SUPPLEMENTARY INFORMATION:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (the Act), amending Marketing Order No. 985 (7 CFR part 985; the Order), regulating the handling of spearmint oil produced in the Far West. The Committee locally administers the Order and is comprised of spearmint oil producers operating within the production area, and a public member.

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends existing Marketing Order No. 985, as amended (7 CFR part 985), Marketing Order Regulating the Handling of Spearmint Oil Produced in the Far West, and is necessary for the continued operation of Marketing Order No. 985. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This proposed rule has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” which requires Federal agencies to consider whether their rulemaking actions would have Tribal implications. The Agricultural Marketing Service (AMS) has determined this proposed rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This proposed rule is not intended to have a retroactive effect. Under the Order now in effect, salable quantities and allotment percentages ( printed page 46309) may be established for each class of spearmint oil produced in the Far West. This proposed rule would establish salable quantities and allotment percentages for Scotch and Native spearmint oil for the 2026-2027 marketing year, which begins on June 1, 2026.

Pursuant to the requirements in § 985.50 of the Order, the Committee meets each year to consider supply and demand of spearmint oil and to adopt a marketing policy for the ensuing marketing year. In determining such marketing policy, the Committee considers several factors, including, but not limited to, the current and projected supply of spearmint oil, estimated future demand, production costs, and producer prices for both Class 1 (Scotch) and Class 3 (Native) spearmint oil. Input from spearmint oil handlers and producers is considered as well.

Pursuant to the provisions in § 985.51, when the Committee's marketing policy considerations indicate a need to establish or to maintain stable market conditions through volume regulation, the Committee subsequently recommends to AMS the establishment of a salable quantity and allotment percentage for such class or classes of spearmint oil for the upcoming marketing year. Recommendations for volume control are intended to ensure market requirements for Far West spearmint oil are satisfied and orderly marketing conditions are maintained.

Salable quantity represents the total quantity of each class of oil (Class 1, commonly referred to as “Scotch,” or Class 3, commonly referred to as “Native”) which handlers may purchase from, or handle on behalf of, producers during a given marketing year. The allotment percentage for each class of spearmint oil is the salable quantity for that class of oil divided by the total of all producers' allotment base for the same class of oil. A producer's allotment base is their calculated share of the spearmint oil market based on a statistical representation of their past spearmint production and sales. To account for changes in production and demand over time, the Committee periodically reviews and adjusts each producer's allotment base in accordance with a formula prescribed by the Committee and approved by AMS. Each producer's annual allotment of the salable quantity is calculated by multiplying their respective allotment base for each class of spearmint oil by the allotment percentage for that class of spearmint oil. The total allotment base is revised each year on June 1 to account for producer allotment base being lost as a result of the “bona fide effort” production provision of § 985.53(e) and additional base made available pursuant to the provisions of § 985.153.

Salable quantities and allotment percentages are established at levels intended to maintain orderly marketing conditions while also ensuring that markets are adequately supplied. Further, Committee recommendations for volume control are made in advance of the upcoming marketing year in which the regulations are to be effective, thereby allowing producers ample time to adjust their production decisions accordingly.

The Committee met on October 8, 2025, to consider its marketing policy for the 2026-2027 marketing year. At that meeting, the Committee determined that, based on the current market and supply conditions, volume regulation for both classes of oil would be necessary. The Committee unanimously recommended, with a vote of seven in favor and none opposed, a salable quantity and allotment percentage for Scotch spearmint oil of 979,704 pounds and 42 percent, respectively. In addition, the Committee also recommended, with a vote of six in favor and one opposed, a salable quantity and allotment percentage for Native spearmint oil of 1,145,220 pounds and 43 percent, respectively. The member voting in opposition to the recommendation for Native spearmint oil supported volume regulation but favored a salable quantity and an allotment percentage higher for Native spearmint oil than what was ultimately recommended by the Committee.

This proposed action would establish the amount of Scotch and Native spearmint oil that handlers may purchase from, or handle on behalf of, producers during the 2026-2027 marketing year, which begins on June 1, 2026. Salable quantities and allotment percentages have been in effect each season since the Order's inception in 1980.

Scotch Spearmint Oil

The Committee recommended a Scotch spearmint oil salable quantity of 979,704 pounds and an allotment percentage of 42 percent for the 2026-2027 marketing year. The proposed salable quantity of 979,704 pounds is 171,048 pounds greater than the salable quantity of 808,656 pounds established for the 2025-2026 marketing year (91 FR 24705; May 7, 2026). The recommended 42 percent allotment percentage for the 2026-2027 marketing year is seven percent more than the 35 percent in effect the previous marketing year.

The total allotment base for the coming marketing year is estimated to be 2,332,629 pounds. This figure represents a one percent increase over the revised 2025-2026 marketing year total allotment base of 2,309,534 pounds. The proposed salable quantity (979,704 pounds) is the product of total allotment base (2,332,629 pounds) times the proposed allotment percentage (42 percent).

The Committee considered several factors in making its recommendation, including the current and projected future supply, estimated future demand, production costs, and producer prices. The Committee's recommendation also accounts for the established acreage of Scotch spearmint, consumer demand, existing carry-in, reserve pool volume, and production in competing markets.

According to the Committee, as costs of production have increased and spearmint oil prices have lagged behind inflation, many producers have forgone new plantings of Scotch spearmint. This has resulted in a significant decline in production of Scotch spearmint oil since 2014, a trend which has begun to reverse in the past year. Production of Scotch spearmint oil decreased from 498,332 pounds in 2020 to an estimated 257,943 pounds in 2024, before rebounding to an estimated 316,665 pounds in 2025 based on a net year-over-year increase of 950 acres of Scotch spearmint production.

Industry reports indicate that trade demand for Far West Scotch spearmint oil, which had been declining in recent years, has begun to stabilize. Sales of Far West Scotch spearmint oil declined from a high of 1,060,232 pounds during the 2014-2015 marketing year to a low of 488,484 pounds in the 2020-2021 marketing year. Sales of Far West Scotch spearmint oil totaled 549,323 pounds during the 2023-2024 marketing year, the last full year of available data. The 3-year sales average for Far West Scotch spearmint oil of 540,676 pounds is only 44,319 pounds lower than the 7-year sales average of 584,995 pounds. The Committee indicates that production of Scotch spearmint oil in competing markets, most notably by Canadian producers, continues to exert downward pressure on trade demand for Scotch spearmint oil from the Far West.

Given the anticipated market conditions for the coming year, the Committee estimates that Scotch spearmint oil trade demand for the 2026-2027 marketing year will be 650,000 pounds, which is 5,000 pounds greater than the Committee's estimate for the prior year and 65,005 pounds greater than the 7-year moving sales average of 584,995 pounds. Should the proposed volume regulation levels prove to be insufficient to adequately ( printed page 46310) supply the market, the Committee has the authority to recommend intra-seasonal increases of the salable quantity and allotment percentage, as it has in previous marketing years.

The Committee calculated the minimum salable quantity of Scotch spearmint oil that would be required during the 2026-2027 marketing year (650,000 pounds) by subtracting the estimated salable carry-in on June 1, 2026 (0 pounds), from the estimated trade demand (650,000 pounds). This minimum salable quantity represents the estimated minimum amount of Scotch spearmint oil that would be needed to satisfy estimated trade demand for the coming year. To ensure that the market would be fully supplied, the Committee recommended a 2026-2027 marketing year salable quantity of 979,704 pounds. The recommended salable quantity of 979,704 pounds, combined with any salable carry-in from the 2025-2026 marketing year, would represent the total available supply of Scotch spearmint oil for the 2026-2027 marketing year.

Salable carry-in is the primary measure of excess spearmint oil supply under the Order, as it represents overproduction in prior years that is currently available to the market without restriction. Under volume regulation, spearmint oil that is designated as salable continues to be available to the market until it is sold and may be marketed at any time at the discretion of the owner.

The Committee estimated that there would be zero pounds of salable carry-in of Scotch spearmint oil on June 1, 2026. At the recommended salable quantity, the Committee projects that salable carry-in would increase to 329,704 pounds at the beginning of the 2026-2027 marketing year if current market conditions are maintained. This level would be greater than the quantity that the Committee generally considers favorable (150,000 pounds). However, the Committee believes that, given the current economic conditions in the Scotch spearmint oil industry, some Scotch spearmint oil producers may not produce their full annual allotment for the 2026-2027 marketing year. Therefore, the Committee anticipates that the actual quantity of Scotch spearmint oil carried into the 2026-2027 marketing year would be less than the quantity calculated above (329,704 pounds).

Spearmint oil held in reserve is oil that has been produced in excess of a producer's annual allotment, either in the current marketing year or in prior years, and is restricted from freely entering the market. After December 1 of each marketing year, reserve pool oil is not available to the market in the current marketing year without an increase in the salable quantity and allotment percentage. The Order does include the provision for reserve oil to be released for limited market development projects, with approval of the Secretary, but this provision is rarely utilized.

Oil held in the reserve pool is another indicator of excess supply. Scotch spearmint oil held in reserve was 13,936 pounds as of May 31, 2025, down from 30,487 pounds as of May 31, 2024. This quantity of reserve pool oil would indicate that the production and marketing of Scotch spearmint oil in the Far West is in relative balance, with the reserve down from a high of 202,638 pounds in 2017.

The Committee recommended an allotment percentage of 42 percent for the 2026-2027 marketing year for Scotch spearmint oil. During its October 8, 2025, meeting, the Committee calculated an initial allotment percentage by dividing the minimum required salable quantity (650,000 pounds) by the total estimated allotment base (2,332,629 pounds), resulting in 27.9 percent. However, producers and handlers at the meeting indicated that the computed percentage (27.9 percent) might not adequately satisfy potential 2026-2027 marketing year Scotch spearmint oil market demand and may also result in a less than desirable carry-in for the subsequent marketing year. After deliberation, the Committee recommended an allotment percentage of 42 percent. The total estimated allotment base (2,332,629 pounds) for the 2026-2027 marketing year, multiplied by the recommended allotment percentage (42 percent), yields 979,704 pounds, which is the recommended salable quantity for the 2026-2027 marketing year.

The 2026-2027 marketing year computational data for the Committee's recommendation is detailed below.

(A) Estimated carry-in of Scotch spearmint oil on June 1, 2026: 0 pounds. This figure is based upon the Committee's belief that the 2025-2026 marketing year total available supply of 518,206 pounds will be completely exhausted in supplying its estimate for 2025-2026 marketing year trade demand of 645,000 pounds.

(B) Estimated trade demand of Scotch spearmint oil for the 2026-2027 marketing year: 650,000 pounds. This figure was established at the Committee meeting held on October 8, 2025.

(C) Minimum salable quantity of Scotch spearmint oil required from the 2026-2027 marketing year production: 650,000 pounds. This figure is the difference between the estimated 2026-2027 marketing year trade demand (650,000 pounds) and the estimated carry-in on June 1, 2026 (0 pounds). This salable quantity represents the minimum amount of Scotch spearmint oil that would be needed to satisfy estimated demand for the coming year.

(D) Total estimated Scotch spearmint oil allotment base for the 2026-2027 marketing year: 2,332,629 pounds. This figure represents a one percent increase over the 2025-2026 marketing year total actual allotment base of 2,309,534 pounds, as prescribed by § 985.53(d). The one percent increase equals 23,095 pounds. This total estimated allotment base is revised each year on June 1 in accordance with § 985.53(e).

(E) Computed Scotch spearmint oil allotment percentage for the 2026-2027 marketing year: 27.9 percent. This percentage is computed by dividing the minimum required salable quantity (650,000) by the total estimated allotment base (2,332,629 pounds).

(F) Recommended Scotch spearmint oil allotment percentage for the 2026-2027 marketing year: 42 percent. This is the Committee's recommendation and is based on the computed allotment percentage (27.9 percent) and input from producers and handlers at the October 8, 2025, meeting. The recommended 42 percent allotment percentage reflects the Committee's belief that the computed percentage (27.9 percent) may not adequately supply the anticipated 2026-2027 marketing year Scotch spearmint oil market demand.

(G) Recommended Scotch spearmint oil salable quantity for the 2026-2027 marketing year: 979,704 pounds. This figure is the product of the recommended salable allotment percentage (42 percent) and the total estimated allotment base (2,332,629 pounds) for the 2026-2027 marketing year.

(H) Estimated total available supply of Scotch spearmint oil for the 2026-2027 marketing year: 979,704 pounds. This figure is the sum of the 2026-2027 marketing year recommended salable quantity (979,704 pounds) and the estimated carry-in on June 1, 2026 (0 pounds).

For the reasons stated above, the Committee believes that the recommended salable quantity and allotment percentage would adequately satisfy trade demand, would result in a reasonable carry-in for the following year, and would contribute to the orderly marketing of Scotch spearmint oil. ( printed page 46311)

Native Spearmint Oil

The Committee recommended a Native spearmint oil salable quantity of 1,145,220 pounds and an allotment percentage of 43 percent for the 2026-2027 marketing year. These figures are, respectively, 116,550 pounds and 4 percentage points greater than the levels established for the 2025-2026 marketing year (91 FR 24705; May 7, 2026). The Committee utilized handlers' estimated trade demand of Native spearmint oil for the coming year, historical and current Native spearmint oil production, inventory statistics, and international market data obtained from consultants for the spearmint oil industry to arrive at these recommendations.

The Committee anticipates that 2025 Native spearmint oil production will total 1,013,990 pounds, a slight increase from the previous year's production of 987,947 pounds. Committee records indicate that spearmint-producing acres in the Far West declined from a recent high of 9,013 acres in 2019 to 6,273 acres of Native spearmint production in 2025.

Sales of Native spearmint oil have been trending downward since the 2020-2021 marketing year, declining from 1,332,260 pounds during the 2020-2021 marketing year to 945,111 pounds for the 2024-2025 marketing year, the last full year for which data is available. The Committee expects demand to rebound slightly, estimating trade demand for Native spearmint oil at 1,150,000 pounds for the 2026-2027 marketing year, an increase of 62,500 pounds from the Committee's estimated trade demand of 1,087,500 pounds for the 2025-2026 marketing year.

The Committee anticipates that 156,832 pounds of salable Native spearmint oil from prior years will be carried into the 2026-2027 marketing year. This amount is down from the 180,092 pounds of salable oil carried into the 2025-2026 marketing year and is consistent with the level that the Committee generally considers favorable (150,000 pounds).

The Committee estimates that there will be 1,265,000 pounds of Native spearmint oil in the reserve pool at the beginning of the 2026-2027 marketing year. Native reserve pool oil has been fairly stable over the past several marketing years. The reserve pool declined from 1,219,122 pounds at the start of the 2021-2022 marketing year to a recent low of 1,026,336 pounds to begin the 2023-2024 marketing year. However, the estimated 1,265,000 pounds that the Committee projected to be held in the reserve pool to begin the 2025-2026 marketing year reflects the Committee's previous efforts to reduce year-over-year salable carry-in by establishing a relatively low salable quantity for Native spearmint oil for the 2025-2026 marketing year.

The Committee expects end users of Native spearmint oil to continue to rely on Far West production as their primary source of high-quality Native spearmint oil. However, increases in domestic production of Native spearmint from regions outside of the Far West production area has created additional competition for market share. For example, there were fewer than 2,000 acres of Native spearmint in production in the U.S. Midwest region in 2016, compared with over 10,000 acres of Native spearmint oil in production in the Far West. However, the Committee's 2025 estimates indicate Far West acreage of approximately 6,273 acres compared with Native spearmint producing acreage of approximately 3,000 acres in the Midwest. This situation has contributed to declining trade demand for Far West Native spearmint oil and led to downward pressure on producer prices.

Given the anticipated market conditions for the coming year, the Committee estimated the 2026-2027 marketing year Native spearmint oil trade demand to be 1,150,000 pounds. This figure is based on input provided by producers at six production area meetings held in September and October 2025, as well as estimates provided by handlers and other meeting participants at the October 8, 2025, Committee meeting. This figure represents an increase of 62,500 pounds from the previous year's estimated trade demand for the 2025-2026 marketing year. The average estimated trade demand for Native spearmint oil derived from the production area meetings was 1,150,000 pounds, whereas handlers' estimates ranged from 1,050,000 to 1,150,000 pounds. The quantity marketed over the most recent full marketing year, 2024-2025, was 945,111 pounds.

The estimated June 1, 2026, carry-in of 156,832 pounds of Native spearmint oil, plus the recommended 2026-2027 marketing year salable quantity of 1,145,220 pounds, would result in an estimated total available supply of 1,302,052 pounds of Native spearmint oil during the 2026-2027 marketing year. With the corresponding estimated trade demand of 1,150,000 pounds, the Committee projects that 152,052 pounds of salable oil will be carried into the 2027-2028 marketing year. Should the proposed volume regulation levels prove insufficient to adequately supply the market, the Committee has the authority to recommend an intra-seasonal increase to the salable quantity and allotment percentage to satisfy that demand.

The Committee recommended a Native spearmint oil allotment percentage of 43 percent for the 2026-2027 marketing year. During its October 8, 2025, meeting, the Committee calculated an initial allotment percentage of 37.3 percent by dividing the minimum required salable quantity to satisfy estimated trade demand (993,168 pounds) by the total allotment base (2,663,302 pounds). However, producers and handlers at the meeting expressed concern that the computed percentage of 37.3 percent may not adequately supply the potential 2026-2027 marketing year Native spearmint oil market demand. Further, it could result in a less than adequate carry-in for the subsequent marketing year. After deliberation, the Committee increased its allotment percentage recommendation to 43 percent. The total estimated Native spearmint oil allotment base (2,663,302 pounds) multiplied by the recommended salable allotment percentage (43 percent) yields 1,145,220 pounds, the recommended Native spearmint oil salable quantity for the 2026-2027 marketing year.

The 2026-2027 marketing year computational data for the Committee's recommendation is further outlined below.

(A) Estimated carry-in of Native spearmint oil on June 1, 2026: 156,832 pounds. This figure is the difference between the estimated 2025-2026 marketing year total available supply of 1,256,832 pounds and the revised 2025-2026 marketing year estimated trade demand of 1,100,000 pounds.

(B) Estimated trade demand of Native spearmint oil for the 2026-2027 marketing year: 1,150,000 pounds. This estimate was established by the Committee at its October 8, 2025, meeting.

(C) Minimum salable quantity of Native spearmint oil required from the 2026-2027 marketing year production: 993,168 pounds. This figure is the difference between the 2026-2027 marketing year estimated trade demand (1,150,000 pounds) and the estimated carry-in on June 1, 2026 (156,832 pounds). This is the minimum amount of Native spearmint oil that the Committee believes would be required to meet the anticipated 2026-2027 marketing year trade demand.

(D) Total estimated allotment base of Native spearmint oil for the 2025-2065 marketing year: 2,663,302 pounds. This figure represents a one percent increase over the 2025-2026 marketing year ( printed page 46312) actual total allotment base of 2,636,933 pounds as prescribed in § 985.53(d). The one percent increase equals 26,369 pounds of oil. This estimate is revised each year on June 1, to adjust for the bona fide effort production provisions of § 985.53(e).

(E) Computed Native spearmint oil allotment percentage for the 2026-2027 marketing year: 37.3 percent. This percentage is calculated by dividing the required minimum salable quantity (993,168 pounds) by the total estimated allotment base (2,663,302 pounds) for the 2026-2027 marketing year.

(F) Recommended Native spearmint oil allotment percentage for the 2026-2027 marketing year: 43 percent. This is the Committee's recommendation based on the computed allotment percentage (37.3 percent) and input from producers and handlers at the October 8, 2025, meeting. The recommended 43 percent allotment percentage is also based on the Committee's belief that the computed percentage (37.3 percent) may not adequately supply the potential market for Native spearmint oil in the 2026-2027 marketing year or allow for sufficient salable Native spearmint oil to be carried into the beginning of the 2026-2027 marketing year.

(G) Recommended Native spearmint oil 2026-2027 marketing year salable quantity: 1,145,220 pounds. This figure is the product of the recommended allotment percentage (43 percent) and the total estimated allotment base (2,663,302 pounds).

(H) Estimated available supply of Native spearmint oil for the 2026-2027 marketing year: 1,302,052 pounds. This figure is the sum of the 2026-2027 marketing year recommended salable quantity (1,145,220 pounds) and the estimated carry-in on June 1, 2026 (156,832 pounds). This amount could be increased, as needed, through an intra-seasonal increase in the salable quantity and allotment percentage.

The Committee's recommended Scotch and Native spearmint oil salable quantities and allotment percentages of 979,704 pounds and 42 percent, and 1,145,220 pounds and 43 percent, respectively, would match the available supply of each class of spearmint oil to the estimated demand of each, thus avoiding extreme fluctuations in inventories and prices. This proposed rule is similar to regulations issued in prior seasons.

The salable quantities in this proposed rule are not expected to cause a shortage of either class of spearmint oil. Any unanticipated or additional market demand for either class of spearmint oil which may develop during the marketing year could be satisfied by an intra-seasonal increase in the salable quantity and corresponding allotment percentage. The Order contains a provision in § 985.51 for intra-seasonal increases to allow the Committee the flexibility to respond quickly to changing market conditions.

Under volume regulation, producers who produce more than their annual allotments during the marketing year may transfer such excess spearmint oil to producers who have produced less than their annual allotment. In addition, on December 1 of each year, producers who have not transferred their excess spearmint oil to other producers must place their excess spearmint oil production into the reserve pool to be released in future marketing years. Each producer controls the disposition of their respective reserve pool spearmint oil, in accordance with market needs and the Order's volume regulation provisions, and under the Committee's oversight.

In conjunction with the issuance of this proposed rule, AMS has reviewed the Committee's marketing policy statement for the 2026-2027 marketing year. The Committee's marketing policy statement, a requirement whenever the Committee recommends volume regulation, meets the requirements of §§ 985.50 and 985.51.

The establishment of the proposed salable quantities and allotment percentages would allow for anticipated market needs. In determining anticipated market needs, the Committee considered historical sales, as well as changes and trends in production and demand. This proposal would also provide producers with information regarding the amount of spearmint oil that should be produced for the 2026-2027 and subsequent marketing years to meet anticipated market demand.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), 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 are unique regulations in that they are brought about through group action of typically small entities acting on their own behalf.

There are approximately 38 producers of Scotch spearmint oil and 84 producers of Native spearmint oil operating within the regulated production area. In addition, there are approximately six spearmint oil handlers (both Scotch and Native spearmint) subject to regulation under the Order. At the time this analysis was prepared, the Small Business Administration (SBA) defined small agricultural producers as those having annual receipts equal to or less than $2,500,000 (NAICS code 111998, All Other Miscellaneous Crop Farming). Small agricultural service firms, which include spearmint oil handlers, are defined by the SBA as those having annual receipts equal to or less than $34,000,000 (NAICS code 115114, Postharvest Crop Activities) (13 CFR 121.201).

The USDA National Agricultural Statistics Service (NASS) reported an average 2024 U.S. season spearmint oil producer price per pound of $16.10. Spearmint oil utilization for the 2024-2025 marketing year, as reported by the Committee, was 474,852 pounds and 945,111 pounds for Scotch and Native spearmint oil, respectively, for a total of 1,419,963 pounds. Multiplying $16.10 per pound by 2024-2025 marketing year spearmint oil utilization of 1,419,963 pounds yields a crop value estimate of about $22.9 million.

Given the accounting requirements for the volume regulation provisions of the Order, the Committee maintains accurate records of each producer's production and sales. Using the $16.10 average spearmint oil price and Committee production data for each producer, the Committee estimates that 37 of the 38 Scotch spearmint oil producers and all of the 84 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. Twenty percent of the 2024 producer price ($16.10) is $3.22, which results in a handler Free on Board (f.o.b.) price per pound estimate of $19.32 ($16.10 + $3.22).

Multiplying this estimated handler f.o.b. price by the 2024-2025 marketing year total spearmint oil utilization of 1,419,963 pounds results in an estimated handler-level spearmint oil value of $27.4 million. Dividing this figure by the number of handlers (6) yields estimated average annual handler receipts of about $4.6 million, which is well below the $34 million SBA ( printed page 46313) threshold for small agricultural service firms.

Furthermore, using confidential data compiled by the Committee on the pounds of spearmint oil handled by each handler and the abovementioned estimated handler price per pound, the Committee reported that it is not likely that any of the 6 handlers had 2024-2025 marketing year spearmint oil sales that exceeded SBA's threshold.

Therefore, in view of the foregoing, the majority of 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 proposed rule would establish the quantity of spearmint oil produced in the Far West, by class, which handlers may purchase from, or handle on behalf of, producers during the 2026-2027 marketing year. The Committee recommended this proposed rule to help maintain stability in the spearmint oil market by matching supply to estimated demand, thereby avoiding extreme fluctuations in supplies and prices. Establishing quantities that may be purchased from or handled on behalf of producers during the marketing year through volume regulation allows producers to coordinate their spearmint oil production with the expected market demand. Authority for this proposal is provided in §§ 985.50, 985.51, and 985.52 of the Order.

The Committee estimates the total trade demand for the 2026-2027 marketing year for both classes of oil at 1,800,000 pounds. In addition, the Committee expects that the combined salable carry-in for both classes of spearmint oil will be 156,832 pounds. As such, the combined required salable quantity to meet demand for the 2026-2027 marketing year is estimated to be 1,643,168 pounds (1,800,000 pounds trade demand, less 156,832 pounds carry-in). Under volume regulation, total sales of spearmint oil by producers for the 2026-2027 marketing year would be held to 2,281,756 pounds (the recommended salable quantity for both classes of spearmint oil of 2,124,924 pounds plus 156,832 of salable carry-in).

This total available supply of 2,281,756 pounds should be more than adequate to supply the 1,800,000 pounds of anticipated total trade demand for spearmint oil. In addition, as of May 31, 2025, the total reserve pool for both classes of spearmint oil stood at 1,301,643 pounds. That quantity is expected to remain stable over the course of the 2025-2026 marketing year, with the Committee projecting a total reserve pool of approximately 1,300,000 pounds on May 31, 2026. Should trade demand increase unexpectedly during the 2026-2027 marketing year, reserve pool spearmint oil could be released into the market to supply that increase in demand.

The recommended allotment percentages, upon which 2026-2027 marketing year annual producer allotments are based, are 42 percent for Scotch spearmint oil and 43 percent for Native spearmint oil. Without volume regulation, producers would not be held to these allotment levels and would be able to sell unrestricted quantities of spearmint oil.

The use of volume regulation allows the industry to fully supply spearmint oil markets while avoiding the negative consequences of over-supplying these markets. The use of volume regulation is believed to have little or no effect on consumer prices of products containing spearmint oil and would not result in fewer retail sales of such products.

The Committee discussed alternatives to the recommendations contained in this proposed rule for both classes of spearmint oil. The Committee rejected the idea of not regulating volume for either class of spearmint oil because of the severe, price-depressing effects that are more likely to occur without volume regulation. The Committee also discussed and considered salable quantities and allotment percentages that were above and below the levels that were eventually recommended for both classes of spearmint oil. Ultimately, the action recommended by the Committee was to increase the allotment percentage and salable quantity for both Scotch spearmint oil and Native spearmint oil from the levels established for the 2025-2026 marketing year.

As noted earlier, the Committee's recommendation to establish salable quantities and allotment percentages for both classes of spearmint oil was made after careful consideration of all available information including: (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) the prospective production of each class of oil; (4) the 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.

Based on its review, the Committee believes that the salable quantities and allotment percentages recommended would achieve the objectives sought. The Committee also believes that, should there be no volume regulation in effect for the upcoming marketing year, the Far West spearmint oil industry would return to the pronounced cyclical price patterns that occurred prior to the promulgation of the Order. As previously stated, annual salable quantities and allotment percentages have been issued for both classes of spearmint oil since the Order's inception. The salable quantities and allotment percentages proposed herein are expected to facilitate the goal of maintaining orderly marketing conditions for Far West spearmint oil for the 2026-2027 and future marketing years.

This proposed rule would establish the salable quantities and allotment percentages for Scotch and Native spearmint oil produced in the Far West during the 2026-2027 marketing year. Costs to producers and handlers, large and small, resulting from this proposal are expected to be offset by the benefits derived from a more stable market and increased returns. The benefits of this proposed rule are expected to be equally available to all producers and handlers regardless of their size.

Committee meetings are widely publicized throughout the Far West spearmint oil industry. All interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the October 8, 2025, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational 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 the Office of Management and Budget (OMB) and assigned OMB No. 0581-0178, Vegetable and Specialty Crops. This proposed rule does not require changes to the current information collection. 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 ( printed page 46314) 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.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that this proposed rule is consistent with and would effectuate the purposes of the Act.

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered before a final determination is made on this rulemaking.

For the reasons set forth in the preamble, the Agriculture Marketing Service proposes to amend 7 CFR part 985 as follows:

1. The authority citation for 7 CFR Part 985 continues to read as follows:

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

2. Add § 985.236 to read as follows:

91 FR 46308