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

DEPARTMENT OF AGRICULTURE

7 CFR Part 985

[FV96-985-3 IFR]

Spearmint Oil Produced in the Far West; Revision of the Salable

Quantity and Allotment Percentage for Class 3 (Native) Spearmint Oil

for the 1996-97 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule increases the quantity of Class 3

(Native) spearmint oil produced in the Far West that handlers may

purchase from, or handle for, producers during the 1996-97 marketing

year. This rule was recommended by the Spearmint Oil Administrative

Committee (Committee), the agency responsible for local administration

of the marketing order for spearmint oil produced in the Far West. The

Committee recommended this rule to avoid extreme fluctuations in

supplies and prices and thus help to maintain stability in the Far West

spearmint oil market.

DATES: Effective on January 9, 1997 through May 31, 1997; comments

received by February 10, 1997 will be considered prior to issuance of a

final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525, South

Building, P.O. Box 96456, Washington, DC 20090-6456; Fax: (202) 720-

5698. All comments should reference the docket number and the date and

page number of this issue of the Federal Register and will be made

available for public inspection in the Office of the Docket Clerk

during regular business hours.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing

Field Office, Marketing Order Administration Branch, Fruit and

Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,

Portland, Oregon 97204-2807; telephone: (503) 326-2043; Fax: (503) 326-

7440; or Caroline C. Thorpe, Marketing Order Administration Branch,

Fruit and Vegetable Division, AMS, USDA, room 2525, South Building,

P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 720-8139;

Fax: (202) 720-5698. Small businesses may request information on

compliance with this regulation by contacting: Jay Guerber, Marketing

Order Administration Branch, Fruit and Vegetable Division, AMS, USDA,

P.O. Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202)

720-2491; Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order

No. 985 (7 CFR part 985), regulating the handling of spearmint oil

produced in the Far West (Washington, Idaho, Oregon, and designated

parts of Nevada, and Utah), hereinafter referred to as the ``order.''

This order is effective under the Agricultural Marketing Agreement Act

of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the

``Act.''

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. Under the provisions of the marketing order now in

effect, salable quantities and allotment percentages may be established

for classes of spearmint oil produced in the Far West. This rule

increases the quantity of Native spearmint oil produced in the Far West

that may be purchased from or handled for producers by handlers during

the 1996-97 marketing year, which ends on May 31, 1997. This rule will

not preempt any State or local laws, regulations, or policies, unless

they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and request a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for a hearing on the

petition. After the hearing the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction to review the Secretary's

ruling on the petition, provided an action is filed not later than 20

days after date of the entry of the ruling.

The Far West spearmint oil industry is characterized by producers

whose farming operations generally involve more than one commodity and

whose income from farming operations is not exclusively dependent on

the production of spearmint oil. The U.S. production of spearmint oil

is concentrated in the Far West, primarily Washington, Idaho, and

Oregon (part of the area covered by the order). Spearmint oil is also

produced in the Midwest. The production area covered by the order

normally accounts for approximately 75 percent of the annual U.S.

production of spearmint oil.

This rule increases the quantity of Native spearmint oil that

handlers may purchase from, or handle for, producers during the 1996-97

marketing year, which ends on May 31, 1997. This rule increases the

salable quantity from 1,074,902 pounds to 1,213,692 pounds and the

allotment percentage from 54 percent to 61 percent for Native spearmint

oil for the 1996-97 marketing year.

The salable quantity is the total quantity of each class of oil

that handlers may purchase from, or handle for, producers during a

marketing year. The salable quantity calculated by the Committee is

based on the estimated trade demand. The total salable quantity is

divided by the total industry allotment base to determine an allotment

percentage. Each producer is allotted a share of the salable quantity

by applying the allotment percentage to the producer's individual

allotment base for the applicable class of spearmint oil.

The initial salable quantity and allotment percentages for Scotch

and Native spearmint oils for the 1996-97 marketing year were

recommended by the Committee at its September 26, 1995, meeting. The

Committee recommended salable quantities of 989,303 pounds and

1,074,902 pounds, and allotment percentages of 55 percent and 54

percent, respectively, for Scotch and Native spearmint oils. A proposed

rule was published in the January 24, 1996, issue of the Federal

Register (61

[[Page 1247]]

FR 1855). Comments on the proposed rule were solicited from interested

persons until February 23, 1996. No comments were received.

Accordingly, based upon analysis of available information, a final rule

establishing the salable quantities and allotment percentages for

Scotch and Native spearmint oils for the 1996-97 marketing year was

published in the March 20, 1996, issue of the Federal Register (61 FR

11291).

Pursuant to authority contained in sections 985.50, 985.51, and

985.52 of the order, at its November 14, 1996, meeting, the Committee

unanimously recommended that the allotment percentage for Native

spearmint oil for the 1996-97 marketing year be increased by 7 percent

from 54 percent to 61 percent. The 1996-97 marketing year salable

quantity of 1,074,902 pounds will therefore be increased to 1,213,692

pounds.

However, some Native spearmint oil producers did not produce all of

their individual salable quantities for the 1996-97 marketing year, or

fill their deficiencies from the prior year's production. The marketing

order authorizes such producers to have their deficiencies filled by

other producers who have production in excess of their salable

quantities. This is optional for producers, but must be done before

November 1 of each marketing year.

The original total industry allotment base for Native spearmint oil

for 1996-97 was established at 1,990,559 pounds and was revised to

1,989,659 pounds to reflect loss of base due to non-production of

producer's total annual allotments. This adjustment resulted in a 900

pound loss of total industry base, which is reflected in the

calculations for the revised salable quantity.

This interim final rule makes an additional amount of Native

spearmint oil available by increasing the salable quantity which

releases oil from the reserve pool. Only producers with Native

spearmint oil in the reserve pool will be able to use this increase in

the salable quantity. Prior to November 1, 1996, producers without

reserve pool oil or producers with an insufficient supply of reserve

oil could have deficiencies in meeting their salable quantities filled

by producers having excess Native spearmint oil. If all producers could

use their salable quantity, this 7 percent increase in the allotment

percentage would have made an additional 135,276 pounds of Native

spearmint oil available (1,989,659 x 7 percent). However, Native

spearmint oil producers having 25,546 pounds of Native spearmint oil

will not be able to use their reserve pool deficiencies this marketing

year. Deficiencies usually exist because of unplanned problems that may

reduce spearmint production. Thus, rather than 135,276 additional

pounds being made available, this action makes 113,730 additional

pounds of Native spearmint oil available to the market.

The following table summarizes the Committee recommendation:

Native Spearmint Oil Recommendation

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(a) Actual Carry In on June 1, 45,632 pounds.

1996.

(b) 1995-96 Salable Quantity..... 1,074,902 pounds.

(c) 1995-96 Available Supply..... 1,120,534 pounds (a + b).

(d) Total Sales as of November 1,036,058 pounds.

14, 1996.

(e) Calculated Available Supply 84,476 pounds ((c-d).

as of November 14, 1996.

(f) Reserve Deficiency Affecting 25,546 pounds.

Salable Quantity.

(g) Revised Total Allotment Base. 1,989,659 pounds.

(h) Recommended Allotment 61 percent.

Percentage as of November 14,

1996.

(i) Calculated Revised Salable 1,213,692 pounds (g x h).

Quantity.

(j) Actual Oil Available as 1,188,146 pounds (i-f).

Salable Quantity.

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In making this latest recommendation, the Committee considered all

available information on supply and demand. The 1996-97 marketing year

began on June 1, 1996. Handlers have indicated that with this action,

the available supply of both Scotch and Native spearmint oils appears

adequate to meet anticipated demand through May 31, 1997. Without the

increase, the Committee believes the industry would not be able to meet

market needs. As of November 14, 1996, 84,476 pounds of Native

spearmint oil was available for market. Demand for Native spearmint oil

from December 1 to May 31 over the past five years has ranged from a

high of 245,661 pounds in 1991-92 to a low of 92,658 pounds in 1992-93.

The five year average is 157,531 pounds. Therefore, based on past

history the industry would be unlikely to meet market demand without

this change. When the Committee made its initial recommendation for the

establishment of the Native spearmint oil salable quantity and

allotment percentage for the 1996-97 marketing year, it had anticipated

that the year would end with an ample available supply. This revision

adds 113,730 pounds of Native spearmint oil to the amount available for

market during the remainder of the 1996-97 marketing year.

The Department, based on its analysis of available information, has

determined that an allotment percentage of 61 percent should be

established for Native spearmint oil for the 1996-97 marketing year.

This percentage will provide an increased salable quantity of 1,213,692

and a new allotment percentage from 54 percent to 61 percent for Native

spearmint oil for the 1996-97 marketing year.

This rule relaxes the regulation of Native spearmint oil and will

allow growers to meet market needs and improved returns. In conjunction

with the issuance of this rule, the Department has reviewed the

Committee's revised marketing policy statement for the 1996-97

marketing year. The Committee's marketing policy statement has been

reviewed under the provisions as set forth in 7 CFR Sec. 985.50 and

with other USDA guidelines.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), AMS has considered the economic impact of this action on

small entities. Accordingly, AMS has prepared this initial regulatory

flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and rules issued thereunder, are unique in that

they are brought about through group action of essentially small

entities acting on their own behalf. Thus, both statutes have small

entity orientation and compatibility.

There are 8 spearmint oil handlers subject to regulation under the

marketing order and approximately 250 producers of spearmint oil in the

regulated production area. Of the 250 producers, approximately 135

producers hold Class 1 (Scotch) oil allotment base, and approximately

115 producers hold

[[Page 1248]]

Class 3 (Native) oil allotment base. Small agricultural service firms

are defined by the Small Business Administration (13 CFR 121.601) as

those having annual receipts of less than $5,000,000, and small

agricultural producers have been defined as those whose annual receipts

are less than $500,000.

This interim final rule increases the quantity of Native spearmint

oil produced in the Far West that handlers may purchase from, or handle

for, producers during the 1996-97 marketing year. This rule was

recommended by the Committee, the agency responsible for local

administration of the marketing order for spearmint oil produced in the

Far West. Pursuant to authority contained in sections 985.50, 985.51,

and 985.52 of the order, at its November 14, 1996, meeting, the

Committee unanimously recommended that the allotment percentage for

Native spearmint oil for the 1996-97 marketing year be increased by 7

percent from 54 percent to 61 percent. The 1996-97 marketing year

salable quantity of 1,074,902 pounds will therefore be increased to

1,213,692 pounds. The Committee recommended this rule to avoid extreme

fluctuations in supplies and prices and thus help to maintain stability

in the Far West spearmint oil market.

The Far West spearmint oil industry is characterized by producers

whose farming operations generally involve more than one commodity, and

whose income from farming operations is not exclusively dependent on

the production of spearmint oil. Crop rotation is an essential cultural

practice in the production of spearmint for weed, insect, and disease

control. A normal spearmint producing operation would have enough

acreage for rotation such that the total acreage required to produce

the crop would be about one-third spearmint and two-thirds rotational

crops. An average spearmint producing farm would thus have to have

considerably more acreage than would be planted to spearmint during any

given season. To remain economically viable with the added costs

associated with spearmint production, most spearmint producing farms

would fall into the category of large businesses.

Based on the Small Business Administration's definition of small

entities, the Committee estimates that none of the eight handlers

regulated by the order would be considered small entities as all are

national and multinational corporations involved in the buying and

selling of essential oils and the products of such essential oils. The

Committee also estimates that 20 of the 135 Scotch spearmint oil

producers and 10 of the 115 Native spearmint oil producers would be

classified as small entities. This is based on production information

gathered from assessments. Thus, a majority of handlers and producers

of Far West spearmint oil may not be classified as small entities.

Small spearmint oil producers represent a minority of farming

operations and are more vulnerable to market fluctuations. Such small

farmers generally need to market their entire annual crop and do not

have the resources to cushion seasons with poor spearmint oil returns.

Conversely, large diversified producers have the potential to endure

one or more seasons of poor spearmint oil markets because of stronger

incomes from alternate crops which could support the operation for a

period of time. Despite the advantage of larger producers, increasing

the Native salable quantity and allotment percentage will help both

large and small producers by improving returns. In addition, this

change may potentially benefit the small producer more than large

producers. This is because the change ensures that small producers are

more likely to maintain a profitable cash flow and meet annual

expenses.

Alternatives to this rule included not to increase the available

supply of Native spearmint oil, which could potentially hurt small

producers. The Committee reached its recommendation to increase the

salable quantity and allotment percentage for Native class oil after

careful consideration of all available information, and believes that

the level recommended will achieve the objectives sought. Without the

increase, the Committee believes the industry would not be able to meet

market needs. As of November 14, 1996, 84,476 pounds of Native

spearmint oil was available for market. Demand for Native spearmint oil

from December 1 to May 31 over the past five years has ranged from a

high of 245,661 pounds in 1991-92 to a low of 92,658 pounds in 1992-93.

The five year average is 157,531 pounds. Therefore, based on past

history the industry would be unlikely to meet market demand without

this change.

Annual salable quantities and allotment percentages have been

issued for both classes of spearmint oil since the order's inception.

Reporting and recordkeeping requirements have remained the same for

each year of regulation. Accordingly, this action will not impose any

additional reporting or recordkeeping requirements on either small or

large spearmint oil producers and handlers. All reports and forms

associated with this program are reviewed periodically in order to

avoid unnecessary and duplicitous information collection by industry

and public sector agencies. The Department has not identified any

relevant Federal rules that duplicate, overlap, or conflict with this

rule.

Finally, the Committee's meeting was widely publicized throughout

the spearmint oil industry and all interested persons were invited to

attend and participate on all issues. Interested persons are also

invited to submit information on the regulatory and informational

impacts of this action on small businesses.

After consideration of all relevant matter presented, including

that contained in the prior proposed and final rules in connection with

the establishment of the salable quantities and allotment percentages

for Scotch and Native spearmint oils for the 1996-97 marketing year,

the Committee's recommendation and other available information, it is

found that to revise section 985.215 (61 FR 11291) to change the

salable quantity and allotment percentage for Native spearmint oil, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect and that good cause exists for not postponing the effective date

of this rule until 30 days after publication in the Federal Register

because: (1) This rule increases the quantity of Native spearmint oil

that may be marketed during the marketing year which began on June 1,

1996; (2) The quantity of Native spearmint planted for the 1997-98

marketing year may be affected, thus handlers and producers should be

apprised as soon as possible of the salable quantity and allotment

percentage of Native spearmint oil contained in this interim final

rule; (3) the Committee unanimously recommended this change at a public

meeting and interested parties had an opportunity to provide input; and

(4) This rule provides a 30-day comment period and any comments

received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 985

Marketing agreements, Oils and fats, Reporting and recordkeeping

requirements, Spearmint oil.

For the reasons set forth in the preamble, 7 CFR part 985 is

amended as follows:

[[Page 1249]]

PART 985--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL

PRODUCED IN THE FAR WEST

1. The authority citation for 7 CFR part 985 continues to read as

follows:

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

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

follows:

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

Regulations.

Sec. 985.215 Salable quantities and allotment percentages 1996-97

marketing year.

* * * * *

(b)Class 3 (Native) oil--a salable quantity of 1,213,692 pounds and

an allotment percentage of 61 percent.

Dated: January 3, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-450 Filed 1-8-97; 8:45 am]

BILLING CODE 3410-02-P