Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations 30291

Federal marketing order programs,

reports and forms are periodically

reviewed to reduce information

requirements and duplication by

industry and public sector agencies.

The Department has not identified

any relevant Federal rules that

duplicate, overlap, or conflict with this

rule.

An interim final rule concerning this

action was published in the Federal

Register on March 6, 2001 (66 FR

13389). Copies of that rule were also

mailed or sent via facsimile to all olive

handlers. Finally, the interim final rule

was made available through the Internet

by the Office of the Federal Register. A

60-day comment period was provided

for interested persons to respond to the

interim final rule. The comment period

ended on May 7, 2001, and no

comments were received.

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.

After consideration of all relevant

material presented, including the

information and recommendation

submitted by the Committee and other

available information, it is hereby found

that this rule, as hereinafter set forth,

will tend to effectuate the declared

policy of the Act.

List of Subjects in 7 CFR Part 932

Marketing agreements, Olives,

Reporting and recordkeeping

requirements.

PART 932—OLIVES GROWN IN

CALIFORNIA

Accordingly, the interim final rule

amending 7 CFR part 932 which was

published at 66 FR 13389 on March 6,

2001, is adopted as a final rule without

change.

Dated: June 1, 2001.

Kenneth C. Clayton,

Acting Administrator, Agricultural Marketing

Service.

[FR Doc. 01–14270 Filed 6–5–01; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV–01–985–1 FR]

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: Final rule.

SUMMARY: This rule establishes 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 establishes 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.

EFFECTIVE DATE: June 1, 2001, through

May 31, 2002.

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) 720–8938.

Small businesses may request

information on complying with this

regulation by contacting Jay Guerber,

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)

720–8938, or E-mail:

Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This final

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

(Department) is issuing this rule in

conformance with Executive Order

12866.

This final rule 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 rule establishes 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 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 the 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.

30292 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations

This final rule limits 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, and ends

on May 31, 2002. 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.

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.

Starting with the 1996–97 marketing

year, the Committee 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

employing this strategy, the Committee

was 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. 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 will 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

producers. The surplus has a basis in

the higher than anticipated carry-in on

June 1, 2000, caused in part by a lateseason increase in last year’s salable

quantity. The Committee recommended

that increase last year 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 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 l,

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

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations 30293

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

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 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 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 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 regulation is similar to those

which have been issued in prior

seasons. Costs to producers and

handlers resulting from this action are

expected to be offset by the benefits

derived from a stable market and

improved returns. In conjunction with

the issuance of this final 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

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.

Final 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 action on small entities.

Accordingly, the AMS has prepared this

final 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,

30294 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations

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

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 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. An average spearmint

oil producing farm has to have

considerably more acreage than is

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 fall into

the SBA category of large businesses.

This final rule establishes 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 U.S. spearmint oil market is

considered a mature agricultural

operation. Aggregate 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 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.

Mint producers tend to respond to

price signals. Consequently, there has

been a cycle where larger producer

stocks of unsold spearmint oil have

depressed producer 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 producers,

particularly those with a heavy debt

load. Moreover, producers have been

less able to weather these cycles in

recent years because of the decline in

prices of many alternative crops. As

noted earlier, almost all spearmint oil

producers diversify by growing other

crops. 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

carry-over stocks from the previous

crop.

In an effort to stabilize prices, the

spearmint oil industry uses the volume

control mechanisms authorized under

the order. This authority allows the

industry 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

that oil which 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.

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 into a reserve pool

administered by the Committee.

The reserve pool oil may not be sold

during the current marketing year

unless the Secretary approves a

Committee recommendation to make a

portion of the pool available. There is a

reserve pool for each class of oil.

However, a producer’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 producers’ deficiencies.

The order attempts to minimize the

price depressing effect that excess

producer stocks have on unsold

spearmint oil. Furthermore, the order

attempts to stabilize prices by having

stocks available in short supply years

when prices would increase

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations 30295

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 carry-out 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 producers

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 producer

prices and a large volume of oil stored

and carried over to the next crop year.

The price received by producers for

harvesting their crops is largely

determined by the level of production

and carry-in inventories. In years of

oversupply and low prices, the season

average producer 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 producer

prices. The econometric model is used

to estimate producer prices with and

without regulation. Without volume

controls, the estimated season-average

producer 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 producer 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 2001–2002

marketing 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

producer 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 carry-in

inventories, a decrease of 0.07 percent

in producer prices occurs. The use of

volume controls allows the industry to

fully supply spearmint oil markets

while avoiding the disastrous results of

over-supplying 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.

Moreover, the use of volume controls

is believed to have a positive impact on

producers’ revenues. With regulation,

producers’ 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, producer 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

producers 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 discussed alternatives

to this rule 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 this discussion, 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 opined 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 spearmint 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 spearmint

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

producers out of business.

The Committee discussed alternative

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 will achieve the

objectives sought.

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 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 two years, the price has dropped

30296 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations

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

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. Thus,

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 does 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 final 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. Like all

Committee meetings, the October 11,

2000, meeting was a public meeting and

all entities, both large and small, were

able to express views on this issue.

Interested persons were also invited to

submit information on the regulatory

and informational impacts of this action

on small businesses.

A proposed rule was published in the

Federal Register (66 FR 20615) on April

24, 2001. A 15-day comment period was

provided to allow interested persons the

opportunity to respond to the proposal,

including any regulatory and

informational impacts of this action on

small businesses. A copy of the

proposed rule was both faxed and

mailed to the Committee office, which

in turn notified Committee members

and spearmint oil producers and

handlers of the proposed action. A copy

of the proposal was also made available

on the Internet by the U.S. Government

Printing Office. No comments were

received.

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.

It is further found that good cause

exists for not postponing the effective

date of this rule until 30 days after

publication in the Federal Register (5

U.S.C. 553) because the 2001–2002

marketing year begins on June 1, 2001.

Further, handlers are aware of this rule,

which was recommended at a public

meeting. Also, a 15-day comment period

was provided for in the proposed rule

and no comments were received.

After consideration of all relevant

matter presented, including the

information and recommendation

submitted by the Committee and other

available information, it is hereby found

that this rule, as hereinafter set forth,

will tend to effectuate the declared

policy of the Act.

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. 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: June 1, 2001.

Kenneth C. Clayton,

Acting Administrator, Agricultural Marketing

Service.

[FR Doc. 01–14236 Filed 6–1–01; 2:02 pm]

BILLING CODE 3410–02–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 2000–CE–25–AD; Amendment

39–12244; AD 2001–11–03]

RIN 2120–AA64

Airworthiness Directives; Raytheon

Aircraft Company Beech Models F33A,

A36, B36TC, 58/58A, C90A, B200, and

1900D Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD) that

applies to certain Raytheon Aircraft

Company (Raytheon) Beech Models

F33A, A36, B36TC, 58/58A, C90A,

B200, and 1900D airplanes equipped

with a KA–33 cooling blower. This AD

requires you to incorporate certain

electrical parts to protect cooling

blowers. This AD is the result of several

reports of circuit breakers failing to

protect cooling blowers on the affected

airplanes. The actions specified by this

AD are intended to protect the blower

motor circuit and reduce the possibility

of emission of smoke or a burning odor

into the cockpit or passenger

compartment as a result of a failed or

seized blower motor.

DATES: This AD becomes effective on

July 20, 2001.

The Director of the Federal Register

approved the incorporation by reference

of certain publications listed in the

regulations as of July 20, 2001.

ADDRESSES: You may get the service

information referenced in this AD from

the Raytheon Aircraft Company, P.O.

Box 85, Wichita, Kansas 67201–0085;

telephone: (800) 429–5372 or (316) 676–

3140. You may examine this

information at the Federal Aviation

Administration (FAA), Central Region,

Office of the Regional Counsel,

Attention: Rules Docket No. 2000–CE–

25–AD, 901 Locust, Room 506, Kansas

City, Missouri 64106; or at the Office of

the Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Todd Dixon, Aerospace Engineer, FAA,