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 2006-2007 Marketing Year, 52735-52738 [E6-14760]
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52735
Rules and Regulations
Federal Register
Vol. 71, No. 173
Thursday, September 7, 2006
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Docket No. FV06–985–2 FIR]
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
2006–2007 Marketing Year
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
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AGENCY:
SUMMARY: The Department of
Agriculture (USDA) is adopting, as a
final rule, without change, an interim
final rule revising the quantity of Class
3 (Native) spearmint oil that handlers
may purchase from, or handle for,
producers during the 2006–2007
marketing year. This rule continues in
effect the action that increased the
Native spearmint oil salable quantity
from 1,007,886 pounds to 1,161,260
pounds, and the allotment percentage
from 46 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 to help maintain
stability in the Far West spearmint oil
market.
DATES: Effective Date: October 10, 2006.
FOR FURTHER INFORMATION CONTACT:
Susan M. Hiller, Marketing Specialist
and 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:
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Susan.Hiller@usda.gov and
GaryD.Olson@usda.gov, respectively.
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. 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 continues in effect the action
that increased the quantity of Native
spearmint oil produced in the Far West
that may be purchased from or handled
for producers by handlers during the
2006–2007 marketing year, which ends
on May 31, 2007. 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
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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 2006–2007
marketing year were recommended by
the Committee at its October 5, 2005,
meeting. The Committee recommended
salable quantities of 878,205 pounds
and 1,007,886 pounds, and allotment
percentages of 45 percent and 46
percent, respectively, for Scotch and
Native spearmint oil. A proposed rule
was published in the Federal Register
on February 1, 2006 (71 FR 5183).
Comments on the proposed rule were
solicited from interested persons until
March 3, 2006. No comments were
received. Subsequently, a final rule
establishing the salable quantities and
allotment percentages for Scotch and
Native spearmint oil for the 2006–2007
marketing year was published in the
Federal Register on April 5, 2006 (71 FR
16986).
This rule continues in effect the
action that revised the quantity of
Native spearmint oil that handlers may
purchase from, or handle for, producers
during the 2006–2007 marketing year,
which ends on May 31, 2007. Pursuant
to authority contained in §§ 985.50,
985.51, and 985.52 of the order, the
Committee, with seven of the eight
members present, met on April 18,
2006, and unanimously recommended
that the 2006–2007 Native spearmint oil
allotment percentage be increased by 7
percent.
Thus, taking into consideration the
following discussion on adjustments to
the Native spearmint oil salable
quantity, the 2006–2007 marketing year
salable quantity and allotment
percentage for Native spearmint oil is
increased to 1,161,260 pounds and 53
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.
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The estimated total industry allotment
base for Native spearmint oil for the
2006–2007 marketing year was
established at 2,191,056 pounds. This
figure represents a one percent increase
over the revised 2005–2006 total
allotment base. This figure is generally
revised each year on June 1 due to
producer base being lost because of the
bona fide effort production provisions of
§ 985.53(e). The revision is usually
minimal.
By increasing the salable quantity and
allotment percentage, this final rule
makes an additional amount of Native
spearmint oil available by releasing oil
from the reserve pool. When applied to
each individual producer, the allotment
percentage increase allows each
producer with reserve pool oil to take
up to an amount equal to their allotment
base from their reserve for this class of
oil. Before November 1, 2006, a
producer may also transfer excess oil to
another producer to enable that
producer to fill a deficiency in that
producer’s annual allotment for this
class of oil.
The following table summarizes the
Committee recommendation:
Native Spearmint Oil Recommendation
(A) Estimated 2006–2007 Allotment
Base—2,191,056 pounds. This is the
estimate on which the original 2006–
2007 Native spearmint oil salable
quantity and allotment percentage was
based.
(B) Original 2006–2007 Allotment
Percentage—46 percent. This was
unanimously recommended by the
Committee on October 5, 2005.
(C) Original 2006–2007 Salable
Quantity—1,007,886 pounds. This
figure is 46 percent of the estimated
2006–2007 allotment base of 2,191,056
pounds.
(D) Increase in Allotment
Percentage—7 percent. The Committee
recommended a 7 percent increase at its
April 18, 2006, meeting.
(E) 2006–2007 Allotment
Percentage—53 percent. This figure is
derived by adding the increase of 7
percent to the original 2006–2007
allotment percentage of 46 percent.
(F) Calculated Revised 2006–2007
Salable Quantity—1,161,260 pounds.
This figure is 53 percent of the
estimated 2006–2007 allotment base of
2,191,056 pounds.
(G) Computed Increase in the 2006–
2007 Salable Quantity—153,374
pounds. This figure is 7 percent of the
estimated 2006–2007 allotment base of
2,191,056 pounds.
In making this recommendation, the
Committee considered all available
information on price, supply, and
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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. On
average, handlers estimated that the
demand for 2006–2007 Native
spearmint oil is 300,000 pounds above
the quantity already contracted for sale.
The 2006–2007 marketing year began
on June 1, 2006, with an estimated
carry-in of 50,000 pounds of salable oil.
When the estimated carry-in is added to
the original 2006–2007 salable quantity
of 1,007,886 pounds, a total estimated
available supply for the 2006–2007
marketing year of 1,057,886 pounds
results. Of this amount, 819,560 pounds
of oil has already been contracted for
the 2006–2007 marketing year.
Additionally, an estimated deficiency of
133,800 pounds may exist from
producers not producing their full
salable quantity. As a result, an
estimated 104,526 pounds of oil would
remain uncontracted and available for
sale without this increase. This increase
supplies an additional 153,374 pounds
of oil to the market, resulting in 257,900
pounds of oil available for contracting
for 2006–2007 marketing year.
The Committee was reluctant to
recommend any more of an increase in
the salable quantity due to the
uncertainty of the 2006–2007 marketing
year; however, the Committee continues
to believe that an increase is necessary
to supply the higher quantity of Native
spearmint oil demanded according to
their revised market estimate. Therefore,
the industry may not be able to meet
market demand without this increase. In
addition, when the Committee made its
original recommendation for the
establishment of the Native spearmint
oil salable quantity and allotment
percentage for the 2006–2007 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 Native spearmint oil for
the 2006–2007 marketing year should be
increased to 1,161,260 pounds and 53
percent, respectively.
This rule finalizes an interim final
rule that relaxed 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 2006–2007
marketing year has been reviewed by
USDA. The Committee’s marketing
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policy statement, a requirement
whenever the Committee recommends
implementing volume regulations or
recommends revisions to existing
volume regulations, meets the intent of
§ 985.50 of the order. During its
discussion of revising the 2006–2007
salable quantity and allotment
percentage, 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.
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
88 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
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Federal Register / Vol. 71, No. 173 / Thursday, September 7, 2006 / Rules and Regulations
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 18 of the 88 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
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.
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This rule continues in effect the
action that revised the quantity of
Native spearmint oil that handlers may
purchase from, or handle for, producers
during the 2006–2007 marketing year,
which ends on May 31, 2007. That
interim final rule increased the Native
spearmint oil salable quantity from
1,007,886 pounds to 1,161,260 pounds,
and the allotment percentage from 46
percent to 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 2006–2007
producer allotments are based, are 45
percent for Scotch and 53 percent for
Native (a 7 percentage point increase
from the original salable percentage of
46 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 (from 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 $1.40 per
pound if volume controls were not used.
A previous price decline estimate of
$1.49 per pound was based on the
2006–2007 allotment percentages (45
percent for Scotch and 46 percent for
Native) published in the Federal
Register on April 5, 2006 (71 FR 16986).
The surplus situation for the
spearmint oil market that would exist
without volume controls in 2006–2007
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
meeting, the Committee considered
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52737
alternatives to the increase 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 10 percent.
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 level
recommended will achieve the
objectives sought. Without the increase,
the Committee believes the industry
would not be able to meet market needs.
The AMS is committed to compliance
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.
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, as noted in the initial
regulatory flexibility analysis, USDA
has not identified any relevant Federal
rules that duplicate, overlap or conflict
with this rule.
Further, the Committee’s meeting was
widely publicized throughout the
spearmint oil industry and all interested
persons were invited to attend the
meeting and participate in Committee
deliberations. Like all Committee
meetings, the April 18, 2006, meeting
was a public meeting and all entities,
both large and small, were able to
express their views on this issue.
An interim final rule concerning this
action was published in the Federal
Register on May 26, 2006. Copies of the
rule were mailed by the Committee’s
staff to all committee members,
producers, handlers, and other
interested persons. In addition, the rule
was made available through the Internet
by USDA and the Office of the Federal
Register. That rule provided for a 60-day
comment period which ended July 25,
2006. No comments were received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at:
https://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.
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Federal Register / Vol. 71, No. 173 / Thursday, September 7, 2006 / Rules and Regulations
After consideration of all relevant
material presented, including the
Committee’s recommendation, and
other information, it is found that
finalizing the interim final rule, without
change, as published in the Federal
Register (71 FR 30266, May 26, 2006)
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
Accordingly, the interim final rule
amending 7 CFR part 985, which was
published at 71 FR 30266 on May 26,
2006, is adopted as a final rule without
change.
I
Dated: August 31, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E6–14760 Filed 9–6–06; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1437
RIN 0560 AH19
Noninsured Crop Disaster Assistance
Program—Tropical Regions
Commodity Credit Corporation,
USDA.
ACTION: Final rule.
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AGENCY:
SUMMARY: This rule changes how the
Commodity Credit Corporation (CCC)
handles certain claims under the
Noninsured Crop Disaster Assistance
Program (NAP) for ‘‘tropical’’ regions,
including Hawaii, Puerto Rico and other
specified areas. The changes will reduce
the burden on the affected program
participants and ease program
administration in the affected areas.
EFFECTIVE DATE: January 1, 2006.
FOR FURTHER INFORMATION CONTACT:
Frances Williams, Program Specialist,
Noninsured Crop Disaster Assistance
Program, Farm Service Agency, United
States Department of Agriculture
(USDA), STOP 0517, Room 3648–S,
1400 Independence Avenue, SW.,
Washington, DC 20250–0517.
Telephone: 202–690–0700. Electronic
Mail: Frances.Williams@wdc.usda.gov.
Persons with disabilities who require
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Jkt 208001
alternative means for communication
(Braille, large print, audiotape, etc.)
should contact the USDA Target Center
at (202) 720–2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Background
A proposed rule published on October
3, 2005 proposed changes for handling
certain but not all claims for assistance
in certain defined ‘‘tropical regions’’
(including Hawaii and Puerto Rico)
under the Noninsured Crop Disaster
Assistance Program (NAP) program
administered by CCC under rules found
at 7 CFR Part 1437. The comment period
for the rule ended on November 2, 2005,
and no comments were received. The
background and need for the rule were
described in the preamble to the
proposed rule. The new regulations, as
proposed, are adopted by final rule with
minor clarifying changes. This final rule
is made effective as of January 1, 2006,
since, as contemplated in the proposed
rule, the rule was to be effective with all
covered crops planted as of that date.
Provision is made in the rule itself for
adjustments as may be needed between
the old and new rules. It is understood,
however, that the changes in 7 CFR
1437 are, in all cases, advantageous to
producers. If not, any producer with a
claim arising from a policy issued before
the date of publication of this final rule
who would have profited from the old
policy may apply for relief.
In the preamble to the proposed rule
it was indicated that the source of
authority for extending the rule to
certain tropical regions was 48 U.S.C.
1469d. However, the NAP program has
been since inception extended to those
regions. NAP was first provided for in
crop insurance legislation that allowed
for crop insurance in such regions and
allowed NAP as an alternative to
catastrophic crop insurance coverage
where such coverage is not available. It
remains the case, even though the
statutory authority for NAP has
changed, that NAP is to be available
where conventional federal crop
insurance catastrophic insurance is not
available and the authority for federal
crop insurance continues to include an
allowance for federal crop insurance in
the areas covered by this NAP rule. That
noted, on review, the provisions of the
rule which provide for different
treatment in certain tropical areas as
opposed to others have been found to be
justified because of differing agricultural
conditions and no change has been
made in the rule in this regard.
Executive Order 12866
This rule is issued in conformance
with Executive Order 12866, was
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determined to be not significant, and
was not reviewed by the Office of
Management and Budget (OMB).
Regulatory Flexibility Act
It has been determined that the
Regulatory Flexibility Act is not
applicable to this rule because CCC is
not required to publish a notice of
proposed rulemaking for the subject
matter of this rule.
Environmental Assessment
The environmental impacts of this
rule have been considered consistent
with the provisions of the National
Environmental Policy Act of 1969
(NEPA), 42 U.S.C. 4321 et seq., the
regulations of the Council on
Environmental Quality (40 CFR parts
1500–1508), and FSA regulations for
compliance with NEPA, 7 CFR 799. FSA
has concluded that this rule is
categorically excluded from further
environmental review and
documentation. No extraordinary
circumstances or other unforeseeable
factors exist which would require
preparation of an environmental
assessment or environmental impact
statement.
Executive Order 12988
This rule has been reviewed in
accordance with Executive Order 12988.
This rule preempts State and other local
laws that are inconsistent with it. Before
any legal action may be brought
regarding a determination under this
rule, the administrative appeal
provisions set forth at 7 CFR parts 11
and 780 must be exhausted.
Executive Order 12372
This program is not subject to the
provisions of Executive Order 12372,
which require intergovernmental
consultation with State and local
officials. ‘‘States’’ for this purpose
included the 50 States and other areas
addressed in the rule. See the notice
related to 7 CFR part 3014, subpart V,
published at 48 FR 29115 (June 24,
1983).
Unfunded Mandates Reform Act of
1995
The rule contains no Federal
mandates under the regulatory
provisions of Title II of the Unfunded
Mandates Reform Act of 1995 (UMRA)
for State, Local, and tribal governments
or the private sector. Thus, this rule is
not subject to the requirements of
sections 202 and 205 of the UMRA.
Paperwork Reduction Act of 1995
The information collection burden for
NAP is by OMB under 5 CFR 1320 and
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[Federal Register Volume 71, Number 173 (Thursday, September 7, 2006)]
[Rules and Regulations]
[Pages 52735-52738]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14760]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 71, No. 173 / Thursday, September 7, 2006 /
Rules and Regulations
[[Page 52735]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Docket No. FV06-985-2 FIR]
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 2006-2007
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, an interim final rule revising the quantity of
Class 3 (Native) spearmint oil that handlers may purchase from, or
handle for, producers during the 2006-2007 marketing year. This rule
continues in effect the action that increased the Native spearmint oil
salable quantity from 1,007,886 pounds to 1,161,260 pounds, and the
allotment percentage from 46 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 to help maintain
stability in the Far West spearmint oil market.
DATES: Effective Date: October 10, 2006.
FOR FURTHER INFORMATION CONTACT: Susan M. Hiller, Marketing Specialist
and 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:
Susan.Hiller@usda.gov and GaryD.Olson@usda.gov, respectively.
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. 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
continues in effect the action that increased the quantity of Native
spearmint oil produced in the Far West that may be purchased from or
handled for producers by handlers during the 2006-2007 marketing year,
which ends on May 31, 2007. 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 2006-2007 marketing year were
recommended by the Committee at its October 5, 2005, meeting. The
Committee recommended salable quantities of 878,205 pounds and
1,007,886 pounds, and allotment percentages of 45 percent and 46
percent, respectively, for Scotch and Native spearmint oil. A proposed
rule was published in the Federal Register on February 1, 2006 (71 FR
5183). Comments on the proposed rule were solicited from interested
persons until March 3, 2006. No comments were received. Subsequently, a
final rule establishing the salable quantities and allotment
percentages for Scotch and Native spearmint oil for the 2006-2007
marketing year was published in the Federal Register on April 5, 2006
(71 FR 16986).
This rule continues in effect the action that revised the quantity
of Native spearmint oil that handlers may purchase from, or handle for,
producers during the 2006-2007 marketing year, which ends on May 31,
2007. Pursuant to authority contained in Sec. Sec. 985.50, 985.51, and
985.52 of the order, the Committee, with seven of the eight members
present, met on April 18, 2006, and unanimously recommended that the
2006-2007 Native spearmint oil allotment percentage be increased by 7
percent.
Thus, taking into consideration the following discussion on
adjustments to the Native spearmint oil salable quantity, the 2006-2007
marketing year salable quantity and allotment percentage for Native
spearmint oil is increased to 1,161,260 pounds and 53 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.
[[Page 52736]]
The estimated total industry allotment base for Native spearmint
oil for the 2006-2007 marketing year was established at 2,191,056
pounds. This figure represents a one percent increase over the revised
2005-2006 total allotment base. This figure is generally revised each
year on June 1 due to producer base being lost because of the bona fide
effort production provisions of Sec. 985.53(e). The revision is
usually minimal.
By increasing the salable quantity and allotment percentage, this
final rule makes an additional amount of Native spearmint oil available
by releasing oil from the reserve pool. When applied to each individual
producer, the allotment percentage increase allows each producer with
reserve pool oil to take up to an amount equal to their allotment base
from their reserve for this class of oil. Before November 1, 2006, a
producer may also transfer excess oil to another producer to enable
that producer to fill a deficiency in that producer's annual allotment
for this class of oil.
The following table summarizes the Committee recommendation:
Native Spearmint Oil Recommendation
(A) Estimated 2006-2007 Allotment Base--2,191,056 pounds. This is
the estimate on which the original 2006-2007 Native spearmint oil
salable quantity and allotment percentage was based.
(B) Original 2006-2007 Allotment Percentage--46 percent. This was
unanimously recommended by the Committee on October 5, 2005.
(C) Original 2006-2007 Salable Quantity--1,007,886 pounds. This
figure is 46 percent of the estimated 2006-2007 allotment base of
2,191,056 pounds.
(D) Increase in Allotment Percentage--7 percent. The Committee
recommended a 7 percent increase at its April 18, 2006, meeting.
(E) 2006-2007 Allotment Percentage--53 percent. This figure is
derived by adding the increase of 7 percent to the original 2006-2007
allotment percentage of 46 percent.
(F) Calculated Revised 2006-2007 Salable Quantity--1,161,260
pounds. This figure is 53 percent of the estimated 2006-2007 allotment
base of 2,191,056 pounds.
(G) Computed Increase in the 2006-2007 Salable Quantity--153,374
pounds. This figure is 7 percent of the estimated 2006-2007 allotment
base of 2,191,056 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 and producers who were not in attendance. On average,
handlers estimated that the demand for 2006-2007 Native spearmint oil
is 300,000 pounds above the quantity already contracted for sale.
The 2006-2007 marketing year began on June 1, 2006, with an
estimated carry-in of 50,000 pounds of salable oil. When the estimated
carry-in is added to the original 2006-2007 salable quantity of
1,007,886 pounds, a total estimated available supply for the 2006-2007
marketing year of 1,057,886 pounds results. Of this amount, 819,560
pounds of oil has already been contracted for the 2006-2007 marketing
year. Additionally, an estimated deficiency of 133,800 pounds may exist
from producers not producing their full salable quantity. As a result,
an estimated 104,526 pounds of oil would remain uncontracted and
available for sale without this increase. This increase supplies an
additional 153,374 pounds of oil to the market, resulting in 257,900
pounds of oil available for contracting for 2006-2007 marketing year.
The Committee was reluctant to recommend any more of an increase in
the salable quantity due to the uncertainty of the 2006-2007 marketing
year; however, the Committee continues to believe that an increase is
necessary to supply the higher quantity of Native spearmint oil
demanded according to their revised market estimate. Therefore, the
industry may not be able to meet market demand without this increase.
In addition, when the Committee made its original recommendation for
the establishment of the Native spearmint oil salable quantity and
allotment percentage for the 2006-2007 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 Native spearmint
oil for the 2006-2007 marketing year should be increased to 1,161,260
pounds and 53 percent, respectively.
This rule finalizes an interim final rule that relaxed 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 2006-2007 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 2006-2007
salable quantity and allotment percentage, 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.
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 88 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
[[Page 52737]]
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 18 of the 88 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 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 continues in effect the action that revised the quantity
of Native spearmint oil that handlers may purchase from, or handle for,
producers during the 2006-2007 marketing year, which ends on May 31,
2007. That interim final rule increased the Native spearmint oil
salable quantity from 1,007,886 pounds to 1,161,260 pounds, and the
allotment percentage from 46 percent to 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 2006-2007
producer allotments are based, are 45 percent for Scotch and 53 percent
for Native (a 7 percentage point increase from the original salable
percentage of 46 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 (from 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 $1.40 per pound if volume controls were not used. A previous price
decline estimate of $1.49 per pound was based on the 2006-2007
allotment percentages (45 percent for Scotch and 46 percent for Native)
published in the Federal Register on April 5, 2006 (71 FR 16986).
The surplus situation for the spearmint oil market that would exist
without volume controls in 2006-2007 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 meeting, the Committee
considered alternatives to the increase 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 10 percent. 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 level recommended will achieve the objectives
sought. Without the increase, the Committee believes the industry would
not be able to meet market needs.
The AMS is committed to compliance 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.
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, as noted in the initial regulatory flexibility
analysis, USDA has not identified any relevant Federal rules that
duplicate, overlap or conflict with this rule.
Further, the Committee's meeting was widely publicized throughout
the spearmint oil industry and all interested persons were invited to
attend the meeting and participate in Committee deliberations. Like all
Committee meetings, the April 18, 2006, meeting was a public meeting
and all entities, both large and small, were able to express their
views on this issue.
An interim final rule concerning this action was published in the
Federal Register on May 26, 2006. Copies of the rule were mailed by the
Committee's staff to all committee members, producers, handlers, and
other interested persons. In addition, the rule was made available
through the Internet by USDA and the Office of the Federal Register.
That rule provided for a 60-day comment period which ended July 25,
2006. 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.
[[Page 52738]]
After consideration of all relevant material presented, including
the Committee's recommendation, and other information, it is found that
finalizing the interim final rule, without change, as published in the
Federal Register (71 FR 30266, May 26, 2006) 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 rule amending 7 CFR part 985, which was
published at 71 FR 30266 on May 26, 2006, is adopted as a final rule
without change.
Dated: August 31, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E6-14760 Filed 9-6-06; 8:45 am]
BILLING CODE 3410-02-P
