[Federal Register: March 30, 2006 (Volume 71, Number 61)]
[Rules and Regulations]
[Page 16015-16019]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30mr06-1]
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Rules and Regulations
Federal Register
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[[Page 16015]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Docket No. FV05-985-2 FIR A]
Marketing Order Regulating the Handling of Spearmint Oil Produced
in the Far West; Revision of the Salable Quantity and Allotment
Percentage for Class 1 (Scotch) and Class 3 (Native) Spearmint Oil for
the 2005-2006 Marketing Year
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, without change, the provisions of two interim final rules that
increased the quantity of Class 1 (Scotch) and Class 3 (Native)
spearmint oil that handlers may purchase from, or handle for, producers
during the 2005-2006 marketing year. This rule continues in effect the
actions that increased the Scotch spearmint oil salable quantity by an
additional 385,489 pounds from 677,409 pounds to 1,062,898 pounds, and
the allotment percentage by an additional 20 percent from 35 percent to
55 percent. In addition, this rule continues in effect the actions that
increased the Native spearmint oil salable quantity by an additional
303,497 pounds from 867,958 pounds to 1,171,455 pounds, and the
allotment percentage by an additional 14 percent from 40 percent to 54
percent. The marketing order regulates the handling of spearmint oil
produced in the Far West and is administered locally by the Spearmint
Oil Administrative Committee (Committee). The Committee recommended
this rule for the purpose of avoiding extreme fluctuations in supplies
and prices and to help maintain stability in the Far West spearmint oil
market.
DATES: Effective Date: May 1, 2006.
FOR FURTHER INFORMATION CONTACT: Susan M. Hiller, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA; Telephone: (503) 326-2724, Fax: (503)
326-7440; or George Kelhart, Technical Advisor, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400
Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237;
Telephone: (202) 720-2491, Fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202)
720-2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order
No. 985 (7 CFR part 985), as amended, regulating the handling of
spearmint oil produced in the Far West (Washington, Idaho, Oregon, and
designated parts of Nevada and Utah), hereinafter referred to as the
``order.'' The 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.''
USDA is issuing this rule in conformance with Executive Order
12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
This rule will not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with USDA a petition
stating that the order, any provision of the order, or any obligation
imposed in connection with the order is not in accordance with law and
request a modification of the order or to be exempted therefrom. A
handler is afforded the opportunity for a hearing on the petition.
After the hearing USDA would rule on the petition. The Act provides
that the district court of the United States in any district in which
the handler is an inhabitant, or has his or her principal place of
business, has jurisdiction to review USDA's ruling on the petition,
provided an action is filed not later than 20 days after the date of
the entry of the ruling.
The initial salable quantities and allotment percentages for Scotch
and Native spearmint oil for the 2005-2006 marketing year was
recommended by the Committee at its October 6, 2004, meeting. The
Committee recommended salable quantities of 677,409 pounds and 867,958
pounds, and allotment percentages of 35 percent and 40 percent,
respectively, for Scotch and Native spearmint oil. A proposed rule was
published in the Federal Register on January 12, 2005 (70 FR 2027).
Comments on the proposed rule were solicited from interested persons
until February 11, 2005. No comments were received. Subsequently, a
final rule establishing the salable quantities and allotment
percentages for Scotch and Native spearmint oil for the 2005-2006
marketing year was published in the Federal Register on March 24, 2005
(70 FR 14969).
Pursuant to authority contained in Sec. Sec. 985.50, 985.51, and
985.52 of the order, the Committee has made recommendations to increase
the quantity of Scotch and Native spearmint oil that handlers may
purchase from, or handle for, producers during the 2005-2006 marketing
year, which ends on May 31, 2006. The first revision was published as
an interim final rule in the Federal Register on September 23, 2005 (70
FR 55713), which increased the 2005-2006 marketing year salable
quantities and allotment percentages for Scotch and Native spearmint
oil to 1,062,898 pounds and 55 percent, and 1,019,600 pounds and 47
percent, respectively. The second revision was published as an amended
interim final rule in the Federal Register on December 5, 2005 (70 FR
72355), which further increased the Native spearmint oil salable
quantity by an additional 151,855 pounds from 1,019,600 pounds to
1,171,455 pounds and the allotment percentage by an additional 7
percent from 47 percent to 54 percent. The Committee did not make a
recommendation to increase the Scotch
[[Page 16016]]
spearmint oil salable quantity or allotment percentage by an additional
amount due to stable market conditions.
Thus, taking into consideration the following discussion on
adjustments, the 2005-2006 marketing year salable quantity and
allotment percentage for Scotch spearmint oil is increased to 1,062,898
pounds and 55 percent, respectively. The 2005-2006 marketing year
salable quantity and allotment percentage for Native spearmint oil is
increased to 1,171,455 pounds and 54 percent, respectively.
The salable quantity is the total quantity of each class of oil
that handlers may purchase from, or handle for, producers during the
marketing year. 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 total industry allotment base for Scotch spearmint oil for the
2005-2006 marketing year was estimated by the Committee at the October
6, 2004, meeting at 1,935,455 pounds. This was later revised at the
beginning of the 2005-2006 marketing year to 1,932,542 pounds to
reflect a 2004-2005 marketing year loss of 2,913 pounds of base due to
non-production of some producers' total annual allotments. When the
revised total allotment base of 1,932,542 pounds is applied to the
originally established allotment percentage of 35 percent, the
initially established 2005-2006 marketing year salable quantity of
677,409 pounds is effectively modified to 676,390 pounds.
The same situation applies to Native spearmint oil where the
Committee estimated that the total industry allotment base for the
2005-2006 marketing year was 2,169,894 pounds, and was revised at the
beginning of the 2005-2006 marketing year to 2,169,362 pounds to
reflect a 2004-2005 marketing year loss of 532 pounds of base due to
non-production of some producers' total annual allotments. When the
revised total allotment base of 2,169,362 pounds is applied to the
originally established allotment percentage of 40 percent, the
initially established 2005-2006 marketing year salable quantity of
867,958 pounds is effectively modified to 867,745 pounds.
By increasing the salable quantity and allotment percentage, this
final rule adopts the provisions of two interim final rules that made
an additional amount of Scotch and Native spearmint oil available by
releasing oil from the reserve pool. When applied to each individual
producer, this allotment percentage increase allows each producer to
take up to an amount equal to their allotment base from their
respective oil reserve. In addition, pursuant to Sec. Sec. 985.56 and
985.156, producers with excess oil are not able to transfer such excess
oil to other producers to fill deficiencies in annual allotments after
October 31 of each marketing year.
The following table summarizes the Committee recommendation:
Scotch Spearmint Oil Recommendation
(A) Estimated 2005-2006 Allotment Base--1,935,455 pounds. This is
the estimate on which the original 2005-2006 Scotch spearmint oil
salable quantity and allotment percentage was based.
(B) Revised 2005-2006 Allotment Base--1,932,542 pounds. This is
2,913 pounds less than the estimated allotment base of 1,935,455
pounds. This is less because some producers failed to produce all of
their 2004-2005 allotment.
(C) Initial 2005-2006 Allotment Percentage--35 percent. This was
recommended by the Committee on October 6, 2004.
(D) Initial 2005-2006 Salable Quantity--677,409. This figure is 35
percent of 1,935,455 pounds.
(E) Initial Adjustment to the 2005-2006 Salable Quantity--676,390
pounds. This figure reflects the salable quantity initially available
after the beginning of the 2005-2006 marketing year due to the 2,913
pound reduction in the industry allotment base to 1,932,542 pounds.
(F) First Revision to the 2005-2006 Salable Quantity and Allotment
Percentage:
(1) Increase in Allotment Percentage--20 percent. The Committee
recommended a 20 percent increase at its August 24, 2005, meeting.
(2) 2005-2006 Allotment Percentage--55 percent. This figure is
derived by adding the increase of 20 percent to the initial 2005-2006
allotment percentage of 35 percent.
(3) Calculated Revised 2005-2006 Salable Quantity--1,062,898
pounds. This figure is 55 percent of the revised 2005-2006 allotment
base of 1,932,542 pounds.
(4) Computed Increase in the 2005-2006 Salable Quantity--386,508
pounds. This figure is 20 percent of the revised 2005-2006 allotment
base of 1,932,542 pounds.
(G) No Second Revision to the 2005-2006 Salable quantity and
Allotment Percentage.
In making this recommendation, the Committee considered all
available information on price, supply, and demand. The Committee also
considered reports and other information from handlers and producers in
attendance at the meeting and reports given by the Committee manager
from handlers who were not in attendance. The 2005-2006 marketing year
began on June 1, 2005. Handlers have reported purchases and committed
sales of 861,579 pounds of Scotch spearmint oil for the period of June
1, 2005, through February 21, 2006. This amount is 117 percent of the
total sales for the five-year average of 736,991 pounds. Handlers
estimated the total demand for the 2005-2006 marketing year could be
between 917,745 pounds to 937,745 pounds. These amounts exceed the
five-year average for an entire marketing year by 180,754 pounds to
200,754 pounds. Therefore, based on past history, the industry may not
be able to meet market demand without this increase. When the Committee
made its initial recommendation for the establishment of the Scotch
spearmint oil salable quantity and allotment percentage for the 2005-
2006 marketing year, it had anticipated that the year would end with an
ample available supply.
Native Spearmint Oil Recommendation
(A) Estimated 2005-2006 Allotment Base--2,169,894 pounds. This is
the estimate on which the original 2005-2006 Native spearmint oil
salable quantity and allotment percentage was based.
(B) Revised 2005-2006 Allotment Base--2,169,362 pounds. This is 532
pounds less than the estimated allotment base of 2,169,894 pounds. This
is less because some producers failed to produce all of their 2004-2005
allotment.
(C) Initial 2005-2006 Allotment Percentage--40 percent. This was
recommended by the Committee on October 6, 2004.
(D) Initial 2005-2006 Salable Quantity--867,958. This figure is 40
percent of 2,169,894 pounds.
(E) Initial Adjustment to the 2005-2006 Salable Quantity--867,745
pounds. This figure reflects the salable quantity initially available
after the beginning of the 2005-2006 marketing year due to the 532
pound reduction in the industry allotment base to 2,169,362 pounds.
(F) First Revision to the 2005-2006 Salable Quantity and Allotment
Percentage:
(1) Increase in Allotment Percentage--7 percent. The Committee
[[Page 16017]]
recommended a 7 percent increase at its August 24, 2005, meeting.
(2) 2005-2006 Allotment Percentage--47 percent. This figure is
derived by adding the increase of 7 percent to the initial 2005-2006
allotment percentage of 40 percent.
(3) Calculated Revised 2005-2006 Salable Quantity--1,019,600
pounds. This figure is 47 percent of the revised 2005-2006 allotment
base of 2,169,362 pounds.
(4) Computed Increase in the 2005-2006 Salable Quantity--151,855
pounds. This figure is 7 percent of the revised 2005-2006 allotment
base of 2,169,362 pounds.
(G) Second Revision to the 2005-2006 Salable Quantity and Allotment
Percentage:
(1) Increase in Allotment Percentage--7 percent. The Committee
recommended a 7 percent increase at its October 5, 2005, meeting.
(2) 2005-2006 Allotment Percentage--54 percent. This figure is
derived by adding the increase of 7 percent to the first revised 2005-
2006 allotment percentage of 47 percent.
(3) Calculated Revised 2005-2006 Salable Quantity--1,171,455
pounds. This figure is 54 percent of the revised 2005-2006 allotment
base of 2,169,362 pounds.
(4) Computed Increase in the 2005-2006 Salable Quantity--151,855
pounds. This figure is 7 percent of the revised 2005-2006 allotment
base of 2,169,362 pounds.
In making this recommendation, the Committee considered all
available information on price, supply, and demand. The Committee also
considered reports and other information from handlers and producers in
attendance at the meeting and reports given by the Committee manager
from handlers who were not in attendance. The 2005-2006 marketing year
began on June 1, 2005. Handlers have reported purchases and committed
sales of 1,060,441 pounds of Native spearmint oil for the period of
June 1, 2005, through February 21, 2006. This amount is 110 percent of
the total sales for the five-year average of 962,377 pounds. Handlers
estimated the total demand for the 2005-2006 marketing year could be
between 1,100,000 pounds to 1,300,000 pounds. These amounts exceed the
five-year average for an entire marketing year by 137,623 pounds to
337,623 pounds. Therefore, based on past history, the industry may not
be able to meet market demand without these increases. When the
Committee made its initial recommendation for the establishment of the
Native spearmint oil salable quantity and allotment percentage for the
2005-2006 marketing year, it had anticipated that the year would end
with an ample available supply.
Based on its analysis of available information, USDA has determined
that the salable quantity and allotment percentage for Scotch spearmint
oil for the 2005-2006 marketing year should be increased to 1,062,898
pounds and 55 percent, respectively. In addition, USDA has determined
that the salable quantity and allotment percentage for Native spearmint
oil for the 2005-2006 marketing year should be increased to 1,171,455
pounds and 54 percent, respectively.
This rule finalizes two interim final rules that relaxed the
regulation of Scotch and Native spearmint oil and will allow producers
to meet market needs and improve returns. In conjunction with the
issuance of this rule, the Committee's revised marketing policy
statement for the 2005-2006 marketing year has been reviewed by USDA.
The Committee's marketing policy statement, a requirement whenever the
Committee recommends implementing volume regulations or recommends
revisions to existing volume regulations, meets the intent of Sec.
985.50 of the order. During its discussion of revising the 2005-2006
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 USDA's ``Guidelines for Fruit, Vegetable, and
Specialty Crop Marketing Orders'' has also been reviewed and confirmed.
The increases in the Scotch and Native spearmint oil salable
quantities and allotment percentages allows for anticipated market
needs for both classes of oil. In determining anticipated market needs,
consideration by the Committee included historical sales, and changes
and trends in production and 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, 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 the 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 eight spearmint oil handlers subject to regulation under
the order, and approximately 59 producers of Scotch spearmint oil and
approximately 91 producers of Native spearmint oil in the regulated
production area. Small agricultural service firms are defined by the
Small Business Administration (SBA) (13 CFR 121.201) as those having
annual receipts of less than $6,000,000, and small agricultural
producers are defined as those having annual receipts of less than
$750,000.
Based on the SBA's definition of small entities, the Committee
estimates that 2 of the 8 handlers regulated by the order could be
considered small entities. Most of the handlers are large corporations
involved in the international trading of essential oils and the
products of essential oils. In addition, the Committee estimates that
19 of the 59 Scotch spearmint oil producers and 21 of the 91 Native
spearmint oil producers could be classified as small entities under the
SBA definition. Thus, a majority of handlers and producers of Far West
spearmint oil may not be classified as small entities.
The Far West spearmint oil industry is characterized by producers
whose farming operations generally involve more than one commodity, and
whose income from farming operations is not exclusively dependent on
the production of spearmint oil. A typical spearmint oil-producing
operation has enough acreage for rotation such that the total acreage
required to produce the crop is about one-third spearmint and two-
thirds rotational crops. Thus, the typical spearmint oil producer has
to have considerably more acreage than is planted to spearmint during
any given season. Crop rotation is an essential cultural practice in
the production of spearmint for weed, insect, and disease control. To
remain economically viable with the added costs associated with
spearmint oil production, most
[[Page 16018]]
spearmint oil-producing farms fall into the SBA category of large
businesses.
Small spearmint oil producers generally are not as extensively
diversified as larger ones and as such are more at risk to market
fluctuations. Such small producers 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 income from alternative crops
could support the operation for a period of time. Being reasonably
assured of a stable price and market provides small producing entities
with the ability to maintain proper cash flow and to meet annual
expenses. Thus, the market and price stability provided by the order
potentially benefit the small producer more than such provisions
benefit large producers. Even though a majority of handlers and
producers of spearmint oil may not be classified as small entities, the
volume control feature of this order has small entity orientation.
This final rule adopts, without change, the provisions of the
interim final rule published in the Federal Register on September 23,
2005 (70 FR 55713) and amended on December 5, 2005 (70 FR 72355).
Specifically, the rule published on September 23, 2005, increased the
2005-2006 marketing year salable quantities and allotment percentages
for Scotch and Native spearmint oil to 1,062,898 pounds and 55 percent,
and 1,019,600 pounds and 47 percent, respectively. The rule that
subsequently amended the interim final rule was published on December
5, 2005, increased the Native spearmint oil salable quantity by an
additional 151,855 pounds from 1,019,600 pounds to 1,171,455 pounds,
and the allotment percentage by an additional 7 percent from 47 percent
to 54 percent. The Committee did not make a recommendation to further
increase the Scotch spearmint oil salable quantity or allotment
percentage due to stable market conditions. This rule finalizes two
interim final rules that relaxed the Scotch and Native spearmint oil
volume regulations and allows producers to meet market needs and
improve returns.
An econometric model was used to assess the impact that volume
control has on the prices producers receive for their commodity.
Without volume control, spearmint oil markets would likely be over-
supplied, resulting in low producer prices and a large volume of oil
stored and carried over to the next crop year. The model estimates how
much lower producer prices would likely be in the absence of volume
controls.
The recommended allotment percentages, upon which 2005-2006
producer allotments are based, are 55 percent for Scotch (a 20
percentage point increase from the original allotment percentage of 35
percent) and 54 percent for Native (a 14 percentage point increase from
the original salable percentage of 40 percent). Without volume
controls, producers would not be limited to these allotment levels, and
could produce and sell additional spearmint oil. The econometric model
estimated a $1.32 decline in the season average producer price per
pound (for both classes of spearmint oil) resulting from the higher
quantities that would be produced and marketed if volume controls were
not used (i.e., if the salable percentages were set at 100 percent).
Loosening the volume control restriction by increasing the
allotment percentages resulted in this revised price decline estimate
of $1.32 per pound if volume controls were not used. The initial price
decline estimate of $1.60 per pound was based on the 2005-2006
allotment percentages (35 percent for Scotch and 40 percent for Native)
published in the Federal Register on March 24, 2005 (70 FR 14969). The
2004 Far West producer price for both classes of spearmint oil was
$9.48 per pound.
The surplus situation for the spearmint oil market that would exist
without volume controls in 2005-2006 also would likely dampen prospects
for improved producer prices in future years because of the buildup in
stocks.
The use of volume controls allows the industry to fully supply
spearmint oil markets while avoiding the negative consequences of over-
supplying these markets. The use of volume controls is believed to have
little or no effect on consumer prices of products containing spearmint
oil and will not result in fewer retail sales of such products.
Based on projections available at the meetings, the Committee
considered alternatives to each of the increases finalized herein. The
Committee not only considered leaving the salable quantity and
allotment percentage unchanged, but also looked at various increases
ranging from 0 percent to 100 percent. The Committee reached each of
its recommendations to increase the salable quantity and allotment
percentage for Scotch and Native spearmint oil after careful
consideration of all available information, and believes that the
levels recommended will achieve the objectives sought. Without the
increases, the Committee believes the industry would not be able to
meet market needs.
This rule will not impose any additional reporting or recordkeeping
requirements on either small or large spearmint oil handlers. As with
all Federal marketing order programs, reports and forms are
periodically reviewed to reduce information requirements and
duplication by industry and public sector agencies.
AMS is committed to compliance with the Government Paperwork
Elimination Act (GPEA), which requires Government agencies in general
to provide the public the option of submitting information or
transacting business electronically to the maximum extent possible.
In addition, USDA has not identified any relevant Federal rules
that duplicate, overlap or conflict with this rule.
Further, the Committee meetings were widely publicized throughout
the spearmint oil industry and all interested persons were invited to
attend and participate in Committee deliberations. Like all Committee
meetings, the August 24, 2005, and October 5, 2005, meetings were
public meetings and all entities, both large and small, were able to
express their views on modification of the 2005-2006 salable quantities
and allotment percentages.
The first revision was published as an interim final rule in the
Federal Register on September 23, 2005. Comments on the interim final
rule were solicited from interested persons until November 22, 2005. No
comments were received. The second revision was published as an amended
interim final rule in the Federal Register on December 5, 2005.
Comments on the amended interim final rule were solicited from
interested persons until February 3, 2006. No comments were received.
Copies of each of these rules were mailed by the Committee's staff to
all committee members, producers, handlers, and other interested
persons. In addition, each of these rules was made available through
the Internet by USDA and the Office of the Federal Register.
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 Committee's recommendation, and other information, it is found that
[[Page 16019]]
finalizing the interim final rules, without change, as published in the
Federal Register (70 FR 55713, September 23, 2005, and 70 FR 72355,
December 5, 2005) 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.
PART 985--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL
PRODUCED IN THE FAR WEST
0
Accordingly, the interim final rules amending 7 CFR part 985, which
were published at 70 FR 55713 on September 23, 2005 and 70 FR 72355 on
December 5, 2005, are adopted as a final rule without change.
Dated: March 27, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-3080 Filed 3-29-06; 8:45 am]
BILLING CODE 3410-02-P