produced in the Midwest. The

production area covered by the

marketing order currently accounts for

approximately 55 percent of the annual

U.S. production of Scotch spearmint oil

and over 90 percent of the annual U.S.

production of Native spearmint oil.

20616 Federal Register / Vol. 66, No. 79 / Tuesday, April 24, 2001 / Proposed Rules

When the order became effective in

1980, the U.S. produced nearly 100

percent of the world’s supply of Scotch

spearmint oil, of which approximately

72 percent was produced in the

regulated production area in the Far

West. The Far West continued to

produce an average of about 69 percent

of the world’s Scotch spearmint oil

supply during the period from 1980 to

1990. International production

characteristics have changed since 1990,

however, with foreign Scotch spearmint

oil production contributing significantly

to world production. The Far West’s

market share as a percent of total world

sales has averaged about 44 percent

since 1990.

Since the 1996–97 marketing year, the

Committee has employed a marketing

strategy for Scotch spearmint oil that

was intended to foster market stability

and expand market share. This

marketing strategy was an attempt to

remain competitive on an international

level by regaining a substantial amount

of the Far West’s historical share of the

global market for this class of oil. In

implementing this strategy, the

Committee has been recommending the

establishment of a salable quantity and

allotment percentage for Scotch

spearmint oil in excess of the estimated

trade demand for each marketing year.

In the development of its annual

marketing policy statements during this

period, the Committee’s strategy

considered general market conditions

for each class of spearmint oil,

including the Far West’s world market

share as it relates to the overall market

stability of spearmint oil.

During its deliberations at the October

11, 2000, meeting, however, the

Committee concluded that its marketing

strategy for Scotch spearmint oil of the

past few seasons has not been entirely

effective. Although sales have increased,

the Far West’s market share as a

percentage of total world sales has not

increased on average, and the market

price for Scotch spearmint oil has

continued to decline throughout this

period. During the last two marketing

years, the price paid to producers for

Scotch spearmint oil has dropped to a

low of $7.00 per pound. The Committee

believes that such a price is generally

below the cost of production for most

producers.

Furthermore, due to the depressed

market, many producers with allotment

base have not planted Scotch spearmint

in recent years. The order (7 CFR

985.53(e)) requires that producers must

make a bona fide effort to produce their

annual allotment, or failing to do so,

have their allotment base reduced by an

amount equivalent to the unproduced

portions. Currently, several producers

are in danger of losing their allotment

base if they do not have spearmint

planted by the Spring of 2001. With

prices near or below the cost of

production, many producers also face

the potential of going out of business.

The Committee determined that its only

responsible course of action was to

adjust its marketing strategy in an

attempt to stabilize prices at a

reasonable level while still considering

market share. Therefore, the

Committee’s recommendation for

Scotch spearmint oil for the 2001–2002

marketing year is based on a desire to

remain competitive on an international

level while maintaining the supply of

oil at a level that could enhance prices

and thus help producers to remain

solvent. The Committee believes that

this recommendation would stabilize

the market at a level that is sustainable

for the majority of Scotch spearmint oil

producers.

Despite the recent downward trend in

the price of both classes of spearmint

oil, 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 about $4.00

per pound to about $12.50 per pound

during the period between 1968 and

1980. Excluding the most recent two

marketing years, prices since the order’s

inception have generally stabilized at

about $11.00 per pound for Native

spearmint oil and at about $13.00 per

pound for Scotch spearmint oil. Over

the last couple of years, the price has

dropped to about $9.00 per pound and

$7.00 per pound, respectively, for

Native and Scotch spearmint oils

despite the Committee’s efforts to

balance available supplies with

demand. Based on comments made at

the Committee’s meeting, factors that

could have contributed to the low prices

include the relatively poor returns being

realized from other essential oils, an

abundant supply of spearmint oil, and

the continuing overall weak farm

situation.

The major conditions contributing to

the Committee’s current

recommendation of 45 percent for the

Native spearmint oil allotment

percentage for the 2001–2002 marketing

year include a surplus of oil and the

resultant softening price being offered to

growers. The surplus has a basis in a

higher than anticipated carry-in on June

1, 2000, caused in part by a late-season

increase in last year’s salable quantity.

The Committee recommended that

increase due to signals from the

industry that there was demand for

more oil—a demand that did not

materialize as expected. Thus, with over

90 percent of the world production

currently located in the Far West, 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 based its

recommendation for the proposed

salable quantity and allotment

percentage for each class of spearmint

oil for the 2001–2002 marketing year on

the summary presented above, as well

as the data outlined below.

(1) Class 1 (Scotch) Spearmint Oil

(A) Estimated carry-in on June 1,

2001—735,517 pounds. This figure is

derived by subtracting the estimated

2000–2001 marketing year trade

demand of 900,000 pounds from the

revised 2000–2001 marketing year total

available supply of 1,635,517 pounds.

The 2000–2001 marketing year trade

demand is an updated figure based on

sales to date, historical data, and input

from spearmint oil producers and

handlers. The 2000–2001 marketing

year total available supply has been

revised from the figure originally

estimated by the Committee during its

deliberations for the 2000–2001

marketing year salable quantities and

allotment percentages due to updated

production estimates and the available

reserve pool oil on June 1, 2000.

(B) Total estimated allotment base for

the 2001–2002 marketing year—

1,875,433 pounds. This figure

represents a one-percent increase over

the revised 2000–2001 total allotment

base. Section 985.53(d)(1) requires that

the Committee make additional

allotment bases available for each class

of oil in the amount of no more than 1

percent of the total allotment base for

that class of oil. The total allotment base

for each marketing year is generally

revised during each such marketing year

since it is estimated several months

earlier during the respective annual

marketing policy meetings.

(C) Average salable quantity as

recommended at the five production

area meetings—888,955 pounds.

(D) Recommended allotment

percentage—48 percent. This figure is

based on the average of the salable

quantity recommended at the five

production area meetings divided by the

total estimated allotment base.

Committee records show that this is

slightly above the average of the past

Federal Register / Vol. 66, No. 79 / Tuesday, April 24, 2001 / Proposed Rules 20617

seven years’ sales (891,815 pounds or

47.6 percent).

(E) The Committee’s recommended

salable quantity—900,208 pounds. This

figure is the product of the

recommended allotment percentage and

the total estimated allotment base.

(F) Estimated available supply for the

2001–2002 marketing year—1,635,725

pounds. This figure is the sum of the

recommended salable quantity and the

estimated carry-in on June 1, 2001.

(G) Estimated trade demand for the

2001–2002 marketing year—875,000

pounds. This figure is based on

estimates provided by producers and

handlers at the five Scotch spearmint oil

production area meetings held in

September 2000. These estimates were

derived using average sales figures for

the past 20 years as well as input from

handlers regarding current and

projected demand for Far West

spearmint oil.

(H) Estimated carry-out on May 31,

2002—760,725 pounds. This figure is

the difference between the estimated

available supply and the estimated trade

demand for the 2001–2002 marketing

year.

(2) Class 3 (Native) Spearmint Oil

(A) Estimated carry-in on June 1,

2001—130,929 pounds. This figure is

the difference between the estimated

2000–2001 marketing year trade

demand of 990,000 pounds and the

revised 2000–2001 marketing year total

available supply of 1,120,929 pounds.

(B) Estimated trade demand for the

2001–2002 marketing year—1,000,000

pounds. This figure is based on the

average of the estimates provided at the

four Native spearmint oil production

area meetings held in September 2000.

(C) Salable quantity required from the

2001–2002 marketing year production—

864,071 pounds. This figure is the

calculated difference between the

estimated 2001–2002 marketing year

trade demand and the estimated carryin on June 1, 2001.

(D) Total estimated allotment base for

the 2001–2002 marketing year—

2,086,542 pounds. This figure

represents a one percent increase over

the revised 2000–2001 total allotment

base.

(E) Computed allotment percentage—

41.7 percent. This percentage is

computed by dividing the required

salable quantity by the total estimated

allotment base.

(F) Recommended allotment

percentage—45 percent. This is the

Committee’s recommendation based on

the computed allotment percentage, the

average of the computed allotment

percentage figures from the four

production area meetings (46.4 percent),

and input from producers and handlers.

(G) The Committee’s recommended

salable quantity—938,944 pounds. This

figure is the product of the

recommended allotment percentage and

the total estimated allotment base.

(H) Estimated available supply for the

2001–2002 marketing year—1,069,873

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 spearmint oil salable quantity of

900,208 pounds and allotment

percentage of 48 percent are based on

the Committee’s goal of maintaining

market stability by avoiding extreme

fluctuations in supplies and prices, and

thereby helping the industry remain

competitive on the international level.

The Committee’s recommended Native

spearmint oil salable quantity of

938,944 pounds and allotment

percentage of 45 percent are based on

the anticipated supply and trade

demand during the 2001–2002

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 2001–2002 season may

transfer such excess spearmint oil to a

producer with spearmint oil production

less than his or her annual allotment or

put it into the reserve pool.

This proposed regulation, if adopted,

would be similar to those which have

been issued in prior seasons. Costs to

producers and handlers resulting from

this proposed action 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, the Committee’s

marketing policy statement for the

2001–2002 marketing year has been

reviewed by the Department. The

Committee’s marketing policy

statement, a requirement whenever the

Committee recommends volume

regulations, fully meets the intent of

section 985.50 of the order. During its

discussion of potential 2001–2002

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 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 which

should be produced for next season in

order to meet anticipated market

demand.

Pursuant to requirements set forth in

the Regulatory Flexibility Act (RFA), the

Agricultural Marketing Service (AMS)

has considered the economic impact of

this action on small entities.

Accordingly, 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 7 spearmint oil handlers

subject to regulation under the order,

and approximately 116 producers of

Class 1 (Scotch) spearmint oil and

approximately 102 producers of Class 3

(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 $5,000,000, and small

agricultural producers are defined as

those whose annual receipts of less than

$500,000.

Based on the SBA’s definition of

small entities, the Committee estimates

that 2 of the 7 handlers regulated by the

20618 Federal Register / Vol. 66, No. 79 / Tuesday, April 24, 2001 / Proposed Rules

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

25 of the 116 Scotch spearmint oil

producers and 7 of the 102 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. 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 twothirds 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

SBA category of large businesses.

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 2001–2002

marketing year. The Committee

recommended this rule for the purpose

of avoiding extreme fluctuations in

supplies and prices, and thus help to

maintain stability in the spearmint oil

market. This action is authorized by the

provisions of sections 985.50, 985.51

and 985.52 of the order.

Small spearmint oil producers

generally are not extensively diversified

and as such are more at risk to market

fluctuations. Such small farmers

generally need to market their entire

annual crop and do not have the luxury

of having other crops to cushion seasons

with poor spearmint oil returns.

Conversely, large diversified producers

have the potential to endure one or

more seasons of poor spearmint oil

markets because incomes 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.

The Committee discussed alternatives

to the proposal including higher and

lower levels for the salable quantities

and allotment percentages for both

classes of oil, as well as not regulating

the handling of spearmint oil during the

2001–2002 marketing year.

During the discussion on the 2001–

2002 Scotch spearmint oil salable

quantity and allotment percentage, one

producer recommended that the

Committee continue with the Scotch

spearmint oil marketing strategy that it

has used in the recent past. He

recommended the establishment of an

allotment percentage of 65 percent or

higher, or alternatively, that there be no

regulation established for Scotch

spearmint oil during the 2001–2002

marketing year. The producer was of the

opinion that the global nature of Scotch

spearmint oil production negates the

stabilizing benefits of the order, and

therefore the order, in regards to Scotch

spearmint oil, no longer effectuates the

declared policy of the Act. He feels that

a swing in policy from 65 percent to a

48 percent allotment percentage is

radical and will not stabilize the market

nor improve prices to producers.

With several individuals commenting

during the meeting, however, most

indicated support for a change in the

marketing strategy for Scotch spearmint

oil to an approach that takes into

consideration current price, supply, and

demand along with the Far West’s share

of the world market. It was noted that,

although world production of Scotch

spearmint oil has increased

significantly, the provisions of the order

in regards to this class of oil are still

relevant since demand for high quality

Far West oil remains relatively good.

Blending of essential oils is more

prevalent today then in the past.

Consequently, the Committee believes

that buyers will continue to seek out the

quality Far West oil for the purpose of

blending with the readily available

lower quality oils. The Committee’s

belief that the Scotch spearmint oil

market can be improved and stabilized

is reflected in its recommendation to

establish the salable quantity and

allotment percentage at 900,208 pounds

and 48 percent, respectively. The

Committee is of the view that levels

higher than 48 percent could cause

further depression in prices, thus

potentially forcing some growers out of

business.

The Committee discussed allotment

percentage levels for Native spearmint

oil from a low of 43 percent to a high

of 46 percent. With the current price for

Native spearmint oil lower than the 20

year average, and demand fairly flat, the

Committee, after considerable

discussion, decided on 938,944 pounds

and 45 percent as the most effective

salable quantity and allotment

percentage, respectively, for the 2001–

2002 marketing year.

Further, 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) 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. Based on its review, the

Committee believes that the salable

quantity and allotment percentage levels

recommended would achieve the

objectives sought.

The U.S. spearmint oil market is

considered a mature agricultural

operation. Aggregate demand for

spearmint 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 is expected to expand

slowly in line with population growth.

Demand for spearmint oil at the farm

level is derived from the demand for

spearmint-flavored products at retail

and the manufacturers of chewing gum,

toothpaste, and mouthwash are by far

the largest users of mint oil. In general,

the farm-level demand for a commodity

consists of the demand at retail or food

service outlets minus per-unit

processing and distribution costs

incurred in transforming the raw farm

commodity into a product available to

consumers. These costs comprise what

is known as the ‘‘marketing margin.’’

However, spearmint flavoring tends to

be a very small component of the retail

price for the products in which it is

used.

Federal Register / Vol. 66, No. 79 / Tuesday, April 24, 2001 / Proposed Rules 20619

Mint growers tend to respond to price

signals. Consequently, there has been a

cycle where larger grower stocks of

unsold spearmint oil have depressed

grower prices for a number of years, and

then shortages and high prices occur in

subsequent years.

The wide fluctuations in supply and

prices that result from this cycle create

liquidity problems for some growers,

particularly those with a heavy debt

load. Moreover, growers have been less

able to weather these cycles in recent

years because of the decline in prices of

many alternative crops. Almost all

spearmint growers diversify by growing

other commodities. It is important that

spearmint be rotated with other crops to

avoid the development of disease

problems.

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. From 1980 through 2000,

production averaged 1,888,810 pounds.

The standard deviation over this period

was 480,911 pounds. This indicates that

production can vary by over 480,000

pounds from year-to-year.

This variation in production has

necessitated the use of a reserve pool to

store product in large production years;

these stocks are drawn down in short

production years. In any given year, the

total available supply of spearmint oil is

composed of current production plus

carryover stocks from the previous crop.

In an effort to stabilize prices, the

spearmint oil industry uses the volume

control mechanisms authorized under

the Federal marketing order. This

authority allows the industry to set a

salable quantity and allotment

percentage for each class of oil for the

upcoming marketing year (June 1—May

31). The salable quantity for each class

of oil is the total volume of that oil

which growers may sell during the

marketing year.

The allotment percentage for each

class of oil is derived by dividing the

salable quantity by the total allotment

base. Each grower is then issued an

annual allotment certificate, in pounds,

for the applicable class of oil, which is

calculated by multiplying the grower’s

allotment base by the applicable

allotment percentage.

By November 1 of each year, the Far

West Spearmint Oil Administrative

Committee (Committee) identifies any

oil that individual growers have

produced above the volume specified on

their annual allotment certificates. This

excess oil is placed into a reserve pool

administered by the Committee.

The reserve pool oil may not be sold

during the current marketing year

unless the Committee decides and the

Department approves, that it is

appropriate to open up the pool. There

is a reserve pool for each class of oil.

However, a grower’s reserve oil can be

used to fill deficiencies in production

(which is less than the salable quantity)

and excess production can be sold to fill

other growers’ deficiencies.

The marketing order attempts to

minimize the price depressing effect

that excess grower stocks have on

unsold spearmint oil. The marketing

order attempts to stabilize prices by

having stocks available in short supply

years when prices would increase

dramatically, and limiting supply and

establishing reserves in high production

years when prices would fall

dramatically.

It is the goal of the Committee to

balance supply and demand with an

appropriate carryout in order to

maintain market stability. If the industry

has production in excess of the salable

quantity, then the reserve pool absorbs

the surplus, and spearmint oil goes

unsold.

To assess the impact that volume

control has on the prices growers

receive for their commodity, an

econometric model has been developed

projecting that the volume control

mechanism used by the spearmint oil

industry will result in decreased

production. Without volume control,

spearmint oil markets would likely be

over-supplied, resulting in low grower

prices and a large volume of oil stored

and carried over to the next crop year.

The price growers receive for

harvesting their crops is largely

determined by the level of production

and carryin inventories. In years of

oversupply and low prices, the season

average grower price of spearmint oil

has failed to cover the average variable

cost of production. The estimated model

provides a way to see what impacts

volume control may have on grower

prices. The econometric model is used

to estimate grower prices with and

without regulation. Without volume

controls, the estimated season-average

grower price would be approximately

$8.97 per pound and production is

assumed to increase to 3,961,975

pounds. With volume controls,

production would be limited to the

salable quantity of 2,086,542 pounds

and the grower price would be

estimated at approximately $10.43 per

pound.

The Committee has estimated the total

trade demand for spearmint oil to be

1,929,623 pounds for the 2002 crop

year. Without volume controls, the

volume supplied to the market would be

approximately 3,961,975 pounds. This

would result in a severe surplus

situation for the spearmint oil market.

This situation would not only

negatively impact grower prices this

year, but would dampen prospects for

prices in future years because of the

buildup in stocks. The econometric

model shows that for every one-percent

increase in carryin inventories, a

decrease of 0.07 percent in grower

prices occurs. The use of volume

controls allows the industry to fully

supply spearmint oil markets while

avoiding the disastrous results of oversupplying these markets. The use of

volume controls is believed to have

little to no effect on consumer prices

and will not result in fewer retail sales.

The use of volume controls is

believed to have a positive impact on

growers’ revenues. With regulation,

growers’ revenues are estimated to be

$20,125,968. In this scenario, demand is

estimated at 1,929,623 pounds and price

at $10.43 per pound. Without

regulation, grower prices are estimated

to be $8.97 per pound and the total

demand for spearmint oil would have to

increase to 2,243,698 pounds for

growers to be as well off as in the

regulated scenario. However, even if

demand were to increase to 2,243,698

pounds in response to the lower $8.97

per pound price, over 1,700,000 pounds

of spearmint oil would likely be placed

in storage, putting tremendous

downward pressure on price the next

crop year.

The Committee further believes that

the order has contributed extensively to

the stabilization of producer prices,

which prior to 1980 experienced wide

fluctuations from year to year. For

example, National Agricultural

Statistics Service records indicate that

the average price paid for both classes

of spearmint oil ranged from about

$4.00 per pound to about $12.50 per

pound during the period between 1968

and 1980. Excluding the most recent

two marketing years, prices since the

order’s inception have generally

stabilized at about $11.00 per pound for

Native spearmint oil and at about $13.00

per pound for Scotch spearmint oil.

Over the last couple of years, the price

has dropped to about $9.00 per pound

and $7.00 per pound, respectively, for

Native and Scotch spearmint oils

despite the Committee’s efforts to

balance available supplies with

demand.

Without any regulations in effect, the

Committee believes the industry would

return to the pattern of cyclical prices of

20620 Federal Register / Vol. 66, No. 79 / Tuesday, April 24, 2001 / Proposed Rules

prior years, as well as suffer the

potentially price depressing

consequence that a release of over a

million pounds of spearmint oil reserves

would have on the market. According to

the Committee, levels for the salable

quantities and allotment percentages

either higher or lower than those

recommended would not achieve the

intended goals of market and price

stability.

As stated earlier, 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. 0581–0065.

Accordingly, this action would 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 proposed rule.

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. In addition, interested persons

are invited to submit information on the

regulatory and informational impacts of

this action on small businesses.

A small business guide on complying

with fruit, vegetable, and specialty crop

marketing agreements and orders may

be viewed at: http://www.ams.usda.gov/

fv/moab.html. Any questions about the

compliance guide should be sent to Jay

Guerber at the previously mentioned

address in the FOR FURTHER INFORMATION

CONTACT section.

A 15-day comment period is provided

to allow interested persons the

opportunity to respond to the proposal,

including any regulatory and

informational impacts of this action on

small businesses. Fifteen days is

deemed appropriate because this rule

would need to be effective as soon as

possible to provide producers sufficient

time prior to the beginning of the 2001–

2002 marketing year to adjust their

cultural and marketing plans

accordingly. All written comments

received within the comment period

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 § 985.220 is added to read

as follows:

Note: This section will not appear in the

Code of Federal Regulations.

§ 985.220 Salable quantities and allotment

percentages—2001–2002 marketing year.

The salable quantity and allotment

percentage for each class of spearmint

oil during the marketing year beginning

on June 1, 2001, shall be as follows:

(a) Class 1 (Scotch) oil—a salable

quantity of 900,208 pounds and an

allotment percentage of 48 percent.

(b) Class 3 (Native) oil—a salable

quantity of 938,944 pounds and an

allotment percentage of 45 percent.

Dated: April 18, 2001.

Kenneth C. Clayton,

Acting Administrator, Agricultural Marketing

Service.

[FR Doc. 01–10115 Filed 4–23–01; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 117

[CGD13–00–029]

RIN 2115–AE87

Drawbridge Operations Regulations;

Duwamish River, WA

AGENCY: Coast Guard, DOT.

ACTION: Withdrawal of proposed rule.

SUMMARY: The Coast Guard is

withdrawing the proposed rulemaking

to amend the operating regulations of

the dual bascule drawbridges on First

Avenue South across the Duwamish

River, mile 2.5, at Seattle, Washington.

This rulemaking is being withdrawn

because of the insufficient road traffic

volume and congestion data provided

by the bridge owner to justify the

proposed change and because of

objections made by navigational

interests. Three marine transport

companies objected to the proposed

addition of one hour to the existing

afternoon closed period. The bridge

currently is closed to vessels of less than

5000 gross tons for six hours each day

Monday through Friday. These objectors

are major commercial users of the

Duwamish Waterway and all are

engaged in various degrees with major

shipping to Alaska from Seattle. One of

these also observed that the dual

drawspans are not operated

simultaneously. Simultaneous operation

could reduce the length of the operating

cycle and therefore reduce the time that

roadway traffic is obstructed by draw

span operations.

DATES: The proposed rulemaking is

withdrawn effective April 24, 2001.

FOR FURTHER INFORMATION CONTACT:

Austin Pratt, Chief, Bridge Section, Aids

to Navigation and Waterways

Management Branch, Thirteenth Coast

Guard District, (206) 220–7282.

SUPPLEMENTARY INFORMATION: This

notice withdraws the notice of proposed

rulemaking for the amendment of

drawbridge operations regulations,

published in the Federal Register,

August 18, 2000 (65 FR 50480, CGD13–

00–029).

Dated: 10 April 2001.

Erroll Brown,

Rear Admiral, U.S. Coast Guard, Commander,

Thirteenth Coast Guard District

[FR Doc. 01–10138 Filed 4–23–01; 8:45 am]

BILLING CODE 4910–15–U

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[DA 01–860, MM Docket No. 01–83, RM–

10085]

Digital Television Broadcast Service;

Lexington, KY

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission requests

comments on a petition filed by WLEX

Communications, LLC, licensee of

station WLEX–TV, NTSC channel 18,

Lexington, Kentucky, requesting the

substitution of DTV channel 39 for DTV

channel 22. DTV Channel 39 can be

allotted to Lexington, Kentucky, in

compliance with the principle

community coverage requirements of

section 73.625(a) at reference

coordinates (38–02–03 N. and 84–23–39

W.). As requested, we propose to allot

DTV Channel 39 to Lexington with a