[Federal Register: December 17, 2007 (Volume 72, Number 241)]
[Rules and Regulations]
[Page 71199-71202]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de07-1]
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Rules and Regulations
Federal Register
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[[Page 71199]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Docket Nos. AMS-FV-07-0134; FV08-985-1 IFR]
Marketing Order Regulating the Handling of Spearmint Oil Produced
in the Far West; Revision of the Salable Quantity and Allotment
Percentage for Class 3 (Native) Spearmint Oil for the 2007-2008
Marketing Year
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule revises the quantity of Class 3 (Native) spearmint
oil that handlers may purchase from, or handle for, producers during
the 2007-2008 marketing year. This rule increases the Native spearmint
oil salable quantity from 1,162,336 pounds to 1,172,956 pounds, and the
allotment percentage from 48 percent to 53 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 June 1, 2007, through May 31, 2008; comments received
by February 15, 2008 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 to the Docket Clerk,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov.
All comments should reference the docket number
and the date and page number of this issue of the Federal Register and
will be made available for public inspection in the Office of the
Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov
.
FOR FURTHER INFORMATION CONTACT: Susan M. Coleman, Marketing
Specialist, or Gary D. Olson, Regional Manager, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA; Telephone: (503) 326-2724, Fax: (503)
326-7440, or E-mail: Sue.Coleman@usda.gov or GaryD.Olson@usda.gov.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202)
720-2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order
No. 985 (7 CFR part 985), as amended, regulating the handling of
spearmint oil produced in the Far West (Washington, Idaho, Oregon, and
designated parts of Nevada and Utah), hereinafter referred to as the
``order.'' 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.''
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the 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 2007-2008 marketing year, which ends on May 31, 2008. 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 original salable quantity and allotment percentages for Scotch
and Native spearmint oil for the 2007-2008 marketing year were
recommended by the Committee at its October 4, 2006, meeting. The
Committee recommended salable quantities of 886,667 pounds and
1,062,336 pounds, and allotment percentages of 45 percent and 48
percent, respectively, for Scotch and Native spearmint oil. A proposed
rule was published in the Federal Register on January 22, 2007 (71 FR
2639). Comments on the proposed rule were solicited from interested
persons until February 21, 2007. No comments were received.
Subsequently, a final rule establishing the salable quantities and
allotment percentages for Scotch and Native spearmint oil for the 2007-
2008 marketing year was published in the Federal Register on March 29,
2007 (72 FR 14657).
This rule revises the quantity of Native spearmint oil that
handlers may purchase from, or handle for, producers during the 2007-
2008 marketing year, which ends on May 31, 2008. Pursuant to authority
contained in Sec. Sec. 985.50, 985.51, and 985.52 of the order, the
Committee, with seven of its eight members present, met on October 17,
2007, and unanimously recommended that the 2007-2008 Native spearmint
oil allotment percentage be increased by 5 percent.
Thus, taking into consideration the following discussion on
adjustments to the Native spearmint oil salable quantities, this rule
increases the 2007-
[[Page 71200]]
2008 marketing year salable quantities and allotment percentages for
Native spearmint oil to 1,172,956 pounds and 53 percent.
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 Native spearmint oil for the
2007-2008 marketing year was estimated by the Committee at the October
4, 2006, meeting at 2,213,200 pounds. This was later revised at the
beginning of the 2007-2008 marketing year to 2,213,124 pounds to
reflect a 2006-2007 marketing year loss of 76 pounds of base due to
non-production of some producers' total annual allotments. When the
revised total allotment base of 2,213,124 pounds is applied to the
originally established allotment percentage of 48 percent, the
initially established 2007-2008 marketing year salable quantity of
1,062,336 pounds is effectively modified to 1,062,300.
By increasing the salable quantity and allotment percentage, this
rule makes an additional amount of Native spearmint oil available by
releasing oil from the reserve pool. As of October 17, 2007, the
reserve pool is estimated at 195,790 pounds. When applied to each
individual producer, the allotment percentage increase allows each
producer to take up to an amount equal to their allotment base from
their reserve for this respective class of oil. 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 recommendations:
Native Spearmint Oil Recommendation
(A) Estimated 2007-2008 Allotment Base--2,213,200 pounds. This is
the estimate on which the original 2007-2008 Native spearmint oil
salable quantity and allotment percentage was based.
(B) Revised 2007-2008 Allotment Base--2,213,124 pounds. This is 76
pounds less than the estimated allotment base of 2,213,200 pounds. This
is less because some producers failed to produce all of their 2006-2007
allotment.
(C) Original 2007-2008 Allotment Percentage--48 percent. This was
unanimously recommended by the Committee on October 4, 2006.
(D) Original 2007-2008 Salable Quantity--1,062,336 pounds. This
figure is 48 percent of the estimated 2007-2008 allotment base of
2,213,200 pounds.
(E) Adjustment to the Original 2007-2008 Salable Quantity--
1,062,300 pounds. This figure reflects the salable quantity initially
available after the beginning of the 2006-2007 marketing year due to
the 76 pound reduction in the industry allotment base to 2,213,124
pounds.
(F) First Revision to the 2007-2008 Salable Quantity and Allotment
Percentage:
(1) Increase in Allotment Percentage--5 percent. The Committee
recommended a 5 percent increase at its October 17, 2007, meeting.
(2) 2007-2008 Allotment Percentage--53 percent. This figure is
derived by adding the increase of 5 percent to the original 2007-2008
allotment percentage of 48 percent.
(3) Calculated Revised 2007-2008 Salable Quantity--1,172,956
pounds. This figure is 53 percent of the revised 2007-2008 allotment
base of 2,213,124 pounds.
(4) Computed Increase in the 2007-2008 Salable Quantity--110,656
pounds. This figure is 5 percent of the revised 2007-2008 allotment
base of 2,213,124 pounds.
The 2007-2008 marketing year began on June 1, 2007, with an
estimated carry-in of 83,417 pounds of salable oil. When the estimated
carry-in is added to the revised 2007-2008 salable quantity of
1,062,300 pounds, a total estimated available supply for the 2007-2008
marketing year of 1,145,717 pounds results. Of this amount, 990,076
pounds of oil has already been sold or committed for the 2007-2008
marketing year, which leaves 155,641 pounds available for sale.
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 and producers who were not in attendance. By increasing
the 2007-2008 salable percentage by five percent, an estimated
additional 110,656 pounds will be made available to the market. This
amount combined with the 155,641 pounds currently available, will make
a total of 266,297 pounds available to the market and bring the total
available supply for the year to 1,256,373 pounds. The handlers are
estimating that the demand for 2007-2008 year will be 1,200,000 pounds,
which will leave 56,373 pounds as a carry out at the end of the year.
However, when the Committee made its original recommendation for the
establishment of the Native spearmint oil salable quantity and
allotment percentage for the 2007-2008 marketing year, it had
anticipated that the year would end with an ample available supply.
Therefore, the industry may not be able to meet market demand without
this increase.
Based on its analysis of available information, USDA has determined
that the salable quantity and allotment percentage for Native spearmint
oil for the 2007-2008 marketing year should be increased to 1,172,956
pounds and 53 percent, respectively.
This rule relaxes the regulation of Native spearmint oil and will
allow producers to meet market demand while improving producer returns.
In conjunction with the issuance of this rule, the Committee's revised
marketing policy statement for the 2007-2008 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 2007-2008 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 increase in the Native spearmint oil salable quantity and
allotment percentage allows for anticipated market needs for this class
of oil. In determining anticipated market needs, consideration by the
Committee was given to historical sales, and changes and trends in
production and demand.
[[Page 71201]]
Initial Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this 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 the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf.
There are seven spearmint oil handlers subject to regulation under
the order, and approximately 58 producers of Scotch spearmint oil and
approximately 92 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 $6,500,000, 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 one of the seven 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 58 Scotch spearmint oil producers and 22 of
the 92 Native spearmint oil producers could be classified as small
entities under the SBA definition. Thus, a majority of handlers and
producers of Far West spearmint oil may not be classified as small
entities.
The Far West spearmint oil industry is characterized by producers
whose farming operations generally involve more than one commodity, and
whose income from farming operations is not exclusively dependent on
the production of spearmint oil. A typical spearmint oil-producing
operation has enough acreage for rotation such that the total acreage
required to produce the crop is about one-third spearmint and two-
thirds rotational crops. Thus, the typical spearmint oil producer has
to have considerably more acreage than is planted to spearmint during
any given season. Crop rotation is an essential cultural practice in
the production of spearmint oil for weed, insect, and disease control.
To remain economically viable with the added costs associated with
spearmint oil production, most spearmint oil-producing farms fall into
the SBA category of large businesses.
Small spearmint oil producers generally are not as extensively
diversified as larger ones and as such are more at risk 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 alternate crops could
support the operation for a period of time. Being reasonably assured of
a stable price and market provides small producing entities with the
ability to maintain proper cash flow and to meet annual expenses. Thus,
the market and price stability provided by the order potentially
benefit the small producer more than such provisions benefit large
producers. Even though a majority of handlers and producers of
spearmint oil may not be classified as small entities, the volume
control feature of this order has small entity orientation.
This rule further increases the quantity of Native spearmint oil
that handlers may purchase from, or handle for, producers during the
2007-2008 marketing year, which ends on May 31, 2008. This rule
increases the 2007-2008 marketing year salable quantity and allotment
percentage for Native spearmint oil to 1,172,956 and 53 percent.
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 2007-2008
producer allotments are based, are 45 percent for Scotch and 53 percent
for Native (a 5 percentage point increase from the original allotment
percentage of 48 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 $1.40
decline in the season average producer price per pound of Far West
spearmint oil (combining the two classes of spearmint oil) resulting
from the higher quantities that would be produced and marketed if
volume controls were not used.
A previous price decline estimate of $1.45 per pound was based on
the original 2007-2008 allotment percentages (45 percent for Scotch and
48 percent for Native) published in the Federal Register on March 29,
2007 (72 FR 14657). The revised estimate reflects the impact of the
additional quantities that will be made available by this rule compared
to the original allotment percentages. In actuality, this rule will
make an amount lower than 110,656 pounds of Native spearmint oil
available, since not all producers have reserve pool oil. Loosening the
volume control restriction resulted in the smaller price decline
estimate of $1.40 per pound.
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 meeting, the Committee
considered alternatives to each of the increases. The Committee not
only considered leaving the salable quantity and allotment percentage
unchanged, but also looked at various increases. The Committee reached
its recommendation to increase the salable quantity and allotment
percentage for Native spearmint oil after careful consideration of all
available information, and believes that the levels recommended will
achieve the objectives sought. Without the increase, 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. In addition, USDA
has not identified any relevant Federal rules that duplicate, overlap
or conflict with this rule.
The AMS is committed to complying with the E-Government Act, to
promote the use of the Internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
The Committee's meeting was widely publicized throughout the
spearmint oil industry and all interested persons were invited to
attend the meeting and
[[Page 71202]]
participate in Committee deliberations. Like all Committee meetings,
the October 17, 2007, meeting was a public meeting and all entities,
both large and small, were able to express their views on this issue.
Finally, interested persons are invited to submit information on the
regulatory and informational impacts of this action on small
businesses.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html.
Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
This rule invites comments on a change to the salable quantity and
allotment percentage for Native spearmint oil for the 2007-2008
marketing year. Any comments received will be considered prior to
finalization of this rule.
After consideration of all relevant material presented, including
the Committee's recommendation, and other information, it is found that
this interim final rule, 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 ends on May 31,
2008; (2) the current quantity of Native spearmint oil may be
inadequate to meet demand for the 2007-2008 marketing year, thus making
the additional oil available as soon as is practicable will be
beneficial to both handlers and producers; (3) the Committee
recommended these changes at a public meeting and interested parties
had an opportunity to provide input; and (4) this rule provides a 60-
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.
0
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
0
1. The authority citation for 7 CFR part 985 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. In Sec. 985.226, paragraph (b) is revised to read as follows:
Note: This section will not appear in the annual Code of Federal
Regulations.
Sec. 985.226 Salable quantities and allotment percentages--2007-2008
marketing year.
* * * * *
(b) Class 3 (Native) oil--a salable quantity of 1,172,956 pounds
and an allotment percentage of 53 percent.
Dated: December 12, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 07-6075 Filed 12-13-07; 12:42 pm]
BILLING CODE 3410-02-P