Marketing Order Regulating the Handling of Spearmint Oil Produced in the Far West; Increased Assessment Rate, 23243-23245 [2020-08396]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 85, Number 81 (Monday, April 27, 2020)]
[Proposed Rules]
[Pages 23243-23245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08396]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 85, No. 81 / Monday, April 27, 2020 / 
Proposed Rules

[[Page 23243]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Doc. No. AMS-SC-20-0029; SC20-985-2 PR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Spearmint Oil Administrative Committee (Committee) to increase the 
assessment rate established for the 2020-2021 and subsequent marketing 
years. The proposed assessment rate would remain in effect indefinitely 
unless modified, suspended, or terminated.

DATES: Comments must be received by May 27, 2020.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or internet: https://www.regulations.gov. Comments should reference the document number, the 
date and page number of this issue of the Federal Register, and will be 
available for public inspection in the Office of the Docket Clerk 
during regular business hours, or can be viewed at: https://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Joshua Wilde, Marketing Specialist, or 
Gary Olson, Regional Director, Northwest Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA; Telephone: (503) 326-2055, Fax: (503) 326-7440, or Email: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Order No. 985, as amended (7 CFR part 985), regulating the 
handling of spearmint oil produced in the Far West. Part 985 (referred 
to as 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 Committee locally administers the Order 
and is comprised of spearmint oil producers operating within the 
production area, and a public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This proposed 
rule falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed rule does not meet the definition 
of a significant regulatory action, it does not trigger the 
requirements contained in Executive Order 13771. See OMB's Memorandum 
titled ``Interim Guidance Implementing Section 2 of the Executive Order 
of January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs'[thinsp]'' (February 2, 2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the Order now in effect, Far West spearmint 
oil handlers are subject to assessments. Funds to administer the Order 
are derived from such assessments. It is intended that the assessment 
rate would be applicable to all assessable spearmint oil for the 2020-
2021 marketing year, and continue until amended, suspended, or 
terminated.
    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. Such 
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 no later than 20 days after the date of the 
entry of the ruling.
    This proposed rule would increase the assessment rate from $0.10 
per pound of Far West spearmint oil handled, the rate that was 
established for the 2019-2020 marketing year, to $0.14 per pound of Far 
West spearmint oil handled for the 2020-2021 and subsequent marketing 
years.
    The Order authorizes the Committee, with the approval of USDA, to 
formulate an annual budget of expenses and collect assessments from 
handlers to administer the program. The members are familiar with the 
Committee's needs and with the costs of goods and services in their 
local area and are in a position to formulate an appropriate budget and 
assessment rate. The Committee discusses and formulates the assessment 
rate in a public meeting. Thus, all directly affected persons have an 
opportunity to participate and provide input.
    For the 2019-2020 and subsequent marketing years, the Committee 
recommended, and USDA approved, an assessment rate of $0.10 per pound 
of Far West spearmint oil handled. That assessment rate would continue 
in effect from marketing year to marketing year unless modified, 
suspended, or terminated by USDA upon recommendation with information

[[Page 23244]]

submitted by the Committee or other information available to USDA.
    The Committee met on February 26, 2020, and unanimously recommended 
expenditures of $214,825 and an assessment rate of $0.14 per pound of 
Far West spearmint oil handled for the 2020-2021 and subsequent 
marketing years. In comparison, last year's budgeted expenditures were 
$272,850. The proposed assessment rate of $0.14 is $0.04 higher than 
the $0.10 rate currently in effect. The Committee recommended the 
assessment rate increase because expenditures have exceeded assessment 
revenue in the previous six marketing years and financial reserves have 
been reduced to approximately $87,468. The Committee believes that 
drawing from reserves to fund operations is not a sustainable strategy 
and that the previous assessment increase from $0.09 to $0.10 per pound 
of Far West spearmint oil handled, effective for the 2019-2020 and 
subsequent marketing years, was not sufficient to offset declining 
sales volume and increasing costs. The Committee projects expenses to 
exceed income by $63,525 if the assessment rate is left unchanged for 
the 2020-2021 marketing year. The Committee believes that the proposed 
assessment rate would allow the Committee to adequately balance 
budgeted expenses with projected income for the 2020-2021 and 
subsequent marketing years.
    The major expenditures recommended by the Committee for the 2020-
2021 marketing year include $169,000 for contracted administration by 
Ag Association Management, Inc., $26,025 for administrative expenses, 
$8,800 for Committee expenses, $6,500 for software/website maintenance, 
and $4,500 for market research and development projects. In comparison, 
major expenses for the 2019-2020 marketing year included $169,000 for 
contracted administration, $30,850 for administrative expenses, $15,000 
for Committee expenses, $6,500 for software/website maintenance, and 
$13,000 for market research and development projects.
    The Committee derived the recommended assessment rate by 
considering anticipated expenses, expected spearmint oil sales, and the 
amount of funds available in the authorized reserve. Income derived 
from handler assessments, calculated at $210,000 (1,500,000 pounds of 
spearmint oil x $0.14 per pound assessment rate), along with $1,300 in 
other income and $3,525 from reserve funds, would be enough to cover 
budgeted expenses of $214,825. Funds in the reserve (estimated to be 
$87,468 at the beginning of the 2020-2021 marketing year) would be kept 
within the maximum permitted by Sec.  985.42(a) of the Order and would 
not exceed the Committee's operational expenses of one marketing year.
    The assessment rate proposed in this rule would continue in effect 
indefinitely unless modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Committee or other 
available information.
    Although the modified assessment rate would be in effect for an 
indefinite period, the Committee would continue to meet prior to or 
during each marketing year to recommend a budget of expenses and 
consider recommendations for modification of the assessment rate. The 
dates and times of Committee meetings are available from the Committee 
or USDA. Committee meetings are open to the public and interested 
persons may express their views at these meetings. USDA would evaluate 
Committee recommendations and other available information to determine 
whether modification of the assessment rate is needed. Further 
rulemaking would be undertaken as necessary. The Committee's 2020-2021 
marketing year budget, and those for subsequent marketing years, would 
be reviewed and, as appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule 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 
businesses 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 approximately 41 producers and 94 producers of Scotch and 
Native spearmint oil, respectively, in the regulated area and 
approximately 8 spearmint oil handlers subject to regulation under the 
Order. Small agricultural producers are defined by the Small Business 
Administration (SBA) as those having annual receipts of less than 
$1,000,000, and small agricultural service firms have been defined as 
those whose annual receipts are less than $30,000,000 (13 CFR 121.201).
    The Committee reported that recent producer prices for spearmint 
oil range from $14.00 to $17.50 per pound. The National Agricultural 
Statistics Service (NASS) reported that the 2018 U.S. season average 
spearmint oil producer price per pound was $16.80. Multiplying $16.80 
per pound by 2018-2019 marketing year spearmint oil utilization of 
1,963,028 million pounds yields a crop value estimate of about $33.0 
million. Total 2018-2019 marketing year spearmint oil utilization, 
reported by the Committee, was 717,952 pounds and 1,245,076 pounds for 
Scotch and Native spearmint oil, respectively.
    Given the reporting requirements for the volume regulation 
provisions of the Order, the Committee maintains accurate records of 
each producer's production and sales. Using the $16.80 average 
spearmint oil price, and Committee production data for each producer, 
the Committee estimates that 38 of the 41 Scotch spearmint oil 
producers and 89 of the 94 Native spearmint oil producers could be 
classified as small entities under the SBA definition.
    There is no third-party or governmental entity that collects and 
reports spearmint oil prices received by spearmint oil handlers. 
However, the Committee estimates an average spearmint oil handling 
markup at approximately 20 percent of the price received by producers. 
Multiplying 1.20 by the 2018 producer price of $16.80 yields a handler 
free on board (FOB) price estimate of $20.16 per pound.
    Multiplying this estimated handler FOB price by spearmint oil 
utilization of 1,963,028 pounds results in an estimated handler-level 
spearmint oil value of $39.6 million. Dividing this figure by the 
number of handlers (8) yields estimated average annual handler receipts 
of about $5.0 million, which is well below the SBA threshold for small 
agricultural service firms.
    Furthermore, using confidential data on pounds handled by each 
handler, and the abovementioned estimated handler price per pound, the 
Committee reported that it is not likely that any of the eight handlers 
had a 2018-2019 marketing year spearmint oil sales value that exceeded 
the $30 million SBA threshold.
    Therefore, in view of the foregoing, most producers of spearmint 
oil may be classified as small entities and all of the handlers of 
spearmint oil may be classified as small entities.
    This proposal would increase the assessment rate collected from 
handlers

[[Page 23245]]

for the 2020-2021 and subsequent marketing years from $0.10 to $0.14 
per pound of spearmint oil handled. The Committee unanimously 
recommended 2020-2021 expenditures of $214,825 and an assessment rate 
of $0.14 per pound of spearmint oil. The proposed assessment rate of 
$0.14 is $0.04 higher than the rate currently in effect. The Committee 
estimates that the industry will handle 1,500,000 pounds of spearmint 
oil during the 2020-2021 marketing year. Thus, the $0.14 per pound rate 
should provide $210,000 in assessment income. The Committee anticipates 
that income derived from handler assessments, along with $1,300 of 
other income and $3,525 from its reserve fund, will fully fund all 
budgeted expenses for the 2020-2021 marketing year. Furthermore, the 
Committee expects that assessment revenue will completely cover 
budgeted expenses for the 2021-2022 and subsequent marketing years.
    The major expenditures recommended by the Committee for the 2020-
2021 marketing year include $169,000 for contracted administration by 
Ag Association Management, Inc., $26,025 for administrative expenses, 
$8,800 for Committee expenses, $6,500 for software/website maintenance, 
and $4,500 for market research and development projects. Budgeted 
expenses for these items in the 2019-2020 marketing year were $169,000, 
$30,850, $15,000, $6,500, and $13,000, respectively.
    The Committee recommended the assessment rate increase because 
expenditures have exceeded assessment revenue in the previous six 
marketing years and financial reserves have been reduced to 
approximately $87,468. The Committee believes that drawing from 
reserves to fund operations is not a sustainable strategy and that the 
previous assessment increase from $0.09 to $0.10 per pound of Far West 
spearmint oil handled was not sufficient to offset declining sales 
volume. The Committee projects expenses to exceed income by $63,525 if 
the assessment rate is left unchanged for the 2020-2021 marketing year. 
The Committee believes that the proposed assessment rate would allow 
the Committee to adequately balance budgeted expenses with projected 
income for the 2020-2021 and subsequent marketing years.
    Prior to arriving at this budget and assessment rate, the Committee 
discussed various alternatives, including maintaining the current 
assessment rate of $0.10 per pound and increasing the assessment rate 
to a different amount. However, leaving the assessment rate unchanged 
would have required the Committee to deplete its financial reserve to a 
fiscally unsustainable level. Based on estimated shipments, the 
recommended assessment rate of $0.14 per pound of spearmint oil should 
provide $210,000 in assessment income. The Committee determined 
assessment revenue would be adequate to cover most of the budgeted 
expenditures for the 2020-2021 marketing year and all of the 
Committee's budgeted expenditures for subsequent marketing years. 
Moving forward, any excess funds would be used to replenish the 
Committee's monetary reserve. Reserve funds would be kept within the 
amount authorized in the Order.
    A review of historical information and preliminary information 
pertaining to the upcoming marketing year indicates an average producer 
price of approximately $15.90-17.40 per pound of spearmint oil for the 
2020-2021 season. Therefore, estimated assessment revenue for the 2020-
2021 marketing year as a percentage of total producer revenue would be 
between 0.80 and 0.88 percent ($0.14 divided by $17.40 and $15.90, 
respectively).
    This proposed action would increase the assessment obligation 
imposed on handlers. Assessments are applied uniformly on all handlers, 
and some of the costs may be passed on to producers. However, these 
costs would be offset by the benefits derived by the operation of the 
Order.
    The Committee's meetings were widely publicized throughout the Far 
West spearmint oil industry. All interested persons were invited to 
attend the meetings and participate in Committee deliberations on all 
issues. Like all Committee meetings, the February 26, 2020, meeting was 
a public meeting and all entities, both large and small, were able to 
express views on this issue. Interested persons are invited to submit 
comments on this proposed rule, including the regulatory and 
information collection impacts of this action on small businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0178 Vegetable and 
Specialty Crops. No changes in those requirements would be necessary as 
a result of this proposed rule. Should any changes become necessary, 
they would be submitted to OMB for approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large Far West 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 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    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/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal.

List of Subjects in 7 CFR Part 985

    Marketing agreements, Oils and fats, Reporting and recordkeeping 
requirements, Spearmint oil.

    For the reasons set forth in the preamble, 7 CFR part 985 is 
proposed to be 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. Section 985.141 is revised to read as follows:


Sec.  985.141  Assessment rate.

    On and after June 1, 2020, an assessment rate of $0.14 per pound is 
established for Far West spearmint oil. Unexpended funds may be carried 
over as a reserve.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-08396 Filed 4-24-20; 8:45 am]
 BILLING CODE P